N-CSRS 1 v348149_n-csrs.htm N-CSRS

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

Hartford Funds Management Company, LLC

5 Radnor Corporate Center, Suite 300

100 Matsonford Road

Radnor, PA 19087

(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, 2012 – April 30, 2013

 

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, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

 
 

Item 1. Reports to Stockholders.

 

HARTFORDFUNDS

 

 

THE HARTFORD BALANCED ALLOCATION FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Balanced Allocation Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 9
Notes to Financial Statements (Unaudited) 10
Financial Highlights (Unaudited) 20
Directors and Officers (Unaudited) 22
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 24
Quarterly Portfolio Holdings Information (Unaudited) 24
Expense Example (Unaudited) 25
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 26
Principal Risks (Unaudited) 28

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Balanced Allocation Fund inception 05/28/2004
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks long-term capital appreciation and income.

 

Performance Overview 5/28/04 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

  

   6 Month†   1 Year   5 year   Since
Inception▲
 
Balanced Allocation A#   6.96%       8.03%       3.82%       5.63%    
Balanced Allocation A##        2.08%       2.65%       4.96%    
Balanced Allocation B#   6.65%       7.28%       3.00%       4.89%*    
Balanced Allocation B##        2.28%       2.64%       4.89%*    
Balanced Allocation C#   6.60%       7.23%       3.06%       4.86%    
Balanced Allocation C##        6.23%       3.06%       4.86%    
Balanced Allocation I#   7.19%       8.35%       4.11%       5.86%    
Balanced Allocation R3#   6.85%       7.66%       3.42%       5.35%    
Balanced Allocation R4#   7.01%       8.07%       3.79%       5.62%    
Balanced Allocation R5#   7.19%       8.34%       4.09%       5.83%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       5.73%       5.50%    
MSCI All Country World Index   13.78%       15.69%       2.09%       7.09%    

 

Not Annualized
Inception: 05/28/2004
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Balanced Allocation Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Balanced Allocation Class A   1.24%       1.24%    
Balanced Allocation Class B   2.04%       2.04%    
Balanced Allocation Class C   1.98%       1.98%    
Balanced Allocation Class I   0.96%       0.96%    
Balanced Allocation Class R3   1.58%       1.58%    
Balanced Allocation Class R4   1.27%       1.27%    
Balanced Allocation Class R5   0.97%       0.97%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

  

Portfolio Managers  
Richard P. Meagher, CFA Wendy M. Cromwell, CFA
Vice President, Asset Allocation Strategist and Portfolio Manager Senior Vice President, Director of Strategic Asset Allocation, Asset Allocation Strategies Group, and Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Balanced Allocation Fund returned 6.96%, before sales charge, for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. The Fund underperformed the average return for the Lipper Mixed-Asset Target Moderate Funds category, a group of funds with investment strategies similar to those of the Fund, which returned 8.76%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose .02% while shorter term yields declined anywhere between .02% - .08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the stock/bond mix of the Fund was approximately 55% equities

 

3

 

The Hartford Balanced Allocation Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

and 45% fixed income. A modest underweight allocation (i.e. the Fund’s position was less than the benchmark position) to fixed income and overweight to equities contributed as equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative performance in the World Bond, Capital Appreciation and International Small Company Funds more than offset weak benchmark-relative results from the International Opportunities and MidCap Value Funds.

 

What is the outlook?

During the quarter we modestly reduced exposure to fixed income funds and increased exposure to international equity funds. We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

  

Composition by Investments

as of April 30, 2013

Fund Name  Percentage of Net
Assets
 
The Hartford Alternative Strategies Fund, Class Y   9.9%
The Hartford Capital Appreciation Fund, Class Y   7.0 
The Hartford Dividend and Growth Fund, Class Y   12.7 
The Hartford Emerging Markets Research Fund, Class Y   5.6 
The Hartford Global Real Asset Fund, Class Y   7.0 
The Hartford Inflation Plus Fund, Class Y   12.9 
The Hartford International Opportunities Fund, Class Y   13.0 
The Hartford International Small Company Fund, Class Y   4.6 
The Hartford MidCap Value Fund, Class Y   2.2 
The Hartford Small Company Fund, Class Y   2.2 
The Hartford Strategic Income Fund, Class Y   4.0 
The Hartford Total Return Bond Fund, Class Y   7.9 
The Hartford World Bond Fund, Class Y   11.0 
Other Assets and Liabilities   0.0 
Total   100.0%

 

4

 

The Hartford Balanced Allocation Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount      Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 100.0%
EQUITY FUNDS - 54.3%
 1,305   The Hartford Capital Appreciation Fund, Class Y       $55,899 
 4,336   The Hartford Dividend and Growth Fund, Class Y        102,296 
 5,019   The Hartford Emerging Markets Research Fund, Class Y        44,619 
 5,402   The Hartford Global Real Asset Fund, Class Y        56,668 
 6,305   The Hartford International Opportunities Fund, Class Y        104,912 
 2,341   The Hartford International Small Company Fund, Class Y        36,703 
 1,168   The Hartford MidCap Value Fund, Class Y        17,772 
 767   The Hartford Small Company Fund, Class Y        17,975 
              436,844 
     Total equity funds          
     (cost $363,666)       $436,844 
                
FIXED INCOME FUNDS - 45.7%
 7,704   The Hartford Alternative Strategies Fund, Class Y       $79,427 
 8,431   The Hartford Inflation Plus Fund, Class Y        103,870 
 3,392   The Hartford Strategic Income Fund, Class Y        32,257 
 5,758   The Hartford Total Return Bond Fund, Class Y        63,793 
 8,141   The Hartford World Bond Fund, Class Y        88,246 
              367,593 
     Total fixed income funds          
     (cost $360,934)       $367,593 
                
     Total investments in affiliated investment companies          
     (cost $724,600)       $804,437 
                
     Total long-term investments          
     (cost $724,600)       $804,437 
                
     Total investments          
     (cost $724,600) ▲   100.0%  $804,437 
     Other assets and liabilities   %   210 
     Total net assets   100.0%  $804,647 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $728,379 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $79,837 
Unrealized Depreciation   (3,779)
Net Unrealized Appreciation  $76,058 

 

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 Balanced Allocation Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Affiliated Investment Companies  $804,437   $804,437   $   $ 
Total  $804,437   $804,437   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.

 

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

 

6

 

The Hartford Balanced Allocation Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in underlying affiliated funds, at market value (cost $724,600)  $804,437 
Receivables:     
Investment securities sold   321 
Fund shares sold   629 
Dividends and interest   159 
Other assets   60 
Total assets   805,606 
Liabilities:     
Payables:     
Investment securities purchased   104 
Fund shares redeemed   647 
Investment management fees   17 
Administrative fees   2 
Distribution fees   62 
Accrued expenses   127 
Total liabilities   959 
Net assets  $804,647 
Summary of Net Assets:     
Capital stock and paid-in-capital  $740,763 
Distributions in excess of net investment loss   (14,222)
Accumulated net realized loss   (1,731)
Unrealized appreciation of investments   79,837 
Net assets  $804,647 
      
Shares authorized   400,000 
Par value  $  0.001 
Class A: Net asset value per share/Maximum offering price per share   $12.49/$13.22 
Shares outstanding   39,176 
Net assets  $489,476 
Class B: Net asset value per share  $12.44 
Shares outstanding   4,295 
Net assets  $53,404 
Class C: Net asset value per share  $12.42 
Shares outstanding   14,285 
Net assets  $177,449 
Class I: Net asset value per share  $12.49 
Shares outstanding   694 
Net assets  $8,673 
Class R3: Net asset value per share  $12.39 
Shares outstanding   3,351 
Net assets  $41,527 
Class R4: Net asset value per share  $12.49 
Shares outstanding   1,907 
Net assets  $23,819 
Class R5: Net asset value per share  $12.50 
Shares outstanding   824 
Net assets  $10,299 

 

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

 

7

 

The Hartford Balanced Allocation Fund

Statement of Operations

For the Six Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends from underlying affiliated funds  $9,400 
Total investment income   9,400 
      
Expenses:     
Investment management fees   519 
Administrative services fees    
Class R3   40 
Class R4   21 
Class R5   5 
Transfer agent fees    
Class A   290 
Class B   55 
Class C   89 
Class I   3 
Class R3   1 
Class R4    
Class R5    
Distribution fees     
Class A   592 
Class B   293 
Class C   853 
Class R3   99 
Class R4   35 
Custodian fees    
Accounting services fees   47 
Registration and filing fees   52 
Board of Directors' fees   12 
Audit fees   9 
Other expenses   57 
Total expenses   3,072 
Net Investment Income   6,328 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   13,334 
Net realized gain on investments in underlying affiliated funds   14,930 
Net Realized Gain on Investments   28,264 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   18,559 
Net Changes in Unrealized Appreciation of Investments   18,559 
Net Gain on Investments   46,823 
Net Increase in Net Assets Resulting from Operations  $53,151 

 

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

 

8

 

The Hartford Balanced Allocation Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $6,328   $6,249 
Net realized gain on investments   28,264    54,108 
Net unrealized appreciation of investments   18,559    3,965 
Net Increase in Net Assets Resulting from Operations   53,151    64,322 
Distributions to Shareholders:          
From net investment income          
Class A   (12,808)   (6,237)
Class B   (1,353)   (569)
Class C   (3,977)   (1,283)
Class I   (209)   (94)
Class R3   (1,011)   (339)
Class R4   (872)   (442)
Class R5   (320)   (165)
Total distributions   (20,550)   (9,129)
Capital Share Transactions:          
Class A   (3,748)   (61,468)
Class B   (13,232)   (19,281)
Class C   (866)   (6,919)
Class I   (196)   2,673 
Class R3   1,255    7,052 
Class R4   (13,303)   (2,642)
Class R5   (1,968)   (152)
Net decrease from capital share transactions   (32,058)   (80,737)
Net Increase (Decrease) in Net Assets   543    (25,544)
Net Assets:          
Beginning of period   804,104    829,648 
End of period  $804,647   $804,104 
Undistributed (distribution in excess of) net investment income (loss)  $(14,222)  $ 

 

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

 

9

 

The Hartford Balanced Allocation Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

10

 

 

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

11

 

The Hartford Balanced Allocation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, quarterly and realized capital gains, if any, at least once a year. 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.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Distributions from net investment income, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending

 

12

 

 

 

December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $9,129   $12,754 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Accumulated Capital Losses *  $(26,216)
Unrealized Appreciation †   57,499 
Total Accumulated Earnings  $31,283 

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $1,468 
Accumulated Net Realized Gain (Loss)   (1,313)
Capital Stock and Paid-in-Capital   (155)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss

 

13

 

The Hartford Balanced Allocation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2017  $3,844 
2018   22,372 
Total  $26,216 

 

During the year ended October 31, 2012, the Fund utilized $48,969 of prior year capital loss carryforwards.

 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

14

 

 

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets    Annual Fee 
On first $500 million   0.15%   
On next $500 million   0.10%   
On next $1.5 billion   0.09%   
On next $2.5 billion   0.08%   
On next $2.5 billion   0.07%   
On next $2.5 billion   0.06%   
Over $10 billion   0.05%   

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5 
 1.40%      2.15%      2.15%      1.15%      1.65%      1.35%      1.05%   

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

d)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $771 and contingent deferred sales charges of $27 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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

 

15

 

The Hartford Balanced Allocation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/dealers of The Hartford for distributing the Fund's shares rounds to zero.  These commissions are in turn paid to sales representatives of the broker/dealers.

 

e)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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 six-month period ended April 30, 2013, 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  $100,410 
Sales Proceeds Excluding U.S. Government Obligations   133,768 

 

16

 

 

 

7.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   3,221    1,050    (4,568)       (297)   6,126    545    (11,962)       (5,291)
Amount  $39,168   $12,515   $(55,431)  $   $(3,748)  $70,870   $6,083   $(138,421)  $   $(61,468)
Class B                                                  
Shares   62    109    (1,261)       (1,090)   185    49    (1,892)       (1,658)
Amount  $751   $1,300   $(15,283)  $   $(13,232)  $2,123   $537   $(21,941)  $   $(19,281)
Class C                                                  
Shares   1,048    318    (1,438)       (72)   2,207    109    (2,905)       (589)
Amount  $12,698   $3,773   $(17,337)  $   $(866)  $25,300   $1,191   $(33,410)  $   $(6,919)
Class I                                                  
Shares   223    17    (260)       (20)   415    8    (185)       238 
Amount  $2,701   $203   $(3,100)  $   $(196)  $4,739   $89   $(2,155)  $   $2,673 
Class R3                                                  
Shares   387    84    (366)       105    1,382    30    (781)       631 
Amount  $4,665   $1,000   $(4,410)  $   $1,255   $15,749   $335   $(9,032)  $   $7,052 
Class R4                                                  
Shares   206    73    (1,374)       (1,095)   682    39    (948)       (227)
Amount  $2,509   $868   $(16,680)  $   $(13,303)  $7,849   $441   $(10,932)  $   $(2,642)
Class R5                                                  
Shares   75    27    (265)       (163)   148    15    (176)       (13)
Amount  $919   $320   $(3,207)  $   $(1,968)  $1,725   $164   $(2,041)  $   $(152)
Total                                                  
Shares   5,222    1,678    (9,532)       (2,632)   11,145    795    (18,849)       (6,909)
Amount  $63,411   $19,979   $(115,448)  $   $(32,058)  $128,355   $8,840   $(217,932)  $   $(80,737)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   230   $2,795 
For the Year Ended October 31, 2012   196   $2,319 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the

 

17

 

The Hartford Balanced Allocation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

18

 

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19

 

The Hartford Balanced Allocation Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $12.00   $0.11   $0.71   $0.82   $(0.33)  $   $   $(0.33)  $12.49 
B   11.93    0.07    0.71    0.78    (0.27)           (0.27)   12.44 
C   11.93    0.06    0.71    0.77    (0.28)           (0.28)   12.42 
I   11.99    0.12    0.73    0.85    (0.35)           (0.35)   12.49 
R3   11.90    0.09    0.71    0.80    (0.31)           (0.31)   12.39 
R4   11.99    0.13    0.69    0.82    (0.32)           (0.32)   12.49 
R5   12.00    0.13    0.72    0.85    (0.35)           (0.35)   12.50 
                                              
For the Year Ended October 31, 2012
A   11.21    0.11    0.82    0.93    (0.14)           (0.14)   12.00 
B   11.19    0.01    0.81    0.82    (0.08)           (0.08)   11.93 
C   11.18    0.02    0.82    0.84    (0.09)           (0.09)   11.93 
I   11.21    0.14    0.81    0.95    (0.17)           (0.17)   11.99 
R3   11.14    0.07    0.81    0.88    (0.12)           (0.12)   11.90 
R4   11.21    0.11    0.81    0.92    (0.14)           (0.14)   11.99 
R5   11.21    0.14    0.82    0.96    (0.17)           (0.17)   12.00 
                                              
For the Year Ended October 31, 2011
A   11.03    0.17    0.21    0.38    (0.20)           (0.20)   11.21 
B   11.00    0.07    0.22    0.29    (0.10)           (0.10)   11.19 
C   10.99    0.08    0.22    0.30    (0.11)           (0.11)   11.18 
I   11.02    0.19    0.23    0.42    (0.23)           (0.23)   11.21 
R3   10.96    0.13    0.21    0.34    (0.16)           (0.16)   11.14 
R4   11.02    0.17    0.21    0.38    (0.19)           (0.19)   11.21 
R5   11.03    0.19    0.22    0.41    (0.23)           (0.23)   11.21 
                                              
For the Year Ended October 31, 2010
A   9.79    0.15    1.24    1.39    (0.15)           (0.15)   11.03 
B   9.76    0.07    1.24    1.31    (0.07)           (0.07)   11.00 
C   9.75    0.08    1.24    1.32    (0.08)           (0.08)   10.99 
I   9.78    0.18    1.24    1.42    (0.18)           (0.18)   11.02 
R3   9.74    0.13    1.23    1.36    (0.14)           (0.14)   10.96 
R4   9.78    0.15    1.24    1.39    (0.15)           (0.15)   11.02 
R5   9.79    0.18    1.24    1.42    (0.18)           (0.18)   11.03 
                                              
For the Year Ended October 31, 2009
A   8.48    0.19    1.30    1.49    (0.18)           (0.18)   9.79 
B   8.45    0.12    1.30    1.42    (0.11)           (0.11)   9.76 
C   8.45    0.12    1.30    1.42    (0.12)           (0.12)   9.75 
I   8.47    0.24    1.28    1.52    (0.21)           (0.21)   9.78 
R3   8.44    0.15    1.30    1.45    (0.15)           (0.15)   9.74 
R4   8.47    0.19    1.30    1.49    (0.18)           (0.18)   9.78 
R5   8.48    0.21    1.31    1.52    (0.21)           (0.21)   9.79 
                                              
For the Year Ended October 31, 2008
A   13.10    0.26    (3.83)   (3.57)   (0.47)   (0.58)       (1.05)   8.48 
B   13.06    0.16    (3.81)   (3.65)   (0.38)   (0.58)       (0.96)   8.45 
C   13.06    0.17    (3.81)   (3.64)   (0.39)   (0.58)       (0.97)   8.45 
I   13.09    0.33    (3.86)   (3.53)   (0.51)   (0.58)       (1.09)   8.47 
R3   13.08    0.26    (3.88)   (3.62)   (0.44)   (0.58)       (1.02)   8.44 
R4   13.10    0.38    (3.96)   (3.58)   (0.47)   (0.58)       (1.05)   8.47 
R5   13.10    0.41    (3.95)   (3.54)   (0.50)   (0.58)       (1.08)   8.48 

 

(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 expenses of the Underlying Funds.
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.

 

20

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net
Assets(C)
   Portfolio
Turnover
Rate(D)
 
  
  
 6.96%(F)  $489,476    0.55%(G)   0.55%(G)   1.81%(G)   13%
 6.65(F)   53,404    1.36(G)   1.36(G)   1.10(G)    
 6.60(F)   177,449    1.28(G)   1.28(G)   1.07(G)    
 7.19(F)   8,673    0.24(G)   0.24(G)   2.00(G)    
 6.85(F)   41,527    0.88(G)   0.88(G)   1.47(G)    
 7.01(F)   23,819    0.58(G)   0.58(G)   2.17(G)    
 7.19(F)   10,299    0.28(G)   0.28(G)   2.16(G)    
                            
                            
 8.41    473,562    0.55    0.55    0.99    79 
 7.42    64,262    1.35    1.35    0.22     
 7.54    171,252    1.29    1.29    0.23     
 8.57    8,563    0.27    0.27    1.11     
 7.94    38,637    0.89    0.89    0.57     
 8.31    35,982    0.58    0.58    0.93     
 8.63    11,846    0.28    0.28    1.25     
                            
                            
 3.39    501,962    0.54    0.54    1.45    36 
 2.64    78,784    1.33    1.33    0.66     
 2.72    167,049    1.28    1.28    0.71     
 3.81    5,333    0.24    0.24    1.72     
 3.12    29,124    0.88    0.88    1.06     
 3.46    36,188    0.57    0.57    1.33     
 3.67    11,208    0.27    0.27    1.73     
                            
                            
 14.33    519,328    0.54    0.54    1.48    25 
 13.44    91,904    1.35    1.35    0.68     
 13.55    175,611    1.29    1.29    0.74     
 14.65    3,685    0.28    0.28    1.73     
 14.02    18,235    0.88    0.88    1.06     
 14.32    19,647    0.58    0.58    1.45     
 14.64    13,874    0.28    0.28    1.76     
                            
                            
 18.01    483,316    0.58    0.58    2.20    17 
 17.15    95,125    1.42    1.38    1.41     
 17.07    169,306    1.34    1.34    1.46     
 18.39    2,079    0.28    0.28    3.01     
 17.52    1,381    0.96    0.96    1.47     
 18.04    13,518    0.59    0.59    2.08     
 18.37    13,104    0.29    0.29    2.22     
                            
                            
 (29.35)   439,955    0.53    0.53    2.23    18 
 (29.95)   92,829    1.35    1.35    1.47     
 (29.91)   160,167    1.29    1.29    1.49     
 (29.15)   2,238    0.22    0.22    1.59     
 (29.74)   358    0.92    0.92    0.86     
 (29.44)   8,535    0.59    0.59    1.54     
 (29.16)   4,135    0.29    0.29    1.54     

 

21

 

The Hartford Balanced Allocation Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

22

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

23

 

The Hartford Balanced Allocation Fund

Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

24

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,069.60   $2.82   $1,000.00   $1,022.07   $2.75    0.55%  181  365
Class B  $1,000.00   $1,066.50   $6.99   $1,000.00   $1,018.03   $6.83    1.36   181  365
Class C  $1,000.00   $1,066.00   $6.56   $1,000.00   $1,018.44   $6.41    1.28   181  365
Class I  $1,000.00   $1,071.90   $1.24   $1,000.00   $1,023.60   $1.21    0.24   181  365
Class R3  $1,000.00   $1,068.50   $4.51   $1,000.00   $1,020.43   $4.41    0.88   181  365
Class R4  $1,000.00   $1,070.10   $2.97   $1,000.00   $1,021.93   $2.90    0.58   181  365
Class R5  $1,000.00   $1,071.90   $1.43   $1,000.00   $1,023.42   $1.39    0.28   181  365

 

25

 

The Hartford Balanced Allocation Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Balanced Allocation Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

26

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

27

 

The Hartford Balanced Allocation Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

28

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-BA13 4/13 113962 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

2

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD BALANCED FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford Balanced Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   6
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   13
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   14
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   15
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   16
Notes to Financial Statements (Unaudited)   17
Financial Highlights (Unaudited)   32
Directors and Officers (Unaudited)   34
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   36
Quarterly Portfolio Holdings Information (Unaudited)   36
Expense Example (Unaudited)   37
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   38
Principal Risks (Unaudited)   40

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Balanced Fund inception 07/22/1996
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks long-term total return.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investments in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
Balanced A#   10.37%       11.85%       4.72%       6.03%    
Balanced A##        5.70%       3.55%       5.44%    
Balanced B#   9.87%       10.85%       3.83%       5.38%*    
Balanced B##        5.85%       3.48%       5.38%*    
Balanced C#   9.97%       11.03%       3.95%       5.29%    
Balanced C##        10.03%       3.95%       5.29%    
Balanced R3#   10.23%       11.57%       4.50%       6.04%    
Balanced R4#   10.43%       11.94%       4.77%       6.23%    
Balanced R5#   10.57%       12.25%       5.11%       6.44%    
Balanced Y#   10.59%       12.30%       5.19%       6.50%    
Balanced Fund Blended Index   8.89%       11.68%       5.65%       6.74%    
Barclays Government/Credit Bond Index   1.09%       4.44%       5.88%       5.07%    
S&P 500 Index   14.41%       16.88%       5.20%       7.88%    

 

Not Annualized
# Without sales charge
## With sales charge
* Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses.

 

Balanced Fund Blended Index is a blended index comprised of the following indices: S&P 500 (60%), Barclays Government/Credit Bond (35%) and 90-day Treasury Bill (5%).

 

Barclays 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 mortgaged-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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Balanced Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Balanced Class A   1.18%       1.24%    
Balanced Class B   2.05%       2.24%    
Balanced Class C   1.92%       1.92%    
Balanced Class R3   1.40%       1.56%    
Balanced Class R4   1.10%       1.16%    
Balanced Class R5   0.80%       0.88%    
Balanced Class Y   0.75%       0.75%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
John C. Keogh Karen H. Grimes, CFA
Senior Vice President and Fixed Income Portfolio Manager Senior Vice President and Equity Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Balanced Fund returned 10.37%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s blended benchmark, 60% S&P 500 Index, 35% Barclays Government/Credit Bond Index, and 5% Treasury Bills, which returned 8.89% for the same period. The Fund underperformed the 10.46% average return 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?

Global equities surged during the period, nearing an all-time high by the end of April 2013. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

Equity markets as measured by the S&P 500 Index returned 14.41% during the period. Within the S&P 500 Index, Consumer Discretionary (+19.8%), Health Care (+19.6%), and Financials (+19.0%) posted the largest gains while Information Technology (+6.7%), Energy (+8.3%), and Materials (+10.7%) lagged the broader index.

 

The bond market, as measured by the Barclays Government/Credit Bond Index, returned 1.09% during the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02%-0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency mortgage-backed securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

The Fund has three primary levers to generate investment performance: equity investments, fixed income investments, and asset allocation among stocks, bonds, and cash. During

 

3

 

The Hartford Balanced Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

the period, the equity and fixed income portions of the Fund both outperformed their respective benchmarks. Asset allocation also contributed positively to benchmark-relative results as the Fund was generally overweight equities relative to the benchmark in an environment where equities outperformed.

 

Equity outperformance versus the benchmark was driven primarily by security selection, as a result of strong selection in the Health Care, Financials, and Materials sectors. Weak security selection within the Consumer Discretionary sector detracted from benchmark-relative returns during the period. Equity sector allocation, which is a result of bottom-up stock selection, detracted from benchmark-relative performance due to an overweight (i.e. the Fund’s sector position was greater than the benchmark position) to the weak performing Information Technology sector and an underweight to the strong performing Consumer Staples sector.

 

Top contributors to relative performance in the equity portion of the Fund during the period were Vertex Pharmaceuticals (Health Care), Celgene (Health Care), and Roche (Health Care). Shares of Vertex Pharmaceuticals, a biotechnology firm, rose during the period after the company announced the initiation of a global pivotal Phase III development program for a drug targeting the underlying causes of Cystic Fibrosis. Shares of Celgene, a global biopharmaceutical company, moved higher after the company provided better-than-expected long term guidance and a positive update on a greatly anticipated clinical study. Roche, a large Swiss biotechnology and pharmaceutical company, outperformed as investors began to appreciate the company’s near-term product roll out and future drug pipeline, particularly from Roche’s innovative oncology portfolio. The Fund’s holding in Cisco (Information Technology) also contributed positively to the Fund’s returns on an absolute basis (i.e. total return).

 

Stocks that detracted the most from relative returns in the equity portion of the Fund during the period were Kohl’s (Consumer Discretionary), EMC (Information Technology), and Statoil (Energy). Shares of Kohl’s, a national department store retailer, fell after the company reported weaker-than-expected earnings in the fourth quarter. Shares of EMC, a data storage provider, fell as a result of investor fear surrounding the shift towards cloud computing. Shares of Statoil, an integrated energy company, fell throughout the period due to severe pressures on the European gas market, as a result of economic contraction and the success of alternative forms of energy. Our position in Apple (Information Technology) also detracted from absolute returns.

 

The fixed income portion of the Fund also outperformed its benchmark, the Barclays Government/Credit Bond Index, during the period. Security selection within the investment grade corporate bond sector, led by financials, was the primary driver of the outperformance. Corporate bonds rose during the period fueled by investors’ ongoing search for yield. Duration positioning also contributed to benchmark-relative results, particularly a short duration positioning in December and January, when better economic data and a partial resolution to fiscal cliff negotiations drove Treasury yields higher.

 

What is the outlook?

In 2013, we expect the global economic recovery to continue, but at a slow rate and with varying degrees of recovery by region.

 

The economic turn-around in Europe is disappointingly slow, yet, we still predict a recovery over the course of the next year. The old euro break-up fears have resurfaced with the recent Cyprus crisis; however, the credible backstop provided by the ECB’s OMT appears to have helped to keep contagion concerns in check. With an unemployment rate of more than 12 percent for half of the euro area population, we expect it will be years not quarters before the ECB can consider an exit of accommodative monetary conditions – much in contrast to the U.S.

 

We believe the medium-term growth prospects in the U.S. are favorable. The consumer is expected to be resilient this year, helped by improving net worth from rising house and equity market prices as well as steady job gains. The key drivers of U.S. growth are expected to be capital spending and the housing and automotive sectors over the course of the next year. We believe capital investment spending should finally rise as capacity utilization levels normalize, while vehicle sales and new home constructions, despite their strong recent advance, still have a lot of pent-up demand behind them. An improving economy and healing labor market notwithstanding, we believe the U.S. Federal Reserve Board (Fed) is unlikely to abandon its quantitative easing (QE) program any time soon.

 

Within the equity portion of the portfolio, we ended the period most overweight the Health Care, Information Technology, and Financials sectors while we were most underweight the Consumer Staples, Telecommunication Services, and Utilities sectors. We continue to see a supportive environment for equities and we view corrections in this environment as buying opportunities when the investment case aligns with our investment strategy.

 

Within the fixed income portion of the Fund, we ended the period with a neutral duration posture and a modest curve flattening bias. U.S. economic data suggests rates should move higher in the future. However, in the near term, we believe yields could stay low for a little longer than currently

 

4

 

 

 

anticipated by markets. At the end of the period we continued to be positioned with modest underweights to the government and investment grade credit sectors. Within investment grade credit, we favored financial companies, which have de-levered significantly. We also maintained our overweight to taxable municipals and a modest allocation to agency MBS where the Fed continues to be the largest buyer and volatility remains low.

 

The equity and fixed income managers will continue to work collaboratively to make decisions regarding portfolio weights in stocks, bonds, and cash. As of April 30, 2013, the Fund’s equity exposure was at 68% compared to 60% in its benchmark, near the top of the Fund’s 50-70% range.

 

Diversification by Industry
as of April 30, 2013
Industry (Sector)  Percentage of
Net Assets
 
Equity Securities     
Automobiles and Components (Consumer Discretionary)   0.6%
Banks (Financials)   3.6 
Capital Goods (Industrials)   5.3 
Consumer Durables and Apparel (Consumer Discretionary)   0.3 
Diversified Financials (Financials)   6.3 
Energy (Energy)   7.3 
Food and Staples Retailing (Consumer Staples)   1.0 
Food, Beverage and Tobacco (Consumer Staples)   3.9 
Health Care Equipment and Services (Health Care)   2.5 
Insurance (Financials)   2.3 
Materials (Materials)   2.5 
Media (Consumer Discretionary)   2.9 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   9.3 
Retailing (Consumer Discretionary)   4.1 
Semiconductors and Semiconductor Equipment (Information Technology)   2.9 
Software and Services (Information Technology)   5.3 
Technology Hardware and Equipment (Information Technology)   5.8 
Telecommunication Services (Services)   0.4 
Transportation (Industrials)   0.6 
Utilities (Utilities)   1.2 
Total   68.1%
Fixed Income Securities     
Air Transportation (Transportation)   0.3%
Arts, Entertainment and Recreation (Services)   1.0 
Beverage and Tobacco Product Manufacturing (Consumer Staples)   0.5 
Chemical Manufacturing (Basic Materials)   0.0 
Computer and Electronic Product Manufacturing (Technology)   0.1 
Couriers and Messengers (Services)   0.0 
Finance and Insurance (Finance)   5.1 
Food Manufacturing (Consumer Staples)   0.3 
General Obligations (General Obligations)   0.2 
Health Care and Social Assistance (Health Care)   0.2 
Health Care/Services (Health Care/Services)   0.1 
Higher Education (Univ., Dorms, etc.) (Higher Education (Univ., Dorms, etc.))   0.1 
Information (Technology)   0.4 
Mining (Basic Materials)   0.0 
Miscellaneous Manufacturing (Capital Goods)   0.0 
Motor Vehicle and Parts Manufacturing (Consumer Cyclical)   0.2 
Petroleum and Coal Products Manufacturing (Energy)   0.5 
Pharmaceuticals (Health Care)   0.0 
Pipeline Transportation (Utilities)   0.2 
Real Estate, Rental and Leasing (Finance)   0.2 
Refunded (Refunded)   0.1 
Retail Trade (Consumer Cyclical)   0.3 
Soap, Cleaning Compound and Toilet Manufacturing (Consumer Staples)   0.4%
Tax Allocation (Tax Allocation)   0.1 
Transportation (Transportation)   0.5 
Transportation Equipment Manufacturing (Transportation)   0.0 
Utilities (Utilities)   0.4 
Wholesale Trade (Consumer Cyclical)   0.0 
Total   11.2%
U.S. Government Agencies   1.4 
U.S. Government Securities   17.4 
Short-Term Investments   2.5 
Other Assets and Liabilities   (0.6)
Total   100.0%

 

Distribution by Credit Quality
as of April 30, 2013
Credit Rating *  Percentage of
Net Assets
 
Aaa / AAA   0.3%
Aa / AA   1.8 
A   4.4 
Baa / BBB   4.5 
Ba / BB   0.2 
U.S. Government Agencies and Securities   18.8 
Non-Debt Securities and Other Short-Term Instruments   70.6 
Other Assets & Liabilities   (0.6)
Total   100.0%

 

*       Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

5

 

The Hartford Balanced Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 68.1% 
     Automobiles and Components - 0.6%     
 286   Ford Motor Co.  $3,925 
           
     Banks - 3.6%     
 108   BB&T Corp.   3,320 
 102   PNC Financial Services Group, Inc.   6,917 
 310   Wells Fargo & Co.   11,766 
         22,003 
     Capital Goods - 5.3%     
 73   3M Co.   7,654 
 58   Boeing Co.   5,302 
 94   Ingersoll-Rand plc   5,057 
 116   PACCAR, Inc.   5,770 
 60   Stanley Black & Decker, Inc.   4,496 
 46   United Technologies Corp.   4,208 
         32,487 
     Consumer Durables and Apparel - 0.3%     
 33   Coach, Inc.   1,919 
           
     Diversified Financials - 6.3%     
 37   Ameriprise Financial, Inc.   2,735 
 23   BlackRock, Inc.   6,103 
 166   Citigroup, Inc.   7,764 
 31   Goldman Sachs Group, Inc.   4,455 
 166   Invesco Ltd.   5,278 
 256   JP Morgan Chase & Co.   12,557 
         38,892 
     Energy - 7.3%     
 70   Anadarko Petroleum Corp.   5,950 
 86   BP plc ADR   3,767 
 55   Chevron Corp.   6,686 
 18   EOG Resources, Inc.   2,181 
 98   Exxon Mobil Corp.   8,748 
 107   Halliburton Co.   4,572 
 56   Noble Corp.   2,081 
 48   Occidental Petroleum Corp.   4,320 
 70   Southwestern Energy Co. ●   2,605 
 164   Statoilhydro ASA ADR   4,006 
         44,916 
     Food and Staples Retailing - 1.0%     
 110   CVS Caremark Corp.   6,406 
           
     Food, Beverage and Tobacco - 3.9%     
 116   General Mills, Inc.   5,864 
 36   Kraft Foods Group, Inc.   1,864 
 79   PepsiCo, Inc.   6,507 
 47   Philip Morris International, Inc.   4,445 
 120   Unilever N.V. NY Shares ADR   5,114 
         23,794 
     Health Care Equipment and Services - 2.5%     
 64   Baxter International, Inc.   4,500 
 85   Covidien plc   5,426 
 87   UnitedHealth Group, Inc.   5,232 
         15,158 
     Insurance - 2.3%     
 117   American International Group, Inc. ●   4,850 
 163   Marsh & McLennan Cos., Inc.   6,211 
 111   Unum Group   3,084 
         14,145 
     Materials - 2.5%     
 120   Dow Chemical Co.  4,076 
 99   International Paper Co.   4,632 
 67   Mosaic Co.   4,096 
 61   Nucor Corp.   2,639 
         15,443 
     Media - 2.9%     
 58   CBS Corp. Class B   2,633 
 129   Comcast Corp. Class A   5,307 
 113   Thomson Reuters Corp.   3,781 
 101   Walt Disney Co.   6,353 
         18,074 
     Pharmaceuticals, Biotechnology and Life Sciences - 9.3%     
 92   Agilent Technologies, Inc.   3,800 
 44   Amgen, Inc.   4,606 
 39   Celgene Corp. ●   4,640 
 206   Daiichi Sankyo Co., Ltd.   4,021 
 61   Gilead Sciences, Inc. ●   3,079 
 28   Johnson & Johnson   2,378 
 226   Merck & Co., Inc.   10,603 
 263   Pfizer, Inc.   7,645 
 27   Roche Holding AG   6,877 
 71   UCB S.A. ●   4,178 
 67   Vertex Pharmaceuticals, Inc. ●   5,182 
         57,009 
     Retailing - 4.1%     
 2,007   Allstar Co. ⌂●†   3,597 
 10   AutoZone, Inc. ●   3,927 
 2,225   Buck Holdings L.P. ⌂●†   697 
 71   Kohl's Corp.   3,332 
 247   Lowe's Co., Inc.   9,490 
 68   Nordstrom, Inc.   3,837 
         24,880 
     Semiconductors and Semiconductor Equipment - 2.9%     
 116   Analog Devices, Inc.   5,089 
 229   Intel Corp.   5,487 
 146   Maxim Integrated Products, Inc.   4,525 
 80   Xilinx, Inc.   3,014 
         18,115 
     Software and Services - 5.3%     
 64   Accenture plc   5,237 
 79   Automatic Data Processing, Inc.   5,313 
 96   eBay, Inc. ●   5,035 
 11   Google, Inc. ●   8,988 
 232   Microsoft Corp.   7,682 
         32,255 
     Technology Hardware and Equipment - 5.8%     
 27   Apple, Inc.   11,954 
 492   Cisco Systems, Inc.   10,286 
 284   EMC Corp. ●   6,372 
 115   Hewlett-Packard Co.   2,365 
 73   Qualcomm, Inc.   4,505 
         35,482 
     Telecommunication Services - 0.4%     
 81   Vodafone Group plc ADR   2,490 
           
     Transportation - 0.6%     
 39   FedEx Corp.   3,685 

 

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

 

6

 

 

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 68.1% - (continued) 
     Utilities - 1.2%     
 91   NextEra Energy, Inc.  $7,432 
           
     Total common stocks     
     (cost $316,535)  $418,510 
           

ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 0.1%

     
     Finance and Insurance - 0.1%     
     Ally Master Owner Trust     
$900   1.54%, 09/15/2019  $907 
           
     Total asset & commercial mortgage backed securities     
     (cost $900)  $907 
           

CORPORATE BONDS - 10.0%

     
     Air Transportation - 0.3%     
     Continental Airlines, Inc.     
$662   5.98%, 04/19/2022  $755 
     Southwest Airlines Co.     
 400   5.75%, 12/15/2016   451 
 552   6.15%, 08/01/2022   652 
         1,858 
     Arts, Entertainment and Recreation - 1.0%     
     CBS Corp.     
 1,270   3.38%, 03/01/2022   1,325 
 30   4.30%, 02/15/2021   33 
 105   5.75%, 04/15/2020   126 
     Comcast Corp.     
 200   4.50%, 01/15/2043   216 
 310   4.65%, 07/15/2042   338 
 1,000   5.90%, 03/15/2016   1,143 
     DirecTV Holdings LLC     
 665   6.38%, 03/01/2041   776 
     Discovery Communications, Inc.     
 55   3.25%, 04/01/2023   57 
 65   4.88%, 04/01/2043   71 
 45   4.95%, 05/15/2042   49 
     News America, Inc.     
 220   4.50%, 02/15/2021   253 
     Time Warner Cable, Inc.     
 175   4.50%, 09/15/2042   167 
 780   5.85%, 05/01/2017   910 
     Viacom, Inc.     
 145   3.88%, 12/15/2021   158 
 215   4.88%, 06/15/2043   224 
         5,846 
     Beverage and Tobacco Product Manufacturing - 0.5%     
     Altria Group, Inc.     
 350   4.50%, 05/02/2043   348 
 520   4.75%, 05/05/2021   597 
     Anheuser-Busch InBev Worldwide, Inc.     
 610   7.75%, 01/15/2019   805 
     BAT International Finance plc     
 565   3.25%, 06/07/2022 ■   597 
     Diageo Capital plc     
 370   2.63%, 04/29/2023   371 
     Molson Coors Brewing Co.     
12   2.00%, 05/01/2017  13 
 180   3.50%, 05/01/2022   190 
 85   5.00%, 05/01/2042   94 
         3,015 
     Chemical Manufacturing - 0.0%     
     Agrium, Inc.     
 105   6.13%, 01/15/2041   128 
           
     Computer and Electronic Product Manufacturing - 0.1%     
     Apple, Inc.     
 375   2.40%, 05/03/2023   375 
 135   3.85%, 05/04/2043   134 
         509 
     Couriers and Messengers - 0.0%     
     FedEx Corp.     
 50   2.63%, 08/01/2022   50 
 80   2.70%, 04/15/2023   80 
         130 
     Finance and Insurance - 5.0%     
     ACE INA Holdings, Inc.     
 125   5.88%, 06/15/2014   132 
     American Express Centurion Bank     
 1,200   6.00%, 09/13/2017   1,435 
     Bank of America Corp.     
 1,000   5.00%, 05/13/2021   1,145 
 1,200   5.42%, 03/15/2017   1,330 
     Barclays Bank plc     
 350   2.38%, 01/13/2014   354 
     BP Capital Markets plc     
 575   4.75%, 03/10/2019   670 
     Brandywine Operating Partnership L.P.     
 350   5.70%, 05/01/2017   397 
     Capital One Financial Corp.     
 445   2.15%, 03/23/2015   454 
     CDP Financial, Inc.     
 575   4.40%, 11/25/2019 ■   667 
     Citigroup, Inc.     
 800   5.85%, 08/02/2016   914 
 300   6.13%, 05/15/2018   361 
 300   6.88%, 03/05/2038   409 
 105   8.13%, 07/15/2039   160 
     Credit Agricole S.A.     
 715   3.50%, 04/13/2015 ■   742 
     Discover Financial Services, Inc.     
 645   6.45%, 06/12/2017   759 
     Eaton Vance Corp.     
 530   6.50%, 10/02/2017   639 
     Everest Reinsurance Holdings, Inc.     
 885   5.40%, 10/15/2014   927 
     Ford Motor Credit Co. LLC     
 585   3.00%, 06/12/2017   606 
     General Electric Capital Corp.     
 800   4.38%, 09/16/2020   908 
 925   5.88%, 01/14/2038   1,121 

 

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

 

7

 

The Hartford Balanced Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

CORPORATE BONDS - 10.0% - (continued)

     
     Finance and Insurance - 5.0% - (continued)     
     Goldman Sachs Group, Inc.     
$275   3.63%, 01/22/2023  $285 
 250   3.70%, 08/01/2015   265 
 1,200   5.63%, 01/15/2017   1,344 
 470   6.25%, 02/01/2041   586 
     HCP, Inc.     
 335   6.00%, 01/30/2017   389 
     HSBC Holdings plc     
 600   6.10%, 01/14/2042   791 
     ING Bank N.V.     
 900   3.75%, 03/07/2017 ■   968 
     Jackson National Life Insurance Co.     
 1,200   8.15%, 03/15/2027 ■   1,607 
     JP Morgan Chase & Co.     
 375   3.25%, 09/23/2022   384 
 475   3.70%, 01/20/2015   498 
 1,045   5.13%, 09/15/2014   1,107 
 230   5.40%, 01/06/2042   278 
 100   6.30%, 04/23/2019   123 
     Merrill Lynch & Co., Inc.     
 300   6.40%, 08/28/2017   353 
     Morgan Stanley     
 550   5.75%, 01/25/2021   655 
     National City Corp.     
 125   6.88%, 05/15/2019   156 
     Nissan Motor Acceptance Corp.     
 700   1.80%, 03/15/2018 ■   708 
     Nordea Bank AB     
 330   3.70%, 11/13/2014 ■   345 
     PNC Funding Corp.     
 625   5.40%, 06/10/2014   658 
     Prudential Financial, Inc.     
 300   4.50%, 11/15/2020   342 
     Rabobank Netherlands     
 750   3.20%, 03/11/2015 ■   783 
     Republic New York Capital I     
 250   7.75%, 11/15/2026   253 
     Sovereign Bancorp, Inc.     
 1,000   8.75%, 05/30/2018   1,210 
     Svenska Handelsbanken AB     
 550   4.88%, 06/10/2014 ■   577 
     Wachovia Corp.     
 1,445   5.25%, 08/01/2014   1,526 
 100   5.75%, 06/15/2017   117 
     WEA Finance LLC     
 250   7.13%, 04/15/2018 ■   311 
     Wellpoint, Inc.     
 81   3.30%, 01/15/2023   84 
         30,833 
     Food Manufacturing - 0.3%     
     ConAgra Foods, Inc.     
 50   1.90%, 01/25/2018   51 
 45   3.20%, 01/25/2023   46 
     Kellogg Co.     
 725   4.00%, 12/15/2020   816 
     Kraft Foods Group, Inc.     
 145   2.25%, 06/05/2017   151 
 90   3.50%, 06/06/2022   96 
 155   5.00%, 06/04/2042   175 
     Mondelez International, Inc.     
700   4.13%, 02/09/2016  762 
         2,097 
     Health Care and Social Assistance - 0.2%     
     Amgen, Inc.     
 600   5.15%, 11/15/2041   688 
     GlaxoSmithKline Capital, Inc.     
 460   2.80%, 03/18/2023   473 
     Kaiser Foundation Hospitals     
 60   3.50%, 04/01/2022   64 
 115   4.88%, 04/01/2042   131 
     McKesson Corp.     
 25   2.85%, 03/15/2023   26 
         1,382 
     Information - 0.4%     
     AT&T, Inc.     
 175   6.55%, 02/15/2039   225 
     BellSouth Telecommunications, Inc.     
 250   7.00%, 12/01/2095   305 
     Cox Communications, Inc.     
 255   4.50%, 06/30/2043 ■☼   255 
 45   4.70%, 12/15/2042 ■   46 
     France Telecom S.A.     
 250   4.13%, 09/14/2021   273 
     SBA Tower Trust     
 370   4.25%, 04/15/2015 ■Δ   385 
     Verizon Communications, Inc.     
 490   3.50%, 11/01/2021   521 
 130   4.75%, 11/01/2041   135 
         2,145 
     Mining - 0.0%     
     Barrick Gold Corp.     
 100   4.10%, 05/01/2023 ■   100 
           
     Miscellaneous Manufacturing - 0.0%     
     United Technologies Corp.     
 65   3.10%, 06/01/2022   69 
           
     Motor Vehicle and Parts Manufacturing - 0.2%     
     Daimler Finance NA LLC     
 1,000   2.63%, 09/15/2016 ■   1,043 
           
     Petroleum and Coal Products Manufacturing - 0.5%     
     Atmos Energy Corp.     
 1,160   6.35%, 06/15/2017   1,390 
     Gazprom Neft OAO via GPN Capital S.A.     
 200   4.38%, 09/19/2022 ■   200 
     Motiva Enterprises LLC     
 80   5.75%, 01/15/2020 ■   97 
     Shell International Finance B.V.     
 1,200   4.38%, 03/25/2020   1,408 
         3,095 
     Pharmaceuticals - 0.0%     
     Zoetis, Inc.     
 30   3.25%, 02/01/2023 ■   31 
 35   4.70%, 02/01/2043 ■   37 
         68 

 

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

 

8

 

 

 

Shares or Principal Amount  Market Value ╪ 

CORPORATE BONDS - 10.0% - (continued)

     
     Pipeline Transportation - 0.2%     
     Kinder Morgan Energy Partners L.P.     
$1,000   6.95%, 01/15/2038  $1,317 
           
     Real Estate, Rental and Leasing - 0.2%     
     ERAC USA Finance Co.     
 180   2.25%, 01/10/2014 ■   182 
 70   2.75%, 03/15/2017 ■   73 
 410   4.50%, 08/16/2021 ■   457 
 250   5.63%, 03/15/2042 ■   286 
         998 
     Retail Trade - 0.3%     
     Amazon.com, Inc.     
 285   2.50%, 11/29/2022   280 
     AutoZone, Inc.     
 200   3.13%, 07/15/2023   199 
 355   3.70%, 04/15/2022   373 
     Lowe's Cos., Inc.     
 600   4.63%, 04/15/2020   703 
         1,555 
     Soap, Cleaning Compound and Toilet Manufacturing - 0.4%     
     Procter & Gamble Co.     
 1,683   9.36%, 01/01/2021   2,228 
           
     Transportation Equipment Manufacturing - 0.0%     
     Kansas City Southern de Mexico S.A. de C.V.     
 35   2.35%, 05/15/2020 ■☼   35 
           
     Utilities - 0.4%     
     Consolidated Edison Co. of NY     
 655   5.30%, 12/01/2016   755 
     Indianapolis Power and Light     
 750   6.60%, 06/01/2037 ■   993 
     Southern California Edison Co.     
 750   5.55%, 01/15/2037   954 
         2,702 
     Wholesale Trade - 0.0%     
     Heineken N.V.     
 245   2.75%, 04/01/2023 ■   245 
 10   4.00%, 10/01/2042 ■   10 
         255 
     Total corporate bonds     
     (cost $54,637)  $61,408 
           

MUNICIPAL BONDS - 1.1%

     
     General Obligations - 0.2%     
     California State GO, Taxable,     
$250   7.55%, 04/01/2039  $374 
     Chicago, IL, Metropolitan Water Reclamation GO,     
 130   5.72%, 12/01/2038   171 
     Los Angeles, CA, USD GO,     
 800   5.75%, 07/01/2034   1,012 
         1,557 
     Health Care/Services - 0.1%     
     University of California, Regents MedCenter Pooled Rev,     
 370   6.58%, 05/15/2049   500 
           
     Higher Education (Univ., Dorms, etc.) - 0.1%     
     University of California, Build America Bonds Rev,     
370   5.77%, 05/15/2043  469 
           
     Refunded - 0.1%     
     Irvine Ranch, CA, Water Dist Joint Powers Agency,     
 515   2.61%, 03/15/2014   525 
           
     Tax Allocation - 0.1%     
     Dallas, TX, Area Rapid Transit Sales Tax Rev,     
 425   6.00%, 12/01/2044   580 
           
     Transportation - 0.5%     
     Bay Area, CA, Toll Auth Bridge Rev,     
 575   6.26%, 04/01/2049   814 
     Illinois State Toll Highway Auth, Taxable Rev,     
 350   6.18%, 01/01/2034   455 
     Maryland State Transportation Auth,     
 255   5.89%, 07/01/2043   341 
     New York & New Jersey PA,     
 185   5.86%, 12/01/2024   242 
 115   6.04%, 12/01/2029   152 
     North Texas Tollway Auth Rev,     
 630   6.72%, 01/01/2049   892 
         2,896 
     Total municipal bonds     
     (cost $5,042)  $6,527 
           
U.S. GOVERNMENT AGENCIES - 1.4%     
     FHLMC - 0.4%     
$86   4.00%, 03/01/2041  $92 
 1,517   5.00%, 09/01/2035 - 06/01/2041   1,636 
 681   5.50%, 07/01/2036 - 01/01/2040   737 
         2,465 
     FNMA - 0.6%     
 3,300   4.00%, 05/15/2043 ☼   3,532 
           
     GNMA - 0.4%     
 587   6.00%, 11/20/2023 - 09/15/2034   670 
 811   6.50%, 04/15/2026 - 02/15/2035   925 
 836   7.00%, 11/15/2031 - 11/15/2033   1,005 
 152   8.00%, 12/15/2029 - 02/15/2031   168 
         2,768 
     Total U.S. government agencies     
     (cost $8,359)  $8,765 
           
U.S. GOVERNMENT SECURITIES - 17.4%     
 Other Direct Federal Obligations - 1.7%     
     FFC - 1.7%     
$3,676   4.40%, 12/06/2013 - 12/27/2013 ○  $3,662 
 5,000   9.80%, 04/06/2018   7,098 
         10,760 

 

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

 

9

 

The Hartford Balanced Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount          Market Value ╪ 
U.S. GOVERNMENT SECURITIES - 17.4% - (continued) 
  U.S. Treasury Securities - 15.7%
     U.S. Treasury Bonds - 3.8%             
$2,965   2.75%, 11/15/2042          $2,876 
 4,429   4.38%, 11/15/2039 - 05/15/2040           5,775 
 5,000   6.00%, 02/15/2026           7,249 
 4,675   6.25%, 08/15/2023 ‡           6,704 
                 22,604 
     U.S. Treasury Notes - 11.9%             
 7,020   0.13%, 12/31/2014 - 04/30/2015           7,011 
 19,435   0.25%, 04/30/2014 - 02/28/2015           19,456 
 1,500   0.63%, 05/31/2017           1,507 
 534   0.88%, 01/31/2017           542 
 5,400   1.00%, 09/30/2016           5,513 
 11,600   1.25%, 10/31/2015           11,883 
 5,000   1.50%, 06/30/2016           5,182 
 1,230   1.63%, 11/15/2022           1,228 
 6,400   1.88%, 02/28/2014           6,493 
 920   2.00%, 02/15/2023           947 
 4,775   3.50%, 05/15/2020           5,559 
 1,950   3.88%, 05/15/2018           2,261 
 5,200   4.50%, 05/15/2017           6,034 
                 73,616 
                 96,220 
     Total U.S. government securities             
     (cost $98,189)          $106,980 
                   
     Total long-term investments             
     (cost $483,662)          $603,097 
                   
SHORT-TERM INVESTMENTS - 2.5%             
 Repurchase Agreements - 2.5%             
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $603,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $615)
            
$603    0.17%, 4/30/2013          $603 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,643, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $1,676)
            
 1,643    0.15%, 4/30/2013           1,643 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $3,164, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $3,227)
            
 3,164    0.15%, 4/30/2013           3,164 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $4,394,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $4,482)
            
 4,394    0.14%, 4/30/2013           4,394 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $790, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA
3.00%, 2043, value of $806)
      
790    0.17%, 4/30/2013       790 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $2,678, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $2,731)
         
 2,678    0.14%, 4/30/2013        2,678 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$1,883, collateralized by U.S. Treasury
Note 0.25% - 1.88%, 2014 - 2019, value of
$1,920)
         
 1,883    0.17%, 4/30/2013       1,883 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$33, collateralized by U.S. Treasury Note
3.88%, 2018, value of $34)
         
 33    0.13%, 4/30/2013       33 
             15,188 
     Total short-term investments        
     (cost $15,188)     $15,188 
              
     Total investments        
     (cost $498,850) ▲   100.6%  $618,285 
     Other assets and liabilities   (0.6)%   (3,522)
     Total net assets   100.0%  $614,763 

 

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

 

10

 

 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.
   
  Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $499,851 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $127,290 
Unrealized Depreciation   (8,856)
Net Unrealized Appreciation  $118,434 

 

These securities were valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $4,294, which represents 0.7% 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.  
   
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.
   
Δ Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.
   
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. Unless otherwise indicated, these issues are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $11,780, which represents 1.9% 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 Acquired  Shares/ Par   Security  Cost Basis 
08/2011   2,007   Allstar Co.  $1,186 
06/2007   2,225   Buck Holdings L.P.   160 

 

At April 30, 2013, the aggregate value of these securities was $4,294, which represents 0.7% of total net assets.

 

The interest rate disclosed for these securities represents the effective yield on the date of the acquisition.
   
This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $3,818 at April 30, 2013.

 

Securities Sold Short Outstanding at April 30, 2013

 

Description  Principal
Amount
   Maturity Date  Market Value ╪   Unrealized
Appreciation/
Depreciation
 
FHLMC TBA, 5.00%  $1,000   06/15/2039  $1,074   $(2)
FHLMC TBA, 5.50%   300   05/15/2043   324    1 
           $1,398   $(1)

 

At April 30, 2013, the aggregate value of these securities represents 0.2% 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 Balanced Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Municipal Bond Abbreviations:
GO General Obligation
PA Port Authority
Rev Revenue
USD United School District
 
Other Abbreviations:
ADR American Depositary Receipt
FFC Federal Financing Corp.
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association

 

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

 

12

 

The Hartford Balanced Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Asset & Commercial Mortgage Backed Securities  $907   $   $907   $ 
Common Stocks ‡   418,510    399,140    15,076    4,294 
Corporate Bonds   61,408        59,653    1,755 
Municipal Bonds   6,527        6,527     
U.S. Government Agencies   8,765        8,765     
U.S. Government Securities   106,980    3,313    103,667     
Short-Term Investments   15,188        15,188     
Total  $618,285   $402,453   $209,783   $6,049 
Liabilities:                    
Securities Sold Short  $1,398   $   $1,398   $ 
Total  $1,398   $   $1,398   $ 

 

For the six-month period ended April 30, 2013, investments valued at $4,127 were transferred from Level 1 to Level 2, and there were no transfers from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:

  1) Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
  2) U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
  3) Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).

The Fund has all or primarily all of the equity securities categorized in a particular 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
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3
   Transfers
Out of
Level 3
   Balance
as of
April 30,
2013
 
Assets:                                             
Common Stocks  $5,658   $1,371   $(173)*  $   $   $(2,562)  $   $   $4,294 
Corporate Bonds   1,396        37       348    (26)           1,755 
Total  $7,054   $1,371   $(136)  $   $348   $(2,588)  $   $   $6,049 

 

* Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $(173).

Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $37.

 

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

 

13

 

The Hartford Balanced Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $498,850)  $618,285 
Cash    
Receivables:     
Investment securities sold   8,677 
Fund shares sold   301 
Dividends and interest   1,901 
Other assets   79 
Total assets   629,243 
Liabilities:     
Securities sold short, at market value (proceeds $1,397)   1,398 
Payables:     
Investment securities purchased   12,071 
Fund shares redeemed   731 
Investment management fees   68 
Administrative fees    
Distribution fees   38 
Accrued expenses   174 
Total liabilities   14,480 
Net assets  $614,763 
Summary of Net Assets:     
Capital stock and paid-in-capital  $683,454 
Undistributed net investment income   495 
Accumulated net realized loss   (188,622)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   119,436 
Net assets  $614,763 
      
Shares authorized   910,000 
Par value  $ 0.001 
Class A: Net asset value per share/Maximum offering price per share   

$17.61/$18.63

 
Shares outstanding   29,010 
Net assets  $510,810 
Class B: Net asset value per share  $17.48 
Shares outstanding   783 
Net assets  $13,686 
Class C: Net asset value per share  $17.62 
Shares outstanding   4,892 
Net assets  $86,177 
Class R3: Net asset value per share  $17.79 
Shares outstanding   26 
Net assets  $468 
Class R4: Net asset value per share  $17.80 
Shares outstanding   78 
Net assets  $1,380 
Class R5: Net asset value per share  $17.83 
Shares outstanding   7 
Net assets  $133 
Class Y: Net asset value per share  $17.84 
Shares outstanding   118 
Net assets  $2,109 

 

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

 

14

 

The Hartford Balanced Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $4,625 
Interest   2,800 
Less: Foreign tax withheld   (59)
Total investment income   7,366 
      
Expenses:     
Investment management fees   1,986 
Administrative services fees     
Class R3    
Class R4   1 
Class R5    
Transfer agent fees     
Class A   567 
Class B   40 
Class C   65 
Class R3    
Class R4    
Class R5    
Class Y    
Distribution fees     
Class A   607 
Class B   73 
Class C   402 
Class R3   1 
Class R4   2 
Custodian fees   4 
Accounting services fees   53 
Registration and filing fees   45 
Board of Directors' fees   8 
Audit fees   8 
Other expenses   61 
Total expenses (before waivers and fees paid indirectly)   3,923 
Expense waivers   (106)
Transfer agent fee waivers   (18)
Commission recapture    
Total waivers and fees paid indirectly   (124)
Total expenses, net   3,799 
Net Investment Income   3,567 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   11,171 
Net realized gain on securities sold short   24 
Net realized loss on foreign currency contracts   (1)
Net realized loss on other foreign currency transactions   (5)
Net Realized Gain on Investments and Foreign Currency Transactions   11,189 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   43,207 
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   1 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   43,208 
Net Gain on Investments and Foreign Currency Transactions   54,397 
Net Increase in Net Assets Resulting from Operations  $57,964 

 

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

 

15

 

The Hartford Balanced Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $3,567   $7,587 
Net realized gain on investments and foreign currency transactions   11,189    22,355 
Net unrealized appreciation of investments and foreign currency transactions   43,208    33,898 
Net Increase in Net Assets Resulting from Operations   57,964    63,840 
Distributions to Shareholders:          
From net investment income          
Class A   (3,209)   (7,249)
Class B   (29)   (113)
Class C   (240)   (593)
Class R3   (2)   (3)
Class R4   (9)   (38)
Class R5   (1)   (2)
Class Y   (17)   (37)
Total distributions   (3,507)   (8,035)
Capital Share Transactions:          
Class A   (17,477)   (50,859)
Class B   (3,455)   (14,780)
Class C   244    (7,648)
Class R3   51    128 
Class R4   (196)   (3,543)
Class R5       3 
Class Y   122    (144)
Net decrease from capital share transactions   (20,711)   (76,843)
Net Increase (Decrease) in Net Assets   33,746    (21,038)
Net Assets:          
Beginning of period   581,017    602,055 
End of period  $614,763   $581,017 
Undistributed (distribution in excess of) net investment income (loss)  $495   $435 

 

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

 

16

 

The Hartford Balanced Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)


 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Balanced 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 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current

 

17

 

The Hartford Balanced Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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:

 

18

 

 

 

·Level 1 – Quoted prices in active markets for identical investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

19

 

The Hartford Balanced Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

c)Investment Transactions and Investment Income – Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. Paydown gains and losses on mortgage-related and other asset-backed securities are included in interest income in the Statement of Operations, as applicable.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, quarterly and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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

 

20

 

 

 

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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

In connection with the Fund’s ability to purchase investments on a when-issued or forward commitment basis, the Fund may enter into to-be announced (“TBA”) commitments. TBA commitments are forward agreements for the purchase or sale of mortgage-backed securities for a fixed price, with payment and delivery on an agreed-upon future settlement date. The specific securities to be delivered are not identified at the trade date; however, delivered securities must meet specified terms, including issuer, rate and mortgage terms. Although the Fund may enter into TBA commitments with the intention of acquiring or delivering securities for its portfolio, the Fund can extend the settlement date, roll the transaction, or dispose of a commitment prior to settlement if deemed appropriate to do so. If the TBA commitment is closed through the acquisition of an offsetting TBA commitment, the Fund realizes a gain or loss. In a TBA roll transaction, the Fund generally purchases or sells the initial TBA commitment prior to the agreed upon settlement date and enters into a new TBA commitment for future delivery or receipt of the mortgage-backed securities. TBA commitments involve a risk of loss if the value of the security to be purchased or sold declines or increases, respectively, prior to settlement date.

 

21

 

The Hartford Balanced Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

The Fund may enter into “dollar rolls” in which the Fund sells securities and contracts with the same counterparty to repurchase substantially similar securities (for example, same issuer, coupon and maturity) on a specified future date at an agreed upon price. The Fund gives up the right to receive interest paid on the investments sold. The Fund would benefit to the extent of any differences between the price received for the security and the lower forward price for the future purchase. Dollar rolls involve the risk that the market value of the securities that the Fund is required to purchase may decline below the agreed upon repurchase price of those securities. The Fund records dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions are excluded from the Fund’s portfolio turnover rate. The Fund had open dollar roll transactions as of April 30, 2013.

 

d)Mortgage Related and Other Asset Backed Securities The Fund may invest in mortgage related and other asset backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations, commercial mortgage backed securities, stripped mortgage backed securities, asset backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. Mortgage related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. These securities provide a monthly payment that consists of both interest and principal payments. Interest payments may be determined by fixed or adjustable rates. The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. The timely payment of principal and interest of certain mortgage related securities is guaranteed by the full faith and credit of the United States Government. Mortgage related and other asset backed securities created and guaranteed by non-governmental issuers, including government-sponsored corporations, may be supported by various forms of insurance or guarantees, but there can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund, as shown on the  Schedule of Investments, had mortgage related and other asset backed securities as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as of April 30, 2013.

 

22

 

 

 

b)Additional Derivative Instrument Information:

 

The volume of derivative activity was minimal during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Loss on Derivatives Recognized as a Result of Operations:
Net realized loss on foreign currency contracts  $   $(1)  $   $   $   $   $(1)
Total  $   $(1)  $   $   $   $   $(1)

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

23

 

The Hartford Balanced Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $8,035   $7,279 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $435 
Accumulated Capital Losses *   (198,810)
Unrealized Appreciation †   75,227 
Total Accumulated Deficit  $(123,148)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(85)
Accumulated Net Realized Gain (Loss)   85 

 

24

 

 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2017  $198,810 
Total  $198,810 

 

During the year ended October 31, 2012, the Fund utilized $17,469 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

25

 

The Hartford Balanced Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A     Class B     Class C     Class R3     Class R4     Class R5     Class Y  
  1.18%     NA   NA     1.40%       1.10%       0.80%       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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.18%
Class B   2.05 
Class C   1.90 
Class R3   1.40 
Class R4   1.10 
Class R5   0.80 
Class Y   0.74 

 

26

 

 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $343 and contingent deferred sales charges of $3 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R3   23%
Class R5   100 
Class Y   7 

 

27

 

The Hartford Balanced Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $43,468 
Sales Proceeds Excluding U.S. Government Obligations   65,383 
Cost of Purchases for U.S. Government Obligations   23,754 
Sales Proceeds for U.S. Government Obligations   25,297 

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   1,285    187    (2,536)       (1,064)   2,036    451    (5,782)       (3,295)
Amount  $21,522   $3,104   $(42,103)  $   $(17,477)  $31,759   $6,974   $(89,592)  $   $(50,859)
Class B                                                  
Shares   39    2    (249)       (208)   54    7    (1,023)       (962)
Amount  $636   $28   $(4,119)  $   $(3,455)  $834   $109   $(15,723)  $   $(14,780)
Class C                                                  
Shares   355    14    (357)       12    330    36    (859)       (493)
Amount  $5,965   $228   $(5,949)  $   $244   $5,151   $557   $(13,356)  $   $(7,648)
Class R3                                                  
Shares   4        (1)       3    8                8 
Amount  $71   $2   $(22)  $   $51   $134   $3   $(9)  $   $128 
Class R4                                                  
Shares   14    1    (27)       (12)   18    2    (254)       (234)
Amount  $242   $9   $(447)  $   $(196)  $279   $38   $(3,860)  $   $(3,543)
Class R5                                                  
Shares                                        
Amount  $   $1   $(1)  $   $   $1   $2   $   $   $3 
Class Y                                                  
Shares   8    1    (2)       7    12    2    (22)       (8)
Amount  $142   $16   $(36)  $   $122   $182   $37   $(363)  $   $(144)
Total                                                  
Shares   1,705    205    (3,172)       (1,262)   2,458    498    (7,940)       (4,984)
Amount  $28,578   $3,388   $(52,677)  $   $(20,711)  $38,340   $7,720   $(122,903)  $   $(76,843)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   107   $1,793 
For the Year Ended October 31, 2012   342   $5,304 
           

 

28

 

 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

29

 

The Hartford Balanced Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

30

  

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31

 

The Hartford Balanced Fund

Financial Highlights

– Selected Per-Share Data – (A)

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited)
A  $16.06   $0.11   $1.55   $1.66   $(0.11)  $   $   $(0.11)  $17.61 
B   15.94    0.04    1.53    1.57    (0.03)           (0.03)   17.48 
C   16.07    0.05    1.55    1.60    (0.05)           (0.05)   17.62 
R3   16.23    0.09    1.56    1.65    (0.09)           (0.09)   17.79 
R4   16.23    0.12    1.57    1.69    (0.12)           (0.12)   17.80 
R5   16.26    0.14    1.57    1.71    (0.14)           (0.14)   17.83 
Y   16.27    0.15    1.57    1.72    (0.15)           (0.15)   17.84 
                                              
For the Year Ended October 31, 2012
A   14.63    0.22    1.44    1.66    (0.23)           (0.23)   16.06 
B   14.51    0.09    1.42    1.51    (0.08)           (0.08)   15.94 
C   14.64    0.10    1.45    1.55    (0.12)           (0.12)   16.07 
R3   14.78    0.18    1.47    1.65    (0.20)           (0.20)   16.23 
R4   14.79    0.24    1.44    1.68    (0.24)           (0.24)   16.23 
R5   14.81    0.28    1.46    1.74    (0.29)           (0.29)   16.26 
Y   14.82    0.29    1.46    1.75    (0.30)           (0.30)   16.27 
                                              
For the Year Ended October 31, 2011 (G)
A   14.23    0.18    0.40    0.58    (0.18)           (0.18)   14.63 
B   14.10    0.05    0.41    0.46    (0.05)           (0.05)   14.51 
C   14.24    0.07    0.41    0.48    (0.08)           (0.08)   14.64 
R3   14.38    0.15    0.41    0.56    (0.16)           (0.16)   14.78 
R4   14.39    0.19    0.41    0.60    (0.20)           (0.20)   14.79 
R5   14.40    0.24    0.41    0.65    (0.24)           (0.24)   14.81 
Y   14.41    0.25    0.41    0.66    (0.25)           (0.25)   14.82 
                                              
For the Year Ended October 31, 2010
A   12.67    0.17    1.55    1.72    (0.16)           (0.16)   14.23 
B   12.54    0.06    1.53    1.59    (0.03)           (0.03)   14.10 
C   12.67    0.07    1.56    1.63    (0.06)           (0.06)   14.24 
R3   12.81    0.13    1.58    1.71    (0.14)           (0.14)   14.38 
R4   12.81    0.18    1.57    1.75    (0.17)           (0.17)   14.39 
R5   12.82    0.21    1.58    1.79    (0.21)           (0.21)   14.40 
Y   12.83    0.23    1.57    1.80    (0.22)           (0.22)   14.41 
                                              
For the Year Ended October 31, 2009 (G)
A   10.80    0.21    1.94    2.15    (0.28)           (0.28)   12.67 
B   10.69    0.12    1.92    2.04    (0.19)           (0.19)   12.54 
C   10.80    0.12    1.94    2.06    (0.19)           (0.19)   12.67 
R3   10.92    0.18    1.97    2.15    (0.26)           (0.26)   12.81 
R4   10.92    0.17    2.01    2.18    (0.29)           (0.29)   12.81 
R5   10.93    0.24    1.97    2.21    (0.32)           (0.32)   12.82 
Y   10.93    0.28    1.95    2.23    (0.33)           (0.33)   12.83 
                                              
For the Year Ended October 31, 2008
A   18.52    0.26    (5.74)   (5.48)   (0.25)   (1.99)       (2.24)   10.80 
B   18.34    0.15    (5.70)   (5.55)   (0.11)   (1.99)       (2.10)   10.69 
C   18.51    0.16    (5.73)   (5.57)   (0.15)   (1.99)       (2.14)   10.80 
R3   18.70    0.21    (5.78)   (5.57)   (0.22)   (1.99)       (2.21)   10.92 
R4   18.70    0.26    (5.78)   (5.52)   (0.27)   (1.99)       (2.26)   10.92 
R5   18.71    0.31    (5.79)   (5.48)   (0.31)   (1.99)       (2.30)   10.93 
Y   18.71    0.33    (5.80)   (5.47)   (0.32)   (1.99)       (2.31)   10.93 

 

(A) Information presented relates to a share outstanding throughout the indicated period.
(B) Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C) Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E) Not annualized.
(F) Annualized.
(G) Per share amounts have been calculated using average shares outstanding method.

 

32

 

– Ratios and Supplemental Data –

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
  
  
 10.37%(E)  $510,810    1.23%(F)   1.18%(F)   1.34%(F)   8%
 9.87(E)   13,686    2.29(F)   2.05(F)   0.50(F)    
 9.97(E)   86,177    1.90(F)   1.90(F)   0.61(F)    
 10.23(E)   468    1.52(F)   1.40(F)   1.10(F)    
 10.43(E)   1,380    1.15(F)   1.10(F)   1.43(F)    
 10.57(E)   133    0.87(F)   0.80(F)   1.72(F)    
 10.59(E)   2,109    0.74(F)   0.74(F)   1.76(F)    
                            
                            
 11.42    483,041    1.24    1.18    1.40    29 
 10.43    15,803    2.24    2.05    0.55     
 10.60    78,414    1.92    1.92    0.67     
 11.22    378    1.56    1.40    1.17     
 11.44    1,456    1.16    1.10    1.59     
 11.84    121    0.88    0.80    1.78     
 11.89    1,804    0.75    0.75    1.83     
                            
                            
 4.10    488,193    1.23    1.18    1.20    43 
 3.24    28,334    2.15    2.03    0.34     
 3.33    78,642    1.90    1.90    0.47     
 3.87    228    1.52    1.40    0.98     
 4.18    4,788    1.14    1.10    1.29     
 4.52    107    0.85    0.80    1.58     
 4.60    1,763    0.74    0.74    1.64     
                            
                            
 13.64    554,735    1.23    1.18    1.21    62 
 12.72    48,096    2.13    2.03    0.38     
 12.89    92,526    1.90    1.90    0.49     
 13.38    153    1.55    1.42    0.91     
 13.72    1,420    1.13    1.12    1.28     
 14.06    102    0.85    0.81    1.51     
 14.14    1,685    0.73    0.73    1.66     
                            
                            
 20.47    580,354    1.32    1.15    1.90    73 
 19.42    73,778    2.25    2.04    1.06     
 19.46    98,891    1.98    1.98    1.08     
 20.20    13    1.84    1.32    1.65     
 20.47    1,275    1.13    1.13    1.61     
 20.83    9    0.85    0.83    2.18     
 20.98    1,610    0.76    0.76    2.49     
                            
                            
 (33.24)   593,816    1.18    1.18    1.75    79 
 (33.80)   103,632    2.03    2.00    0.93     
 (33.68)   106,819    1.87    1.87    1.06     
 (33.39)   9    1.57    1.43    1.49     
 (33.16)   113    1.11    1.11    1.80     
 (32.96)   7    0.79    0.79    2.13     
 (32.91)   11,347    0.70    0.70    2.22     

 

33

 

The Hartford Balanced Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

34

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

35

 

The Hartford Balanced Fund

Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

36

 

The Hartford Balanced 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,103.70   $6.16   $1,000.00   $1,018.93   $5.92    1.18%  181  365
Class B  $1,000.00   $1,098.70   $10.66   $1,000.00   $1,014.64   $10.23    2.05   181  365
Class C  $1,000.00   $1,099.70   $9.91   $1,000.00   $1,015.36   $9.51    1.90   181  365
Class R3  $1,000.00   $1,102.30   $7.31   $1,000.00   $1,017.84   $7.01    1.40   181  365
Class R4  $1,000.00   $1,104.30   $5.75   $1,000.00   $1,019.33   $5.52    1.10   181  365
Class R5  $1,000.00   $1,105.70   $4.18   $1,000.00   $1,020.82   $4.01    0.80   181  365
Class Y  $1,000.00   $1,105.90   $3.88   $1,000.00   $1,021.11   $3.73    0.74   181  365

 

37

 

The Hartford Balanced Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Balanced Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the

 

38

 

 

 

following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

39

 

The Hartford Balanced Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early).

 

Mortgage-Backed Securities Risk: Mortgage-backed securities are subject to interest rate risk, credit risk, prepayment risk, extension risk, and the risk that an investment’s value may be reduced or become worthless if it receives interest or income payments only after other investments in the same pool.

 

40
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-B13 4/13 113290-1 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

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HARTFORDFUNDS

 

 

THE HARTFORD BALANCED INCOME FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Balanced Income Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   7
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   33
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   34
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   36
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   37
Notes to Financial Statements (Unaudited)   38
Financial Highlights (Unaudited)   54
Directors and Officers (Unaudited)   56
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   58
Quarterly Portfolio Holdings Information (Unaudited)   58
Expense Example (Unaudited)   59
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   60
Principal Risks (Unaudited)   62

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

The Hartford Balanced Income Fund inception 07/31/2006
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks to provide current income with growth of capital as a secondary objective.

 

Performance Overview 7/31/06 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   Since
Inception▲
 
Balanced Income A#   8.12%       14.08%       8.28%       7.66%    
Balanced Income A##        7.80%       7.06%       6.77%    
Balanced Income B#   8.14%       13.98%       7.60%       6.95%    
Balanced Income B##        8.98%       7.30%       6.95%    
Balanced Income C#   7.68%       13.22%       7.48%       6.86%    
Balanced Income C##        12.22%       7.48%       6.86%    
Balanced Income I#   8.24%       14.34%       8.44%       7.79%    
Balanced Income R3#   7.87%       13.69%       8.25%       7.74%    
Balanced Income R4#   8.08%       14.10%       8.44%       7.88%    
Balanced Income R5#   8.21%       14.38%       8.61%       8.00%    
Balanced Income Y#   8.20%       14.56%       8.74%       8.10%    
Balanced Income Fund Blended Index   8.40%       14.71%       7.02%       6.54%    
Barclays Corporate Index   1.49%       7.92%       8.07%       7.43%    
Russell 1000 Value Index   16.31%       21.80%       4.17%       4.11%    

 

Not Annualized
Inception: 07/31/2006
#Without sales charge
##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 2/26/10. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 5/28/10. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses.

 

Balanced Income Fund Blended Index is a blended index comprised of the following indices: Russell 1000 Value Index (45%), Barclays Corporate Index (44%), Barclays U.S. High-Yield 2% Capped Bond Index (5.5%) and JP Morgan EMBI Plus Bond Index (5.5%).

 

Barclays Corporate Index is an unmanaged index and is the Corporate component of the U.S. Credit Index within the Barclays 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. The Russell 1000 Index is an unmanaged index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, which measures the performance of the 3,000 largest U.S. companies, based on total market capitalizations.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

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The Hartford Balanced Income Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Balanced Income Class A   0.99%       1.04%   
Balanced Income Class B   1.74%       1.87%   
Balanced Income Class C   1.74%       1.79%   
Balanced Income Class I   0.74%       0.81%   
Balanced Income Class R3   1.24%       1.41%   
Balanced Income Class R4   0.94%       1.17%   
Balanced Income Class R5   0.69%       0.76%   
Balanced Income Class Y   0.64%       0.74%   

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers    
Lucius T. Hill, III Karen H. Grimes, CFA Ian R. Link, CFA
Senior Vice President and Fixed Income Portfolio Manager Senior Vice President and Equity Portfolio Manager Director and Equity Portfolio Manager
     
W. Michael Reckmeyer, III, CFA Scott I. St. John, CFA  
Senior Vice President and Equity Portfolio Manager Senior Vice President and Fixed Income Portfolio Manager  

 

How did the Fund perform?

The Class A shares of The Hartford Balanced Income Fund returned 8.12%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s blended benchmark (45% Russell 1000 Value Index, 44% Barclays Corporate Index, 5.5% Barclays U.S. High-Yield 2% Capped Bond Index, and 5.5% JP Morgan EMBI Plus Bond Index) which returned 8.40% for the same period. The Fund also underperformed the 8.76% average return 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?

U.S. equities surged during the period, ending at an all-time high. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. U.S. housing data continued to provide evidence that the sector at the epicenter of the financial crisis could be a key engine of economic recovery in 2013. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

The Russell 1000 Value Index rose 16.31% during the period. The Information Technology (+28%), Consumer Discretionary (+22%), and Consumer Staples (+19%) sectors posted the sharpest gains, while Materials (+4%) and Energy (+8%) lagged on a relative basis during the period.

 

Within fixed income, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02% to 0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency mortgage-backed securities (MBS), outperformed Treasuries on a duration-adjusted basis. For the period, the Barclays Corporate Bond Index returned (+1.49%), the Barclays High-Yield 2% Capped Bond Index returned (+7.3%), and the JP Morgan EMBI Plus Bond Index returned (+2.6%).

 

3

 

The Hartford Balanced Income Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

The equity portion of the Fund lagged its benchmark during the period due primarily to weak stock selection in Financials, Information Technology, and Consumer Staples. Among the top detractors from relative returns in the equity portion of the Fund were M&T Bank (Financials), Royal Dutch Shell (Energy), and Merck (Health Care). Shares of M&T Bank, a U.S.-based bank holding company, fell during the period over investor concern due to the uncertainty over M&T Bank’s proposed merger with Hudson City Bancorp. Shares of Royal Dutch Shell, a global integrated oil and gas company, fell during the period after the company posted disappointing quarterly earnings due to weak upstream performance which was primarily due to soft North American realizations and high costs. Shares of Merck, a global pharmaceutical company, underperformed during the period after the company announced a delay of Odanacatib (treatment for osteoporosis and bone metastasis), a drug which represents an important opportunity in Merck’s late stage pipeline. Stocks that detracted most from absolute returns included Consumer Discretionary company WPP and Energy company Exxon Mobil.

 

Among the top contributors to relative returns in the equity sleeve were BlackRock (Financials), Exxon Mobil (Energy), and Roche Holdings (Health Care). Shares of investment management firm BlackRock outperformed after the company reported better-than-expected fourth quarter revenue and earnings, in part due to strong markets. The firm posted strong organic net cash inflows and announced a 12% hike in its dividend. Shares of global integrated energy company Exxon fell during the period as fundamentals at the company continued to deteriorate, pressured by the company’s high cost base, which has been inflated by several recent acquisitions and caused profitability to suffer. Our relative underweight position in this benchmark-component contributed to relative returns. Shares of Roche Holding, a Swiss-based global health care company, contributed to relative returns during the period as the stock rose based on investor enthusiasm for progress in the oncology franchise pipeline. Johnson & Johnson (Health Care) and JPMorgan Chase (Financials) were also top contributors to absolute returns for the period.

 

The Fund’s fixed income component of the Fund outperformed its bond benchmark, Barclays Corporate Index, for the period due primarily to sector allocation. An overweight (i.e. the Fund’s position was greater than the benchmark position) to High Yield credit contributed positively to relative returns as the sector outperformed the blended index. Security selection within Investment Grade Credit and Emerging Market Debt also contributed positively to relative returns. Among investment grade corporates, overweights to the Banking and REIT sectors were additive to relative returns. Within the emerging markets debt portion of the Fund, security selection within Venezuela, Russia, and Mexico contributed positively to relative results, more than offsetting the negative contribution from allocations to Chile and Uruguay during the period.

 

Asset allocation between equities and fixed income contributed positively to relative results during the period due to an underweight to fixed income and an overweight to equities in an environment where equities outperformed the broad fixed income markets.

 

What is the outlook?

The world economy is slowly but steadily emerging from a post-bubble overhang. Looking into 2014, we expect all regions to strengthen economically while inflation is still subdued in parts of the world. Central banks are playing a key role in anchoring bond yields and helping the financial sector healing process. We believe the U.S. Federal Reserve Board is likely to tighten monetary policy later next year, while the ECB and BOJ are expected to leave monetary conditions accommodative for longer. Overall, we expect a return of a world economy that is determined by regional macro fundamentals rather than by swings in global risk sentiment.

 

Based on bottom-up stock decisions, we ended the period most overweight Industrials, Consumer Staples, and Information Technology in the equity portion of the Fund. Our largest equity underweights were Financials, Energy, and Consumer Discretionary, relative to the Russell 1000 Value Index.

 

We remain positive on the corporate bond market, although we are incrementally more cautious, given less attractive valuations. Our outlook for U.S. high-yield bonds remains positive, given strong fundamentals, relatively appealing yields, and a technical backdrop that is still supportive, albeit less robust than last year. Despite the soft start to the year, we remain positive on emerging markets debt and we maintained a modestly pro-risk stance in portfolios at the end of the period. The fundamental story remains intact: most countries continue to have low debt burdens, solid fiscal management, abundant reserves, and manageable inflation.

 

The equity and fixed income managers will continue to work collaboratively to make decisions regarding the Fund’s mix of equities and fixed income. At the end of the period, the Fund had a bias towards equities relative to its blended benchmark.

 

4

 

 

 

Distribution by Credit Quality

as of April 30, 2013

 

Credit Rating *  Percentage of
Net Assets
 
Aaa / AAA   0.3%
Aa / AA   2.0 
A   13.1 
Baa / BBB   22.2 
Ba / BB   4.7 
B   3.1 
Caa / CCC or Lower   1.7 
Unrated   0.3 
U.S. Government Agencies and Securities   2.4 
Non-Debt Securities and Other Short-Term Instruments   49.5 
Other Assets & Liabilities   0.7 
Total   100.0%

 

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

Diversification by Industry

as of April 30, 2013

Industry (Sector)  Percentage of
Net Assets
 
Equity Securities     
Banks (Financials)   4.1%
Capital Goods (Industrials)   4.2 
Consumer Durables and Apparel (Consumer Discretionary)   0.6 
Consumer Services (Consumer Discretionary)   0.4 
Diversified Financials (Financials)   2.8 
Energy (Energy)   5.6 
Finance (Financials)   0.4 
Food and Staples Retailing (Consumer Staples)   0.6 
Food, Beverage and Tobacco (Consumer Staples)   4.0 
Household and Personal Products (Consumer Staples)   0.8 
Insurance (Financials)   2.3 
Materials (Materials)   1.9 
Media (Consumer Discretionary)   1.3 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   6.4 
Semiconductors and Semiconductor Equipment (Information Technology)   2.7 
Services (Industrials)   0.4 
Software and Services (Information Technology)   1.5 
Technology (Industrials)   1.0 
Technology Hardware and Equipment (Information Technology)   0.7 
Telecommunication Services (Services)   1.3 
Transportation (Industrials)   0.5 
Utilities (Utilities)   2.8 
Total   46.3%
Fixed Income Securities     
Accommodation and Food Services (Services)   0.1%
Administrative Waste Management and Remediation (Services)   0.3 
Agriculture, Forestry, Fishing and Hunting (Consumer Staples)   0.0 
Air Transportation (Transportation)   0.1 
Airport Revenues (Airport Revenues)   0.0 
Arts, Entertainment and Recreation (Services)   2.9 
Beverage and Tobacco Product Manufacturing (Consumer Staples)   1.1 
Chemical Manufacturing (Basic Materials)   0.5 
Computer and Electronic Product Manufacturing (Technology)   0.6 
Construction (Consumer Cyclical)   0.1 
Couriers and Messengers (Services)   0.0 
Electrical Equipment and Appliance Manufacturing (Technology)   0.1 
Fabricated Metal Product Manufacturing (Basic Materials)   0.0 
Finance and Insurance (Finance)   18.8 
Food Manufacturing (Consumer Staples)   0.6 
Food Services (Consumer Cyclical)   0.1 
Furniture and Related Product Manufacturing (Consumer Cyclical)   0.1 
Gas Utilities (Utilities)   0.1 
General Obligations (General Obligations)   0.2 
Health Care and Social Assistance (Health Care)   2.3 
Information (Technology)   2.3 
Leather and Allied Product Manufacturing (Consumer Cyclical)   0.1 

 

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The Hartford Balanced Income Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

Industry (Sector)  Percentage of
Net Assets
 
Fixed Income Securities - (continued)     
Machinery Manufacturing (Capital Goods)   0.2%
Mining (Basic Materials)   0.6 
Miscellaneous (Miscellaneous)   0.0 
Miscellaneous Manufacturing (Capital Goods)   0.5 
Motor Vehicle and Parts Manufacturing (Consumer Cyclical)   0.3 
Nonmetallic Mineral Product Manufacturing (Basic Materials)   0.1 
Other Services (Services)   0.1 
Paper Manufacturing (Basic Materials)   0.1 
Petroleum and Coal Products Manufacturing (Energy)   3.3 
Pipeline Transportation (Utilities)   0.6 
Plastics and Rubber Products Manufacturing (Basic Materials)   0.1 
Primary Metal Manufacturing (Basic Materials)   0.3 
Printing and Related Support Activities (Services)   0.0 
Professional, Scientific and Technical Services (Services)   0.1 
Rail Transportation (Transportation)   0.3 
Real Estate, Rental and Leasing (Finance)   1.2 
Retail Trade (Consumer Cyclical)   1.2 
Soap, Cleaning Compound and Toilet Manufacturing (Consumer Staples)   0.1 
Transportation (Transportation)   0.1 
Transportation Equipment Manufacturing (Transportation)   0.1 
Truck Transportation (Transportation)   0.2 
Utilities (Utilities)   2.7 
Water Transportation (Transportation)   0.0 
Wholesale Trade (Consumer Cyclical)   0.3 
Total   42.9%
Foreign Government Obligations   4.5%
U.S. Government Securities   1.7 
Short-Term Investments   3.9 
Other Assets and Liabilities   0.7 
Total   100.0%

 

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The Hartford Balanced Income Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 46.2% 
     Banks - 4.1%     
 494   BB&T Corp.  $15,214 
 430   M&T Bank Corp.   43,053 
 199   National Bank of Canada   15,053 
 224   US Bancorp   7,445 
 1,285   Wells Fargo & Co.   48,795 
         129,560 
     Capital Goods - 4.2%     
 280   3M Co.   29,294 
 561   Eaton Corp. plc   34,454 
 313   Illinois Tool Works, Inc.   20,180 
 91   Lockheed Martin Corp.   9,042 
 103   Schneider Electric S.A.   7,839 
 185   Stanley Black & Decker, Inc.   13,814 
 221   United Technologies Corp.   20,151 
         134,774 
     Consumer Durables and Apparel - 0.6%     
 394   Mattel, Inc.   17,976 
           
     Consumer Services - 0.4%     
 132   McDonald's Corp.   13,500 
           
     Diversified Financials - 2.7%     
 144   BlackRock, Inc.   38,456 
 964   JP Morgan Chase & Co.   47,263 
         85,719 
     Energy - 5.6%     
 296   BP plc ADR   12,890 
 513   Chevron Corp.   62,566 
 328   ConocoPhillips Holding Co.   19,853 
 412   Exxon Mobil Corp.   36,700 
 1,301   Royal Dutch Shell plc Class B   45,623 
         177,632 
     Finance - 0.4%     
 170   Ameriprise Financial, Inc.   12,656 
           
     Food and Staples Retailing - 0.6%     
 531   Sysco Corp.   18,502 
           
     Food, Beverage and Tobacco - 4.0%     
 366   Altria Group, Inc.   13,355 
 97   British American Tobacco plc   5,355 
 185   General Mills, Inc.   9,348 
 324   Imperial Tobacco Group plc   11,580 
 532   Kraft Foods Group, Inc.   27,402 
 115   PepsiCo, Inc.   9,466 
 313   Philip Morris International, Inc.   29,918 
 468   Unilever N.V. NY Shares ADR   19,873 
         126,297 
     Household and Personal Products - 0.8%     
 100   Kimberly-Clark Corp.   10,330 
 182   Procter & Gamble Co.   14,001 
         24,331 
     Insurance - 2.3%     
 163   ACE Ltd.   14,517 
 1,361   Marsh & McLennan Cos., Inc.   51,747 
 80   Swiss Re Ltd.   6,366 
         72,630 
     Materials - 1.9%     
 494   Dow Chemical Co.   16,735 
 254   E.I. DuPont de Nemours & Co.   13,822 
 355   International Paper Co.   16,681 
 288   Nucor Corp.   12,542 
         59,780 
     Media - 1.3%     
 381   Thomson Reuters Corp.   12,770 
 154   Time Warner Cable, Inc.   14,471 
 972   WPP plc   16,074 
         43,315 
     Pharmaceuticals, Biotechnology and Life Sciences - 6.4%     
 291   AstraZeneca plc ADR   15,101 
 813   Johnson & Johnson   69,278 
 1,135   Merck & Co., Inc.   53,337 
 1,258   Pfizer, Inc.   36,580 
 125   Roche Holding AG   31,238 
         205,534 
     Semiconductors and Semiconductor Equipment - 2.7%     
 694   Analog Devices, Inc.   30,522 
 1,216   Intel Corp.   29,125 
 318   Linear Technology Corp.   11,622 
 249   Maxim Integrated Products, Inc.   7,695 
 184   Texas Instruments, Inc.   6,680 
         85,644 
     Services - 0.4%     
 292   Waste Management, Inc.   11,970 
           
     Software and Services - 1.5%     
 1,439   Microsoft Corp.   47,618 
           
     Technology - 1.0%     
 1,432   General Electric Co.   31,911 
           
     Technology Hardware and Equipment - 0.7%     
 1,010   Cisco Systems, Inc.   21,136 
           
     Telecommunication Services - 1.3%     
 497   AT&T, Inc.   18,635 
 282   Verizon Communications, Inc.   15,175 
 285   Vodafone Group plc ADR   8,723 
         42,533 
     Transportation - 0.5%     
 206   United Parcel Service, Inc. Class B   17,670 
           
     Utilities - 2.8%     
 81   American Electric Power Co., Inc.   4,178 
 63   Dominion Resources, Inc.   3,911 
 1,528   National Grid plc   19,484 
 164   NextEra Energy, Inc.   13,439 
 216   Northeast Utilities   9,802 
 61   PG&E Corp.   2,931 
 60   PPL Corp.   1,993 
 422   UGI Corp.   17,299 
 529   Xcel Energy, Inc.   16,816 
         89,853 
     Total common stocks     
     (cost $1,255,474)  $1,470,541 

 

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

 

7

 

The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
PREFERRED STOCKS - 0.1%     
     Diversified Financials - 0.1%     
 23   Citigroup Capital XIII  $636 
 25   GMAC Capital Trust I ۞   694 
         1,330 
     Insurance - 0.0%     
 45   Allstate (The) Corp.   1,208 
           
     Telecommunication Services - 0.0%     
 7   Intelsat S.A., 5.75%  ۞   393 
           
     Total preferred stocks     
     (cost $2,736)  $2,931 
           
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 1.5%     
     Finance and Insurance - 1.4%     
     Banc of America Funding Corp.     
$1,278   0.50%, 05/20/2047 Δ  $1,111 
 1,398   5.77%, 05/25/2037   1,237 
     BCAP LLC Trust     
 651   0.37%, 01/25/2037 Δ   495 
     Bear Stearns Adjustable Rate Mortgage Trust     
 1,265   2.32%, 08/25/2035 Δ   1,284 
 358   2.47%, 10/25/2035 Δ   347 
     Bear Stearns Alt-A Trust     
 312   0.58%, 05/25/2036 Δ   199 
     Bear Stearns Commercial Mortgage Securities, Inc.     
 455   5.20%, 12/11/2038   513 
 550   5.54%, 09/11/2041 - 10/12/2041   622 
     Cabela's Master Credit Card Trust     
 3,600   2.71%, 02/17/2026 ■   3,648 
     Citigroup Commercial Mortgage Trust, Inc.     
 1,296   0.55%, 03/25/2037 Δ   694 
     Commercial Mortgage Pass-Through Certificates     
 1,000   4.34%, 12/10/2045 ■Δ   756 
 1,100   4.73%, 10/15/2045 ■Δ   1,090 
 1,130   4.77%, 11/15/2045 ■Δ   1,129 
 100   5.94%, 06/10/2046 Δ   113 
     Community or Commercial Mortgage Trust     
 380   4.34%, 12/10/2045 ■Δ   369 
     Countrywide Alternative Loan Trust     
 321   0.52%, 11/25/2035 Δ   251 
     Countrywide Home Loans, Inc.     
 377   2.99%, 04/20/2036 Δ   258 
 917   3.08%, 09/25/2047 Δ   766 
     CS First Boston Mortgage Securities Corp.     
 754   5.50%, 06/25/2035   753 
     Fieldstone Mortgage Investment Corp.     
 455   0.54%, 04/25/2047 Δ   285 
     First Franklin Mortgage Loan Trust     
 1,602   0.44%, 04/25/2036 Δ   972 
     First Horizon Alternative Mortgage Securities     
 838   2.33%, 04/25/2036 Δ   682 
 2,253   2.36%, 09/25/2035 Δ   2,002 
     GMAC Mortgage Corp. Loan Trust     
 286   3.87%, 04/19/2036 Δ   250 
     Goldman Sachs Mortgage Securities Trust     
 855   4.86%, 11/10/2045 ■Δ   863 
     GSAA Home Equity Trust     
 314   0.27%, 03/25/2047 Δ   210 
 2,355   0.28%, 02/25/2037 Δ   1,295 
 355   0.29%, 12/25/2036 Δ   196 
 422   0.30%, 03/25/2037 Δ   226 
 249   0.43%, 04/25/2047 Δ   157 
     GSAMP Trust     
 214   0.30%, 02/25/2037 Δ   117 
 641   0.40%, 11/25/2036 Δ   365 
     GSR Mortgage Loan Trust     
 411   0.70%, 11/25/2035 Δ   317 
 1,529   2.78%, 01/25/2036 Δ   1,312 
     Harborview Mortgage Loan Trust     
 503   0.39%, 01/19/2038 Δ   414 
 747   0.42%, 05/19/2047 Δ   369 
 543   0.56%, 09/19/2035 Δ   435 
     IndyMac Index Mortgage Loan Trust     
 273   0.49%, 01/25/2036 Δ   178 
 825   0.60%, 07/25/2046 Δ   421 
 449   2.49%, 01/25/2036 Δ   418 
 587   2.56%, 08/25/2035 Δ   467 
 94   2.91%, 12/25/2036 Δ   80 
 618   2.92%, 09/25/2036 Δ   463 
     JP Morgan Chase Commercial Mortgage Securities Corp.     
 1,248   4.67%, 10/15/2045 ■Δ   1,230 
 850   5.31%, 08/15/2046 ■Δ   914 
 266   5.47%, 04/15/2043 Δ   297 
     JP Morgan Mortgage Trust     
 416   2.88%, 04/25/2037 Δ   354 
 1,436   4.13%, 05/25/2036 Δ   1,294 
     Lehman XS Trust     
 438   0.41%, 07/25/2046 Δ   329 
     Merrill Lynch Mortgage Investors Trust     
 456   2.88%, 07/25/2035 Δ   384 
 100   5.05%, 07/12/2038   109 
     Morgan Stanley ABS Capital I     
 1,951   0.26%, 12/25/2036 Δ   1,074 
     Morgan Stanley Capital I     
 99   5.23%, 09/15/2042   107 
     Morgan Stanley Mortgage Loan Trust     
 2,162   0.37%, 05/25/2036 - 11/25/2036 Δ   1,083 
     Option One Mortgage Loan Trust     
 355   0.45%, 03/25/2037 Δ   180 
     Residential Accredit Loans, Inc.     
 524   2.99%, 11/25/2037 Δ   293 
     Residential Asset Securitization Trust     
 588   0.65%, 03/25/2035 Δ   452 
     RFMSI Trust     
 233   3.22%, 04/25/2037 Δ   201 
     SBA Tower Trust     
 1,050   2.93%, 12/15/2017 ■   1,088 
 205   4.25%, 04/15/2015 ■Δ   213 
     Securitized Asset Backed Receivables LLC     
 1,115   0.29%, 07/25/2036 Δ   541 

 

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

 

8

 

Shares or Principal Amount ╬  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 1.5% - (continued)     
     Finance and Insurance - 1.4% - (continued)     
     Sequoia Mortgage Trust     
$433   2.60%, 07/20/2037 Δ  $357 
     Soundview Home Equity Loan Trust, Inc.     
 620   0.35%, 06/25/2037 Δ   376 
     Structured Adjustable Rate Mortgage Loan Trust     
 903   0.50%, 09/25/2034 Δ   792 
     Structured Asset Mortgage Investments Trust     
 249   0.42%, 05/25/2046 Δ   144 
 434   0.48%, 02/25/2036 Δ   340 
     Wells Fargo Commercial Mortgage Trust     
 360   4.78%, 10/15/2045 ■Δ   359 
     Wells Fargo Mortgage Backed Securities Trust     
 398   5.15%, 10/25/2035 Δ   393 
     WF-RBS Commercial Mortgage Trust     
 745   4.46%, 12/15/2045 ■Δ   595 
 1,000   4.80%, 11/15/2045 ■Δ   998 
         42,626 
     Real Estate, Rental and Leasing - 0.1%     
     ARI Fleet Lease Trust     
 3,865   0.50%, 01/15/2021 ■Δ   3,856 
           
     Total asset & commercial mortgage backed securities     
     (cost $42,211)  $46,482 
           
CORPORATE BONDS - 41.0%     
     Accommodation and Food Services - 0.1%     
     Caesars Entertainment Operating Co., Inc.     
$500   8.50%, 02/15/2020  $483 
     Caesars Operating Escrow     
 435   9.00%, 02/15/2020 ■   428 
     Choice Hotels International, Inc.     
 351   5.70%, 08/28/2020   388 
 960   5.75%, 07/01/2022   1,075 
     Harrah's Operating Co., Inc.     
 620   11.25%, 06/01/2017   656 
     Wynn Las Vegas LLC     
 130   5.38%, 03/15/2022   141 
 250   7.75%, 08/15/2020   286 
 260   7.88%, 05/01/2020   296 
         3,753 
     Administrative Waste Management and Remediation - 0.3%     
     Casella Waste Systems, Inc.     
 625   7.75%, 02/15/2019   605 
     Clean Harbors, Inc.     
 120   5.13%, 06/01/2021 ■   126 
 150   5.25%, 08/01/2020   158 
     Equinix, Inc.     
 45   4.88%, 04/01/2020   47 
 260   5.38%, 04/01/2023   272 
 95   7.00%, 07/15/2021   108 
     Iron Mountain, Inc.     
 175   5.75%, 08/15/2024   180 
 785   7.75%, 10/01/2019   887 
 525   8.38%, 08/15/2021   587 
     Republic Services, Inc.     
 2,850   3.55%, 06/01/2022   3,015 
 595   3.80%, 05/15/2018   655 
     Waste Management, Inc.     
 1,800   2.60%, 09/01/2016   1,887 
 250   6.38%, 03/11/2015   275 
 300   7.38%, 05/15/2029   402 
         9,204 
     Agriculture, Forestry, Fishing and Hunting - 0.0%     
     Ainsworth Lumber Ltd.     
 355   7.50%, 12/15/2017 ■   387 
     Weyerhaeuser Co.     
 110   7.38%, 03/15/2032   150 
         537 
     Air Transportation - 0.1%     
     Continental Airlines, Inc.     
 1,760   4.00%, 10/29/2024   1,852 
 18   5.98%, 04/19/2022   20 
 37   6.90%, 04/19/2022   40 
         1,912 
     Arts, Entertainment and Recreation - 2.9%     
     AMC Entertainment, Inc.     
 1,100   8.75%, 06/01/2019   1,212 
 956   9.75%, 12/01/2020   1,111 
     Bresnan Broadband Holdings LLC     
 150   8.00%, 12/15/2018 ■   164 
     BSKYB Finance UK plc     
 350   6.50%, 10/15/2035 ■   445 
     CBS Corp.     
 920   3.38%, 03/01/2022   960 
 150   5.50%, 05/15/2033   163 
 1,000   5.75%, 04/15/2020   1,197 
 1,250   8.88%, 05/15/2019   1,672 
     CCO Holdings LLC     
 1,185   5.25%, 09/30/2022   1,207 
 720   5.75%, 01/15/2024 ☼   750 
 45   6.50%, 04/30/2021   49 
 500   6.63%, 01/31/2022   550 
 309   7.25%, 10/30/2017   335 
 575   7.38%, 06/01/2020   645 
 215   8.13%, 04/30/2020   243 
     Cedar Fair L.P.     
 450   5.25%, 03/15/2021 ■   460 
     Cinemark USA, Inc.     
 90   5.13%, 12/15/2022 ■   93 
     Citycenter Holdings LLC     
 365   7.63%, 01/15/2016   392 

 

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

 

9

 

The Hartford Balanced Income Fund

Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Arts, Entertainment and Recreation - 2.9% - (continued)     
     Comcast Corp.     
$4,975   4.25%, 01/15/2033  $5,260 
 1,000   5.65%, 06/15/2035   1,219 
 900   5.70%, 05/15/2018 - 07/01/2019   1,102 
 1,000   5.90%, 03/15/2016   1,143 
 1,250   6.40%, 05/15/2038   1,671 
 1,980   6.45%, 03/15/2037   2,647 
 1,500   6.95%, 08/15/2037   2,103 
 510   7.05%, 03/15/2033   710 
     DirecTV Holdings LLC     
 2,455   1.75%, 01/15/2018   2,456 
 2,000   3.13%, 02/15/2016   2,107 
 200   3.55%, 03/15/2015   209 
 2,100   3.80%, 03/15/2022   2,206 
 305   4.60%, 02/15/2021   340 
 325   5.00%, 03/01/2021   370 
 146   5.20%, 03/15/2020   170 
 175   6.00%, 08/15/2040   196 
 400   6.38%, 03/01/2041   467 
     Discovery Communications, Inc.     
 665   3.25%, 04/01/2023   692 
 290   3.70%, 06/01/2015   307 
     Emdeon, Inc.     
 791   11.00%, 12/31/2019   923 
     Fidelity National Information Services, Inc.     
 280   5.00%, 03/15/2022   309 
 95   7.63%, 07/15/2017   101 
     Gray Television, Inc.     
 1,125   7.50%, 10/01/2020   1,221 
     Great Canadian Gaming Co.     
CAD  190     6.63%, 07/25/2022 ■   198 
     Greektown Superholdings, Inc.     
 510   13.00%, 07/01/2015   548 
     Grupo Televisa S.A.     
 95   6.63%, 01/15/2040   123 
     Isle of Capri Casinos, Inc.     
 120   7.75%, 03/15/2019   132 
 290   8.88%, 06/15/2020   319 
     NBC Universal Enterprise     
 1,540   1.66%, 04/15/2018 ■   1,558 
 2,745   1.97%, 04/15/2019 ■   2,791 
 600   5.25%, 12/19/2049 ■   606 
     NBC Universal Media LLC     
 1,900   2.88%, 01/15/2023   1,954 
 770   3.65%, 04/30/2015   815 
 1,350   5.95%, 04/01/2041   1,728 
     NCR Corp.     
 430   4.63%, 02/15/2021 ■   430 
     Net Servicos De Comnicacao S.A.     
 323   7.50%, 01/27/2020   363 
     News America Holdings, Inc.     
 75   7.75%, 12/01/2045   107 
 100   8.88%, 04/26/2023   140 
     News America, Inc.     
 4,925   3.00%, 09/15/2022   4,995 
 850   6.15%, 02/15/2041   1,068 
 285   6.40%, 12/15/2035   362 
 2,450   6.90%, 03/01/2019   3,095 
     Regal Cinemas Corp.     
195   8.63%, 07/15/2019  216 
     Regal Entertainment Group     
 138   5.75%, 02/01/2025   139 
 120   9.13%, 08/15/2018   134 
     Sinclair Television Group, Inc.     
 260   9.25%, 11/01/2017 ■   282 
     Sirius XM Radio, Inc.     
 1,040   5.25%, 08/15/2022 ■   1,074 
     Time Warner Cable, Inc.     
 1,290   4.00%, 09/01/2021   1,397 
 1,040   4.50%, 09/15/2042   989 
 2,150   5.88%, 11/15/2040   2,394 
 2,000   6.55%, 05/01/2037   2,414 
 625   6.75%, 06/15/2039   773 
 300   7.30%, 07/01/2038   388 
 970   8.25%, 04/01/2019   1,273 
     Time Warner Entertainment Co., L.P.     
 30   8.38%, 03/15/2023   42 
     Time Warner, Inc.     
 360   3.40%, 06/15/2022   380 
 600   4.00%, 01/15/2022   662 
 2,275   4.88%, 03/15/2020   2,649 
 1,500   5.88%, 11/15/2016   1,747 
 1,985   6.10%, 07/15/2040   2,436 
 350   6.25%, 03/29/2041   436 
 75   6.63%, 05/15/2029   96 
 1,010   7.63%, 04/15/2031   1,427 
     Univision Communications, Inc.     
 1,060   6.75%, 09/15/2022 ■   1,177 
     Viacom, Inc.     
 305   1.25%, 02/27/2015   307 
 2,450   4.25%, 09/15/2015   2,638 
 470   4.38%, 09/15/2014   493 
 2,129   4.38%, 03/15/2043 ■   2,028 
 500   4.50%, 03/01/2021   560 
 340   6.13%, 10/05/2017   405 
     Videotron Ltee     
 245   5.00%, 07/15/2022   252 
     Virgin Media Finance plc     
 220   5.25%, 02/15/2022   224 
     Virgin Media Secured Finance plc     
 500   5.25%, 01/15/2021   539 
 100   6.50%, 01/15/2018   106 
         90,986 
     Beverage and Tobacco Product Manufacturing - 1.1%     
     Altria Group, Inc.     
 3,800   2.85%, 08/09/2022   3,792 
 550   8.50%, 11/10/2013   573 
 115   9.25%, 08/06/2019   161 
 451   9.70%, 11/10/2018   632 
 185   10.20%, 02/06/2039   315 
     Anheuser-Busch InBev Worldwide, Inc.     
 3,570   1.38%, 07/15/2017   3,618 
 3,815   5.38%, 11/15/2014 - 01/15/2020   4,558 
 100   8.00%, 11/15/2039   161 
 500   8.20%, 01/15/2039   826 

 

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

 

10

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Beverage and Tobacco Product Manufacturing - 1.1% - (continued)     
     Constellation Brands, Inc.     
$190   4.25%, 05/01/2023 ☼  $190 
 585   6.00%, 05/01/2022   675 
     Diageo Capital plc     
 1,850   1.13%, 04/29/2018   1,843 
 180   5.75%, 10/23/2017   215 
     International CCE, Inc.     
 500   3.50%, 09/15/2020   534 
     Lorillard Tobacco Co.     
 1,210   8.13%, 06/23/2019   1,549 
     Molson Coors Brewing Co.     
 476   2.00%, 05/01/2017   490 
 110   3.50%, 05/01/2022   116 
 3,310   5.00%, 05/01/2042   3,662 
     PepsiCo, Inc.     
 750   7.90%, 11/01/2018   999 
     Pernod-Ricard S.A.     
 190   4.45%, 01/15/2022 ■   212 
 500   5.50%, 01/15/2042 ■   580 
 2,290   5.75%, 04/07/2021 ■   2,754 
     Philip Morris International, Inc.     
 1,400   1.13%, 08/21/2017   1,400 
 2,100   2.63%, 03/06/2023   2,109 
 400   5.65%, 05/16/2018   482 
 400   6.38%, 05/16/2038   534 
     Reynolds American, Inc.     
 1,345   3.25%, 11/01/2022   1,354 
 685   7.63%, 06/01/2016   814 
 100   7.75%, 06/01/2018   127 
         35,275 
     Chemical Manufacturing - 0.5%     
     Agrium, Inc.     
 1,650   3.15%, 10/01/2022   1,657 
 200   6.75%, 01/15/2019   245 
     Celanese U.S. Holdings LLC     
 50   6.63%, 10/15/2018   55 
     CF Industries Holdings, Inc.     
 195   6.88%, 05/01/2018   234 
 35   7.13%, 05/01/2020   44 
     Dow Chemical Co.     
 2,850   4.25%, 11/15/2020   3,165 
 100   5.90%, 02/15/2015   109 
     E.I. DuPont de Nemours & Co.     
 3,650   2.80%, 02/15/2023   3,749 
     Ecolab, Inc.     
 500   1.45%, 12/08/2017   498 
 1,285   3.00%, 12/08/2016   1,366 
     EuroChem Mineral & Chemical Co.     
 330   5.13%, 12/12/2017 ■   338 
     Ferro Corp.     
 680   7.88%, 08/15/2018   716 
     Hexion Specialty Chemicals     
 245   8.88%, 02/01/2018   260 
     Hexion U.S. Finance Corp.     
 215   6.63%, 04/15/2020   224 
 225   9.00%, 11/15/2020   234 
     Ineos Group Holdings plc     
 1,450   8.50%, 02/15/2016 ■   1,474 
     MPM Escrow LLC/MPM Finance Corp.     
 370   8.88%, 10/15/2020    403 
     PTT Global Chemical PCL     
 200   4.25%, 09/19/2022 ■   213 
     Sinopec Group Overseas Development 2012 Ltd.     
 245   3.90%, 05/17/2022 ■   263 
         15,247 
     Computer and Electronic Product Manufacturing - 0.6%     
     Apple, Inc.     
 1,770   2.40%, 05/03/2023   1,768 
 685   3.85%, 05/04/2043   681 
     CDW Escrow Corp.     
 1,722   8.50%, 04/01/2019   1,931 
     eAccess Ltd.     
 75   8.25%, 04/01/2018 ■   84 
     Esterline Technologies Corp.     
 265   7.00%, 08/01/2020   293 
     Freescale Semiconductor, Inc.     
 190   8.05%, 02/01/2020   205 
 1,065   9.25%, 04/15/2018 ■   1,171 
 44   10.75%, 08/01/2020   50 
     Hewlett-Packard Co.     
 2,000   2.60%, 09/15/2017   2,035 
 2,380   2.65%, 06/01/2016   2,440 
 365   3.75%, 12/01/2020   364 
 635   4.30%, 06/01/2021   642 
 1,475   4.65%, 12/09/2021   1,526 
 1,015   4.75%, 06/02/2014   1,056 
     Jabil Circuit, Inc.     
 380   5.63%, 12/15/2020   408 
     Micron Technology, Inc.     
 301   1.63%, 02/15/2033۞■   341 
 237   2.13%, 02/15/2033۞■   264 
     ON Semiconductor Corp.     
 271   2.63%, 12/15/2026۞   308 
     Raytheon Co.     
 1,250   4.88%, 10/15/2040   1,431 
     Seagate HDD Cayman     
 350   6.88%, 05/01/2020   380 
 51   7.00%, 11/01/2021   56 
     Sensata Technologies B.V.     
 285   4.88%, 10/15/2023 ■   291 
     Siemens Financieringsmaatschappij N.V.     
 1,300   6.13%, 08/17/2026 ■   1,727 
         19,452 
     Construction - 0.1%     
     Aguila 3 S.A.     
 165   7.88%, 01/31/2018 ■   178 
     American Builders & Contractors Supply Co., Inc.     
 190   5.63%, 04/15/2021 ■   197 
     Empresas ICA, S.A.B. de C.V.     
 250   8.90%, 02/04/2021 §   243 
     K Hovnanian Enterprises, Inc.     
 885   9.13%, 11/15/2020 ■   1,004 
     KB Home     
 492   1.38%, 02/01/2019۞   570 
 365   7.50%, 09/15/2022   416 
 411   8.00%, 03/15/2020   484 

 

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

 

11

 

The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Construction - 0.1% - (continued)     
     Lennar Corp.     
$725   4.75%, 12/15/2017  $768 
 455   4.75%, 11/15/2022 ■   458 
 95   5.60%, 05/31/2015   102 
     Pulte Homes, Inc.     
 130   6.38%, 05/15/2033   132 
     Ryland Group, Inc.     
 150   5.38%, 10/01/2022   156 
         4,708 
     Couriers and Messengers - 0.0%     
     United Parcel Service, Inc.     
 1,540   2.45%, 10/01/2022   1,550 
           
     Electrical Equipment and Appliance Manufacturing - 0.1%     
     General Electric Co.     
 2,550   0.85%, 10/09/2015   2,565 
 1,000   2.70%, 10/09/2022   1,030 
 795   4.13%, 10/09/2042   841 
         4,436 
     Fabricated Metal Product Manufacturing - 0.0%     
     Anixter International, Inc.     
 145   5.63%, 05/01/2019   155 
     Ball Corp.     
 135   5.00%, 03/15/2022   143 
 240   5.75%, 05/15/2021   262 
     Crown Americas, Inc.     
 55   6.25%, 02/01/2021   61 
     Ply Gem Industries, Inc.     
 310   9.38%, 04/15/2017   342 
         963 
     Finance and Insurance - 17.4%     
     Abbey National Treasury Services plc     
 200   3.88%, 11/10/2014 ■   208 
     ABN Amro Bank N.V.     
 1,000   4.25%, 02/02/2017 ■   1,099 
     ACE Capital Trust II     
 90   9.70%, 04/01/2030   132 
     Ace INA Holdings, Inc.     
 3,700   2.70%, 03/13/2023   3,766 
     Akbank T.A.S.     
 185   3.88%, 10/24/2017 ■   192 
 150   5.00%, 10/24/2022 ■   160 
     Allied World Assurance Co., Ltd.     
 20   7.50%, 08/01/2016   24 
     Allstate (The) Corp.     
 500   5.55%, 05/09/2035   621 
 1,010   7.45%, 05/16/2019   1,333 
     Ally Financial, Inc.     
 650   6.75%, 12/01/2014   698 
 125   7.50%, 09/15/2020   154 
 590   8.00%, 03/15/2020   742 
     American Express Co.     
 1,700   1.75%, 06/12/2015   1,738 
 5,127   2.65%, 12/02/2022   5,138 
 1,700   7.00%, 03/19/2018   2,132 
 250   7.25%, 05/20/2014   267 
     American Express Credit Corp.     
325   2.75%, 09/15/2015  341 
 1,750   2.80%, 09/19/2016   1,856 
     American Honda Finance Corp.     
 2,730   1.60%, 02/16/2018 ■   2,762 
     American International Group, Inc.     
 360   3.65%, 01/15/2014   368 
 605   3.80%, 03/22/2017   656 
 950   4.88%, 09/15/2016 - 06/01/2022   1,085 
 100   5.05%, 10/01/2015   109 
 375   5.45%, 05/18/2017   429 
 1,300   5.85%, 01/16/2018   1,525 
 3,050   6.40%, 12/15/2020   3,816 
 2,125   8.18%, 05/15/2058   2,874 
 525   8.25%, 08/15/2018   681 
     AmeriGas Finance LLC     
 240   6.75%, 05/20/2020   266 
     Ameriprise Financial, Inc.     
 1,265   5.30%, 03/15/2020   1,521 
 370   5.65%, 11/15/2015   415 
     Aon Corp.     
 656   3.13%, 05/27/2016   695 
 275   5.00%, 09/30/2020   322 
     Ausdrill Finance Pty. Ltd.     
 770   6.88%, 11/01/2019 ■   778 
     Banco Davivienda S.A.     
 335   2.95%, 01/29/2018 ■   330 
     Banco de Credito del Peru/Panama     
 30   5.38%, 09/16/2020 §   33 
 71   6.88%, 09/16/2026 ■   81 
     Banco do Brasil     
 225   3.88%, 10/10/2022   223 
 800   6.25%, 04/15/2024 ■♠   799 
     Banco Santander S.A.     
 195   4.13%, 11/09/2022 ■   196 
     Bancolombia S.A.     
 1,016   5.13%, 09/11/2022   1,038 
 125   6.13%, 07/26/2020   137 
     Bank of America Corp.     
 500   1.50%, 10/09/2015   503 
 2,700   3.88%, 03/22/2017   2,913 
 1,500   4.90%, 05/01/2013   1,500 
 5,425   5.63%, 07/01/2020   6,438 
 915   5.65%, 05/01/2018   1,062 
 2,115   5.70%, 01/24/2022   2,521 
 2,040   5.75%, 12/01/2017   2,371 
 3,665   5.88%, 01/05/2021 - 02/07/2042   4,459 
 2,960   6.00%, 09/01/2017   3,442 
 3,645   7.63%, 06/01/2019   4,667 
     Bank of India London     
 400   3.63%, 09/21/2018 ■   404 
     Barclays Bank plc     
 146   5.14%, 10/14/2020   157 
 6,530   6.05%, 12/04/2017 ■   7,393 
     BB&T Corp.     
 200   4.90%, 06/30/2017   226 
     BBVA Banco Continental S.A.     
 475   3.25%, 04/08/2018 ■   476 

 

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

 

12

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued) 
     Finance and Insurance - 17.4% - (continued)     
     Bear Stearns & Co., Inc.     
$1,750   5.30%, 10/30/2015  $1,931 
 1,000   5.70%, 11/15/2014   1,075 
 1,210   7.25%, 02/01/2018   1,507 
     Berkshire Hathaway, Inc.     
 3,400   1.55%, 02/09/2018   3,458 
     BM&F Bovespa S.A.     
 385   5.50%, 07/16/2020 §   430 
     BNP Paribas     
 8,430   2.38%, 09/14/2017   8,646 
 1,050   3.25%, 03/03/2023   1,058 
     Boston Properties L.P.     
 435   3.70%, 11/15/2018   480 
     BP Capital Markets plc     
 2,250   1.38%, 11/06/2017   2,272 
 1,675   2.25%, 11/01/2016   1,745 
 375   3.13%, 10/01/2015   397 
 3,800   3.25%, 05/06/2022   4,010 
     Branch Banking & Trust Co.     
 250   5.63%, 09/15/2016   284 
     Brandywine Operating Partnership L.P.     
 3,325   3.95%, 02/15/2023   3,419 
 1,100   4.95%, 04/15/2018   1,226 
 215   5.70%, 05/01/2017   244 
 150   7.50%, 05/15/2015   168 
     Brazil Minas SPE via State of Minas Gerais     
 1,775   5.33%, 02/15/2028 ■   2,009 
     Capital One Bank     
 1,596   3.38%, 02/15/2023   1,624 
     Capital One Financial Corp.     
 2,800   1.00%, 11/06/2015   2,792 
 1,006   2.15%, 03/23/2015   1,027 
 500   4.75%, 07/15/2021   574 
 1,075   6.15%, 09/01/2016   1,233 
 125   6.75%, 09/15/2017   151 
 325   7.38%, 05/23/2014   348 
     Capital One National Association     
 3,490   1.50%, 03/22/2018   3,479 
     Caterpillar Financial Services Corp.     
 1,710   1.63%, 06/01/2017   1,747 
 2,100   2.05%, 08/01/2016   2,183 
     Cigna Corp.     
 1,700   4.00%, 02/15/2022   1,875 
 800   5.38%, 02/15/2042   942 
 900   5.88%, 03/15/2041   1,112 
     CIT Group, Inc.     
 335   5.00%, 05/15/2017   365 
 686   5.25%, 03/15/2018   758 
 545   5.38%, 05/15/2020   614 
 180   5.50%, 02/15/2019 ■   203 
 70   6.63%, 04/01/2018 ■   82 
     Citigroup, Inc.     
3,155   1.25%, 01/15/2016  3,164 
 5,675   1.75%, 05/01/2018 ☼   5,676 
 1,250   2.65%, 03/02/2015   1,287 
 2,890   4.05%, 07/30/2022   3,004 
 445   4.59%, 12/15/2015   485 
 590   4.75%, 05/19/2015   634 
 800   5.38%, 08/09/2020   954 
 845   5.85%, 07/02/2013   852 
 1,485   6.00%, 10/31/2033   1,678 
 7,750   6.13%, 05/15/2018 - 08/25/2036   9,178 
 3,035   6.38%, 08/12/2014   3,245 
 300   6.50%, 08/19/2013   305 
 1,250   6.63%, 06/15/2032   1,506 
 2,115   6.88%, 03/05/2038   2,884 
 1,285   8.50%, 05/22/2019   1,729 
     CNH Capital LLC     
 245   3.88%, 11/01/2015   254 
 1,070   6.25%, 11/01/2016   1,185 
     Community Choice Financial, Inc.     
 535   10.75%, 05/01/2019   520 
     Consorcio De Alimentos     
 240   3.88%, 03/20/2023 ■   241 
     Credit Acceptance Corp.     
 710   9.13%, 02/01/2017   774 
     Credit Suisse New York     
 1,000   3.50%, 03/23/2015   1,053 
 1,500   5.40%, 01/14/2020   1,718 
     DBS Bank Ltd.     
 475   3.63%, 09/21/2022 §   497 
     Development Bank of Kazakhstan JSC     
 345   4.13%, 12/10/2022 ■   340 
 1,020   4.13%, 12/10/2022 §☼   1,005 
     Discover Financial Services, Inc.     
 960   5.20%, 04/27/2022   1,100 
     El Fondo Mivivienda S.A.     
 285   3.50%, 01/31/2023 ■   283 
     Equity One, Inc.     
 65   6.00%, 09/15/2017   75 
     ERP Operating L.P.     
 300   5.13%, 03/15/2016   334 
     Everest Reinsurance Holdings, Inc.     
 70   5.40%, 10/15/2014   73 
     Federal Realty Investment Trust     
 55   5.95%, 08/15/2014   59 
     Felcor Escrow Holdings     
 340   6.75%, 06/01/2019   371 
     Felcor Lodging L.P.     
 495   5.63%, 03/01/2023 ■   513 
     Fibria Overseas Finance Ltd.     
 250   6.75%, 03/03/2021 §   279 
 365   7.50%, 05/04/2020 ■   415 
     Fifth Third Bancorp     
 356   3.63%, 01/25/2016   381 
 2,225   5.45%, 01/15/2017   2,507 
 1,300   8.25%, 03/01/2038   1,863 
     FMR LLC     
 4,075   4.95%, 02/01/2033 ■   4,306 

 

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

 

13

 

The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Finance and Insurance - 17.4% - (continued)     
     Ford Motor Credit Co. LLC     
$2,575   2.38%, 01/16/2018  $2,586 
 2,100   2.75%, 05/15/2015   2,152 
 680   3.00%, 06/12/2017   705 
 5,100   3.88%, 01/15/2015   5,307 
 675   4.21%, 04/15/2016   721 
 2,220   4.25%, 02/03/2017 - 09/20/2022   2,362 
 240   5.00%, 05/15/2018   268 
 145   6.63%, 08/15/2017   170 
 195   8.00%, 12/15/2016   235 
 200   8.13%, 01/15/2020   257 
     General Electric Capital Corp.     
 3,375   1.00%, 01/08/2016   3,392 
 3,925   1.63%, 07/02/2015 - 04/02/2018   3,973 
 5,750   2.30%, 04/27/2017   5,982 
 1,600   2.95%, 05/09/2016   1,691 
 725   3.50%, 06/29/2015   766 
 1,625   4.65%, 10/17/2021   1,857 
 55   5.50%, 01/08/2020   66 
 725   5.55%, 05/04/2020   875 
 4,075   5.63%, 05/01/2018   4,847 
 2,995   5.88%, 01/14/2038   3,629 
 90   6.15%, 08/07/2037   112 
 1,000   6.25%, 12/15/2022 ♠   1,106 
 4,530   6.75%, 03/15/2032   5,925 
     Globo Communicacao e Participacoes S.A.     
 265   5.31%, 05/11/2022 ■   290 
 320   6.25%, 07/20/2015 §♠   342 
     Goldman Sachs Group, Inc.     
 3,600   3.30%, 05/03/2015   3,756 
 1,000   4.75%, 07/15/2013   1,009 
 1,820   5.25%, 07/27/2021   2,110 
 4,200   5.38%, 03/15/2020   4,900 
 2,525   5.63%, 01/15/2017   2,827 
 4,740   5.75%, 01/24/2022   5,659 
 75   5.95%, 01/15/2027   84 
 1,000   6.00%, 05/01/2014   1,052 
 2,550   6.15%, 04/01/2018   3,013 
 665   6.25%, 02/01/2041   830 
 200   6.35%, 02/15/2034   210 
 2,470   6.45%, 05/01/2036   2,729 
 5,825   6.75%, 10/01/2037   6,683 
 701   7.50%, 02/15/2019   884 
     Grupo Aval Ltd.     
 300   4.75%, 09/26/2022 ■   302 
 200   4.75%, 09/26/2022 §   202 
     Guardian Life Insurance Co.     
 250   7.38%, 09/30/2039 ■   348 
     Halyk Savings Bank of Kazakhstan JSC     
 380   9.25%, 10/16/2013 §   390 
     Harley-Davidson Financial Services, Inc.     
 2,185   1.15%, 09/15/2015 ■   2,194 
     HCP, Inc.     
 1,700   2.63%, 02/01/2020   1,726 
 540   3.75%, 02/01/2019   586 
 330   6.00%, 01/30/2017   383 
 1,000   6.70%, 01/30/2018   1,219 
 1,125   6.75%, 02/01/2041   1,521 
     Health Care, Inc. REIT     
525   2.25%, 03/15/2018  536 
 3,195   4.13%, 04/01/2019   3,500 
 266   5.25%, 01/15/2022   309 
     Host Hotels & Resorts L.P.     
 190   6.00%, 11/01/2020   213 
     Host Marriott L.P.     
 49   6.75%, 06/01/2016   50 
     HSBC Bank plc     
 330   3.50%, 06/28/2015 ■   349 
     HSBC Bank USA     
 3,240   2.38%, 02/13/2015   3,338 
 250   6.00%, 08/09/2017   293 
     HSBC Holdings plc     
 1,665   5.10%, 04/05/2021   1,975 
 1,000   6.50%, 09/15/2037   1,266 
 2,100   6.80%, 06/01/2038   2,779 
     HSBC USA, Inc.     
 1,295   1.63%, 01/16/2018   1,304 
 175   5.00%, 09/27/2020   198 
     Imerial Tobacco Finance plc     
 5,525   2.05%, 02/11/2018 ■   5,601 
     Ineos Finance plc     
 190   7.50%, 05/01/2020 ■   212 
     ING US, Inc.     
 545   5.50%, 07/15/2022 ■   620 
     Itau Unibanco Holding S.A.     
 530   5.50%, 08/06/2022 §   563 
     John Deere Capital Corp.     
 2,900   0.70%, 09/04/2015   2,909 
 1,835   3.15%, 10/15/2021   1,965 
 395   3.90%, 07/12/2021   445 
     JP Morgan Chase & Co.     
 2,220   1.10%, 10/15/2015   2,229 
 2,270   3.25%, 09/23/2022   2,325 
 1,565   3.38%, 05/01/2023 ☼   1,561 
 265   4.25%, 10/15/2020   297 
 5,300   4.35%, 08/15/2021   5,951 
 500   4.40%, 07/22/2020   566 
 2,220   4.63%, 05/10/2021   2,527 
 4,070   5.13%, 09/15/2014   4,312 
 1,025   5.40%, 01/06/2042   1,236 
 11,081   6.00%, 07/05/2017 - 01/15/2018   13,172 
 930   6.30%, 04/23/2019   1,145 
 1,000   6.40%, 05/15/2038   1,320 
     Key Bank NA     
 250   5.45%, 03/03/2016   280 
     Kimco Realty Corp.     
 1,380   4.30%, 02/01/2018   1,544 
 20   5.58%, 11/23/2015   22 
     Ladder Capital Finance Holdings LLC     
 1,291   7.38%, 10/01/2017 ■   1,341 
     Liberty Property L.P.     
 635   3.38%, 06/15/2023   641 
 520   4.13%, 06/15/2022   558 
 115   4.75%, 10/01/2020   128 
 350   5.50%, 12/15/2016   396 
           
           

 

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

 

14

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Finance and Insurance - 17.4% - (continued)     
     Lincoln National Corp.     
$1,035   6.15%, 04/07/2036  $1,277 
 450   7.00%, 06/15/2040   620 
 2,000   8.75%, 07/01/2019   2,725 
     Lloyds Banking Group plc     
 165   6.50%, 09/14/2020 ■   188 
 944   7.88%, 11/01/2020 ■   1,031 
     Majapahit Holding B.V.     
 100   7.75%, 01/20/2020 §   125 
     Marsh & McLennan Cos., Inc.     
 3,825   2.30%, 04/01/2017   3,931 
 565   4.80%, 07/15/2021   653 
     Massachusetts Mutual Life Insurance Co.     
 500   8.88%, 06/01/2039 ■   812 
     Massmutual Global Funding     
 630   3.13%, 04/14/2016 ■   671 
     Merrill Lynch & Co., Inc.     
 2,496   5.70%, 05/02/2017   2,782 
 320   6.40%, 08/28/2017   377 
 4,515   6.88%, 04/25/2018   5,489 
 6,830   7.75%, 05/14/2038   9,250 
     MetLife Global Funding I     
 300   2.50%, 09/29/2015 ■   312 
 500   3.13%, 01/11/2016 ■   529 
     MetLife Institutional Funding II     
 2,500   1.63%, 04/02/2015 ■   2,543 
     MetLife, Inc.     
 965   1.76%, 12/15/2017   987 
 275   6.38%, 06/15/2034   360 
 50   7.72%, 02/15/2019   66 
     Morgan Stanley     
 5,030   1.75%, 02/25/2016   5,066 
 2,700   2.13%, 04/25/2018   2,706 
 3,095   4.88%, 11/01/2022   3,336 
 3,900   5.45%, 01/09/2017   4,385 
 675   5.50%, 07/28/2021   792 
 2,371   5.55%, 04/27/2017   2,676 
 1,890   5.63%, 09/23/2019   2,202 
 1,726   5.75%, 01/25/2021   2,054 
 785   6.00%, 04/28/2015   856 
 1,265   6.38%, 07/24/2042   1,604 
 2,460   6.63%, 04/01/2018   2,949 
 2,600   7.30%, 05/13/2019   3,257 
     National City Corp.     
 585   6.88%, 05/15/2019   728 
     National Money Mart Co.     
 830   10.38%, 12/15/2016   893 
     Nationstar Mortgage LLC     
 35   6.50%, 07/01/2021 ■   37 
 675   7.88%, 10/01/2020 ■   756 
     Nationwide Mutual Insurance Co.     
 1,800   9.38%, 08/15/2039 ■   2,711 
     New York Life Global Funding     
 800   2.45%, 07/14/2016 ■   840 
 200   3.00%, 05/04/2015 ■   210 
     Nordea Bank AB     
 760   4.88%, 05/13/2021 ■   837 
     Nuveen Investments, Inc.     
 890   9.13%, 10/15/2017 ■   950 
 616   9.50%, 10/15/2020 ■   664 
     Oversea-Chinese Banking Corp., Ltd.     
400   3.75%, 11/15/2022  424 
     Pacific Life Insurance Co.     
 575   9.25%, 06/15/2039 ■   861 
     PKO Finance AB     
 375   4.63%, 09/26/2022 ■   397 
 200   4.63%, 09/26/2022 §   212 
     PNC Bank NA     
 1,690   2.70%, 11/01/2022   1,674 
     PNC Financial Services Group, Inc.     
 1,240   2.85%, 11/09/2022 Δ   1,247 
     PNC Funding Corp.     
 3,000   5.25%, 11/15/2015   3,318 
 190   5.63%, 02/01/2017   218 
     Pricoa Global Funding I     
 400   5.45%, 06/11/2014 ■   422 
     Principal Financial Group, Inc.     
 620   3.30%, 09/15/2022   647 
 40   8.88%, 05/15/2019   54 
     Principal Life Global Funding II     
 1,640   1.00%, 12/11/2015 ■   1,646 
     Provident Funding Associates L.P.     
 705   10.25%, 04/15/2017 ■   788 
     Prudential Financial, Inc.     
 1,660   5.80%, 11/16/2041   2,020 
 170   6.10%, 06/15/2017   200 
 265   6.20%, 01/15/2015   288 
 5,320   7.38%, 06/15/2019   6,856 
     Rabobank Netherlands     
 925   3.95%, 11/09/2022   954 
     Realty Income Corp.     
 2,676   3.25%, 10/15/2022   2,696 
 1,085   6.75%, 08/15/2019   1,348 
     Royal Bank of Canada     
 3,000   0.80%, 10/30/2015   3,012 
     Royal Bank of Scotland plc     
 3,720   2.55%, 09/18/2015   3,832 
 710   3.95%, 09/21/2015   755 
 100   5.63%, 08/24/2020   118 
 1,640   6.13%, 01/11/2021 - 12/15/2022   1,815 
     Russian Agricultural Bank OJSC     
 640   5.30%, 12/27/2017 §   684 
     Santander Holdings USA, Inc.     
 730   3.00%, 09/24/2015   755 
     Sasol Financing International plc     
 455   4.50%, 11/14/2022   467 
     SB Capital S.A.     
 1,085   5.72%, 06/16/2021 §   1,201 
     Simon Property Group L.P.     
 120   4.38%, 03/01/2021   137 
     Simon Property Group, Inc.     
 3,120   1.50%, 02/01/2018 ■   3,131 
     SLM Corp.     
 1,550   3.88%, 09/10/2015   1,609 
 1,950   4.63%, 09/25/2017   2,028 
 200   5.63%, 08/01/2033   190 
 915   6.25%, 01/25/2016   995 
 640   7.25%, 01/25/2022   712 
 181   8.00%, 03/25/2020   209 
 395   8.45%, 06/15/2018   464 

 

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

 

15

 

The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Finance and Insurance - 17.4% - (continued)     
     Softbank Corp.     
$850   4.50%, 04/15/2020 ■  $881 
     Sompo Japan Insurance Inc.     
 3,790   5.33%, 03/28/2073 ■   3,937 
     Standard Bank plc     
 100   8.13%, 12/02/2019   118 
     Standard Chartered plc     
 3,300   3.95%, 01/11/2023 ■   3,371 
     State Street Capital Trust IV     
 100   1.28%, 06/15/2037 Δ   84 
     SunTrust Banks, Inc.     
 991   3.50%, 01/20/2017   1,064 
 410   3.60%, 04/15/2016   439 
     Swiss Re Treasury U.S. Corp.     
 460   2.88%, 12/06/2022 ■   465 
     Teachers Insurance & Annuity Association of America     
 2,000   6.85%, 12/16/2039 ■   2,767 
     TitleMax, Inc.     
 345   13.25%, 07/15/2015   376 
     TMX Finance LLC     
 65   13.25%, 07/15/2015   71 
     TSMC Global LTD     
 1,910   0.95%, 04/03/2016 ■   1,912 
     Turkiye Garanti Bankasi A.S.     
 285   4.00%, 09/13/2017 ■   299 
     Turkiye Halk Bankasi A.S.     
 415   3.88%, 02/05/2020 ■   417 
     Turkiye Is Bankasi A.S.     
 215   6.00%, 10/24/2022 ■   235 
     U.S. Bancorp     
 2,100   1.65%, 05/15/2017   2,151 
 961   2.95%, 07/15/2022   971 
     UBS AG Stamford CT     
 1,235   2.25%, 01/28/2014   1,251 
 537   4.88%, 08/04/2020   628 
 2,850   5.88%, 07/15/2016   3,200 
 1,510   7.63%, 08/17/2022   1,751 
     UDR, Inc.     
 125   4.25%, 06/01/2018   139 
     United Dominion Realty Trust, Inc.     
 55   6.05%, 06/01/2013   55 
     UnitedHealth Group, Inc.     
 555   1.40%, 10/15/2017   560 
 3,000   2.88%, 03/15/2023   3,046 
 530   6.00%, 02/15/2018   643 
 100   6.63%, 11/15/2037   135 
 1,981   6.88%, 02/15/2038   2,753 
     Ventas Realty L.P.     
 1,240   2.70%, 04/01/2020   1,260 
 200   3.13%, 11/30/2015   211 
 3,975   3.25%, 08/15/2022   4,052 
 325   4.25%, 03/01/2022   355 
 316   4.75%, 06/01/2021   356 
     VTB Bank OJSC Via VTB Capital S.A.     
 775   6.55%, 10/13/2020 §   865 
     VTB Capital S.A.     
 390   6.88%, 05/29/2018 §   437 
     Wachovia Bank NA     
1,250   4.80%, 11/01/2014  1,328 
 1,750   5.00%, 08/15/2015   1,911 
 1,000   5.85%, 02/01/2037   1,246 
 2,275   6.60%, 01/15/2038   3,091 
     Wachovia Capital Trust III     
 325   5.57%, 06/28/2013 ♠Δ   327 
     Wachovia Corp.     
 755   4.88%, 02/15/2014   781 
 300   5.50%, 08/01/2035   346 
 670   5.63%, 10/15/2016   768 
 50   5.75%, 06/15/2017   59 
     Wellpoint, Inc.     
 1,015   1.25%, 09/10/2015   1,024 
 1,365   3.13%, 05/15/2022   1,394 
 1,525   4.63%, 05/15/2042   1,619 
 1,000   5.85%, 01/15/2036   1,216 
 2,330   6.38%, 06/15/2037   2,968 
 60   7.00%, 02/15/2019   76 
     Wells Fargo & Co.     
 3,710   1.50%, 07/01/2015 - 01/16/2018   3,751 
 2,865   3.45%, 02/13/2023   2,923 
 615   3.50%, 03/08/2022   660 
 1,375   3.68%, 06/15/2016   1,486 
 750   5.63%, 12/11/2017   889 
 500   5.75%, 05/16/2016   569 
     XL Capital Ltd.     
 50   5.25%, 09/15/2014   53 
     Xstrata Finance Canada Corp.     
 800   3.60%, 01/15/2017 ■   845 
     Xstrata Finance Canada Ltd.     
 4,200   2.45%, 10/25/2017 ■   4,272 
         555,154 
     Food Manufacturing - 0.6%     
     Archer-Daniels-Midland Co.     
 750   4.48%, 03/01/2021   864 
     Cargill, Inc.     
 2,925   4.10%, 11/01/2042 ■   2,949 
 517   4.31%, 05/14/2021 ■   582 
 1,000   6.00%, 11/27/2017 ■   1,207 
     ConAgra Foods, Inc.     
 875   1.90%, 01/25/2018   891 
 735   2.10%, 03/15/2018   751 
 620   3.25%, 09/15/2022   636 
     General Mills, Inc.     
 462   5.65%, 02/15/2019   559 
     Kellogg Co.     
 550   7.45%, 04/01/2031   767 
     Kraft Foods Group, Inc.     
 1,450   3.50%, 06/06/2022   1,546 
 770   5.00%, 06/04/2042   872 
 1,900   5.38%, 02/10/2020   2,273 
 500   6.50%, 02/09/2040   676 
 1,075   6.75%, 02/19/2014   1,126 
 1,000   6.88%, 02/01/2038   1,384 
     Mondelez International, Inc.     
 375   4.13%, 02/09/2016   408 

 

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

 

16

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Food Manufacturing - 0.6% - (continued)     
     Pinnacle Foods Finance LLC     
$1,065   4.88%, 05/01/2021 ■  $1,096 
         18,587 
     Food Services - 0.1%     
     ARAMARK Corp.     
 1,220   5.75%, 03/15/2020 ■   1,278 
     McDonald's Corp.     
 355   3.70%, 02/15/2042   355 
 600   5.30%, 03/15/2017   697 
 400   6.30%, 10/15/2037   559 
         2,889 
     Furniture and Related Product Manufacturing - 0.1%     
     Masco Corp.     
 155   6.13%, 10/03/2016   175 
 25   6.50%, 08/15/2032   26 
 310   7.13%, 03/15/2020   361 
 160   7.75%, 08/01/2029   184 
     Newell Rubbermaid, Inc.     
 1,565   2.05%, 12/01/2017   1,580 
     Tempur-Pedic International, Inc.     
 80   6.88%, 12/15/2020 ■   87 
         2,413 
     Gas Utilities - 0.1%     
     EQT Corp.     
 1,680   8.13%, 06/01/2019   2,099 
           
     Health Care and Social Assistance - 2.3%     
     AbbVie, Inc.     
 1,940   1.75%, 11/06/2017 ■   1,969 
 2,240   2.00%, 11/06/2018 ■   2,278 
 3,585   2.90%, 11/06/2022 ■   3,658 
     Alere, Inc.     
 730   9.00%, 05/15/2016   766 
     Amgen, Inc.     
 1,500   2.13%, 05/15/2017   1,553 
 700   4.10%, 06/15/2021   786 
 4,340   5.15%, 11/15/2041   4,975 
 500   5.85%, 06/01/2017   591 
 425   6.40%, 02/01/2039   553 
 1,475   6.90%, 06/01/2038   2,014 
     AstraZeneca plc     
 1,540   1.95%, 09/18/2019   1,570 
 200   5.90%, 09/15/2017   241 
 1,000   6.45%, 09/15/2037   1,342 
     Baxter International, Inc.     
 1,845   2.40%, 08/15/2022   1,834 
     Biomet, Inc.     
 1,005   6.50%, 08/01/2020 - 10/01/2020 ■   1,061 
     BioScrip, Inc.     
 170   10.25%, 10/01/2015   180 
     Cardinal Health, Inc.     
 250   4.00%, 06/15/2015   266 
     Catholic Health Initiatives     
 435   2.95%, 11/01/2022   443 
     Community Health Systems, Inc.     
 345   5.13%, 08/15/2018   369 
 500   7.13%, 07/15/2020   559 
     CVS Caremark Corp.     
 1,730   2.75%, 12/01/2022   1,744 
 1,115   3.25%, 05/18/2015   1,171 
 1,694   5.75%, 06/01/2017 - 05/15/2041   2,057 
 1,325   6.13%, 09/15/2039   1,684 
 150   6.25%, 06/01/2027   195 
 35   6.94%, 01/10/2030   44 
     CVS Pass-Through Trust     
 17   6.04%, 12/10/2028   20 
     DaVita, Inc.     
 385   6.63%, 11/01/2020   422 
     Exelixis, Inc.     
 345   4.25%, 08/15/2019۞   359 
     Express Scripts, Inc.     
 5,000   2.10%, 02/12/2015   5,106 
 195   3.13%, 05/15/2016   207 
     Fresenius Medical Care U.S. Finance II, Inc.     
 115   5.63%, 07/31/2019 ■   128 
 96   5.88%, 01/31/2022 ■   110 
     Fresenius Medical Care US Finance II, Inc.     
 30   6.50%, 09/15/2018 ■   35 
     Gilead Sciences, Inc.     
 3,700   4.40%, 12/01/2021   4,245 
     GlaxoSmithKline Capital, Inc.     
 1,090   2.80%, 03/18/2023   1,121 
     HCA, Inc.     
 1,490   5.88%, 03/15/2022 - 05/01/2023   1,624 
 630   6.25%, 02/15/2021   690 
 645   6.38%, 01/15/2015   695 
 1,510   6.50%, 02/15/2016 - 02/15/2020   1,719 
 115   7.25%, 09/15/2020   128 
 315   7.50%, 11/15/2095   292 
     Health Management Associates, Inc.     
 640   7.38%, 01/15/2020   710 
     Hologic, Inc.     
 725   2.00%, 03/01/2042۞   739 
 65   6.25%, 08/01/2020   70 
     IMS Health, Inc.     
 255   12.50%, 03/01/2018 ■   303 
     Kaiser Foundation Hospitals     
 650   3.50%, 04/01/2022   692 
     Laboratory Corp. of America Holdings     
 285   3.75%, 08/23/2022   293 
     Medco Health Solutions, Inc.     
 525   2.75%, 09/15/2015   547 
     Memorial Sloan-Kettering Cancer Center     
 695   5.00%, 07/01/2042   802 
     Mylan, Inc.     
 4,600   6.00%, 11/15/2018 ■   5,045 
     Pfizer, Inc.     
 1,000   6.20%, 03/15/2019   1,259 
 1,450   7.20%, 03/15/2039   2,181 
     Radiation Therapy Services, Inc.     
 211   8.88%, 01/15/2017   201 
 390   9.88%, 04/15/2017   234 
     Rite Aid Corp.     
 75   8.00%, 08/15/2020   86 
     Roche Holdings, Inc.     
 250   6.00%, 03/01/2019 ■   310 

 

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

 

17

 

The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Health Care and Social Assistance - 2.3% - (continued)     
     Sanofi-Aventis S.A.     
$3,900   1.25%, 04/10/2018  $3,917 
     Savient Pharmaceuticals, Inc.     
 565   4.75%, 02/01/2018۞   136 
     Schering-Plough Corp.     
 1,000   6.50%, 12/01/2033   1,437 
     Tenet Healthcare Corp.     
 170   4.50%, 04/01/2021 ■   173 
 345   4.75%, 06/01/2020 ■   359 
 315   6.25%, 11/01/2018   355 
 200   8.88%, 07/01/2019   226 
     Warner Chilcott plc     
 296   7.75%, 09/15/2018   321 
     Zoetis, Inc.     
 380   1.88%, 02/01/2018 ■   385 
 2,735   3.25%, 02/01/2023 ■   2,808 
 380   4.70%, 02/01/2043 ■   401 
         74,794 
     Information - 2.3%     
     Altice Financing S.A.     
 315   7.88%, 12/15/2019 ■   348 
 225   9.88%, 12/15/2020 ■   256 
     America Movil S.A.B. de C.V.     
 620   2.38%, 09/08/2016   644 
 160   5.00%, 03/30/2020   184 
 385   6.13%, 03/30/2040   481 
     AT&T, Inc.     
 1,500   3.00%, 02/15/2022   1,558 
 205   3.88%, 08/15/2021   227 
 1,490   4.30%, 12/15/2042 ■   1,460 
 114   4.35%, 06/15/2045 ■   111 
 475   4.45%, 05/15/2021   548 
 1,170   5.35%, 09/01/2040   1,321 
 1,250   5.50%, 02/01/2018   1,478 
 1,800   6.30%, 01/15/2038   2,261 
 454   6.50%, 09/01/2037   581 
     Audatex North America, Inc.     
 510   6.75%, 06/15/2018 ■   549 
     Bharti Airtel International     
 390   5.13%, 03/11/2023 ■   401 
     British Telecommunications plc     
 1,160   2.00%, 06/22/2015   1,192 
     Cellco Partnership - Verizon Wireless Capital LLC     
 325   8.50%, 11/15/2018   436 
     CenturyTel, Inc.     
 205   6.00%, 04/01/2017   228 
     Cricket Communications, Inc.     
 515   7.75%, 05/15/2016   536 
     CSC Holdings LLC     
 130   6.75%, 11/15/2021   149 
 355   7.63%, 07/15/2018   417 
     Deutsche Telekom International Finance B.V.     
 710   3.13%, 04/11/2016 ■   752 
 425   4.88%, 07/08/2014   446 
 1,130   4.88%, 03/06/2042 ■   1,207 
 670   8.75%, 06/15/2030   997 
     DISH DBS Corp.     
315   5.00%, 03/15/2023 ■  306 
 675   5.88%, 07/15/2022   688 
 1,760   6.75%, 06/01/2021   1,901 
 885   7.88%, 09/01/2019   1,009 
     First Data Corp.     
 260   6.75%, 11/01/2020 ■   279 
 1,445   7.38%, 06/15/2019 ■   1,571 
 1,521   8.25%, 01/15/2021 ■   1,616 
 36   8.75%, 01/15/2022 ■Þ   39 
     GCI, Inc.     
 65   6.75%, 06/01/2021   62 
     Harron Communications L.P.     
 275   9.13%, 04/01/2020 ■   312 
     Hughes Satellite Systems Corp.     
 1,026   6.50%, 06/15/2019   1,141 
     Intelsat Jackson Holdings S.A.     
 410   6.63%, 12/15/2022 ■   444 
 1,295   7.25%, 04/01/2019   1,425 
 235   7.50%, 04/01/2021   265 
 10   8.50%, 11/01/2019   11 
     Intelsat Luxembourg S.A.     
 190   6.75%, 06/01/2018 ■   200 
 1,965   7.75%, 06/01/2021 ■   2,073 
     InterActiveCorp     
 250   4.75%, 12/15/2022 ■   251 
     Lawson Software, Inc.     
 530   9.38%, 04/01/2019   604 
     Level 3 Communications, Inc.     
 80   8.88%, 06/01/2019 ■   88 
     Level 3 Escrow, Inc.     
 466   8.13%, 07/01/2019   514 
     Level 3 Financing, Inc.     
 1,444   7.00%, 06/01/2020 ■   1,527 
 415   8.63%, 07/15/2020   469 
     Mediacom LLC     
 150   7.25%, 02/15/2022   166 
 420   9.13%, 08/15/2019   469 
     MetroPCS Wireless, Inc.     
 340   6.63%, 11/15/2020   368 
 540   7.88%, 09/01/2018   595 
     Microsoft Corp.     
 255   0.88%, 11/15/2017   255 
     Nara Cable Funding Ltd.     
 1,285   8.88%, 12/01/2018 ■   1,375 
     NII Capital Corp.     
 600   7.63%, 04/01/2021   531 
 85   8.88%, 12/15/2019   80 
     NII International Telecom Sarl     
 165   11.38%, 08/15/2019 ■   191 
     Nippon Telegraph & Telephone Corp.     
 1,505   1.40%, 07/18/2017   1,521 
     Oracle Corp.     
 1,300   5.75%, 04/15/2018   1,573 
     Qwest Communications International, Inc.     
 100   7.13%, 04/01/2018   104 
     SBA Communications Corp.     
 430   5.63%, 10/01/2019 ■   453 
     SBA Telecommunications, Inc.     
 170   5.75%, 07/15/2020 ■   181 

 

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

 

18

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Information - 2.3% - (continued)     
     Softbrands, Inc.     
$140   11.50%, 07/15/2018  $165 
     Sprint Nextel Corp.     
 420   7.00%, 03/01/2020 ■   478 
 900   9.00%, 11/15/2018 ■   1,107 
     Syniverse Holdings, Inc.     
 1,115   9.13%, 01/15/2019   1,235 
     Telecom Italia Capital     
 450   7.20%, 07/18/2036   484 
 300   7.72%, 06/04/2038   333 
     Telefonica Emisiones SAU     
 300   3.99%, 02/16/2016   316 
 400   5.13%, 04/27/2020   434 
 500   5.46%, 02/16/2021   551 
     Telefonica Europe B.V.     
 440   8.25%, 09/15/2030   551 
     Telefonos de Mexico S.A.B. de C.V.     
 100   5.50%, 11/15/2019   118 
     Telemar Norte Leste S.A.     
 100   5.50%, 10/23/2020 §   105 
     TW Telecom Holdings, Inc.     
 90   5.38%, 10/01/2022   94 
     Unitymedia Hessen GmbH & Co.     
 935   5.50%, 01/15/2023 ■   968 
     UPCB Finance VI Ltd.     
 470   6.88%, 01/15/2022 ■   516 
     Verizon Communications, Inc.     
 1,200   3.85%, 11/01/2042   1,100 
 400   4.60%, 04/01/2021   461 
 2,000   5.55%, 02/15/2016   2,252 
 1,125   6.10%, 04/15/2018   1,363 
 1,150   6.35%, 04/01/2019   1,426 
 970   6.40%, 02/15/2038   1,221 
 2,300   6.90%, 04/15/2038   3,059 
 500   7.35%, 04/01/2039   701 
 182   8.75%, 11/01/2018   246 
     Verizon Global Funding Corp.     
 310   7.75%, 12/01/2030   431 
     Verizon Wireless Capital LLC     
 800   5.55%, 02/01/2014   828 
     Vivendi S.A.     
 1,335   2.40%, 04/10/2015 ■   1,360 
     Vodafone Group plc     
 2,000   1.25%, 09/26/2017   1,988 
 2,100   1.50%, 02/19/2018   2,107 
     Wind Acquisition Finance S.A.     
 225   6.50%, 04/30/2020 ■   236 
 890   7.25%, 02/15/2018 ■   934 
     Windstream Corp.     
 615   6.38%, 08/01/2023   637 
 280   7.50%, 06/01/2022   309 
 480   7.75%, 10/15/2020   527 
 165   8.13%, 09/01/2018   181 
     Zayo Group LLC     
 755   8.13%, 01/01/2020   851 
 60   10.13%, 07/01/2020   71 
         73,169 
    Leather and Allied Product Manufacturing - 0.1%    
    Nike, Inc.    
1,940   3.63%, 05/01/2043  1,910 
           
     Machinery Manufacturing - 0.2%     
     Case New Holland, Inc.     
 290   7.88%, 12/01/2017   345 
     Caterpillar Financial Services Corp.     
 3,000   1.30%, 03/01/2018   3,016 
     Gibraltar Industries, Inc.     
 175   6.25%, 02/01/2021 ■   187 
     Perusahaan Listrik Negara     
 200   5.50%, 11/22/2021 ■   222 
     Weekley Homes LLC     
 110   6.00%, 02/01/2023 ■   114 
     Xerox Corp.     
 275   4.25%, 02/15/2015   290 
 1,100   8.25%, 05/15/2014   1,183 
         5,357 
     Mining - 0.6%     
     ALROSA Finance S.A.     
 415   7.75%, 11/03/2020 §   483 
     American Rock Salt Co. LLC     
 111   8.25%, 05/01/2018 ■   107 
     Codelco, Inc.     
 225   3.00%, 07/17/2022 ■   226 
 100   3.75%, 11/04/2020 ■   107 
 115   3.75%, 11/04/2020 §   123 
 235   3.88%, 11/03/2021 §   253 
 435   4.25%, 07/17/2042 ■   423 
 430   4.25%, 07/17/2042 §   418 
     Falconbridge Ltd.     
 75   5.38%, 06/01/2015   81 
 75   6.00%, 10/15/2015   83 
     FMG Resources Pty Ltd.     
 980   6.00%, 04/01/2017 ■   1,019 
 655   7.00%, 11/01/2015 ■   686 
 350   8.25%, 11/01/2019 ■   385 
     Freeport-McMoRan Copper & Gold, Inc.     
 520   2.38%, 03/15/2018 ■   524 
 505   3.10%, 03/15/2020 ■   508 
 3,685   3.55%, 03/01/2022   3,686 
 2,225   5.45%, 03/15/2043 ■   2,257 
     Inco Ltd.     
 30   7.20%, 09/15/2032   36 
     Newmont Mining Corp.     
 1,660   3.50%, 03/15/2022   1,638 
     Peabody Energy Corp.     
 1,555   6.00%, 11/15/2018   1,679 
 280   7.38%, 11/01/2016   321 
     Rio Tinto Finance USA Ltd.     
 920   2.25%, 09/20/2016   956 
 100   3.50%, 11/02/2020   106 
 225   4.13%, 05/20/2021   246 
     Southern Copper Corp.     
 585   7.50%, 07/27/2035   728 
     Teck Resources Ltd.     
 1,015   3.00%, 03/01/2019   1,042 
 1,300   5.20%, 03/01/2042   1,249 
     Vale Overseas Ltd.     
 500   6.88%, 11/21/2036   594 

 

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

 

19

 

The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Mining - 0.6% - (continued)     
     Vale S.A.     
$805   5.63%, 09/11/2042  $841 
         20,805 
     Miscellaneous Manufacturing - 0.5%     
     BE Aerospace, Inc.     
 895   5.25%, 04/01/2022   953 
 305   6.88%, 10/01/2020   343 
     Boeing Co.     
 1,000   6.13%, 02/15/2033   1,301 
     DigitalGlobe, Inc.     
 690   5.25%, 02/01/2021 ■   697 
     Hutchison Whampoa International Ltd.     
 2,800   2.00%, 11/08/2017 ■   2,821 
 965   3.50%, 01/13/2017 ■   1,024 
 900   5.75%, 09/11/2019 ■   1,069 
     L-3 Communications Corp.     
 430   3.95%, 11/15/2016   463 
     Owens-Brockway Glass Container, Inc.     
 155   7.38%, 05/15/2016   177 
     Reynolds Group Issuer, Inc.     
 270   6.87%, 02/15/2021 Δ   294 
 690   7.13%, 04/15/2019 Δ   744 
     Textron, Inc.     
 300   6.20%, 03/15/2015   326 
     TransDigm Group, Inc.     
 781   5.50%, 10/15/2020 ■   834 
 475   7.75%, 12/15/2018   526 
     United Technologies Corp.     
 1,925   4.50%, 06/01/2042   2,128 
 950   6.13%, 07/15/2038   1,283 
         14,983 
     Motor Vehicle and Parts Manufacturing - 0.3%     
     American Axle & Manufacturing Holdings, Inc.     
 295   6.63%, 10/15/2022   315 
     Daimler Finance NA LLC     
 5,130   1.25%, 01/11/2016 ■   5,153 
 1,900   1.65%, 04/10/2015 ■   1,923 
     Ford Motor Co.     
 370   7.45%, 07/16/2031   492 
     Meritor, Inc.     
 270   8.13%, 09/15/2015   292 
 970   10.63%, 03/15/2018   1,069 
     Tenneco, Inc.     
 240   7.75%, 08/15/2018   264 
     TRW Automotive, Inc.     
 435   7.25%, 03/15/2017 ■   503 
         10,011 
     Nonmetallic Mineral Product Manufacturing - 0.1%     
     Ardagh Packaging Finance plc     
 410   7.00%, 11/15/2020 ■   434 
 240   9.13%, 10/15/2020 ■   271 
     Cemex S.A.B. de C.V.     
 325   3.75%, 03/15/2018   428 
     Rearden G Holdings EINS GmbH     
 333   7.88%, 03/30/2020 §   366 
     Silgan Holdings, Inc.     
 500   5.00%, 04/01/2020   520 
         2,019 
     Other Services - 0.1%     
     Service Corp. International     
960   4.50%, 11/15/2020  979 
 120   6.75%, 04/01/2016   134 
 460   7.63%, 10/01/2018   547 
     Sonic Automotive, Inc.     
 590   7.00%, 07/15/2022   659 
         2,319 
     Paper Manufacturing - 0.1%     
     Boise Cascade LLC     
 625   6.38%, 11/01/2020 ■   669 
     Clearwater Paper Corp.     
 140   4.50%, 02/01/2023 ■   139 
 20   7.13%, 11/01/2018   22 
     Kimberly-Clark Corp.     
 1,000   6.13%, 08/01/2017   1,209 
     Neenah Paper, Inc.     
 104   7.38%, 11/15/2014   104 
     P.H. Glatfelter Co.     
 250   5.38%, 10/15/2020   264 
         2,407 
     Petroleum and Coal Products Manufacturing - 3.3%     
     Anadarko Petroleum Corp.     
 170   5.75%, 06/15/2014   179 
 1,650   5.95%, 09/15/2016   1,897 
 1,300   6.45%, 09/15/2036   1,661 
 150   6.95%, 06/15/2019   190 
 125   7.95%, 06/15/2039   184 
 2,110   8.70%, 03/15/2019   2,849 
     Antero Resources Finance Corp.     
 1,250   6.00%, 12/01/2020   1,322 
 190   7.25%, 08/01/2019   206 
 125   9.38%, 12/01/2017   136 
     BG Energy Capital plc     
 1,800   4.00%, 10/15/2021 ■   2,017 
     Canadian Natural Resources Ltd.     
 600   5.70%, 05/15/2017   702 
     Chesapeake Energy Corp.     
 1,063   2.50%, 05/15/2037۞   1,021 
 160   6.63%, 08/15/2020   181 
 255   6.88%, 11/15/2020   291 
     CNOOC Finance 2012 Ltd.     
 2,466   3.88%, 05/02/2022 ■   2,616 
     CNPC General Capital     
 2,270   1.95%, 04/16/2018 ■   2,276 
     CNPC HK Overseas Capital Ltd.     
 1,900   2.75%, 04/19/2017 ■   1,976 
 315   4.50%, 04/28/2021 ■   352 
     ConocoPhillips Co.     
 2,040   1.05%, 12/15/2017   2,043 
 1,775   6.50%, 02/01/2039   2,458 
 250   7.00%, 03/30/2029   335 
     Continental Resources, Inc.     
 680   5.00%, 09/15/2022   739 
     Denbury Resources, Inc.     
 590   4.63%, 07/15/2023   596 
     Devon Energy Corp.     
 1,400   1.88%, 05/15/2017   1,423 
 555   4.75%, 05/15/2042   572 
 260   7.95%, 04/15/2032   370 

 

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

 

20

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Petroleum and Coal Products Manufacturing - 3.3% - (continued)     
     Devon Financing Corp.     
$350   7.88%, 09/30/2031  $486 
     EDC Finance Ltd.     
 480   4.88%, 04/17/2020 ■   484 
     Empresa Nacional del Petroleo     
 100   4.75%, 12/06/2021 §   106 
     EnCana Corp.     
 725   5.15%, 11/15/2041   764 
 1,100   5.90%, 12/01/2017   1,298 
     Endeavour International Corp.     
 675   12.00%, 03/01/2018   640 
     Ensco plc     
 450   4.70%, 03/15/2021   512 
     EPE Holding/EP Energy Bond     
 295   8.13%, 12/15/2017 ■Þ   306 
     Everest Acquisition LLC     
 380   6.88%, 05/01/2019   416 
 620   9.38%, 05/01/2020   722 
     Ferrellgas Partners L.P.     
 520   6.50%, 05/01/2021   547 
     Gaz Capital S.A.     
 882   8.63%, 04/28/2034 §   1,224 
     Gazprom Neft OAO via GPN Capital S.A.     
 3,525   4.38%, 09/19/2022 ■   3,529 
 555   4.38%, 09/19/2022 §   556 
     Gazprom OAO Via Gaz Capital S.A.     
 475   4.95%, 02/06/2028 ■   475 
 335   4.95%, 07/19/2022 §   352 
 590   6.00%, 01/23/2021 §   670 
     Harvest Operations Corp.     
 520   6.88%, 10/01/2017   582 
     Hess Corp.     
 1,150   5.60%, 02/15/2041   1,271 
 500   6.00%, 01/15/2040   581 
 1,325   7.30%, 08/15/2031   1,715 
 45   7.88%, 10/01/2029   61 
     Hornbeck Offshore Services, Inc.     
 55   5.88%, 04/01/2020   58 
     Kazmunaigaz Finance Sub B.V.     
 935   9.13%, 07/02/2018 §   1,195 
 320   11.75%, 01/23/2015 §   370 
     KazMunayGas National Co.     
 1,325   5.75%, 04/30/2043 ■   1,347 
 480   4.40%, 04/30/2023 ■   485 
     Lukoil International Finance B.V.     
 3,435   3.42%, 04/24/2018 ■   3,497 
 915   4.56%, 04/24/2023 ■   926 
     Marathong Oil Corp.     
 3,310   2.80%, 11/01/2022   3,309 
     MEG Energy Corp.     
 315   6.38%, 01/30/2023 ■   332 
     Newfield Exploration Co.     
 501   5.63%, 07/01/2024   539 
 465   5.75%, 01/30/2022   514 
 150   7.13%, 05/15/2018   156 
     Nexen, Inc.     
 400   6.40%, 05/15/2037   523 
 1,450   7.50%, 07/30/2039   2,151 
     Pacific Rubiales Energy Corp.     
310   5.13%, 03/28/2023 ■  319 
     Pertamina PT     
 605   6.00%, 05/03/2042 §   651 
     Petrobras International Finance Co.     
 530   5.38%, 01/27/2021   585 
 465   5.75%, 01/20/2020   525 
 1,344   5.88%, 03/01/2018   1,529 
 364   6.75%, 01/27/2041   432 
     Petrohawk Energy Corp.     
 1,315   6.25%, 06/01/2019   1,481 
 2,525   7.25%, 08/15/2018   2,795 
     Petroleos de Venezuela S.A.     
 1,438   8.50%, 11/02/2017 §   1,391 
     Petroleos Mexicanos     
 2,000   5.50%, 06/27/2044 ■   2,190 
     Phillips 66     
 1,400   2.95%, 05/01/2017   1,490 
     Pioneer Natural Resources Co.     
 95   5.88%, 07/15/2016   107 
 260   6.65%, 03/15/2017   305 
 145   6.88%, 05/01/2018   177 
     Plains Exploration & Production Co.     
 45   6.63%, 05/01/2021   50 
 126   6.75%, 02/01/2022   143 
     PT Pertamina     
 200   6.50%, 05/27/2041 §   227 
     Range Resources Corp.     
 430   5.75%, 06/01/2021   470 
 15   6.75%, 08/01/2020   16 
     Ras Laffan Liquefied Natural Gas Co., Ltd.     
 1,163   5.83%, 09/30/2016 ■   1,256 
     Reliance Holdings USA, Inc.     
 255   5.40%, 02/14/2022 ■   287 
 250   5.40%, 02/14/2022 §   282 
     Rosetta Resources, Inc.     
 810   5.63%, 05/01/2021 ☼   844 
 260   9.50%, 04/15/2018   288 
     Rosneft Oil Co.     
 625   3.15%, 03/06/2017 ■   631 
 1,135   4.20%, 03/06/2022 §   1,141 
     Schlumberger Norge AS     
 1,395   1.25%, 08/01/2017 ■   1,402 
     Seadrill Ltd.     
 940   5.63%, 09/15/2017 ■   961 
     Shell International Finance B.V.     
 2,400   6.38%, 12/15/2038   3,430 
     Sibur Securities Ltd.     
 260   3.91%, 01/31/2018 ■   256 
     Tosco Corp.     
 500   8.13%, 02/15/2030   752 
     Total Capital International S.A.     
 1,600   1.55%, 06/28/2017   1,632 
 3,065   2.88%, 02/17/2022   3,209 

 

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

 

21

 

The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Petroleum and Coal Products Manufacturing - 3.3% - (continued)     
     Transocean, Inc.     
$1,100   2.50%, 10/15/2017  $1,121 
 215   4.95%, 11/15/2015   233 
 1,260   5.05%, 12/15/2016   1,405 
 300   6.00%, 03/15/2018   347 
 1,100   6.50%, 11/15/2020   1,304 
     Valero Energy Corp.     
 410   4.50%, 02/01/2015   436 
 310   6.13%, 02/01/2020   380 
 2,630   6.63%, 06/15/2037   3,310 
     Williams Partners L.P.     
 2,295   3.35%, 08/15/2022   2,321 
 125   5.25%, 03/15/2020   145 
 750   6.30%, 04/15/2040   914 
         104,461 
     Pipeline Transportation - 0.6%     
     DCP Midstream LLC     
 600   4.75%, 09/30/2021 ■   653 
 250   6.75%, 09/15/2037 ■   301 
     El Paso Corp.     
 370   6.50%, 09/15/2020   418 
 850   7.00%, 06/15/2017   978 
 50   7.75%, 01/15/2032   57 
     El Paso Natural Gas Co.     
 70   5.95%, 04/15/2017   82 
 50   7.25%, 06/01/2018   58 
     Energy Transfer Equity L.P.     
 425   7.50%, 10/15/2020   497 
     Enterprise Products Operating LLC     
 4,450   3.35%, 03/15/2023   4,645 
 1,300   5.95%, 02/01/2041   1,585 
 500   6.50%, 01/31/2019   624 
     Kinder Morgan Energy Partners L.P.     
 4,650   5.00%, 12/15/2013 - 08/15/2042   4,975 
 150   6.55%, 09/15/2040   192 
 90   6.95%, 01/15/2038   119 
 350   7.30%, 08/15/2033   462 
 50   7.75%, 03/15/2032   69 
 100   9.00%, 02/01/2019   135 
     Kinder Morgan Finance Co.     
 110   5.70%, 01/05/2016   120 
 275   6.00%, 01/15/2018 ■   306 
     MarkWest Energy Partners L.P.     
 175   5.50%, 02/15/2023   192 
 88   6.25%, 06/15/2022   98 
     Plains All American Pipeline L.P.     
 980   2.85%, 01/31/2023   984 
 125   5.75%, 01/15/2020   152 
     TransCanada Pipelines Ltd.     
 45   7.63%, 01/15/2039   67 
     Transnet SOC Ltd.     
 890   4.00%, 07/26/2022 ■   884 
 200   4.50%, 02/10/2016 §   212 
         18,865 
     Plastics and Rubber Products Manufacturing - 0.1%     
     Associated Materials LLC     
 50   9.13%, 11/01/2017   54 
 260   9.13%, 11/01/2017 ■☼   280 
    Continental Rubber of America Corp.    
 470   4.50%, 09/15/2019 ■   488 
     Nortek, Inc.     
 950   8.50%, 04/15/2021   1,062 
 205   8.50%, 04/15/2021 ■   228 
         2,112 
     Primary Metal Manufacturing - 0.3%     
     ArcelorMittal     
 2,475   5.00%, 02/25/2017   2,626 
 125   9.50%, 02/15/2015   141 
     Novelis, Inc.     
 125   8.38%, 12/15/2017   137 
     Precision Castparts Corp.     
 3,100   1.25%, 01/15/2018   3,114 
     Rio Tinto Alcan, Inc.     
 2,300   1.63%, 08/21/2017   2,332 
 50   6.13%, 12/15/2033   64 
     Samarco Mineracao S.A.     
 455   4.13%, 11/01/2022 ■   446 
         8,860 
     Printing and Related Support Activities - 0.0%     
     Deluxe Corp.     
 640   6.00%, 11/15/2020 ■   665 
     Quebecor Media, Inc.     
 335   5.75%, 01/15/2023 ■   349 
 239   7.75%, 03/15/2016   244 
         1,258 
     Professional, Scientific and Technical Services - 0.1%     
     Electronic Data Systems Corp.     
 40   7.45%, 10/15/2029   48 
     IBM Corp.     
 750   7.63%, 10/15/2018   993 
     Lamar Media Corp.     
 625   5.00%, 05/01/2023   636 
 95   5.88%, 02/01/2022   104 
     Lender Processing Services, Inc.     
 330   5.75%, 04/15/2023   352 
     SunGard Data Systems, Inc.     
 365   6.63%, 11/01/2019 ■   388 
 990   7.38%, 11/15/2018   1,069 
 45   7.63%, 11/15/2020   50 
         3,640 
     Rail Transportation - 0.3%     
     Burlington Northern Santa Fe Corp.     
 3,340   3.05%, 03/15/2022 - 09/01/2022   3,456 
 150   5.75%, 05/01/2040   185 
     Canadian Pacific Railway Co.     
 1,450   4.50%, 01/15/2022   1,624 
     CSX Corp.     
 185   4.25%, 06/01/2021   210 
 1,000   4.75%, 05/30/2042   1,077 
     Georgian Railway LLC     
 240   7.75%, 07/11/2022 ■   279 
     Russian Railways     
 313   5.74%, 04/03/2017 §   346 
     RZD Capital Ltd.     
 1,015   5.70%, 04/05/2022 §   1,128 
         8,305 

 

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

 

22

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued) 
     Real Estate, Rental and Leasing - 1.1%     
     Air Lease Corp.     
$970   4.50%, 01/15/2016  $1,009 
 625   6.13%, 04/01/2017   684 
     CBRE Services, Inc.     
 905   5.00%, 03/15/2023   927 
     Cox Communications, Inc.     
 3,240   2.95%, 06/30/2023 ■☼   3,233 
 700   3.25%, 12/15/2022 ■   725 
 2,565   4.50%, 06/30/2043 ■☼   2,564 
 220   6.45%, 12/01/2036 ■   274 
 700   8.38%, 03/01/2039 ■   1,068 
     Duke Realty L.P.     
 2,200   3.63%, 04/15/2023   2,240 
 1,061   3.88%, 10/15/2022   1,105 
 1,235   4.38%, 06/15/2022   1,332 
 15   5.95%, 02/15/2017   17 
 895   6.75%, 03/15/2020   1,103 
 260   7.38%, 02/15/2015   287 
     ERAC USA Finance Co.     
 65   2.25%, 01/10/2014 ■   66 
 585   2.75%, 07/01/2013 - 03/15/2017 ■   603 
 1,370   3.30%, 10/15/2022 ■   1,398 
 1,000   5.63%, 03/15/2042 ■   1,145 
 300   6.38%, 10/15/2017 ■   361 
 125   7.00%, 10/15/2037 ■   165 
     H & E Equipment Services, Inc.     
 700   7.00%, 09/01/2022 ■   775 
     Hertz Corp.     
 275   6.75%, 04/15/2019   305 
     Hertz Global Holdings, Inc.     
 195   5.88%, 10/15/2020   213 
 130   6.25%, 10/15/2022   145 
     International Lease Finance Corp.     
 1,425   3.88%, 04/15/2018   1,446 
 415   5.65%, 06/01/2014   434 
 785   5.75%, 05/15/2016   854 
 3,620   5.88%, 04/01/2019 - 08/15/2022   3,974 
 810   6.25%, 05/15/2019   908 
 165   6.75%, 09/01/2016 ■   188 
 815   7.13%, 09/01/2018 ■   970 
 380   8.75%, 03/15/2017   457 
     ProLogis L.P.     
 460   4.00%, 01/15/2018   498 
 175   4.50%, 08/15/2017   193 
 250   6.13%, 12/01/2016   289 
 95   6.25%, 03/15/2017   110 
 400   6.63%, 05/15/2018   486 
     Realogy Corp.     
 673   7.63%, 01/15/2020 ■   772 
     Regency Centers L.P.     
 830   5.25%, 08/01/2015   900 
 15   5.88%, 06/15/2017   17 
     United Rental Financing Escrow Corp.     
 570   7.38%, 05/15/2020   646 
     United Rentals North America, Inc.     
 65   5.75%, 07/15/2018   71 
 315   6.13%, 06/15/2023   339 
 135   7.63%, 04/15/2022   155 
     UR Merger Sub Corp.     
 475   8.38%, 09/15/2020   537 
         35,988 
     Retail Trade - 1.2%     
     99 Cents Only Stores     
 1,062   11.00%, 12/15/2019   1,227 
     Affinia Group, Inc.     
 40   10.75%, 08/15/2016 ■   43 
     Amazon.com, Inc.     
 2,555   2.50%, 11/29/2022   2,509 
     AmeriGas Finance LLC     
 155   7.00%, 05/20/2022   173 
     AutoZone, Inc.     
 1,823   3.70%, 04/15/2022   1,914 
 700   7.13%, 08/01/2018   876 
     Building Materials Corp.     
 200   6.75%, 05/01/2021 ■   222 
     Energy Transfer Partners     
 3,655   3.60%, 02/01/2023   3,730 
 660   5.20%, 02/01/2022   755 
 835   6.13%, 02/15/2017   969 
 125   6.63%, 10/15/2036   148 
 746   8.50%, 04/15/2014   799 
     Energy Transfer Partners L.P.     
 1,000   7.50%, 07/01/2038   1,303 
     GRD Holding III Corp.     
 630   10.75%, 06/01/2019 ■   677 
     Home Depot, Inc.     
 735   2.70%, 04/01/2023   749 
 1,400   5.88%, 12/16/2036   1,813 
     JC Penney Corp., Inc.     
 280   5.65%, 06/01/2020   241 
 265   6.38%, 10/15/2036   212 
 445   7.40%, 04/01/2037   373 
 45   7.95%, 04/01/2017   44 
     Macy's Retail Holdings, Inc.     
 20   6.70%, 09/15/2028   24 
 20   7.00%, 02/15/2028   25 
     Michaels Stores, Inc.     
 1,240   7.75%, 11/01/2018   1,362 
     PC Merger Sub, Inc.     
 490   8.88%, 08/01/2020 ■   554 
     QVC, Inc.     
 30   5.13%, 07/02/2022   32 
     Sally Holdings LLC     
 135   5.75%, 06/01/2022   145 
 225   6.88%, 11/15/2019   252 
     Sotheby's     
 595   5.25%, 10/01/2022 ■   609 
     Turlock Corp.     
 2,800   2.75%, 11/02/2022 ■   2,839 
     Wal-Mart Stores, Inc.     
 600   3.25%, 10/25/2020   656 
 3,000   4.00%, 04/11/2043   3,094 
 1,000   5.00%, 10/25/2040   1,178 
 600   5.25%, 09/01/2035   728 
 703   5.63%, 04/15/2041   907 
 2,000   6.20%, 04/15/2038   2,721 
 2,800   6.50%, 08/15/2037   3,918 
         37,821 

 

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

 

23

 

The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued)     
     Soap, Cleaning Compound and Toilet Manufacturing - 0.1%     
     Avon Products, Inc.     
$2,015   2.38%, 03/15/2016  $2,058 
     Procter & Gamble Co.     
 816   1.45%, 08/15/2016   838 
 1,200   5.55%, 03/05/2037   1,577 
         4,473 
     Transportation Equipment Manufacturing - 0.1%     
     Huntington Ingalls Industries, Inc.     
 1,315   6.88%, 03/15/2018   1,455 
 106   7.13%, 03/15/2021   118 
     Kansas City Southern de Mexico S.A. de C.V.     
 1,830   2.35%, 05/15/2020 ■☼   1,838 
         3,411 
     Truck Transportation - 0.2%     
     Penske Truck Leasing Co.     
 2,975   2.50%, 07/11/2014 - 03/15/2016 ■   3,073 
 3,220   2.88%, 07/17/2018 ■   3,375 
         6,448 
     Utilities - 2.6%     
     Abu Dhabi National Energy Co.     
 385   4.13%, 03/13/2017 §   416 
     AES (The) Corp.     
 160   7.75%, 10/15/2015   183 
 1,010   8.00%, 10/15/2017   1,210 
     AES Panama S.A.     
 15   6.35%, 12/21/2016 §   16 
     American Electric Power Co., Inc.     
 565   1.65%, 12/15/2017   571 
     Calpine Corp.     
 576   7.25%, 10/15/2017 ■   610 
 198   7.50%, 02/15/2021 ■   224 
     Carolina Power & Light Co.     
 5,060   4.10%, 05/15/2042 - 03/15/2043   5,285 
     CenterPoint Energy Resources Corp.     
 290   4.50%, 01/15/2021   335 
     Centrais Eletricas Brasileiras S.A.     
 1,595   5.75%, 10/27/2021 §   1,739 
     Cia Saneamento Basico de Estado de Sao Paulo     
 243   6.25%, 12/16/2020 §   264 
     Commonwealth Edison Co.     
 720   3.40%, 09/01/2021   788 
 100   5.80%, 03/15/2018   120 
     Connecticut (The) Light & Power Co.     
 2,575   2.50%, 01/15/2023   2,614 
     Consolidated Edison Co. of NY     
 1,400   4.20%, 03/15/2042   1,497 
 140   5.70%, 06/15/2040   182 
 700   5.85%, 04/01/2018   851 
     Dolphin Subsidiary II, Inc.     
 460   7.25%, 10/15/2021   490 
     Dominion Resources, Inc.     
 1,075   1.40%, 09/15/2017   1,083 
 3,000   1.95%, 08/15/2016   3,096 
 900   5.15%, 07/15/2015   984 
 1,615   7.00%, 06/15/2038   2,306 
     Duke Energy Corp.     
 1,000   2.15%, 11/15/2016   1,036 
 1,350   3.55%, 09/15/2021   1,454 
     Duke Energy Indiana, Inc.     
 225   3.75%, 07/15/2020   251 
     E CL S.A.     
 100   5.63%, 01/15/2021 §   112 
     Edison International     
 1,210   3.75%, 09/15/2017   1,322 
     Enel Finance International S.A.     
 200   3.88%, 10/07/2014 ■   206 
     Entergy Corp.     
 115   3.63%, 09/15/2015   120 
     Exelon Generation Co. LLC     
 325   4.00%, 10/01/2020   348 
 270   5.20%, 10/01/2019   310 
 2,725   4.25%, 06/15/2022   2,904 
     FirstEnergy Corp.     
 3,665   2.75%, 03/15/2018   3,736 
     Florida Power & Light Co.     
 1,300   4.13%, 02/01/2042   1,385 
     Georgia Power Co.     
 4,550   0.75%, 08/10/2015   4,569 
 320   4.75%, 09/01/2040   355 
     Great Plains Energy, Inc.     
 181   4.85%, 06/01/2021   205 
     IPALCO Enterprises, Inc.     
 30   7.25%, 04/01/2016 ■   34 
     Kansas City Power & Light Co.     
 50   7.15%, 04/01/2019   65 
     MidAmerican Energy Holdings Co.     
 100   5.75%, 04/01/2018   120 
 500   5.95%, 05/15/2037   637 
     National Power Corp.     
 15   9.63%, 05/15/2028   24 
     Nevada Power Co.     
 450   7.13%, 03/15/2019   581 
     NiSource Finance Corp.     
 1,450   3.85%, 02/15/2023   1,528 
 1,460   5.25%, 09/15/2017 - 02/15/2043   1,575 
 140   6.40%, 03/15/2018   169 
     Oncor Electric Delivery Co. LLC     
 700   4.55%, 12/01/2041   746 
 1,000   5.00%, 09/30/2017   1,148 
 615   5.25%, 09/30/2040   719 
     Pacific Gas & Electric Co.     
 625   2.45%, 08/15/2022   624 
 346   3.25%, 09/15/2021   371 
 75   3.50%, 10/01/2020   83 
 2,400   6.05%, 03/01/2034   3,122 
 725   8.25%, 10/15/2018   974 
     PacifiCorp     
 840   4.10%, 02/01/2042   885 
 1,000   5.50%, 01/15/2019   1,213 
 250   6.25%, 10/15/2037   341 
     Pepco Holdings, Inc.     
 230   2.70%, 10/01/2015   238 
     Potomac Electric Power     
 2,700   4.15%, 03/15/2043   2,892 
           

 

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

 

24

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 41.0% - (continued) 
     Utilities - 2.6% - (continued)     
     Progress Energy, Inc.     
$345   3.15%, 04/01/2022  $357 
 500   5.63%, 01/15/2016   561 
 3,051   7.05%, 03/15/2019   3,885 
 540   7.75%, 03/01/2031   766 
     PSEG Power LLC     
 850   2.75%, 09/15/2016   885 
 975   8.63%, 04/15/2031   1,466 
     Public Service Co. of Colorado     
 1,930   3.60%, 09/15/2042   1,902 
     San Diego Gas & Electric Co.     
 285   4.50%, 08/15/2040   328 
     Scana Corp.     
 500   4.75%, 05/15/2021   561 
     Sierra Pacific Power Co.     
 100   6.00%, 05/15/2016   115 
     Southern California Edison Co.     
 925   4.50%, 09/01/2040   1,044 
 500   6.00%, 01/15/2034   665 
 1,010   6.05%, 03/15/2039   1,376 
     Southern Co.     
 300   2.38%, 09/15/2015   312 
     Tampa Electric Co.     
 2,095   2.60%, 09/15/2022   2,143 
     Texas Competitive Electric Co.     
 820   11.50%, 10/01/2020 ■   646 
     Union Electric Co.     
 145   6.40%, 06/15/2017   175 
     Virginia Electric & Power Co.     
 545   2.95%, 01/15/2022   581 
 325   3.45%, 09/01/2022   358 
 200   6.35%, 11/30/2037   280 
     Virginia Electric and Power Co.     
 2,450   1.20%, 01/15/2018   2,464 
 905   4.00%, 01/15/2043   948 
         83,084 
     Water Transportation - 0.0%     
     Marquette Transport Co.     
 225   10.88%, 01/15/2017   243 
     Royal Caribbean Cruises Ltd.     
 120   5.25%, 11/15/2022   124 
         367 
     Wholesale Trade - 0.3%     
     Controladora Mabe S.A. de C.V.     
 705   7.88%, 10/28/2019 §   823 
     HD Supply, Inc.     
 220   8.13%, 04/15/2019   249 
     Heineken N.V.     
 1,770   1.40%, 10/01/2017 ■   1,775 
     International Paper Co.     
 500   7.30%, 11/15/2039   685 
     Interpublic (The) Group of Co., Inc.     
 120   6.25%, 11/15/2014   128 
     J.M. Huber Corp.     
 337   9.88%, 11/01/2019 ■   388 
     SABMiller Holdings, Inc.     
 1,500   2.45%, 01/15/2017 ■   1,571 
 1,475   3.75%, 01/15/2022 ■   1,613 
 800   4.95%, 01/15/2042 ■   921 
         8,153 
     Total corporate bonds     
     (cost $1,247,221)  $1,304,185 
           
FOREIGN GOVERNMENT OBLIGATIONS - 4.5%     
     Argentina - 0.1%     
     Argentina (Republic of)     
$2,565   2.50%, 12/31/2038  $853 
 280   7.00%, 10/03/2015   244 
EUR  296   7.82%, 12/31/2033   224 
 2,577   8.28%, 12/31/2033   1,503 
        $2,824 
     Bolivia - 0.0%     
     Bolivia (Government of)     
 215   4.88%, 10/29/2022 ■   218 
 230   4.88%, 10/29/2022 §   234 
         452 
     Brazil - 0.4%     
     Banco Nacional De Desenvolvimento Economico     
 935   6.50%, 06/10/2019 §   1,119 
     Brazil (Republic of)     
 1,225   2.63%, 01/05/2023   1,222 
 1,029   5.63%, 01/07/2041   1,290 
 445   5.88%, 01/15/2019   544 
BRL727   6.00%, 05/15/2015 ◄   385 
 4,430   7.13%, 01/20/2037   6,501 
 954   8.25%, 01/20/2034   1,530 
 15   12.25%, 03/06/2030   30 
         12,621 
     Chile - 0.1%     
     Chile (Republic of)     
 509   3.25%, 09/14/2021   545 
 1,365   3.88%, 08/05/2020   1,532 
         2,077 
     Colombia - 0.3%     
     Colombia (Republic of)     
 875   2.63%, 03/15/2023   867 
 535   6.13%, 01/18/2041   720 
 2,380   7.38%, 03/18/2019 - 09/18/2037   3,331 
COP1,450,000   7.75%, 04/14/2021   994 
 565   8.13%, 05/21/2024   833 
COP10,000   9.85%, 06/28/2027   8 
 85   10.38%, 01/28/2033   152 
 1,371   11.75%, 02/25/2020   2,183 
COP108,000   12.00%, 10/22/2015   71 
         9,159 
     Costa Rica - 0.0%     
     Costa Rica (Republic of)     
 680   4.25%, 01/26/2023 ■   690 
 255   4.38%, 04/30/2025 ■   257 
 255   5.63%, 04/30/2043 ■   262 
         1,209 

 

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

 

25

 

The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
FOREIGN GOVERNMENT OBLIGATIONS - 4.5% - (continued)     
     Croatia - 0.1%     
     Croatia (Republic of)     
$1,330   5.50%, 04/04/2023 ■  $1,413 
 460   6.25%, 04/27/2017 ■   506 
 750   6.25%, 04/27/2017 §   825 
 530   6.75%, 11/05/2019 §   606 
         3,350 
     Dominican Republic - 0.0%     
     Dominican Republic     
 130   5.88%, 04/18/2024 ■   133 
           
     El Salvador - 0.0%     
     El Salvador (Republic of)     
 360   5.88%, 01/30/2025 ■   378 
 175   7.63%, 02/01/2041 §   203 
 375   7.65%, 06/15/2035 §   436 
 10   8.25%, 04/10/2032 §   13 
         1,030 
     Guatemala - 0.0%     
     Guatemala (Republic of)     
 570   4.88%, 02/13/2028 ■   579 
 240   5.75%, 06/06/2022 ■   270 
 200   5.75%, 06/06/2022 §   225 
         1,074 
     Hungary - 0.2%     
     Hungary (Republic of)     
EUR  280   3.88%, 02/24/2020   354 
 708   4.13%, 02/19/2018   715 
EUR505   4.38%, 07/04/2017   672 
 588   5.38%, 02/21/2023   606 
EUR550   5.75%, 06/11/2018 §   773 
EUR366   6.00%, 01/11/2019 §   518 
 750   7.63%, 03/29/2041   880 
         4,518 
     Iceland - 0.0%     
     Iceland (Republic of)     
 425   4.88%, 06/16/2016 §   453 
 226   5.88%, 05/11/2022 ■   261 
         714 
     Indonesia - 0.3%     
     Indonesia (Republic of)     
 1,160   4.63%, 04/15/2043 ■   1,198 
 485   4.88%, 05/05/2021 §   550 
 1,000   5.88%, 03/13/2020 §   1,187 
 265   6.75%, 03/10/2014 §   277 
 2,000   6.88%, 03/09/2017 - 01/17/2018 §   2,383 
 780   7.25%, 04/20/2015 §   866 
 2,070   7.50%, 01/15/2016 §   2,380 
 360   10.38%, 05/04/2014 §   392 
 105   11.63%, 03/04/2019 §   156 
         9,389 
     Ivory Coast - 0.0%     
     Ivory Coast (Republic of)     
 1,110   7.10%, 12/31/2032 §   1,060 
 100   7.21%, 12/31/2032 ■   96 
         1,156 
     Latvia - 0.1%     
    Latvia (Republic of)    
1,095   2.75%, 01/12/2020 ■  1,092 
 425   2.75%, 01/12/2020 §   424 
 385   5.25%, 02/22/2017 ■   431 
 200   5.25%, 02/22/2017 §   224 
         2,171 
     Mexico - 0.6%     
     Mexican Bonos De Desarrollo     
MXN2,265   7.25%, 12/15/2016   207 
MXN18,408   8.00%, 12/17/2015   1,665 
     United Mexican States     
 6,434   4.75%, 03/08/2044   7,119 
 920   5.63%, 01/15/2017   1,061 
 1,470   5.75%, 10/12/2110   1,732 
 230   5.88%, 01/15/2014   237 
 1,598   6.05%, 01/11/2040   2,101 
 439   6.63%, 03/03/2015   484 
 409   6.75%, 09/27/2034   571 
 1,371   7.50%, 04/08/2033   2,050 
 335   8.30%, 08/15/2031   528 
         17,755 
     Morocco - 0.0%     
     Morocco (Kingdom of)     
 330   4.25%, 12/11/2022 ■   342 
 355   5.50%, 12/11/2042 ■   369 
         711 
     Panama - 0.1%     
     Panama (Republic of)     
 329   7.13%, 01/29/2026   457 
 798   7.25%, 03/15/2015   888 
 345   8.88%, 09/30/2027   552 
 120   9.38%, 04/01/2029   204 
         2,101 
     Peru - 0.1%     
     Peru (Republic of)     
 455   6.55%, 03/14/2037   650 
 505   7.13%, 03/30/2019   655 
PEN75   7.84%, 08/12/2020   35 
 905   8.38%, 05/03/2016   1,099 
 354   8.75%, 11/21/2033   605 
 25   9.88%, 02/06/2015   29 
         3,073 
     Philippines - 0.2%     
     Philippines (Republic of)     
 755   6.38%, 01/15/2032   1,021 
 1,101   7.75%, 01/14/2031   1,668 
 875   9.38%, 01/18/2017   1,118 
 1,138   9.50%, 02/02/2030   1,949 
 350   9.88%, 01/15/2019   495 
 365   10.63%, 03/16/2025   625 
         6,876 
     Poland - 0.0%     
     Poland (Republic of)     
 75   6.38%, 07/15/2019   93 

 

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

 

26

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
FOREIGN GOVERNMENT OBLIGATIONS - 4.5% - (continued)    
     Qatar (State of) - 0.0%     
     Qatar (State of)     
$495   3.13%, 01/20/2017 §  $526 
 160   5.25%, 01/20/2020 §   190 
         716 
     Romania - 0.1%     
     Romania (Republic of)     
 624   4.38%, 08/22/2023 ■   646 
EUR510   4.88%, 11/07/2019 §   720 
         1,366 
     Russia - 0.3%     
     Russia (Federation of)     
 1,600   3.25%, 04/04/2017 §   1,692 
 200   3.63%, 04/29/2015 ■   209 
 400   3.63%, 04/29/2015 §   419 
 800   4.50%, 04/04/2022 §   897 
 1,300   5.00%, 04/29/2020 §   1,500 
RUB16,880   6.80%, 12/11/2019   561 
RUB9,875   7.05%, 01/19/2028   326 
 3,736   7.50%, 03/31/2030 §   4,700 
RUB11,340   8.15%, 02/03/2027 Δ   412 
         10,716 
     Serbia - 0.0%     
     Serbia (Republic of)     
 550   4.88%, 02/25/2020 ■   566 
           
     Slovakia - 0.1%     
     Slovakia (Republic of)     
 535   4.38%, 05/21/2022 ■   587 
 1,670   4.38%, 05/21/2022 §   1,831 
         2,418 
     Slovenia - 0.0%     
     Slovenia (Republic of)     
 475   5.50%, 10/26/2022 §☼   470 
           
     South Africa - 0.1%     
     South Africa (Republic of)     
 340   4.67%, 01/17/2024   380 
 860   6.88%, 05/27/2019   1,073 
ZAR4,045   8.75%, 02/28/2048   502 
         1,955 
     Turkey - 0.7%     
     Turkey (Republic of)     
 1,230   4.88%, 04/16/2043   1,264 
 270   5.13%, 03/25/2022   308 
 870   6.00%, 01/14/2041   1,046 
 2,580   6.75%, 04/03/2018   3,077 
 519   6.88%, 03/17/2036   680 
 3,595   7.00%, 09/26/2016   4,166 
 2,175   7.25%, 03/15/2015   2,398 
 2,575   7.38%, 02/05/2025   3,438 
 3,350   7.50%, 07/14/2017   4,041 
 865   8.00%, 02/14/2034   1,258 
        21,676 
     Ukraine - 0.1%     
    Ukraine (Government of)    
 350   6.25%, 06/17/2016 ■   342 
 200   6.25%, 06/17/2016 §   195 
 1,380   6.58%, 11/21/2016 §   1,345 
 260   6.75%, 11/14/2017 §   256 
 105   6.88%, 09/23/2015 §   105 
 865   7.50%, 04/17/2023 ■   835 
 595   7.80%, 11/28/2022 ■   593 
 220   9.25%, 07/24/2017 ■   235 
         3,906 
     United Arab Emirates - 0.0%     
     United Arab Emirates     
 200   6.75%, 04/08/2019 §   253 
           
     Uruguay - 0.0%     
     Uruguay (Republic of)     
 509   7.88%, 01/15/2033   771 
           
     Venezuela - 0.5%     
     Venezuela (Republic of)     
 2,985   5.75%, 02/26/2016 §   2,828 
 540   7.00%, 03/31/2038 §   429 
 430   8.25%, 10/13/2024 §   388 
 1,863   9.00%, 05/07/2023 §   1,773 
 3,260   9.25%, 05/07/2028 §   3,118 
 3,610   9.38%, 01/13/2034   3,471 
 3,055   11.75%, 10/21/2026 §   3,335 
         15,342 
     Total foreign government obligations     
     (cost $138,990)  $142,641 
           
MUNICIPAL BONDS - 0.3%     
     Airport Revenues - 0.0%     
     New York & New Jersey PA,     
$15   4.93%, 10/01/2051  $18 
           
     General Obligations - 0.2%     
     California State GO,     
 725   7.30%, 10/01/2039   1,040 
 230   7.60%, 11/01/2040   349 
 550   7.63%, 03/01/2040   823 
     California State GO, Taxable,     
 2,570   7.55%, 04/01/2039   3,843 
     Illinois State GO,     
 155   5.10%, 06/01/2033   156 
 585   5.67%, 03/01/2018   666 
         6,877 
     Miscellaneous - 0.0%     
     California State Public Works Board Lease Rev,     
 50   8.36%, 10/01/2034   69 
           
     Transportation - 0.1%     
     New Jersey State Turnpike Auth,     
 250   7.10%, 01/01/2041   367 
     New Jersey State Turnpike Auth, Taxable,     
 50   7.41%, 01/01/2040   76 

 

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

 

27

 

The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪
MUNICIPAL BONDS - 0.3% - (continued)     
     Transportation - 0.1% - (continued)     
     New York & New Jersey PA,     
$2,500   4.46%, 10/01/2062  $2,612 
 350   5.86%, 12/01/2024   457 
     North Texas Tollway Auth Rev,     
 455   6.72%, 01/01/2049   644 
         4,156 
     Total municipal bonds     
     (cost $9,515)  $11,120 
           
SENIOR FLOATING RATE INTERESTS♦ - 0.1%     
     Arts, Entertainment and Recreation - 0.0%     
     Kabel Deutschland Holding AG     
$295   3.25%, 02/01/2019  $296 
           
     Finance and Insurance - 0.0%     
     Asurion LLC     
 324   4.50%, 05/24/2019   328 
           
     Health Care and Social Assistance - 0.0%     
     Hologic, Inc.     
 124   4.50%, 08/01/2019   126 
           
     Information - 0.0%     
     Alcatel-Lucent     
 245   6.25%, 06/29/2016   249 
 110   7.25%, 01/30/2019   112 
         361 
     Mining - 0.0%     
     Arch Coal, Inc.     
 407   5.75%, 05/16/2018   412 
           
     Utilities - 0.1%     
     Texas Competitive Electric Holdings Co. LLC     
 1,949   4.73%, 10/10/2017   1,433 
           
     Total senior floating rate interests     
     (cost $2,886)  $2,956 
           
U.S. GOVERNMENT SECURITIES - 1.7%     
 U.S. Treasury Securities - 1.7%     
     U.S. Treasury Bonds - 0.3%     
$5,800   4.50%, 02/15/2036 ╦  $7,634 
           
     U.S. Treasury Notes - 1.4%     
 14,000   2.63%, 01/31/2018   15,321 
 26,800   3.25%, 12/31/2016 ‡   29,547 
         44,868 
         52,502 
     Total U.S. government securities     
     (cost $52,430)  $52,502 
           
     Total long-term investments     
     (cost $2,751,463)  $3,033,358 
           
SHORT-TERM INVESTMENTS - 3.9%     
Repurchase Agreements - 3.2%    
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $4,023,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $4,104)
     
$4,023   0.17%, 4/30/2013  $4,023 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $10,962, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury
Bond 11.25%, 2015, U.S. Treasury Note
0.75%, 2013, value of $11,182)
     
 10,962   0.15%, 4/30/2013   10,962 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $21,113, collateralized by
U.S. Treasury Note 0.88% - 3.13%,
2017 - 2021, value of $21,536)
     
 21,113   0.15%, 4/30/2013   21,113 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $29,324,
collateralized by U.S. Treasury Note
0.75% - 2.13%, 2015 - 2019, value of
$29,911)
     
 29,324   0.14%, 4/30/2013   29,324 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $5,273,
collateralized by FHLMC 3.00% -
5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $5,378)
     
 5,273   0.17%, 4/30/2013   5,273 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $17,869, collateralized by
U.S. Treasury Note 1.00% - 2.25%,
2016 - 2022, value of $18,226)
     
 17,869   0.14%, 4/30/2013   17,869 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $12,563, collateralized by
U.S. Treasury Note 0.25% - 1.88%,
2014 - 2019, value of $12,814)
     
 12,563   0.17%, 4/30/2013   12,563 
     UBS Securities, Inc. Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $224, collateralized by
U.S. Treasury Note 3.88%, 2018, value
of $229)
     
 224   0.13%, 4/30/2013    224 
         101,351 
U.S. Treasury Bills - 0.7%     
 25,000   0.15%, 01/09/2014   ○  $24,984 

 

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

 

28

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
SHORT-TERM INVESTMENTS - 3.9% - (continued)        
U.S. Treasury Bills - 0.7% - (continued)           
     Total short-term investments          
     (cost $126,326)       $126,335 
                
     Total investments          
     (cost $2,877,789) ▲   99.3%  $3,159,693 
     Other assets and liabilities   0.7%   20,735 
     Total net assets   100.0%  $3,180,428 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $2,878,873 and the aggregate gross unrealized appreciation and depreciation based on that cost were:    

 

Unrealized Appreciation  $284,831 
Unrealized Depreciation   (4,011)
Net Unrealized Appreciation  $280,820 

 

This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

 

This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.  In addition, cash of $260 was received from broker(s) as collateral in connection with swap contracts.  Securities valued at $2,438, held on behalf of the Fund at the custody bank, were designated by broker(s) as collateral in connection with swap contracts.

 

ΔVariable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

ÞThis security may pay interest in additional principal instead of cash.

 

The interest rate disclosed for these securities represents the effective yield on the date of the acquisition.

 

The principal amount for this security is adjusted for inflation and the interest payments equal a fixed percentage of the inflation-adjusted principal amount.

 

Senior floating rate interests 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 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.  Unless otherwise noted, the interest rate disclosed for these securities represents the average coupon as of April 30, 2013.

 

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. Unless otherwise indicated, these issues are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $266,501, which represents 8.4% of total net assets.

 

§These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $64,751, which represents 2.0% of total net assets.  

 

۞Convertible security.

 

Perpetual maturity security.  Maturity date shown is the first call date.

 

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

 

29

 

The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

All principal amounts are in U.S. dollars unless otherwise indicated.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $17,703 at April 30, 2013.

 

Futures Contracts Outstanding at April 30, 2013

 

Description  Number of
Contracts*
   Expiration
Date
  Notional Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
Long position contracts:                       
U.S. Treasury 30-Year Bond Future   218   06/19/2013  $31,499   $32,346   $847 
                        
Short position contracts:                       
U.S. Treasury 10-Year Note Future   231   06/19/2013  $30,393   $30,806   $(413)
U.S. Treasury CME Ultra Long Term Bond Future   30   06/19/2013   4,746    4,931    (185)
                     $(598)
                     $249 

 

* The number of contracts does not omit 000's.

 

Cash of $200 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

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

 

30

  

 

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
BRL  Buy  06/04/2013  GSC  $507   $505   $(2)
BRL  Buy  06/04/2013  UBS   3    3     
CHF  Sell  05/06/2013  DEUT   638    638     
CHF  Sell  05/02/2013  JPM   1,089    1,088    1 
CHF  Sell  05/03/2013  NAB   824    830    (6)
CLP  Buy  06/19/2013  UBS   348    350    2 
CLP  Sell  06/19/2013  SCB   347    350    (3)
COP  Buy  06/19/2013  SCB   426    427    1 
COP  Sell  06/19/2013  BOA   1,142    1,130    12 
COP  Sell  06/19/2013  SCB   211    213    (2)
EUR  Sell  06/19/2013  JPM   3,105    3,155    (50)
ILS  Buy  06/19/2013  JPM   362    372    10 
INR  Buy  06/19/2013  SCB   162    165    3 
INR  Buy  06/19/2013  UBS   696    714    18 
MXN  Buy  06/19/2013  CSFB   946    956    10 
MXN  Buy  06/19/2013  SCB   101    103    2 
MXN  Sell  06/19/2013  JPM   1,523    1,568    (45)
MYR  Buy  06/19/2013  JPM   341    352    11 
MYR  Buy  06/19/2013  SCB   94    95    1 
NGN  Buy  12/09/2013  CBK   623    644    21 
NGN  Buy  12/09/2013  SCB   185    182    (3)
PEN  Sell  06/19/2013  SSG   33    32    1 
PHP  Buy  06/19/2013  JPM   394    387    (7)
PHP  Buy  06/19/2013  SCB   47    47     
RUB  Buy  06/19/2013  UBS   378    376    (2)
RUB  Sell  06/19/2013  CSFB   560    567    (7)
RUB  Sell  06/19/2013  JPM   1,086    1,100    (14)
TRY  Buy  06/19/2013  CSFB   340    344    4 
TRY  Buy  06/19/2013  SCB   98    100    2 
ZAR  Sell  06/19/2013  JPM   469    483    (14)
                      $(56)

 

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

 

31

 

 The Hartford Balanced Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Credit Default Swap Contracts Outstanding at April 30, 2013

 

Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate /
Implied Credit
Spread (b)
  Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices:                             
Sell protection:                             
CDX.NA.HY.19  BCLY  $35,500   5.00%  12/20/17  $522   $2,517   $1,995 
CDX.NA.HY.19  BOA   3,555   5.00%  12/20/17   87    252    165 
Total                $609   $2,769   $2,160 
Credit default swaps on single-name issues:                             
Sell protection:                             
Societe Generale  MSC  $2,450   1.00% / 1.69%  03/20/18  $(98)  $(79)  $19 
Telecom Italia S.p.A.  BOA   1,000   1.00% / 2.56%  03/20/18   (105)   (72)   33 
Total                $(203)  $(151)  $52 
                 $406   $2,618   $2,212 

 

(a)The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.  Notional shown in U.S. dollars unless otherwise noted.

 

(b)Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues, U.S. municipal issues or sovereign government issues as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood of risk of default for the credit derivative.  The implied credit spread of a particular entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement.  Wider credit spreads represent a deterioration of the reference entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.  The percentage shown is the implied credit spread on April 30, 2013.  For credit default swap agreements on indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk.

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)  
   
Counterparty Abbreviations:  
BCLY Barclays    
BOA Banc of America Securities LLC    
CBK Citibank NA    
CSFB Credit Suisse First Boston Corp.  
DEUT Deutsche Bank Securities, Inc.    
GSC Goldman Sachs & Co.  
JPM JP Morgan Chase & Co.    
MSC Morgan Stanley    
NAB National Australia Bank  
SCB Standard Chartered Bank    
SSG State Street Global Markets LLC    
UBS UBS AG    
   
Currency Abbreviations:  
BRL Brazilian Real    
CAD Canadian Dollar    
CHF Swiss Franc    
CLP Chilean Peso    
COP Colombian Peso    
EUR EURO    
ILS Israeli New Shekel    
INR Indian Rupee    
MXN Mexican New Peso    
MYR Malaysian Ringgit    
NGN Nigerian Naira    
PEN Peruvian New Sol    
PHP Philippine Peso    
RUB New Ruble    
TRY Turkish New Lira    
ZAR South African Rand    
   
Index Abbreviations:  
CDX.NA.HY Credit Derivatives North American High Yield  
   
Municipal Bond Abbreviations:  
GO General Obligation    
PA Port Authority    
Rev Revenue    
   
Other Abbreviations:  
ADR American Depositary Receipt  
FHLB Federal Home Loan Bank    
FHLMC Federal Home Loan Mortgage Corp.  
FNMA Federal National Mortgage Association  
LIBOR London Interbank Offered Rate  
REIT Real Estate Investment Trust  

 

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

 

32

 

The Hartford Balanced Income Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                     
Asset & Commercial Mortgage Backed Securities   $46,482   $   $36,570   $9,912 
Common Stocks ‡    1,470,541    1,326,982    143,559     
Corporate Bonds    1,304,185        1,302,273    1,912 
Foreign Government Obligations    142,641        142,641     
Municipal Bonds    11,120        11,120     
Preferred Stocks    2,931    2,931         
Senior Floating Rate Interests    2,956        2,956     
U.S. Government Securities    52,502        52,502     
Short-Term Investments    126,335        126,335     
Total   $3,159,693   $1,329,913   $1,817,956   $11,824 
Credit Default Swaps *    2,212        2,212     
Foreign Currency Contracts *    99        99     
Futures *    847    847         
Total   $3,158   $847   $2,311   $ 
Liabilities:                     
Foreign Currency Contracts *    155        155     
Futures *    598    598         
Total   $753   $598   $155   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.
The Fund has all or primarily all of the equity securities categorized in a particular level.  Refer to the Schedule of Investments for further industry breakout.
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3 *
   Transfers Out of
Level 3 *
   Balance as
of April
30, 2013
 
Assets:                                             
Asset & Commercial Mortgage Backed Securities  $8,740   $1,825   $660  $495   $5,679   $(6,611)  $   $(876)  $9,912 
Corporate Bonds and Foreign Government Obligations   3,056        22           (1)       (1,165)   1,912 
Total  $11,796   $1,825   $682   $495   $5,679   $(6,612)  $   $(2,041)  $11,824 

 

*Investments are transferred into and out of Level 3 for a variety of reasons including, but not limited to:
1)Investments where trading has been halted (transfer into Level 3) or investments where trading has resumed (transfer out of Level 3).
2)Broker quoted investments (transfer into Level 3) or quoted prices in active markets (transfer out of Level 3).
3)Investments that have certain restrictions on trading (transfer into Level 3) or investments where trading restrictions have expired (transfer out of Level 3).
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $1,047.
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $22.

 

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

 

33

 

The Hartford Balanced Income Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:      
Investments in securities, at market value (cost $2,877,789)  $3,159,693 
Cash   1,917*
Foreign currency on deposit with custodian (cost $187)   188 
Unrealized appreciation on foreign currency contracts    99 
Unrealized appreciation on swap contracts   2,212 
Receivables:     
Investment securities sold   17,714 
Fund shares sold   24,566 
Dividends and interest   18,594 
Variation margin   41 
Swap premiums paid   609 
Other assets   199 
Total assets   3,225,832 
Liabilities:     
Unrealized depreciation on foreign currency contracts   155 
Payables:     
Investment securities purchased   37,007 
Fund shares redeemed   6,830 
Investment management fees   303 
Administrative fees   2 
Distribution fees   238 
Collateral received from broker   260 
Variation margin   49 
Accrued expenses   332 
Swap premiums received   203 
Other liabilities   25 
Total liabilities   45,404 
Net assets  $3,180,428 
Summary of Net Assets:     
Capital stock and paid-in-capital  $2,862,108 
Undistributed net investment income   5,807 
Accumulated net realized gain   28,178 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   284,335 
Net assets  $3,180,428 

 

*Cash of $200 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

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

 

34

 

 

 

Shares authorized   1,250,000 
Par value  $   0.001 
Class A: Net asset value per share/Maximum offering price per share  $12.91/$13.66 
Shares outstanding   123,363 
Net assets  $1,592,469 
Class B: Net asset value per share  $12.87 
Shares outstanding   1,523 
Net assets  $19,599 
Class C: Net asset value per share  $12.78 
Shares outstanding   79,856 
Net assets  $1,020,175 
Class I: Net asset value per share  $12.91 
Shares outstanding   35,851 
Net assets  $462,797 
Class R3: Net asset value per share  $12.95 
Shares outstanding   3,349 
Net assets  $43,382 
Class R4: Net asset value per share  $12.95 
Shares outstanding   1,937 
Net assets  $25,091 
Class R5: Net asset value per share  $12.96 
Shares outstanding   621 
Net assets  $8,048 
Class Y: Net asset value per share  $13.01 
Shares outstanding   681 
Net assets  $8,867 

 

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

 

35

 

The Hartford Balanced Income Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $21,217 
Interest   25,346 
Less: Foreign tax withheld   (362)
Total investment income   46,201 
      
Expenses:     
Investment management fees   7,665 
Administrative services fees     
Class R3   33 
Class R4   19 
Class R5   2 
Transfer agent fees     
Class A   729 
Class B   20 
Class C   367 
Class I   192 
Class R3   1 
Class R4    
Class R5    
Class Y    
Distribution fees     
Class A   1,658 
Class B   22 
Class C   4,039 
Class R3   83 
Class R4   31 
Custodian fees   15 
Accounting services fees   259 
Registration and filing fees   134 
Board of Directors' fees   25 
Audit fees   14 
Other expenses   181 
Total expenses (before waivers and fees paid indirectly)   15,489 
Expense waivers   (855)
Commission recapture   (3)
Custodian fee offset    
Total waivers and fees paid indirectly   (858)
Total expenses, net   14,631 
Net Investment Income   31,570 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities   28,626 
Net realized loss on futures   (36)
Net realized gain on swap contracts   693 
Net realized gain on foreign currency contracts   21 
Net realized loss on other foreign currency transactions   (148)
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   29,156 
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   147,545 
Net unrealized appreciation of futures   362 
Net unrealized appreciation of swap contracts   1,990 
Net unrealized depreciation of foreign currency contracts   (51)
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   30 
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions   149,876 
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   179,032 
Net Increase in Net Assets Resulting from Operations  $210,602 

 

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

 

36

 

The Hartford Balanced Income Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $31,570   $36,617 
Net realized gain on investments, other financial instruments and foreign currency transactions   29,156    27,655 
Net unrealized appreciation of investments, other financial instruments and foreign currency transactions   149,876    105,391 
Net Increase in Net Assets Resulting from Operations   210,602    169,663 
Distributions to Shareholders:          
From net investment income          
Class A   (16,638)   (19,641)
Class B   (222)   (283)
Class C   (7,615)   (7,668)
Class I   (5,082)   (5,040)
Class R3   (367)   (389)
Class R4   (230)   (194)
Class R5   (48)   (4)
Class Y   (83)   (22)
Total from net investment income   (30,285)   (33,241)
From net realized gain on investments          
Class A   (14,201)    
Class B   (205)    
Class C   (8,322)    
Class I   (3,831)    
Class R3   (354)    
Class R4   (187)    
Class R5   (2)    
Class Y   (31)    
Total from net realized gain on investments   (27,133)    
Total distributions   (57,418)   (33,241)
Capital Share Transactions:          
Class A   383,357    658,746 
Class B   2,146    5,691 
Class C   322,896    471,539 
Class I   133,455    227,464 
Class R3   13,496    20,914 
Class R4   8,926    13,365 
Class R5   7,565    31 
Class Y   6,623    1,616 
Net increase from capital share transactions   878,464    1,399,366 
Net Increase in Net Assets   1,031,648    1,535,788 
Net Assets:          
Beginning of period   2,148,780    612,992 
End of period  $3,180,428   $2,148,780 
Undistributed (distribution in excess of) net investment income (loss)  $5,807   $4,522 

 

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

 

37

 

The Hartford Balanced Income Fund

Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 I shares are sold without sales charges to certain eligible investors primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of

 

38

 

 

 

the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

39

 

The Hartford Balanced Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

40

  

 

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

  c) Investment Transactions and Investment Income – Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Trade date for senior floating rate interests purchased in the primary loan market is considered the date on which the loan allocations are determined. Trade date for senior floating rate interests purchased in the secondary loan market is the date on which the transaction is entered into.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. Paydown gains and losses on mortgage-related and other asset-backed securities are included in interest income in the Statement of Operations, as applicable.

 

  d) 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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

  e) Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

  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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received after the close of the

 

41

 

The Hartford Balanced Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, quarterly and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

d)Senior Floating Rate Interests – The Fund, as shown on the Schedule of Investments, invests 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

 

42

 

 

 

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. The Fund may invest in multiple series or tranches of a senior floating rate interest, which may have varying terms and carry different associated risks. The Fund may also enter into unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. In certain circumstances, the Fund may receive various fees upon the restructure of a senior floating rate interest by a borrower. Fees earned/paid may be recorded as a component of income or realized gain/loss in the Statement of Operations.

 

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.

 

e)Inflation Indexed Bonds – The Fund may invest in inflation indexed bonds. Inflation indexed bonds are fixed income investments whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation indexed bond will be included as interest income on the Statement of Operations, even though investors do not receive the principal amount until maturity. The Fund, as shown on the Schedule of Investments, had inflation indexed bonds as of April 30, 2013.

 

f)Mortgage Related and Other Asset Backed Securities The Fund may invest in mortgage related and other asset backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations, commercial mortgage backed securities, stripped mortgage backed securities, asset backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. Mortgage related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. These securities provide a monthly payment that consists of both interest and principal payments. Interest payments may be determined by fixed or adjustable rates. The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. The timely payment of principal and interest of certain mortgage related securities is guaranteed by the full faith and credit of the United States Government. Mortgage related and other asset backed securities created and guaranteed by non-governmental issuers, including government-sponsored corporations, may be supported by various forms of insurance or guarantees, but there can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund, as shown on the  Schedule of Investments, had mortgage related and other asset backed securities as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or

 

43

 

The Hartford Balanced Income Fund

Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. The Fund, as shown on the  Schedule of Investments, had outstanding futures contracts as of April 30, 2013.

 

c)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The
44

 

 

 

risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

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 investment or index in the event of a credit event, such as payment default or bankruptcy.

 

Under a credit default swap contract, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying investment 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. Although specified events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. These potential amounts would be partially offset by any recovery values of the respective referenced obligations or upfront payments received upon entering into the contract.

 

Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap contracts on corporate issues, sovereign government issues or U.S. municipal issues as of period-end are disclosed in the notes to the Schedule of Investments, as applicable, and serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the contract. Wider credit spreads represent a deterioration of the referenced entity’s soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. For credit default swap contracts on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced equity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. The Fund, as shown on the Schedule of Investments, had outstanding credit default swaps as of April 30, 2013.

 

45

 

The Hartford Balanced Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

d)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $99   $   $   $   $   $99 
Unrealized appreciation on swap contracts           2,212                2,212 
Variation margin receivable *   41                        41 
Total  $41   $99   $2,212   $   $   $   $2,352 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $155   $   $   $   $   $155 
Variation margin payable *   49                        49 
Total  $49   $155   $   $   $   $   $204 

 

* Only current day's variation margin is reported within the Statement of Assets and Liabilities. The variation margin is included in the open futures cumulative appreciation of $249 as reported in the Schedule of Investments.

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain (Loss) on Derivatives Recognized as a Result of Operations:            
Net realized loss on futures  $(36)  $   $   $   $   $   $(36)
Net realized gain on swap contracts           693                693 
Net realized gain on foreign currency contracts       21                    21 
Total  $(36)  $21   $693   $   $   $   $678 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations: 
Net change in unrealized appreciation of futures  $362   $   $   $   $   $   $362 
Net change in unrealized appreciation of swap contracts           1,990                1,990 
Net change in unrealized depreciation of foreign currency contracts       (51)                   (51)
Total  $362   $(51)  $1,990   $   $   $   $2,301 

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

46

 

 

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. Senior floating rate interests and securities subject to prepayment and extension risk generally offer less potential for gains when interest rates decline. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities, senior floating rate interests, and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

47

 

The Hartford Balanced Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $33,241   $11,828 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $17,916 
Undistributed Long-Term Capital Gain   13,778 
Unrealized Appreciation *   133,440 
Total Accumulated Earnings  $165,134 

 

*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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(366)
Accumulated Net Realized Gain (Loss)   366 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

During the year ended October 31, 2012, the Fund utilized $922 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

48

 

 

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $250 million   0.700%  
On next $250 million   0.630%  
On next $500 million   0.600%  
On next $1.5 billion   0.570%  
On next $2.5 billion   0.550%  
On next $5 billion   0.530%  
Over $10 billion   0.525%  

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.020%  
On next $5 billion   0.018%  
Over $10 billion   0.016%  

 

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

 

49

 

The Hartford Balanced Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B*   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 0.99%      1.74%      1.74%      0.74%      1.24%      0.94%      0.69%      0.64%   

 

*Due to the reduced Class B Distribution and Service Plan (12b-1) fees effective June 30, 2012, the limit on net operating expenses attributable to Class B shares is 0.99%.

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses as follows:

 

Class A   Class B*   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 0.89%      1.64%      1.64%      0.64%      1.14%      0.84%      0.64%      0.59%   

 

*Due to the reduced Class B Distribution and Service Plan (12b-1) fees effective June 30, 2012, the limit on net operating expenses attributable to Class B shares was 0.89%.

 

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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended 
April 30, 2013
 
Class A   0.93%
Class B   0.93 
Class C   1.68 
Class I   0.68 
Class R3   1.18 
Class R4   0.88 
Class R5   0.68 
Class Y   0.61 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $12,328 and contingent deferred sales charges of $119 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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

 

50

 

 

payment of a Rule 12b-1 fee of 0.25% of average daily net assets. 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. Effective January 1, 2011, Class B shares’ Rule 12b-1 fee was reduced from 1.00% to 0.25% in accordance with FINRA rules, although it is possible that such fees may be charged in the future. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R4   1%
Class R5   2 

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $1,071,680 
Sales Proceeds Excluding U.S. Government Obligations   309,180 
Cost of Purchases for U.S. Government Obligations   92,252 
Sales Proceeds for U.S. Government Obligations   64,651 

 

51

 

The Hartford Balanced Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares Sold   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease)
of Shares
   Shares Sold   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   37,250    2,448    (8,731)       30,967    63,789    1,615    (8,878)       56,526 
Amount  $461,644   $29,850   $(108,137)  $   $383,357   $743,556   $18,846   $(103,656)  $   $658,746 
Class B                                                  
Shares   306    30    (161)       175    750    20    (272)       498 
Amount  $3,754   $369   $(1,977)  $   $2,146   $8,622   $237   $(3,168)  $   $5,691 
Class C                                                  
Shares   29,426    1,151    (4,261)       26,316    43,872    561    (3,706)       40,727 
Amount  $361,346   $13,864   $(52,314)  $   $322,896   $508,056   $6,494   $(43,011)  $   $471,539 
Class I                                                  
Shares   15,463    572    (5,295)       10,740    21,997    324    (2,850)       19,471 
Amount  $192,126   $6,985   $(65,656)  $   $133,455   $257,129   $3,794   $(33,459)  $   $227,464 
Class R3                                                  
Shares   1,424    58    (403)       1,079    2,613    33    (858)       1,788 
Amount  $17,824   $715   $(5,043)  $   $13,496   $30,676   $388   $(10,150)  $   $20,914 
Class R4                                                  
Shares   2,067    31    (1,347)       751    1,437    15    (308)       1,144 
Amount  $25,467   $376   $(16,917)  $   $8,926   $16,938   $180   $(3,753)  $   $13,365 
Class R5                                                  
Shares   640    4    (36)       608    2                2 
Amount  $7,966   $50   $(451)  $   $7,565   $27   $4   $   $   $31 
Class Y                                                  
Shares   565    9    (41)       533    143    2    (9)       136 
Amount  $7,016   $113   $(506)  $   $6,623   $1,700   $21   $(105)  $   $1,616 
Total                                                  
Shares   87,141    4,303    (20,275)       71,169    134,603    2,570    (16,881)       120,292 
Amount  $1,077,143   $52,322   $(251,001)  $   $878,464   $1,566,704   $29,964   $(197,302)  $   $1,399,366 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   17   $211 
For the Year Ended October 31, 2012   28   $332 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

52

 

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

53

 

The Hartford Balanced Income Fund
Financial Highlights
– Selected Per-Share Data – (A)

  

Class

  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
 Capital
   Total Distributions   Net Asset Value at
End of Period
 
 
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $12.24   $0.16   $0.81   $0.97   $(0.15)  $(0.15)  $   $(0.30)  $12.91 
B   12.20    0.16    0.81    0.97    (0.15)   (0.15)       (0.30)   12.87 
C   12.13    0.11    0.80    0.91    (0.11)   (0.15)       (0.26)   12.78 
I   12.24    0.18    0.81    0.99    (0.17)   (0.15)       (0.32)   12.91 
R3   12.29    0.15    0.80    0.95    (0.14)   (0.15)       (0.29)   12.95 
R4   12.28    0.16    0.81    0.97    (0.15)   (0.15)       (0.30)   12.95 
R5   12.29    0.18    0.81    0.99    (0.17)   (0.15)       (0.32)   12.96 
Y   12.34    0.18    0.81    0.99    (0.17)   (0.15)       (0.32)   13.01 
                                              
For the Year Ended October 31, 2012 (E)
A   11.02    0.35    1.18    1.53    (0.31)           (0.31)   12.24 
B   10.98    0.30    1.16    1.46    (0.24)           (0.24)   12.20 
C   10.94    0.25    1.18    1.43    (0.24)           (0.24)   12.13 
I   11.02    0.37    1.18    1.55    (0.33)           (0.33)   12.24 
R3   11.06    0.31    1.20    1.51    (0.28)           (0.28)   12.29 
R4   11.06    0.33    1.21    1.54    (0.32)           (0.32)   12.28 
R5   11.06    0.38    1.18    1.56    (0.33)           (0.33)   12.29 
Y   11.05    0.37    1.26    1.63    (0.34)           (0.34)   12.34 
                                              
For the Year Ended October 31, 2011 (E)
A   10.55    0.37    0.44    0.81    (0.34)           (0.34)   11.02 
B   10.51    0.28    0.44    0.72    (0.25)           (0.25)   10.98 
C   10.48    0.29    0.44    0.73    (0.27)           (0.27)   10.94 
I   10.54    0.39    0.45    0.84    (0.36)           (0.36)   11.02 
R3   10.58    0.32    0.46    0.78    (0.30)           (0.30)   11.06 
R4   10.58    0.37    0.44    0.81    (0.33)           (0.33)   11.06 
R5   10.58    0.41    0.44    0.85    (0.37)           (0.37)   11.06 
Y   10.57    0.42    0.43    0.85    (0.37)           (0.37)   11.05 
                                              
For the Year Ended October 31, 2010
A   9.44    0.33    1.11    1.44    (0.33)           (0.33)   10.55 
B   9.40    0.29    1.07    1.36    (0.25)           (0.25)   10.51 
C   9.40    0.26    1.10    1.36    (0.28)           (0.28)   10.48 
I(H)   9.81    0.25    0.74    0.99    (0.26)           (0.26)   10.54 
R3(I)   9.75    0.13    0.84    0.97    (0.14)           (0.14)   10.58 
R4(I)   9.75    0.14    0.84    0.98    (0.15)           (0.15)   10.58 
R5(I)   9.75    0.16    0.84    1.00    (0.17)           (0.17)   10.58 
Y   9.46    0.42    1.05    1.47    (0.36)           (0.36)   10.57 
                                              
For the Year Ended October 31, 2009 (E)
A   8.22    0.38    1.23    1.61    (0.39)           (0.39)   9.44 
B   8.20    0.31    1.23    1.54    (0.34)           (0.34)   9.40 
C   8.19    0.31    1.23    1.54    (0.33)           (0.33)   9.40 
Y   8.24    0.42    1.22    1.64    (0.42)           (0.42)   9.46 
                                              
For the Year Ended October 31, 2008
A   11.02    0.40    (2.75)   (2.35)   (0.41)   (0.04)       (0.45)   8.22 
B   10.98    0.33    (2.74)   (2.41)   (0.33)   (0.04)       (0.37)   8.20 
C   10.97    0.33    (2.74)   (2.41)   (0.33)   (0.04)       (0.37)   8.19 
Y   11.03    0.44    (2.75)   (2.31)   (0.44)   (0.04)       (0.48)   8.24 

 

(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.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)Commenced operations on February 26, 2010.
(I)Commenced operations on May 28, 2010.

 

54

 

- Ratios and Supplemental Data -

  

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                            
                            
 8.12%(F)  $1,592,469    1.00%(G)   0.93%(G)   2.64%(G)   15%
 8.14(F)   19,599    1.11(G)   0.93(G)   2.65(G)    
 7.68(F)   1,020,175    1.73(G)   1.68(G)   1.88(G)    
 8.24(F)   462,797    0.74(G)   0.68(G)   2.88(G)    
 7.87(F)   43,382    1.34(G)   1.18(G)   2.37(G)    
 8.08(F)   25,091    1.04(G)   0.88(G)   2.64(G)    
 8.21(F)   8,048    0.74(G)   0.68(G)   2.95(G)    
 8.20(F)   8,867    0.64(G)   0.61(G)   2.88(G)    
                            
                            
 14.05    1,131,250    1.04    0.83    2.98    30 
 13.44    16,451    1.54    1.30    2.55     
 13.22    649,208    1.79    1.58    2.19     
 14.31    307,422    0.81    0.59    3.19     
 13.84    27,888    1.41    1.11    2.64     
 14.08    14,568    1.17    0.83    2.77     
 14.33    164    0.76    0.56    3.29     
 14.98    1,829    0.74    0.56    3.14     
                            
                            
 7.78    395,347    1.17    0.67    3.44    29 
 6.96    9,328    2.05    1.50    2.61     
 7.05    140,127    1.90    1.40    2.70     
 8.11    62,139    0.94    0.44    3.62     
 7.45    5,333    1.50    1.00    2.96     
 7.82    463    1.22    0.70    3.37     
 8.13    119    0.91    0.40    3.75     
 8.23    136    0.81    0.31    3.84     
                            
                            
 15.55    178,227    1.24    0.74    3.73    34 
 14.69    5,008    2.13    1.50    3.07     
 14.66    52,740    1.98    1.48    2.82     
 10.23(F)   17,593    0.99(G)   0.49(G)   3.52(G)    
 10.03(F)   166    1.58(G)   1.01(G)   3.03(G)    
 10.17(F)   112    1.28(G)   0.71(G)   3.40(G)    
 10.33(F)   110    0.96(G)   0.41(G)   3.70(G)    
 15.87    126    0.86    0.35    4.24     
                            
                            
 20.29    59,923    1.32    1.19    4.56    63 
 19.37    3,681    2.26    1.90    3.80     
 19.44    6,409    2.10    1.94    3.81     
 20.67    108    0.94    0.85    4.96     
                            
                            
 (22.01)   36,544    1.25    1.25    4.10    44 
 (22.53)   1,945    2.14    2.00    3.35     
 (22.55)   4,007    2.04    2.00    3.34     
 (21.67)   90    0.91    0.90    4.43     

 

55

 

The Hartford Balanced Income Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

56

 

 

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

57

 

The Hartford Balanced Income Fund
Directors and Officers (Unaudited) – (continued)

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

58

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical  (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
  

Ending Account

Value
April 30, 2013

   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,081.20   $4.79   $1,000.00   $1,020.19   $4.65    0.93%  181  365
Class B  $1,000.00   $1,081.40   $4.78   $1,000.00   $1,020.20   $4.64    0.93   181  365
Class C  $1,000.00   $1,076.80   $8.64   $1,000.00   $1,016.47   $8.39    1.68   181  365
Class I  $1,000.00   $1,082.40   $3.51   $1,000.00   $1,021.42   $3.41    0.68   181  365
Class R3  $1,000.00   $1,078.70   $6.08   $1,000.00   $1,018.94   $5.91    1.18   181  365
Class R4  $1,000.00   $1,080.80   $4.52   $1,000.00   $1,020.45   $4.39    0.88   181  365
Class R5  $1,000.00   $1,082.10   $3.49   $1,000.00   $1,021.44   $3.39    0.68   181  365
Class Y  $1,000.00   $1,082.00   $3.17   $1,000.00   $1,021.75   $3.07    0.61   181  365

 

59

 

The Hartford Balanced Income Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Balanced Income Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the

 

60

 

 

 

following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

61

 

The Hartford Balanced Income Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early).

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Dividend Paying Security Investment Risk: Dividends are not guaranteed and are subject to change. Dividend paying securities as a group can fall out of favor with the market, causing the Fund to underperform.

 

62
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-BI13 4/13 113963 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

3

 

 

 
 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD CAPITAL APPRECIATION FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Capital Appreciation Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   11
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   12
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   13
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   14
Notes to Financial Statements (Unaudited)   15
Financial Highlights (Unaudited)   28
Directors and Officers (Unaudited)   31
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   33
Quarterly Portfolio Holdings Information (Unaudited)   33
Expense Example (Unaudited)   34
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   35
Principal Risks (Unaudited)   37

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

The Hartford Capital Appreciation Fund inception 07/22/1996
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks growth of capital.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
Capital Appreciation A#   21.39%       20.54%       1.04%       9.72%    
Capital Appreciation A##        13.91%       -0.10%       9.10%    
Capital Appreciation B#   20.87%       19.50%       0.21%       9.10%*    
Capital Appreciation B##        14.50%       -0.18%       9.10%*    
Capital Appreciation C#   20.96%       19.67%       0.32%       8.96%    
Capital Appreciation C##        18.67%       0.32%       8.96%    
Capital Appreciation I#   21.56%       20.86%       1.34%       9.93%    
Capital Appreciation R3#   21.26%       20.24%       0.78%       9.72%    
Capital Appreciation R4#   21.41%       20.59%       1.09%       9.94%    
Capital Appreciation R5#   21.59%       20.94%       1.40%       10.15%    
Capital Appreciation Y#   21.66%       21.08%       1.50%       10.23%    
Russell 3000 Index   15.16%       17.21%       31.48%       8.48%    
S&P 500 Index   14.41%       16.88%       28.88%       7.88%    

 

Not Annualized
# Without sales charge
## With sales charge
* Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund's Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Capital Appreciation Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*

   Net   Gross 
Capital Appreciation Class A   1.16%       1.16%    
Capital Appreciation Class B   2.00%       2.01%    
Capital Appreciation Class C   1.87%       1.87%    
Capital Appreciation Class I   0.86%       0.86%    
Capital Appreciation Class R3   1.40%       1.41%    
Capital Appreciation Class R4   1.10%       1.11%    
Capital Appreciation Class R5   0.80%       0.80%    
Capital Appreciation Class Y   0.70%       0.70%    

 

*

As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013. 

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Saul J. Pannell, CFA Frank D. Catrickes, CFA Kent M. Stahl, CFA*
Senior Vice President and Equity Portfolio Manager Senior Vice President and Equity Portfolio Manager Senior Vice President and Director, Investments and Risk Management
     
Gregg R. Thomas, CFA*    
Vice President and Director, Risk Management    
     
*Appointed as a Portfolio Manager to the Fund as of March 1, 2013.

 

How did the Fund perform?

The Class A shares of The Hartford Capital Appreciation Fund returned 21.39%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the Russell 3000 Index, which returned 15.16% for the same period. The Fund also outperformed the 13.98% average return 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?

U.S. equities surged during the period, ending at an all-time high. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. U.S. housing data continued to provide evidence that the sector at the epicenter of the financial crisis could be a key engine of economic recovery in 2013. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

All ten sectors in the Russell 3000 Index posted positive returns during the period. Strong performers included the Health Care (+20.3%), Consumer Discretionary (+20.0%), and Financials (+18.71%) sectors, while the Information Technology (+7.8%), Energy (+8.9%) and Materials (+10.3%) sectors lagged on a relative basis.

 

The Fund outperformed its benchmark primarily due to strong security selection. Positive stock selection within the Industrials, Information Technology, and Consumer Staples sectors more than offset weak stock selection within the Materials, Health Care, and Telecommunication Services sectors. Sector allocation, a result of bottom-up stock selection, modestly contributed to benchmark-relative returns due to an overweight position (i.e. the Fund’s sector position was greater than the benchmark position) in the strong-performing Consumer Discretionary sector and an underweight to the weaker performing Energy sector.

 

The top contributors to relative performance included United Continental (Industrials), Hertz Global Holding (Industrials), and Best Buy Company (Consumer Discretionary). U.S.-based global airline United Continental saw shares rise as investors continued to gain confidence that the integration problems from the United and Continental merger were beginning to be resolved. The share price of U.S.-based car and equipment

 

3

 

The Hartford Capital Appreciation Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

rental company Hertz Global Holding climbed as a result of a strong earnings release with higher-than-expected revenue and profit margins as well as higher earning guidance. Shares of Best Buy Company, a U.S.-based electronics and entertainment retailer, rose after the company announced that it would divest its interest in a European joint venture to its partner in the joint venture, Carphone Warehouse. U.S.-based biopharmaceutical company Gilead Sciences was also among the top contributors to absolute performance (i.e. total return) during the period.

 

Teva Pharmaceutical (Health Care), Barrick Gold (Materials), and JC Penney Holding (Consumer Discretionary) detracted most from relative returns during the period. Israel-based global pharmaceutical company Teva Pharmaceutical’s stock declined early in the period after management announced that it would take longer than expected to realize the benefits from a strategy to reduce costs. Shares of Canada-based gold exploration and mining company Barrick Gold underperformed as investors grew concerned about the rising cost to extract gold; downward pressure on gold prices also weighed on the stock.U.S.-based department store operator JC Penney Holding saw shares decline as a result of soft earnings attributed to a slowdown in same store sales and a decline in gross margins. Top detractors from absolute returns also included computer, smartphone, and application designer and retailer Apple (Consumer Discretionary).

 

What is the outlook?

Looking forward, fundamentals appear to have improved somewhat as compared to this time last year. In our view, signs of strength include macroeconomic trends, particularly U.S. housing, where we are starting to see higher construction building on 2012 orders. We believe that housing is a tailwind that should drive Gross Domestic Product going forward.

 

Although we believe the U.S. outlook continues to improve, significant challenges remain in Europe, as evidenced by the recent Cyprus bank crisis. In response to these mixed developments, we have maintained a neutral posture while perhaps letting some stocks run a bit more because of the more stable backdrop. We believe strong gains in equity markets, especially in the U.S., mean that valuations for some companies and sectors are becoming less attractive.

 

In this environment we continue to focus our efforts on stock-by-stock fundamental research consistent with the Fund’s opportunistic investment strategy. We continue to seek out and identify companies that we believe hold the potential for capital appreciation in a moderate growth environment. At the end of the period, our bottom-up decisions resulted in overweights in the Consumer Discretionary, Industrials, and Information Technology sectors and underweights in Financials, Utilities, and Energy sectors relative to the Russell 3000 Index.

 

Diversification by Industry
as of April 30, 2013

Industry (Sector)  Percentage of
Net Assets
 
Equity Securities     
Automobiles and Components (Consumer Discretionary)   6.4%
Banks (Financials)   0.6 
Capital Goods (Industrials)   7.6 
Commercial and Professional Services (Industrials)   0.3 
Consumer Durables and Apparel (Consumer Discretionary)   0.2 
Consumer Services (Consumer Discretionary)   3.3 
Diversified Financials (Financials)   6.5 
Energy (Energy)   6.2 
Food and Staples Retailing (Consumer Staples)   4.6 
Food, Beverage and Tobacco (Consumer Staples)   2.8 
Health Care Equipment and Services (Health Care)   2.8 
Household and Personal Products (Consumer Staples)   0.0 
Insurance (Financials)   4.5 
Materials (Materials)   3.5 
Media (Consumer Discretionary)   2.7 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   7.8 
Real Estate (Financials)   0.4 
Retailing (Consumer Discretionary)   8.4 
Semiconductors and Semiconductor Equipment (Information Technology)   4.4 
Software and Services (Information Technology)   9.5 
Technology Hardware and Equipment (Information Technology)   4.2 
Telecommunication Services (Services)   0.9 
Transportation (Industrials)   10.3 
Utilities (Utilities)   0.2 
Total   98.1%
Fixed Income Securities     
Finance and Insurance (Finance)   0.2%
Total   0.2%
Short-Term Investments   1.1 
Other Assets and Liabilities   0.6 
Total   100.0%

 

4

 

The Hartford Capital Appreciation Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 98.1%

     
     Automobiles and Components - 6.4%     
 117   Dana Holding Corp.  $2,016 
 25   Delphi Automotive plc   1,146 
 28,299   Ford Motor Co.   387,973 
 81   General Motors Co. ●   2,489 
 9,940   Goodyear (The) Tire & Rubber Co. ●   124,205 
 58   Harley-Davidson, Inc.   3,195 
 500   Hyundai Motor Co., Ltd.   90,704 
 71   Modine Manufacturing Co. ●   647 
 13   Renault S.A.   888 
 106   Stoneridge, Inc. ●   803 
 58   Tenneco Automotive, Inc. ●   2,251 
 37   Tesla Motors, Inc. ●   1,980 
 2,713   TRW Automotive Holdings Corp. ●   162,952 
         781,249 
     Banks - 0.6%     
 1,061   Hana Financial Holdings   33,991 
 860   Intesa Sanpaolo   1,562 
 406   Mitsubishi UFJ Financial Group, Inc.   2,754 
 272   PNC Financial Services Group, Inc.   18,461 
 477   Wells Fargo & Co.   18,123 
         74,891 
     Capital Goods - 7.6%     
 48   3M Co.   4,990 
 88   AGCO Corp. ‡   4,686 
 72   AMETEK, Inc.   2,923 
 26   Armstrong World Industries, Inc. ●   1,317 
 46   Assa Abloy Ab   1,850 
 78   Belden, Inc.   3,856 
 31   Boeing Co.   2,798 
 1,405   Cummins, Inc.   149,521 
 200   DigitalGlobe, Inc. ●   5,852 
 28   Dover Corp.   1,911 
 67   Eaton Corp. plc   4,102 
 16   Flowserve Corp.   2,592 
 44   Gencorp, Inc. ●   575 
 65   General Cable Corp. ●   2,257 
 46   Illinois Tool Works, Inc.   2,970 
 17,942   Itochu Corp.   222,471 
 4,350   KBR, Inc.   130,843 
 40   Lockheed Martin Corp.   4,007 
 67   Masco Corp.   1,303 
 45   MasTec, Inc. ●   1,263 
 55   Northrop Grumman Corp.   4,149 
 1,030   Pentair Ltd.   55,975 
 154   Polypore International, Inc. ●   6,443 
 97   Rexel S.A.   2,145 
 6,642   Rolls-Royce Holdings plc   116,760 
 2,597   Safran S.A.   127,679 
 40   Stanley Black & Decker, Inc.   3,013 
 294   TransDigm Group, Inc.   43,145 
 47   United Technologies Corp.   4,266 
 80   WESCO International, Inc. ●   5,741 
         921,403 
     Commercial and Professional Services - 0.3%     
 56   IHS, Inc. ●   5,434 
 65   Knoll, Inc.   1,012 
 840   Nielsen Holdings N.V.   29,076 
 43   Verisk Analytics, Inc. ●   2,633 
 80   Waste Connections, Inc.   3,042 
         41,197 
     Consumer Durables and Apparel - 0.2%     
 116   D.R. Horton, Inc.   3,038 
 11   Deckers Outdoor Corp. ●   633 
 191   Fifth & Pacific Cos., Inc. ●   3,930 
 25   Fossil, Inc. ●   2,429 
 87   Mattel, Inc.   3,952 
 13   PVH Corp.   1,466 
 178   Quiksilver, Inc. ●   1,195 
 2,098   Samsonite International S.A.   5,173 
 3   Taylor Morrison Home Corp. ●   77 
 29   Tempur-Pedic International, Inc. ●   1,407 
 118   Vera Bradley, Inc. ●   2,692 
         25,992 
     Consumer Services - 3.3%     
 64   Apollo Group, Inc. Class A ●   1,184 
 21   Buffalo Wild Wings, Inc. ●   1,852 
 219   Burger King Worldwide, Inc.   3,942 
 36   DeVry, Inc.   996 
    Diamond Resorts LLC ⌂●†   110,536 
 1,891   Dunkin' Brands Group, Inc.   73,384 
 107   Grand Canyon Education, Inc. ●   2,727 
 48   ITT Educational Services, Inc. ●   877 
 50   MGM China Holdings Ltd.   118 
 697   Penn National Gaming, Inc. ●   40,825 
 52   Tim Hortons, Inc.   2,806 
 2,666   Wyndham Worldwide Corp.   160,183 
 30   Yum! Brands, Inc.   2,010 
         401,440 
     Diversified Financials - 6.5%     
 1,279   Ameriprise Financial, Inc.   95,334 
 420   Bank of America Corp.   5,175 
 45   BlackRock, Inc.   12,048 
 4,052   Citigroup, Inc.   189,067 
 462   E*Trade Financial Corp. ●   4,758 
 795   IntercontinentalExchange, Inc. ●   129,485 
 77   Invesco Ltd.   2,447 
 6,825   JP Morgan Chase & Co.   334,513 
 149   Julius Baer Group Ltd. ☼   5,934 
 61   LPL Financial Holdings, Inc.   2,094 
 28   Oaktree Capital Group LLC   1,434 
 102   Waddell & Reed Financial, Inc. Class A   4,353 
         786,642 
     Energy - 6.2%     
 200   Anadarko Petroleum Corp.   16,913 
 72   Atwood Oceanics, Inc. ●   3,509 
 182   Baker Hughes, Inc.   8,243 
 8,121   BG Group plc   137,095 
 3,014   BP plc ADR   131,418 
 52   Cameron International Corp. ●   3,174 
 106   Canadian Natural Resources Ltd. ADR   3,111 
 6,597   Chesapeake Energy Corp.   128,898 
 43   Chevron Corp.   5,226 
 2,961   Cobalt International Energy, Inc. ●   82,740 
 56   Consol Energy, Inc.   1,876 
 19   Continental Resources, Inc. ●   1,519 
 43   Exxon Mobil Corp.   3,794 
 127   Halliburton Co.   5,417 

 

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

 

5

 

The Hartford Capital Appreciation Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 98.1% - (continued)

     
     Energy - 6.2% - (continued)     
 665   Imperial Oil Ltd.  $26,498 
    Inpex Corp.   924 
 14,545   JX Holdings, Inc.   78,978 
 780   Karoon Gas Australia Ltd. ●   3,383 
 100   Kior, Inc. ●   487 
 221   McDermott International, Inc. ●   2,362 
 48   National Oilwell Varco, Inc.   3,098 
 87   Newfield Exploration Co. ●   1,887 
 100   Occidental Petroleum Corp.   8,893 
 35   Peabody Energy Corp.   700 
 12   Pioneer Natural Resources Co.   1,422 
 81   QEP Resources, Inc.   2,327 
 53   Royal Dutch Shell plc ADR   3,677 
 121   Southwestern Energy Co. ●   4,514 
 96   Superior Energy Services, Inc. ●   2,635 
 1,379   Tesoro Corp.   73,617 
 98   Trican Well Service Ltd.   1,275 
 83   Whiting Petroleum Corp. ●   3,713 
         753,323 
     Food and Staples Retailing - 4.6%     
 99   AEON Co., Ltd.   1,394 
 4,559   CVS Caremark Corp.   265,214 
 56   FamilyMart Co., Ltd.   2,573 
 8,093   Kroger (The) Co.   278,244 
 102   Walgreen Co.   5,070 
         552,495 
     Food, Beverage and Tobacco - 2.8%     
 1,785   Anheuser-Busch InBev N.V. ☼   171,477 
 38   Archer-Daniels-Midland Co.   1,298 
 80   Green Mountain Coffee Roasters, Inc. ●   4,593 
 1,686   Hillshire (The) Brands Co.   60,531 
 100   Imperial Tobacco Group plc   3,563 
 77   Kraft Foods Group, Inc.   3,940 
 119,009   LT Group, Inc. ●   70,260 
 157   Maple Leaf Foods, Inc. w/ Rights   2,075 
 57   Molson Coors Brewing Co.   2,952 
 68   Monster Beverage Corp. ●   3,814 
 94   PepsiCo, Inc.   7,778 
 34   Philip Morris International, Inc.   3,224 
 91   Unilever N.V. NY Shares ADR   3,863 
 342   Universal Robina Corp.   986 
         340,354 
     Health Care Equipment and Services - 2.8%     
 37   Aetna, Inc.   2,126 
 13,205   Boston Scientific Corp. ●   98,905 
 64   Brookdale Senior Living, Inc. ●   1,647 
 223   Cardinal Health, Inc.   9,839 
 766   CareView Communications, Inc. ⌂†   379 
 104   Catamaran Corp. ●   5,981 
 44   CIGNA Corp.   2,927 
 1,591   Covidien plc   101,576 
 4,878   Hologic, Inc. ●   99,356 
 279   Medtronic, Inc.   13,003 
 68   St. Jude Medical, Inc.   2,815 
 76   UnitedHealth Group, Inc.   4,525 
         343,079 
     Household and Personal Products - 0.0%     
 43   Estee Lauder Co., Inc.   2,961 
 45   Herbalife Ltd.   1,771 
         4,732 
     Insurance - 4.5%     
 49   ACE Ltd.   4,352 
 1,777   Aflac, Inc.   96,715 
 503   AIA Group Ltd.   2,236 
 8,375   American International Group, Inc. ●   346,872 
 167   Assured Guaranty Ltd.   3,444 
 149   AXA S.A. ☼   2,800 
 604   China Pacific Insurance Co., Ltd.   2,178 
 2,318   Fidelity National Financial, Inc.   62,227 
 96   Lincoln National Corp.   3,274 
 145   Marsh & McLennan Cos., Inc.   5,524 
 123   MetLife, Inc.   4,776 
 66   Principal Financial Group, Inc.   2,370 
 63   Reinsurance Group of America, Inc.   3,966 
 73   T&D Holdings, Inc. ☼   847 
 93   Tokio Marine Holdings, Inc.   2,949 
 125   Unum Group   3,488 
         548,018 
     Materials - 3.5%     
 31   Air Liquide   3,871 
 878   Akzo Nobel N.V. ☼   52,970 
 146   Allied Nevada Gold Corp. ●   1,562 
 8,559   AuRico Gold, Inc.   44,250 
 7,402   Barrick Gold Corp.   145,886 
 78   Cabot Corp.   2,927 
 468   Continental Gold Ltd. ●   2,316 
 78   Dow Chemical Co.   2,633 
 29   E.I. DuPont de Nemours & Co.   1,583 
 15,570   Glencore Xstrata plc   76,971 
 54   International Paper Co.   2,531 
 84   Methanex Corp. ADR   3,558 
 23,908   Mitsui Chemicals, Inc.   55,328 
 397   Molycorp, Inc. ●   2,317 
 47   Mosaic Co.   2,918 
 86   Norbord, Inc. ●   2,876 
 71   Packaging Corp. of America   3,384 
 44   Reliance Steel & Aluminum   2,837 
 57   Rock Tenn Co. Class A   5,728 
 173   SunCoke Energy, Inc. ●   2,624 
         419,070 
     Media - 2.7%     
 59   CBS Corp. Class B   2,700 
 377   Charter Communications, Inc. ●   37,975 
 25   Harvey Weinstein Co. Holdings Class A-1 ⌂●†∞    
 7,822   Interpublic Group of Cos., Inc.   108,262 
 508   Mediaset S.p.A.   1,316 
 127   Omnicom Group, Inc.   7,601 
 252   Pandora Media, Inc. ●   3,514 
 2,702   Time Warner, Inc.   161,542 
 66   Walt Disney Co.   4,126 
 161   WPP plc   2,653 
         329,689 
     Pharmaceuticals, Biotechnology and Life Sciences - 7.8%     
 65   Actavis, Inc. ●‡   6,841 
 200   Agilent Technologies, Inc.   8,300 
 22   Algeta ASA ●   756 

 

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

 

6

 

The Hartford Capital Appreciation Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 98.1% - (continued)

     
     Pharmaceuticals, Biotechnology and Life Sciences - 7.8% - (continued)     
 50   Alkermes plc ●  $1,541 
 166   Almirall S.A.   2,197 
 2,739   Arena Pharmaceuticals, Inc. ●   22,570 
 115   AstraZeneca plc   5,975 
 415   AVANIR Pharmaceuticals, Inc. ●   1,323 
 89   Bristol-Myers Squibb Co.   3,547 
 1,181   Endo Health Solutions, Inc. ●   43,275 
 9,084   Excel Medical Fund L.P. ⌂●†Ђ   6,880 
 8,026   Gilead Sciences, Inc. ●   406,412 
 190   Johnson & Johnson   16,235 
 352   Merck & Co., Inc.   16,528 
 40   Onyx Pharmaceuticals, Inc. ●   3,752 
 66   Pfizer, Inc.   1,906 
 26   Puma Biotechnology, Inc. ●   822 
 23   Regeneron Pharmaceuticals, Inc. ●   4,997 
 67   Roche Holding AG   16,858 
 37   Seattle Genetics, Inc. ●   1,381 
 700   Shionogi & Co., Ltd.   17,218 
 30   Tesaro, Inc. ●   815 
 8,695   Teva Pharmaceutical Industries Ltd. ADR   332,921 
 1,156   TherapeuticsMD, Inc. ●   2,913 
 105   Vertex Pharmaceuticals, Inc. ●   8,068 
 99   Warner Chilcott plc   1,422 
 107   WuXi PharmaTech Cayman, Inc. ●   2,035 
 80   Zoetis, Inc.   2,625 
         940,113 
     Real Estate - 0.4%     
 11   American Tower Corp. REIT   961 
 6,299   Bekasi Fajar Industrial Estate Tbk PT ●   648 
 20   Boston Properties, Inc. REIT   2,167 
 285   Fibra Uno Administracion S.A. REIT   1,094 
 35   Forestar Group, Inc. ●   754 
 4,018   Hemaraj Land Development plc REIT   590 
 6,383   PT Lippo Karawaci, Tbk   887 
 8   Public Storage REIT   1,307 
 581   Realogy Holdings Corp. ●   27,870 
 1,505   Robinsons Land Corp.   940 
 14   Unibail Rodamco REIT ☼   3,788 
 208   Westfield Group REIT   2,513 
         43,519 
     Retailing - 8.4%     
 123   Abercrombie & Fitch Co. Class A   6,102 
 227   Aeropostale, Inc. ●   3,323 
 150   Ascena Retail Group, Inc. ●   2,777 
 415   AutoZone, Inc. ●   169,603 
 12,331   Best Buy Co., Inc.   320,472 
 36,752   Buck Holdings L.P. ⌂●†   11,519 
 70   Buckle (The), Inc.   3,400 
 33   CarMax, Inc. ●   1,496 
 126   Chico's FAS, Inc.   2,302 
 56   Dollar Tree, Inc. ●   2,681 
 16   Expedia, Inc.   877 
 96   GameStop Corp. Class A   3,367 
 30,754   Intime Department Store Group Co., Ltd.   36,544 
 3,885   Liberty Media - Interactive A ●   82,709 
 121   LKQ Corp. ●   2,921 
 794   Lowe's Co., Inc.   30,487 
 53   Men's Wearhouse, Inc.   1,785 
 133   Priceline.com, Inc. ●   92,578 
 26   Sears Hometown and Outlet Stores, Inc. ●   1,138 
 8,131   Staples, Inc.   107,654 
 75   Target Corp.   5,277 
 2,707   TJX Cos., Inc.   132,040 
 48   TripAdvisor, Inc. ●   2,523 
         1,023,575 
     Semiconductors and Semiconductor Equipment - 4.4%     
 106   Analog Devices, Inc.   4,684 
 887   ASML Holding N.V.   65,956 
 1,102   Broadcom Corp. Class A   39,658 
 396   GT Advanced Technologies, Inc. ●   1,558 
 9,471   Intel Corp.   226,840 
 97   Maxim Integrated Products, Inc.   2,988 
 390   MEMC Electronic Materials, Inc. ●   2,107 
 12,554   Micron Technology, Inc. ●   118,255 
 311   RF Micro Devices, Inc. ●   1,744 
 82   Skyworks Solutions, Inc. ●   1,810 
 3,964   Teradyne, Inc. ●   65,168 
         530,768 
     Software and Services - 9.5%     
 30   Accenture plc   2,468 
 143   Activision Blizzard, Inc.   2,135 
 2,776   Akamai Technologies, Inc. ●   121,904 
 3,818   Amadeus IT Holding S.A. Class A   112,662 
 143   Autodesk, Inc. ●   5,633 
 58   Automatic Data Processing, Inc.   3,913 
 179   Booz Allen Hamilton Holding Corp.   2,722 
 422   Cadence Design Systems, Inc. ●   5,825 
 104   Check Point Software Technologies Ltd. ADR ●   4,827 
 85   Concur Technologies, Inc. ●   6,212 
 50   eBay, Inc. ●   2,622 
 1,404   Facebook, Inc. ●   38,963 
 6,339   Genpact Ltd.   117,913 
 71   Global Payments, Inc.   3,311 
 212   Google, Inc. ●   174,479 
 66   IAC/InterActiveCorp.   3,089 
 191   iGate Corp. ●   3,184 
 295   LinkedIn Corp. Class A ●   56,633 
 8,254   Microsoft Corp.   273,208 
 940   Oracle Corp.   30,822 
 43   Rovi Corp. ●   1,002 
 167   ServiceNow, Inc. ●   6,826 
 7   Splunk, Inc. ●   269 
 66   Teradata Corp. ●   3,391 
 34   TiVo, Inc. ●   404 
 93   VeriFone Systems, Inc. ●   2,006 
 186   Web.com Group, Inc. ●   3,230 
 116   Western Union Co.   1,716 
 24   WEX, Inc. ●   1,844 
 6,287   Yahoo!, Inc. ●   155,487 
         1,148,700 
     Technology Hardware and Equipment - 4.2%     
 1,352   Alcatel - Lucent ADR ●   1,853 
 11   Apple, Inc.   4,693 
 16,633   Cisco Systems, Inc.   347,967 
 241   EMC Corp. ●   5,408 
 106   Hewlett-Packard Co.   2,181 

 

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

 

7

 

The Hartford Capital Appreciation Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 98.1% - (continued)

     
     Technology Hardware and Equipment - 4.2% - (continued)     
 111   Jabil Circuit, Inc.  $1,981 
 393   JDS Uniphase Corp. ●   5,302 
 107   Juniper Networks, Inc. ●   1,770 
 1,878   Lenovo Group Ltd.   1,718 
 29   Motorola Solutions, Inc.   1,659 
 2,431   SanDisk Corp. ●   127,491 
 38   Seagate Technology plc   1,401 
 277   Toshiba Corp.   1,527 
         504,951 
     Telecommunication Services - 0.9%     
 2,452   Intelsat S.A. ●   49,410 
 10,075   Portugal Telecom SGPS S.A.   52,569 
 48   Verizon Communications, Inc.   2,609 
 763   Vodafone Group plc   2,327 
         106,915 
     Transportation - 10.3%     
 1,507   AirAsia Berhad   1,452 
 64   C.H. Robinson Worldwide, Inc.   3,816 
 28   Canadian National Railway Co.   2,702 
 17   Canadian Pacific Railway Ltd. ADR   2,075 
 8,447   Delta Air Lines, Inc. ●   144,775 
 305   FedEx Corp.   28,692 
 14,953   Hertz Global Holdings, Inc. ●   360,078 
 19,324   JetBlue Airways Corp. ●   133,139 
 890   Kansas City Southern   97,072 
 189   Knight Transportation, Inc.   2,947 
 432   Union Pacific Corp.   63,934 
 12,085   United Continental Holdings, Inc. ●   390,350 
 163   United Parcel Service, Inc. Class B   13,997 
         1,245,029 
     Utilities - 0.2%     
 124   Calpine Corp. ●   2,697 
 57   Entergy Corp.   4,090 
 168   NRG Energy, Inc.   4,670 
 514   Snam S.p.A.   2,528 
 126   UGI Corp.   5,179 
 137   Xcel Energy, Inc.   4,360 
         23,524 
     Total common stocks     
     (cost $10,175,399)  $11,890,668 
           

CORPORATE BONDS - 0.2%

     
     Finance and Insurance - 0.2%     
     MBIA Insurance Co.     
$87,920   0.00%, 01/15/2033 ■●  $23,738 
           
     Total corporate bonds     
     (cost $87,306)  $23,738 
           
     Total long-term investments     
     (cost $10,262,705)  $11,914,406 
           
SHORT-TERM INVESTMENTS - 1.1%     
 Repurchase Agreements - 1.1%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $5,061,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $5,162)
     
$5,061    0.17%, 4/30/2013  $5,061 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $13,789, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $14,065)
     
 13,789    0.15%, 4/30/2013   13,789 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $26,558, collateralized by
U.S. Treasury Note 0.88% - 3.13%, 2017
- 2021, value of $27,089)
     
 26,558    0.15%, 4/30/2013   26,558 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $36,886,
collateralized by U.S. Treasury Note
0.75% - 2.13%, 2015 - 2019, value of
$37,624)
     
 36,886    0.14%, 4/30/2013   36,886 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $6,633,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value
of $6,765)
     
 6,633    0.17%, 4/30/2013   6,633 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $22,476, collateralized by
U.S. Treasury Note 1.00% - 2.25%, 2016
- 2022, value of $22,926)
     
 22,476    0.14%, 4/30/2013   22,476 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $15,802, collateralized by
U.S. Treasury Note 0.25% - 1.88%, 2014
- 2019, value of $16,118)
     
 15,802    0.17%, 4/30/2013   15,802 

 

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

 

8

 

The Hartford Capital Appreciation Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount        Market Value ╪ 
SHORT-TERM INVESTMENTS - 1.1% - (continued) 
Repurchase Agreements - 1.1% - (continued)           
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$282, collateralized by U.S. Treasury
Note 3.88%, 2018, value of $288)
          
$282    0.13%, 4/30/2013        $282 
               127,487 
     Total short-term investments           
     (cost $127,487)        $127,487 
                 
     Total investments           
     (cost $10,390,192) ▲   99.4 %  $12,041,893 
     Other assets and liabilities   0.6 %   72,185 
     Total net assets   100.0 %  $12,114,078 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.
   
  Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $10,310,587 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $2,198,855 
Unrealized Depreciation   (467,549)
Net Unrealized Appreciation  $1,731,306 

 

These securities were valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $129,314, which represents 1.1% 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.

   

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.
   
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. Unless otherwise indicated, these issues are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $23,738, which represents 0.2% of total net assets.  
   
Securities exempt from registration under Regulation D of the Securities Act of 1933.  The Fund may only be able to resell these securities if they are subsequently registered or if an exemption from registration under the federal and state securities laws is available.  Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value and percentage of net assets of these securities rounds to zero.  
   
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 Acquired  Shares/ Par   Security  Cost Basis 
06/2007   36,752   Buck Holdings L.P.  $2,453 
03/2013   766   CareView Communications, Inc.   379 
07/2011      Diamond Resorts LLC   89,870 
05/2011 - 03/2013   9,084   Excel Medical Fund L.P.   9,084 
10/2005   25   Harvey Weinstein Co. Holdings Class A-1  - Reg D   23,636 

 

At April 30, 2013, the aggregate value of these securities was $129,314, which represents 1.1% of total net assets.

 

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

 

9

 

The Hartford Capital Appreciation Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Ђ As of April 30, 2013, the Fund has future commitments to purchase an additional $2,988.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $10,532 at April 30, 2013.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
CAD  Buy  05/02/2013  BCLY  $166   $167   $1 
CHF  Buy  05/06/2013  DEUT   85    85     
CHF  Buy  05/03/2013  NAB   104    105    1 
EUR  Buy  05/02/2013  BCLY   499    504    5 
EUR  Buy  05/03/2013  BCLY   3,886    3,908    22 
EUR  Buy  05/03/2013  DEUT   3,982    4,002    20 
EUR  Buy  05/06/2013  JPM   969    969     
EUR  Sell  05/03/2013  BCLY   60    60     
GBP  Buy  05/03/2013  BCLY   429    429     
GBP  Buy  05/02/2013  DEUT   14    14     
GBP  Sell  05/01/2013  DEUT   10,306    10,343    (37)
HKD  Buy  05/03/2013  BCLY   117    117     
JPY  Buy  12/12/2013  CBK   157,706    160,156    2,450 
JPY  Buy  05/07/2013  CSFB   125    125     
JPY  Buy  12/12/2013  CSFB   55,204    52,805    (2,399)
JPY  Buy  05/02/2013  SSG   700    708    8 
JPY  Buy  12/12/2013  UBS   38,309    36,678    (1,631)
JPY  Sell  12/12/2013  BCLY   150,840    133,589    17,251 
JPY  Sell  12/12/2013  CSFB   73,636    65,331    8,305 
JPY  Sell  12/12/2013  DEUT   113,999    96,025    17,974 
JPY  Sell  12/12/2013  GSC   73,690    65,331    8,359 
JPY  Sell  12/12/2013  MSC   113,920    96,025    17,895 
JPY  Sell  12/12/2013  UBS   35,409    33,634    1,775 
MYR  Sell  05/02/2013  JPM   2,275    2,267    8 
                      $70,007 

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)

 

Counterparty Abbreviations:
BCLY Barclays
CBK Citibank NA
CSFB Credit Suisse First Boston Corp.
DEUT Deutsche Bank Securities, Inc.
GSC Goldman Sachs & Co.
JPM JP Morgan Chase & Co.
MSC Morgan Stanley
NAB National Australia Bank
SSG State Street Global Markets LLC
UBS UBS AG
   
Currency Abbreviations:
CAD Canadian Dollar
CHF Swiss Franc
EUR EURO
GBP British Pound
HKD Hong Kong Dollar
JPY Japanese Yen
MYR Malaysian Ringgit
   
Other Abbreviations:
ADR American Depositary Receipt
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
REIT Real Estate Investment Trust

 

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

 

10

 

The Hartford Capital Appreciation Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Automobiles and Components  $781,249   $689,657   $91,592   $ 
Banks   74,891    36,584    38,307     
Capital Goods   921,403    450,498    470,905     
Commercial and Professional Services   41,197    41,197         
Consumer Durables and Apparel   25,992    20,819    5,173     
Consumer Services   401,440    290,786    118    110,536 
Diversified Financials   786,642    780,708    5,934     
Energy   753,323    532,943    220,380     
Food and Staples Retailing   552,495    548,528    3,967     
Food, Beverage and Tobacco   340,354    164,328    176,026     
Health Care Equipment and Services   343,079    342,700        379 
Household and Personal Products   4,732    4,732         
Insurance   548,018    537,008    11,010     
Materials   419,070    229,930    189,140     
Media   329,689    325,720    3,969     
Pharmaceuticals, Biotechnology and Life Sciences   940,113    890,229    43,004    6,880 
Real Estate   43,519    38,881    4,638     
Retailing   1,023,575    975,512    36,544    11,519 
Semiconductors and Semiconductor Equipment   530,768    530,768         
Software and Services   1,148,700    1,036,038    112,662     
Technology Hardware and Equipment   504,951    501,706    3,245     
Telecommunication Services   106,915    52,019    54,896     
Transportation   1,245,029    1,243,577    1,452     
Utilities   23,524    20,996    2,528     
Total   11,890,668    10,285,864    1,475,490    129,314 
Corporate Bonds   23,738        23,738     
Short-Term Investments   127,487        127,487     
Total  $12,041,893   $10,285,864   $1,626,715   $129,314 
Foreign Currency Contracts*   74,074        74,074     
Total  $74,074   $   $74,074   $ 
Liabilities:                    
Foreign Currency Contracts*   4,067        4,067     
Total  $4,067   $   $4,067   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.
* Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance as
of October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3
   Transfers
Out of
Level 3
   Balance as
of April
30, 2013
 
Assets:                                             
Common Stocks  $146,489   $(89,279)  $101,425*  $   $572   $(29,893)  $   $   $129,314 
Total  $146,489   $(89,279)  $101,425   $   $572   $(29,893)  $   $   $129,314 

 

* Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $(10,064).

 

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

 

11

 

The Hartford Capital Appreciation Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $10,390,192)  $12,041,893 
Cash   1,665 
Foreign currency on deposit with custodian (cost $–)    
Unrealized appreciation on foreign currency contracts   74,074 
Receivables:     
Investment securities sold   80,325 
Fund shares sold   7,421 
Dividends and interest   27,485 
Other assets   222 
Total assets   12,233,085 
Liabilities:     
Unrealized depreciation on foreign currency contracts   4,067 
Payables:     
Investment securities purchased   92,135 
Fund shares redeemed   18,407 
Investment management fees   1,298 
Administrative fees   10 
Distribution fees   581 
Accrued expenses   2,509 
Total liabilities   119,007 
Net assets  $12,114,078 
Summary of Net Assets:     
Capital stock and paid-in-capital  $10,895,471 
Undistributed net investment income   5,430 
Accumulated net realized loss   (508,422)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   1,721,599 
Net assets  $12,114,078 
      
Shares authorized   1,615,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   

$39.37/$41.66

 
Shares outstanding   133,687 
Net assets  $5,262,806 
Class B: Net asset value per share  $34.57 
Shares outstanding   11,184 
Net assets  $386,639 
Class C: Net asset value per share  $34.82 
Shares outstanding   50,585 
Net assets  $1,761,402 
Class I: Net asset value per share  $39.38 
Shares outstanding   75,582 
Net assets  $2,976,493 
Class R3: Net asset value per share  $41.58 
Shares outstanding   2,977 
Net assets  $123,766 
Class R4: Net asset value per share  $42.21 
Shares outstanding   3,932 
Net assets  $165,993 
Class R5: Net asset value per share  $42.63 
Shares outstanding   3,121 
Net assets  $133,075 
Class Y: Net asset value per share  $42.83 
Shares outstanding   30,446 
Net assets  $1,303,904 

 

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

 

12

 

The Hartford Capital Appreciation Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $103,948 
Interest   5,152 
Less: Foreign tax withheld   (3,336)
Total investment income   105,764 
      
Expenses:     
Investment management fees   38,842 
Administrative services fees    
Class R3   120 
Class R4   121 
Class R5   93 
Transfer agent fees    
Class A   5,057 
Class B   596 
Class C   1,369 
Class I   2,636 
Class R3   7 
Class R4   2 
Class R5   1 
Class Y   12 
Distribution fees     
Class A   6,238 
Class B   1,928 
Class C   8,391 
Class R3   300 
Class R4   201 
Custodian fees   127 
Accounting services fees   977 
Registration and filing fees   229 
Board of Directors' fees   155 
Audit fees   61 
Other expenses   912 
Total expenses (before waivers and fees paid indirectly)   68,375 
Expense waivers   (5)
Transfer agent fee waivers   (18)
Commission recapture   (504)
Custodian fee offset    
Total waivers and fees paid indirectly   (527)
Total expenses, net   67,848 
Net Investment Income   37,916 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   859,569 
Net realized gain on foreign currency contracts   35,509 
Net realized loss on other foreign currency transactions   (1,291)
Net Realized Gain on Investments and Foreign Currency Transactions   893,787 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   1,334,385 
Net unrealized appreciation of foreign currency contracts   50,101 
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   186 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   1,384,672 
Net Gain on Investments and Foreign Currency Transactions   2,278,459 
Net Increase in Net Assets Resulting from Operations  $2,316,375 

 

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

 

13

 

The Hartford Capital Appreciation Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $37,916   $77,683 
Net realized gain on investments and foreign currency transactions   893,787    162,917 
Net unrealized appreciation of investments and foreign currency transactions   1,384,672    808,801 
Net Increase in Net Assets Resulting from Operations   2,316,375    1,049,401 
Distributions to Shareholders:          
From net investment income          
Class A   (33,216)   (96,230)
Class B       (4,952)
Class C   (758)   (21,104)
Class I   (31,552)   (64,375)
Class R3   (420)   (1,994)
Class R4   (999)   (3,660)
Class R5   (1,806)   (4,025)
Class Y   (13,888)   (27,689)
Total distributions   (82,639)   (224,029)
Capital Share Transactions:          
Class A   (536,653)   (1,341,961)
Class B   (78,325)   (199,865)
Class C   (201,601)   (573,112)
Class I   (618,958)   (428,136)
Class R3   (21,254)   (25,386)
Class R4   (33,013)   (70,218)
Class R5   (84,806)   (32,280)
Class Y   (244,831)   (251,784)
Net decrease from capital share transactions   (1,819,441)   (2,922,742)
Net Increase (Decrease) in Net Assets   414,295    (2,097,370)
Net Assets:          
Beginning of period   11,699,783    13,797,153 
End of period  $12,114,078   $11,699,783 
Undistributed (distribution in excess of) net investment income (loss)  $5,430   $50,153 

 

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

 

14

 

The Hartford Capital Appreciation Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an

 

15

 

The Hartford Capital Appreciation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable

 

16

 

 

market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be

 

17

 

The Hartford Capital Appreciation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At

 

18

  

 

the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

19

 

The Hartford Capital Appreciation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $74,074   $   $   $   $   $74,074 
Total  $   $74,074   $   $   $   $   $74,074 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $4,067   $   $   $   $   $4,067 
Total  $   $4,067   $   $   $   $   $4,067 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain on Derivatives Recognized as a Result of Operations:
Net realized gain on foreign currency contracts  $   $35,509   $   $   $   $   $35,509 
Total  $   $35,509   $   $   $   $   $35,509 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation of foreign currency contracts  $   $50,101   $   $   $   $   $50,101 
Total  $   $50,101   $   $   $   $   $50,101 

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.
   

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities and certain asset backed

 

20

  

  

securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $224,029   $ 

 

21

 

The Hartford Capital Appreciation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis are as follows:

 

   Amount 
Undistributed Ordinary Income  $59,052 
Accumulated Capital Losses *   (1,470,826)
Unrealized Appreciation †   396,645 
Total Accumulated Deficit  $(1,015,129)

 

* The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(27,531)
Accumulated Net Realized Gain (Loss)   27,531 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2017  $1,470,826 
Total  $1,470,826 

 

During the year ended October 31, 2012, the Fund utilized $52,125 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized

 

22

 

 

tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B  Class C  Class I   Class R3   Class R4   Class R5   Class Y
 1.29%     NA  NA   1.04%      1.40%      1.10%      0.80%     NA

 

23

 

The Hartford Capital Appreciation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

d)Fees Paid Indirectly The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
 
   April 30, 2013 
Class A   1.14%
Class B   1.99 
Class C   1.85 
Class I   0.87 
Class R3   1.39 
Class R4   1.09 
Class R5   0.79 
Class Y   0.69 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $2,960 and contingent deferred sales charges of $234 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of the investment companies in the Hartford fund complex. The

 

24

  

  

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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage
of Fund
 
Class Y   6%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, the Fund's aggregate purchases and sales of investment securities (excluding short-term investments) were as follows:

 

   Amount 
Cost of Purchases Excluding U.S. Government Obligations  $6,394,860 
Sales Proceeds Excluding U.S. Government Obligations   8,161,865 

 

25

 

The Hartford Capital Appreciation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

  

For the Six-Month Period Ended April 30, 2013

  

For the Year Ended October 31, 2012

 
  

Shares
Sold

  

Shares
Issued for
Reinvested
Dividends

  

Shares
Redeemed

  

Shares
Issued
from
Merger

   Net Increase
(Decrease) of
Shares
  

Shares Sold

  

Shares
Issued for
Reinvested
Dividends

  

Shares
Redeemed

  

Shares
Issued
from
Merger

   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   4,836    930    (20,914)       (15,148)   11,731    3,110    (57,835)       (42,994)
Amount  $174,074   $32,224   $(742,951)  $   $(536,653)  $368,064   $90,076   $(1,800,101)  $   $(1,341,961)
Class B                                                  
Shares   33        (2,532)       (2,499)   111    176    (7,528)       (7,241)
Amount  $1,038   $   $(79,363)  $   $(78,325)  $3,055   $4,506   $(207,426)  $   $(199,865)
Class C                                                  
Shares   1,118    21    (7,583)       (6,444)   2,553    686    (24,015)       (20,776)
Amount  $35,899   $656   $(238,156)  $   $(201,601)  $70,784   $17,633   $(661,529)  $   $(573,112)
Class I                                                  
Shares   8,811    656    (26,306)       (16,839)   24,761    1,525    (40,163)       (13,877)
Amount  $313,818   $22,696   $(955,472)  $   $(618,958)  $770,534   $44,145   $(1,242,815)  $   $(428,136)
Class R3                                                  
Shares   249    11    (835)       (575)   690    64    (1,484)       (730)
Amount  $9,502   $411   $(31,167)  $   $(21,254)  $22,596   $1,945   $(49,927)  $   $(25,386)
Class R4                                                  
Shares   618    26    (1,534)       (890)   1,750    110    (3,912)       (2,052)
Amount  $24,270   $957   $(58,240)  $   $(33,013)  $58,349   $3,411   $(131,978)  $   $(70,218)
Class R5                                                  
Shares   427    48    (2,599)       (2,124)   1,027    127    (2,086)       (932)
Amount  $16,651   $1,803   $(103,260)  $   $(84,806)  $34,710   $3,984   $(70,974)  $   $(32,280)
Class Y                                                  
Shares   1,503    364    (8,097)       (6,230)   8,986    856    (17,076)       (7,234)
Amount  $58,900   $13,688   $(317,419)  $   $(244,831)  $295,153   $26,919   $(573,856)  $   $(251,784)
Total                                                  
Shares   17,595    2,056    (70,400)       (50,749)   51,609    6,654    (154,099)       (95,836)
Amount  $634,152   $72,435   $(2,526,028)  $   $(1,819,441)  $1,623,245   $192,619   $(4,738,606)  $   $(2,922,742)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   340   $12,256 
For the Year Ended October 31, 2012   1,010   $31,724 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

26

  

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act. HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

27

 

The Hartford Capital Appreciation Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class

 

Net Asset Value at
Beginning of
Period

  

Net Investment
Income (Loss)

  

Net Realized and
Unrealized Gain
(Loss) on
Investments

  

Total from
Investment
Operations

  

Dividends from Net
Investment Income

  

Distributions from
Realized Capital
Gains

  

Distributions from
Capital

  

Total Distributions

  

Net Asset Value at
End of Period

 
 
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $32.65   $0.11   $6.84   $6.95   $(0.23)  $   $   $(0.23)  $39.37 
B   28.60    (0.03)   6.00    5.97                    34.57 
C   28.80    (0.01)   6.04    6.03    (0.01)           (0.01)   34.82 
I   32.72    0.16    6.85    7.01    (0.35)           (0.35)   39.38 
R3   34.41    0.08    7.22    7.30    (0.13)           (0.13)   41.58 
R4   34.98    0.14    7.32    7.46    (0.23)           (0.23)   42.21 
R5   35.40    0.19    7.40    7.59    (0.36)           (0.36)   42.63 
Y   35.58    0.21    7.44    7.65    (0.40)           (0.40)   42.83 
                                              
For the Year Ended October 31, 2012
A   30.55    0.25    2.38    2.63    (0.53)           (0.53)   32.65 
B   26.76    (0.31)   2.40    2.09    (0.25)           (0.25)   28.60 
C   26.94    (0.16)   2.31    2.15    (0.29)           (0.29)   28.80 
I   30.61    0.36    2.37    2.73    (0.62)           (0.62)   32.72 
R3   32.17    0.10    2.61    2.71    (0.47)           (0.47)   34.41 
R4   32.68    0.28    2.57    2.85    (0.55)           (0.55)   34.98 
R5   33.09    0.40    2.58    2.98    (0.67)           (0.67)   35.40 
Y   33.26    0.55    2.47    3.02    (0.70)           (0.70)   35.58 
                                              
For the Year Ended October 31, 2011 (E)
A   32.40    0.19    (2.04)   (1.85)                   30.55 
B   28.62    (0.08)   (1.78)   (1.86)                   26.76 
C   28.79    (0.05)   (1.80)   (1.85)                   26.94 
I   32.39    0.27    (2.05)   (1.78)                   30.61 
R3   34.22    0.10    (2.15)   (2.05)                   32.17 
R4   34.66    0.21    (2.19)   (1.98)                   32.68 
R5   34.99    0.32    (2.22)   (1.90)                   33.09 
Y   35.13    0.36    (2.23)   (1.87)                   33.26 
                                              
For the Year Ended October 31, 2010 (E)
A   28.02    0.14    4.24    4.38                    32.40 
B   24.95    (0.10)   3.77    3.67                    28.62 
C   25.07    (0.07)   3.79    3.72                    28.79 
I   27.94    0.21    4.24    4.45                    32.39 
R3   29.67    0.05    4.50    4.55                    34.22 
R4   29.96    0.16    4.54    4.70                    34.66 
R5   30.15    0.26    4.58    4.84                    34.99 
Y   30.24    0.29    4.60    4.89                    35.13 
                                              
For the Year Ended October 31, 2009 (E)
A   23.43    0.14    4.76    4.90    (0.31)           (0.31)   28.02 
B   20.77    (0.05)   4.28    4.23    (0.05)           (0.05)   24.95 
C   20.91    (0.03)   4.29    4.26    (0.10)           (0.10)   25.07 
I   23.41    0.14    4.82    4.96    (0.43)           (0.43)   27.94 
R3   24.92    0.05    5.07    5.12    (0.37)           (0.37)   29.67 
R4   25.08    0.15    5.12    5.27    (0.39)           (0.39)   29.96 
R5   25.21    0.20    5.17    5.37    (0.43)           (0.43)   30.15 
Y   25.28    0.27    5.14    5.41    (0.45)           (0.45)   30.24 
                                              
For the Year Ended October 31, 2008 (E)
A   46.08    0.20    (19.12)   (18.92)       (3.73)       (3.73)   23.43 
B   41.59    (0.09)   (17.00)   (17.09)       (3.73)       (3.73)   20.77 
C   41.82    (0.06)   (17.12)   (17.18)       (3.73)       (3.73)   20.91 
I   45.90    0.28    (19.04)   (18.76)       (3.73)       (3.73)   23.41 
R3   48.91    0.09    (20.35)   (20.26)       (3.73)       (3.73)   24.92 
R4   49.05    0.22    (20.46)   (20.24)       (3.73)       (3.73)   25.08 
R5   49.15    0.34    (20.55)   (20.21)       (3.73)       (3.73)   25.21 
Y   49.23    0.36    (20.58)   (20.22)       (3.73)       (3.73)   25.28 

 

28

 

- Ratios and Supplemental Data -

 

Total Return(B)

  

Net Assets at End of Period
(000's)

  

Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)

  

Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)

  

Ratio of Net Investment
Income to Average Net Assets

  

Portfolio
Turnover
Rate(D)

 
                            
                            
 21.39%(F)  $5,262,806    1.15%(G)   1.15%(G)   0.64%(G)   55%
 20.87(F)   386,639    2.01(G)   2.00(G)   (0.20)(G)    
 20.96(F)   1,761,402    1.86(G)   1.86(G)   (0.07)(G)    
 21.56(F)   2,976,493    0.87(G)   0.87(G)   0.93(G)    
 21.26(F)   123,766    1.41(G)   1.40(G)   0.40(G)    
 21.41(F)   165,993    1.10(G)   1.10(G)   0.72(G)    
 21.59(F)   133,075    0.80(G)   0.80(G)   0.99(G)    
 21.66(F)   1,303,904    0.70(G)   0.70(G)   1.10(G)    
                            
                            
 8.84    4,859,760    1.16    1.16    0.63    74 
 7.93    391,388    2.01    2.00    (0.23)    
 8.11    1,642,578    1.87    1.87    (0.09)    
 9.19    3,024,465    0.86    0.86    0.93     
 8.59    122,235    1.41    1.40    0.39     
 8.92    168,689    1.11    1.10    0.68     
 9.25    185,705    0.80    0.80    1.00     
 9.36    1,304,963    0.70    0.70    1.09     
                            
                            
 (5.71)   5,859,434    1.12    1.12    0.55    75 
 (6.50)   559,856    1.95    1.95    (0.28)    
 (6.43)   2,096,461    1.84    1.84    (0.16)    
 (5.50)   3,254,198    0.87    0.87    0.81     
 (5.99)   137,767    1.41    1.40    0.30     
 (5.71)   224,653    1.10    1.10    0.59     
 (5.43)   204,417    0.80    0.80    0.89     
 (5.32)   1,460,367    0.70    0.70    0.98     
                            
                            
 15.63    8,535,338    1.15    1.15    0.45    70 
 14.71    828,754    1.95    1.95    (0.36)    
 14.84    3,001,079    1.85    1.85    (0.25)    
 15.93    4,781,187    0.88    0.88    0.70     
 15.34    126,972    1.42    1.41    0.17     
 15.69    270,804    1.10    1.10    0.49     
 16.05    215,999    0.80    0.80    0.79     
 16.17    2,196,541    0.70    0.70    0.89     
                            
                            
 21.40    9,038,634    1.22    1.22    0.58    77 
 20.44    1,027,505    2.07    2.02    (0.22)    
 20.54    2,905,481    1.93    1.93    (0.15)    
 21.84    2,616,775    0.89    0.89    0.59     
 21.08    30,633    1.46    1.46    0.19     
 21.53    189,912    1.12    1.12    0.60     
 21.89    173,619    0.81    0.81    0.75     
 22.01    1,474,927    0.72    0.72    1.05     
                            
                            
 (44.46)   8,682,603    1.12    1.12    0.54    82 
 (44.90)   1,064,188    1.92    1.92    (0.29)    
 (44.86)   2,637,037    1.84    1.84    (0.19)    
 (44.27)   438,528    0.81    0.81    0.87     
 (44.64)   7,809    1.46    1.46    0.28     
 (44.46)   75,127    1.12    1.12    0.60     
 (44.30)   35,734    0.83    0.83    0.93     
 (44.24)   1,074,711    0.72    0.72    0.95     

 

29

 

The Hartford Capital Appreciation Fund

Financial Highlights – (continued)

 

(A) Information presented relates to a share outstanding throughout the indicated period.
(B) Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C) Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E) Per share amounts have been calculated using average shares outstanding method.
(F) Not annualized.
(G) Annualized.

 

30

 

The Hartford Capital Appreciation Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

31

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

32

 

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

  

Actual return

  

Hypothetical (5% return before expenses)

           
  

Beginning
Account Value
October 31, 2012

  

Ending Account
Value
April 30, 2013

   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
  

Beginning
Account Value
October 31, 2012

  

Ending Account
Value
April 30, 2013

  

Expenses paid
during the
period

October 31, 2012
through
April 30, 2013

  

Annualized
expense
ratio

  

Days in
the
current
1/2
year

 

Days
in the
full
year

Class A  $1,000.00   $1,213.90   $6.32   $1,000.00   $1,019.08   $5.76     1.15%   181  365
Class B  $1,000.00   $1,208.70   $10.95   $1,000.00   $1,014.88   $9.99     2.00   181  365
Class C  $1,000.00   $1,209.60   $10.20   $1,000.00   $1,015.56   $9.31     1.86   181  365
Class I  $1,000.00   $1,215.60   $4.80   $1,000.00   $1,020.46   $4.38     0.87   181  365
Class R3  $1,000.00   $1,212.60   $7.70   $1,000.00   $1,017.84   $7.02     1.40   181  365
Class R4  $1,000.00   $1,214.10   $6.05   $1,000.00   $1,019.33   $5.52     1.10   181  365
Class R5  $1,000.00   $1,215.90   $4.40   $1,000.00   $1,020.82   $4.01     0.80   181  365
Class Y  $1,000.00   $1,216.60   $3.85   $1,000.00   $1,021.32   $3.51     0.70   181  365

 

34

 

The Hartford Capital Appreciation Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Capital Appreciation Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

35

 

The Hartford Capital Appreciation Fund

Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

36

 

The Hartford Capital Appreciation Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Mid-cap Stock Risk: Mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

37
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-CA13 4/13 113964 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

4

 

 

 
 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD CAPITAL APPRECIATION II FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Capital Appreciation II Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 11
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 12
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 13
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 14
Notes to Financial Statements (Unaudited) 15
Financial Highlights (Unaudited) 28
Directors and Officers (Unaudited) 31
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 33
Quarterly Portfolio Holdings Information (Unaudited) 33
Expense Example (Unaudited) 34
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 35
Principal Risks (Unaudited) 37

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

The Hartford Capital Appreciation II Fund inception 04/29/2005
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks growth of capital.

 

Performance Overview 4/29/05 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   Since
Inception▲
 
Capital Appreciation II A#   18.96%       17.11%       4.01%       8.02%    
Capital Appreciation II A##        10.67%       2.84%       7.26%    
Capital Appreciation II B#   18.55%       16.24%       3.21%       7.18%*    
Capital Appreciation II B##        11.24%       2.85%       7.18%*    
Capital Appreciation II C#   18.51%       16.22%       3.27%       7.25%    
Capital Appreciation II C##        15.22%       3.27%       7.25%    
Capital Appreciation II I#   19.09%       17.36%       4.34%       8.31%    
Capital Appreciation II R3#   18.87%       17.01%       3.77%       7.87%    
Capital Appreciation II R4#   19.04%       17.29%       4.10%       8.16%    
Capital Appreciation II R5#   19.16%       17.43%       4.35%       8.37%    
Capital Appreciation II Y#   19.12%       17.49%       4.47%       8.48%    
Russell 3000 Index   15.16%       17.21%       5.63%       6.74%    

 

Not Annualized
Inception: 04/29/2005
# Without sales charge
## With sales charge
* Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund's Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Capital Appreciation II Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Capital Appreciation II Class A   1.25%       1.41%    
Capital Appreciation II Class B   2.00%       2.26%    
Capital Appreciation II Class C   2.00%       2.12%    
Capital Appreciation II Class I   1.00%       1.10%    
Capital Appreciation II Class R3   1.35%       1.69%    
Capital Appreciation II Class R4   1.05%       1.37%    
Capital Appreciation II Class R5   0.95%       1.09%    
Capital Appreciation II Class Y   0.90%       0.97%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers    
Michael T. Carmen, CFA Nicolas M. Choumenkovitch Saul J. Pannell, CFA
Senior Vice President and Equity Portfolio Manager Senior Vice President and Equity Portfolio Manager Senior Vice President and Equity Portfolio Manager
     
Kent M. Stahl, CFA Frank D. Catrickes, CFA David W. Palmer, CFA
Senior Vice President and Director, Investments and
Risk Management
Senior Vice President and Equity Portfolio Manager Senior Vice President and Equity Portfolio Manager
     
Gregg R. Thomas, CFA*    
Vice President and Director, Risk Management    
     
*Appointed as a Portfolio Manager for the Fund as of March 1, 2013.

 

How did the Fund perform?

The Class A shares of The Hartford Capital Appreciation Fund II returned 18.96%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the Russell 3000 Index, which returned 15.16% for the same period. The Fund also outperformed the 14.96% average return 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?

U.S. equities surged during the period, ending at an all-time high. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. U.S. housing data continued to provide evidence that the sector at the epicenter of the financial crisis could be a key engine of economic recovery in 2013. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

All ten sectors in the Russell 3000 Index posted positive returns during the period. Strong performing sectors included Health Care (+20%), Consumer Discretionary (+20%), and Financials (+19%), while the Information Technology (+8%) and Energy (+9%) sectors lagged on a relative basis.

 

Favorable security selection was the primary driver of Fund outperformance during the period. Strong stock selection within the Information Technology, Consumer Discretionary, and Industrials sectors more than offset weaker selection in the Materials and Telecommunication Services sectors. Sector allocation, a result of the bottom-up stock selection process, had a neutral impact on relative returns. The Fund’s frictional cash position detracted from relative performance in an upward-trending market

 

3

 

The Hartford Capital Appreciation II Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

The top contributors to relative performance included Apple (Information Technology), Hertz Global (Industrials), and Best Buy (Consumer Discretionary). Shares of Apple, a U.S.-based designer and retailer of a range of personal electronics products, fell during the period due to investor disappointment that the company has not returned more of its $137 billion cash balance to shareholders in the form of higher dividends or share buybacks. Investors also continued to be concerned about decelerating revenue and earnings growth rates. Our underweight position in this benchmark-component contributed to relative returns. Shares of Hertz Global, a U.S.-based car and equipment rental company, rose during the period after the company announced in August 2012 that it would acquire competitor Dollar Thrifty Automotive. In addition, the company released strong earnings results with higher-than-expected revenue and profit margins, which prompted further gains in the share price. Shares of Best Buy, a U.S.-based consumer electronics and entertainment product retailer, rose during the period on news the company hired a new Chief Financial Officer who investors believe is well-qualified to execute on a turnaround strategy that should drive operational efficiency and higher earnings. Top contributors to absolute performance (i.e. total return) during the period also included Cisco Systems (Information Technology).

 

Barrick Gold (Materials), BG Group (Energy), and JC Penny (Consumer Discretionary) were the largest detractors from relative performance during the period. Shares of Barrick Gold, a Canada-based gold exploration and mining company, fell during the period as a result of investor concern that rising costs, primarily higher costs to extract gold, would continue to challenge Barrick's incremental returns. Downward pressure on gold prices due to the strong dollar also weighed on the stock. Shares of BG Group, a U.K.-based integrated global natural gas company, dipped during the period as the company lowered both production and earnings guidance in response to higher exploration expenses. Shares of U.S.-based department store operator JC Penney declined as a result of soft earnings attributed to low traffic, difficulty completing a transition to a new strategy, slow same store sales, and a decline in gross margins. Apple (Information Technology) was also a top detractor on an absolute basis.

 

What is the outlook?

Looking forward, fundamentals appear to have improved somewhat as compared to this time last year. In our view, signs of strength include macroeconomic trends, particularly U.S. housing, where we are starting to see higher construction building on 2012 orders. We believe that housing is a tailwind that should drive Gross Domestic Product going forward.

 

Although, we believe the U.S. outlook continues to improve, significant challenges remain in Europe, as evidenced by the recent Cyprus bank crisis. In response to these mixed developments, we have maintained a neutral posture while perhaps letting some stocks run a bit more because of the more stable backdrop. We recognize strong gains in equity markets, especially in the U.S., mean that valuations for some companies and sectors are becoming less attractive.

 

We continue to focus our efforts on stock-by-stock fundamental research across the Fund’s opportunistic and complementary investment strategies. At the end of the period, the Fund’s largest overweight allocations (i.e. the Fund’s position was greater than the benchmark position) were to the Consumer Discretionary, Information Technology, and Health Care sectors and largest underweight allocations were to the Consumer Staples, Utilities, and Telecommunication Services sectors relative to the Russell 3000 benchmark.

 

Diversification by Industry
as of April 30, 2013

 

Industry (Sector) 

Percentage of
Net Assets

 
Equity Securities     
Automobiles and Components (Consumer Discretionary)   2.4%
Banks (Financials)   2.8 
Capital Goods (Industrials)   6.7 
Commercial and Professional Services (Industrials)   1.0 
Consumer Durables and Apparel (Consumer Discretionary)   2.2 
Consumer Services (Consumer Discretionary)   1.9 
Diversified Financials (Financials)   5.8 
Energy (Energy)   9.4 
Food and Staples Retailing (Consumer Staples)   1.5 
Food, Beverage and Tobacco (Consumer Staples)   3.9 
Health Care Equipment and Services (Health Care)   4.0 
Household and Personal Products (Consumer Staples)   0.4 
Insurance (Financials)   5.3 
Materials (Materials)   4.6 
Media (Consumer Discretionary)   2.5 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   10.2 
Real Estate (Financials)   1.3 
Retailing (Consumer Discretionary)   5.7 
Semiconductors and Semiconductor Equipment (Information Technology)   3.1 
Software and Services (Information Technology)   10.4 
Technology Hardware and Equipment (Information Technology)   5.4 
Telecommunication Services (Services)   0.8
Transportation (Industrials)   4.1 
Utilities (Utilities)   1.5 
Total   96.9%
Short-Term Investments   3.6 
Other Assets and Liabilities   (0.5)
Total   100.0%

 

4

 

The Hartford Capital Appreciation II Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 96.9% 
     Automobiles and Components - 2.4%     
 77   Dana Holding Corp.  $1,335 
 17   Delphi Automotive plc   767 
 548   Ford Motor Co.   7,520 
 54   General Motors Co. ●   1,662 
 66   Goodyear (The) Tire & Rubber Co. ●   823 
 39   Harley-Davidson, Inc.   2,142 
 17   Hyundai Motor Co., Ltd.   3,114 
 44   Modine Manufacturing Co. ●   400 
 9   Renault S.A.   594 
 72   Stoneridge, Inc. ●   543 
 39   Tenneco Automotive, Inc. ●   1,512 
 24   Tesla Motors, Inc. ●   1,321 
         21,733 
     Banks - 2.8%     
 26   Hana Financial Holdings   827 
 578   Intesa Sanpaolo   1,050 
 278   Mitsubishi UFJ Financial Group, Inc.   1,885 
 162   PNC Financial Services Group, Inc.   11,011 
 278   Wells Fargo & Co.   10,545 
         25,318 
     Capital Goods - 6.7%     
 17   3M Co.   1,784 
 59   AGCO Corp.   3,142 
 48   AMETEK, Inc.   1,967 
 17   Armstrong World Industries, Inc. ●   883 
 31   Assa Abloy Ab   1,246 
 53   Belden, Inc.   2,604 
 19   Boeing Co.   1,764 
 137   DigitalGlobe, Inc. ●   3,996 
 18   Dover Corp.   1,221 
 24   Eaton Corp. plc   1,471 
 11   Flowserve Corp.   1,739 
 30   Gencorp, Inc. ●   397 
 45   General Cable Corp. ●   1,545 
 31   Illinois Tool Works, Inc.   2,001 
 237   Itochu Corp.   2,942 
 165   KBR, Inc.   4,975 
 27   Lockheed Martin Corp.   2,648 
 44   Masco Corp.   862 
 31   MasTec, Inc. ●   865 
 35   Northrop Grumman Corp.   2,675 
 105   Polypore International, Inc. ●   4,401 
 66   Rexel S.A.   1,444 
 221   Rolls-Royce Holdings plc   3,886 
 39   Safran S.A.   1,897 
 15   Stanley Black & Decker, Inc.   1,088 
 12   TransDigm Group, Inc.   1,696 
 17   United Technologies Corp.   1,532 
 54   WESCO International, Inc. ●   3,843 
         60,514 
     Commercial and Professional Services - 1.0%     
 38   IHS, Inc. ●   3,710 
 40   Knoll, Inc.   621 
 23   Nielsen Holdings N.V.   804 
 29   Verisk Analytics, Inc. ●   1,795 
 55   Waste Connections, Inc.   2,083 
         9,013 
     Consumer Durables and Apparel - 2.2%     
 78   D.R. Horton, Inc.   2,032 
 8   Deckers Outdoor Corp. ●   420 
 128   Fifth & Pacific Cos., Inc. ●   2,630 
 17   Fossil, Inc. ●   1,638 
 59   Mattel, Inc.   2,705 
 9   PVH Corp.   981 
 123   Quiksilver, Inc. ●   825 
 2,435   Samsonite International S.A.   6,006 
 2   Taylor Morrison Home Corp. ●   51 
 19   Tempur-Pedic International, Inc. ●   926 
 76   Vera Bradley, Inc. ●   1,723 
         19,937 
     Consumer Services - 1.9%     
 42   Apollo Group, Inc. Class A ●   766 
 14   Buffalo Wild Wings, Inc. ●   1,278 
 151   Burger King Worldwide, Inc.   2,724 
 21   DeVry, Inc.   597 
 42   Dunkin' Brands Group, Inc.   1,621 
 71   Grand Canyon Education, Inc. ●   1,820 
 32   ITT Educational Services, Inc. ●   588 
 28   MGM China Holdings Ltd.   66 
 44   Penn National Gaming, Inc. ●   2,604 
 36   Tim Hortons, Inc.   1,929 
 23   Wyndham Worldwide Corp. ‡   1,389 
 20   Yum! Brands, Inc.   1,376 
         16,758 
     Diversified Financials - 5.8%     
 94   Ameriprise Financial, Inc.   7,022 
 267   Bank of America Corp.   3,290 
 26   BlackRock, Inc.   6,992 
 79   Citigroup, Inc.   3,697 
 303   E*Trade Financial Corp. ●   3,115 
 38   IntercontinentalExchange, Inc. ●   6,136 
 52   Invesco Ltd.   1,647 
 224   JP Morgan Chase & Co.   11,000 
 100   Julius Baer Group Ltd. ☼   3,970 
 63   LPL Financial Holdings, Inc.   2,170 
 59   Solar Cayman Ltd. ⌂■●†   4 
 68   Waddell & Reed Financial, Inc. Class A   2,913 
         51,956 
     Energy - 9.4%     
 136   Anadarko Petroleum Corp.   11,554 
 48   Atwood Oceanics, Inc. ●   2,345 
 127   Baker Hughes, Inc.   5,777 
 617   BG Group plc   10,412 
 92   BP plc ADR   4,019 
 35   Cameron International Corp. ●‡   2,123 
 72   Canadian Natural Resources Ltd. ADR   2,107 
 13   Chesapeake Energy Corp.   247 
 15   Chevron Corp.   1,877 
 284   Cobalt International Energy, Inc. ●   7,939 
 34   Consol Energy, Inc.   1,151 
 13   Continental Resources, Inc. ●   1,015 
 15   Exxon Mobil Corp.   1,370 
 87   Halliburton Co.   3,701 
 413   JX Holdings, Inc.   2,243 
 530   Karoon Gas Australia Ltd. ●   2,298 
 67   Kior, Inc. ●   325 
 156   McDermott International, Inc. ●   1,665 
 32   National Oilwell Varco, Inc.   2,100 

 

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

 

5

 

The Hartford Capital Appreciation II Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 96.9% - (continued) 
     Energy - 9.4% - (continued)     
 58   Newfield Exploration Co. ●   $1,270 
 57   Occidental Petroleum Corp.   5,113 
 23   Peabody Energy Corp.   466 
 8   Pioneer Natural Resources Co.   941 
 57   QEP Resources, Inc.   1,642 
 19   Royal Dutch Shell plc ADR   1,319 
 76   Southwestern Energy Co. ●    2,825 
 62   Superior Energy Services, Inc. ●    1,724 
 18   Tesoro Corp.   970 
 70   Trican Well Service Ltd.   917 
 56   Whiting Petroleum Corp. ●    2,483 
         83,938 
     Food and Staples Retailing - 1.5%     
 67   AEON Co., Ltd.   943 
 63   CVS Caremark Corp.   3,642 
 37   FamilyMart Co., Ltd.   1,673 
 104   Kroger (The) Co.   3,572 
 71   Walgreen Co.   3,490 
         13,320 
     Food, Beverage and Tobacco - 3.9%     
 107   Anheuser-Busch InBev N.V. ☼    10,238 
 27   Archer-Daniels-Midland Co.   910 
 54   Green Mountain Coffee Roasters, Inc. ●    3,077 
 36   Hillshire (The) Brands Co.   1,281 
 62   Imperial Tobacco Group plc   2,207 
 27   Kraft Foods Group, Inc.   1,400 
 2,520   LT Group, Inc. ●    1,487 
 129   Maple Leaf Foods, Inc. w/ Rights   1,707 
 37   Molson Coors Brewing Co.   1,919 
 46   Monster Beverage Corp. ●    2,615 
 64   PepsiCo, Inc.   5,272 
 12   Philip Morris International, Inc.   1,143 
 33   Unilever N.V. NY Shares ADR   1,382 
 236   Universal Robina Corp.   680 
         35,318 
     Health Care Equipment and Services - 4.0%     
 23   Aetna, Inc.   1,344 
 44   Brookdale Senior Living, Inc. ●    1,129 
 148   Cardinal Health, Inc.   6,556 
 1,635   CareView Communications, Inc. ●    900 
 71   Catamaran Corp. ●    4,119 
 30   CIGNA Corp.   1,965 
 329   Hologic, Inc. ●    6,702 
 189   Medtronic, Inc.   8,829 
 46   St. Jude Medical, Inc.   1,904 
 39   UnitedHealth Group, Inc.   2,343 
         35,791 
     Household and Personal Products - 0.4%     
 29   Estee Lauder Co., Inc.   2,004 
 30   Herbalife Ltd.   1,187 
         3,191 
     Insurance - 5.3%     
 18   ACE Ltd.   1,563 
 47   Aflac, Inc.   2,542 
 342   AIA Group Ltd.   1,523 
 432   American International Group, Inc. ●    17,880 
 112   Assured Guaranty Ltd.   2,309 
 102   AXA S.A. ☼    1,917 
 407   China Pacific Insurance Co., Ltd.   1,466 
 66   Fidelity National Financial, Inc.  1,779 
 65   Lincoln National Corp.   2,200 
 52   Marsh & McLennan Cos., Inc.   1,975 
 90   MetLife, Inc.   3,513 
 43   Principal Financial Group, Inc.   1,538 
 43   Reinsurance Group of America, Inc.   2,658 
 50   T&D Holdings, Inc. ☼   578 
 63   Tokio Marine Holdings, Inc.   2,005 
 83   Unum Group   2,315 
         47,761 
     Materials - 4.6%     
 21   Air Liquide   2,606 
 56   Akzo Nobel N.V. ☼   3,402 
 98   Allied Nevada Gold Corp. ●   1,051 
 649   AuRico Gold, Inc.   3,353 
 295   Barrick Gold Corp.   5,807 
 49   Cabot Corp.   1,825 
 309   Continental Gold Ltd. ●   1,527 
 28   Dow Chemical Co.   944 
 19   E.I. DuPont de Nemours & Co.   1,052 
 136   Glencore Xstrata plc   672 
 19   International Paper Co.   904 
 55   Methanex Corp. ADR   2,342 
 259   Molycorp, Inc. ●   1,515 
 34   Mosaic Co.   2,106 
 56   Norbord, Inc. ●   1,881 
 49   Packaging Corp. of America   2,317 
 29   Reliance Steel & Aluminum   1,913 
 39   Rock Tenn Co. Class A   3,949 
 117   SunCoke Energy, Inc. ●   1,763 
         40,929 
     Media - 2.5%     
 40   CBS Corp. Class B   1,808 
 13   Charter Communications, Inc. ●   1,351 
 341   Mediaset S.p.A.   883 
 85   Omnicom Group, Inc.   5,109 
 171   Pandora Media, Inc. ●   2,385 
 122   Time Warner, Inc.   7,320 
 43   Walt Disney Co.   2,720 
 57   WPP plc   938 
         22,514 
     Pharmaceuticals, Biotechnology and Life Sciences - 10.2%     
 45   Actavis, Inc. ●   4,710 
 138   Agilent Technologies, Inc.   5,701 
 15   Algeta ASA ●   522 
 38   Alkermes plc ●‡   1,161 
 141   Almirall S.A.   1,870 
 552   Arena Pharmaceuticals, Inc. ●   4,550 
 79   AstraZeneca plc   4,081 
 277   AVANIR Pharmeceuticals, Inc. ●   882 
 60   Bristol-Myers Squibb Co.   2,391 
 155   Gilead Sciences, Inc. ●   7,874 
 104   Johnson & Johnson   8,867 
 204   Merck & Co., Inc.   9,571 
 27   Onyx Pharmaceuticals, Inc. ●   2,557 
 24   Pfizer, Inc.   684 
 17   Puma Biotechnology, Inc. ●   558 
 16   Regeneron Pharmaceuticals, Inc. ●   3,425 
 40   Roche Holding AG   10,020 

 

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

  

6

  

 

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 96.9% - (continued) 
     Pharmaceuticals, Biotechnology and Life Sciences - 10.2% - (continued)     
 26   Seattle Genetics, Inc. ●  $947 
 20   Tesaro, Inc. ●   563 
 222   Teva Pharmaceutical Industries Ltd. ADR   8,481 
 728   TherapeuticsMD, Inc. ●   1,833 
 69   Vertex Pharmaceuticals, Inc. ●   5,327 
 64   Warner Chilcott plc   927 
 103   WuXi PharmaTech Cayman, Inc. ●   1,966 
 54   Zoetis, Inc.   1,793 
         91,261 
     Real Estate - 1.3%     
 8   American Tower Corp. REIT   664 
 4,472   Bekasi Fajar Industrial Estate Tbk PT ●   460 
 16   Boston Properties, Inc. REIT   1,718 
 197   Fibra Uno Administracion S.A. REIT   756 
 24   Forestar Group, Inc. ●   506 
 2,785   Hemaraj Land Development plc REIT   409 
 4,402   PT Lippo Karawaci, Tbk   612 
 5   Public Storage REIT   907 
 22   Realogy Holdings Corp. ●   1,056 
 1,046   Robinsons Land Corp.   653 
 10   Unibail Rodamco REIT ☼   2,552 
 140   Westfield Group REIT   1,690 
         11,983 
     Retailing - 5.7%     
 83   Abercrombie & Fitch Co. Class A   4,090 
 150   Aeropostale, Inc. ●   2,200 
 727   Allstar Co. ⌂●†   1,303 
 100   Ascena Retail Group, Inc. ●   1,857 
 3   AutoZone, Inc. ●   1,060 
 165   Best Buy Co., Inc.   4,296 
 1,405   Buck Holdings L.P. ⌂●†   440 
 47   Buckle (The), Inc.   2,272 
 22   CarMax, Inc. ●   1,013 
 84   Chico's FAS, Inc.   1,537 
 38   Dollar Tree, Inc. ●   1,793 
 11   Expedia, Inc.   592 
 65   GameStop Corp. Class A   2,263 
 808   Intime Department Store Group Co., Ltd.   960 
 82   LKQ Corp. ●   1,967 
 299   Lowe's Co., Inc.   11,494 
 30   Men's Wearhouse, Inc.   1,008 
 6   Priceline.com, Inc. ●   3,842 
 17   Sears Hometown and Outlet Stores, Inc. ●   758 
 71   Staples, Inc.   937 
 50   Target Corp.   3,561 
 33   TripAdvisor, Inc. ●   1,723 
         50,966 
     Semiconductors and Semiconductor Equipment - 3.1%     
 38   Analog Devices, Inc.   1,672 
 20   ASML Holding N.V.   1,468 
 265   GT Advanced Technologies, Inc. ●   1,043 
 275   Intel Corp.   6,578 
 65   Maxim Integrated Products, Inc.   2,007 
 262   MEMC Electronic Materials, Inc. ●   1,416 
 985   Micron Technology, Inc. ●   9,279 
 214   RF Micro Devices, Inc. ●   1,200 
 58   Skyworks Solutions, Inc. ●   1,273 
 98   Teradyne, Inc. ●   1,610 
         27,546 
     Software and Services - 10.4%     
 20   Accenture plc   1,661 
 95   Activision Blizzard, Inc.   1,420 
 251   Akamai Technologies, Inc. ●   11,018 
 182   Amadeus IT Holding S.A. Class A   5,365 
 98   Autodesk, Inc. ●   3,869 
 40   Automatic Data Processing, Inc.   2,663 
 118   Booz Allen Hamilton Holding Corp.   1,797 
 289   Cadence Design Systems, Inc. ●   3,987 
 68   Check Point Software Technologies Ltd. ADR ●   3,189 
 58   Concur Technologies, Inc. ●   4,243 
 34   eBay, Inc. ●   1,795 
 48   Global Payments, Inc.   2,213 
 4   Google, Inc. ●   3,133 
 44   IAC/InterActiveCorp.   2,071 
 128   iGate Corp. ●   2,135 
 32   LinkedIn Corp. Class A ●   6,240 
 297   Microsoft Corp.   9,822 
 187   Oracle Corp.   6,126 
 29   Rovi Corp. ●   687 
 114   ServiceNow, Inc. ●   4,650 
 4   Splunk, Inc. ●   175 
 45   Teradata Corp. ●   2,316 
 22   TiVo, Inc. ●   260 
 55   VeriFone Systems, Inc. ●   1,188 
 124   Web.com Group, Inc. ●   2,165 
 77   Western Union Co.   1,146 
 22   WEX, Inc. ●   1,675 
 257   Yahoo!, Inc. ●   6,345 
         93,354 
     Technology Hardware and Equipment - 5.4%     
 918   Alcatel - Lucent ADR ●   1,257 
 7   Apple, Inc. ‡   3,139 
 1,024   Cisco Systems, Inc.   21,417 
 156   EMC Corp. ●   3,493 
 71   Hewlett-Packard Co.   1,465 
 299   High Technology Computer Corp.   3,056 
 75   Jabil Circuit, Inc.   1,331 
 261   JDS Uniphase Corp. ●   3,526 
 73   Juniper Networks, Inc. ●   1,210 
 1,264   Lenovo Group Ltd.   1,156 
 20   Motorola Solutions, Inc.   1,134 
 79   SanDisk Corp. ●   4,164 
 25   Seagate Technology plc   913 
 190   Toshiba Corp.   1,048 
         48,309 
     Telecommunication Services - 0.8%     
 63   Intelsat S.A. ●   1,270 
 584   Portugal Telecom SGPS S.A.   3,047 
 17   Verizon Communications, Inc.   933 
 522   Vodafone Group plc   1,592 
         6,842 
     Transportation - 4.1%     
 43   C.H. Robinson Worldwide, Inc.   2,530 
 19   Canadian National Railway Co.   1,850 

 

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

 

7

 

The Hartford Capital Appreciation II Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

 Shares or Principal Amount         Market Value ╪ 
COMMON STOCKS - 96.9% - (continued)           
     Transportation - 4.1% - (continued)           
 11   Canadian Pacific Railway Ltd. ADR        $1,413 
 14   FedEx Corp.         1,269 
 346   Hertz Global Holdings, Inc. ●         8,320 
 453   JetBlue Airways Corp. ●         3,118 
 17   Kansas City Southern         1,898 
 119   Knight Transportation, Inc.         1,863 
 178   United Continental Holdings, Inc. ●         5,757 
 102   United Parcel Service, Inc. Class B         8,750 
               36,768 
     Utilities - 1.5%           
 83   Calpine Corp. ●         1,799 
 35   Entergy Corp.         2,514 
 112   NRG Energy, Inc.         3,115 
 342   Snam S.p.A.         1,685 
 45   UGI Corp.         1,859 
 92   Xcel Energy, Inc.         2,928 
               13,900 
     Total common stocks           
     (cost $769,928)        $868,920 
 

WARRANTS - 0.0%

          
     Pharmaceuticals, Biotechnology and Life Sciences - 0.0%           
 13   Novavax, Inc. ⌂●        $ 
                 
     Total warrants           
     (cost $–)        $ 
                 
     Total long-term investments
          
     (cost $769,928)        $868,920 
                 
 SHORT-TERM INVESTMENTS - 3.6%           
 Repurchase Agreements - 3.6%           
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $1,294,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $1,320)
          
$1,294    0.17%, 4/30/2013        $1,294 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $3,526, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%, 2013,
value of $3,596)
          
 3,526    0.15%, 4/30/2013         3,526 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $6,791, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $6,926)
          
 6,791    0.15%, 4/30/2013         6,791 
    Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $9,431,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $9,620)
         
 9,431    0.14%, 4/30/2013         9,431 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,696, collateralized by
FHLMC 3.00% - 5.50%, 2037 - 2043,
FNMA 3.00%, 2043, value of $1,730)
          
 1,696    0.17%, 4/30/2013         1,696 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $5,747, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $5,862)
          
 5,747    0.14%, 4/30/2013         5,747 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$4,041, collateralized by U.S. Treasury
Note 0.25% - 1.88%, 2014 - 2019, value of
$4,121)
          
 4,040    0.17%, 4/30/2013         4,040 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$72, collateralized by U.S. Treasury Note
3.88%, 2018, value of $74)
          
 72    0.13%, 4/30/2013         72 
               32,597 
     Total short-term investments           
     (cost $32,597)        $32,597 
      Total investments           
      (cost $802,525) ▲   100.5 % $ 901,517 
      Other assets and liabilities   (0.5 )%   (4,324)
      Total net assets   100.0 % $ 897,193

 

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.
   
  Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $827,684 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

  

Unrealized Appreciation  $116,377 
Unrealized Depreciation   (42,544)
Net Unrealized Appreciation  $73,833 

 

These securities were valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $1,747, which represents 0.2% 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.  
   
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. Unless otherwise indicated, these issues are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $4, which rounds to zero percent of total net assets.  
   

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $7,190 at April 30, 2013. 

 

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 Acquired  Shares/ Par   Security  Cost Basis 
08/2011   727   Allstar Co.  $430 
06/2007   1,405   Buck Holdings L.P.   105 
07/2008   13   Novavax, Inc. Warrants   – 
03/2007   59   Solar Cayman Ltd.  - 144A   17 

 

At April 30, 2013, the aggregate value of these securities was $1,747, which represents 0.2% of total net assets.

 

Foreign Currency Contracts Outstanding at April 30, 2013
 
Currency  Buy / Sell  Delivery Date   

Counterparty

  

Contract Amount

  

Market Value ╪

  

Unrealized
Appreciation/
(Depreciation)

 
CAD  Buy  05/02/2013   

BCLY

   $110   $110   $ 
CHF  Buy  05/06/2013   

DEUT

    58    58     
CHF  Buy  05/03/2013   

NAB

    70    71    1 
EUR  Buy  05/02/2013   

BCLY

    341    345    4 
EUR  Buy  05/03/2013   

BCLY

    2,654    2,669    15 
EUR  Buy  05/03/2013   

DEUT

    2,719    2,732    13 
EUR  Buy  05/06/2013   

JPM

    662    662     
EUR  Sell  05/03/2013   

BCLY

    40    41    (1)
GBP  Buy  05/03/2013   

BCLY

    143    143     
GBP  Buy  05/02/2013   

DEUT

    4    4     
HKD  Buy  05/03/2013   

BCLY

    66    66     
JPY  Buy  12/12/2013   

CBK

    1,546    1,570    24 
JPY  Buy  05/07/2013   

CSFB

    90    90     

 

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

 

9

 

The Hartford Capital Appreciation II Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Foreign Currency Contracts Outstanding at April 30, 2013 - (continued)
 
Currency  Buy / Sell  Delivery Date  Counterparty 

Contract Amount

  

Market Value ╪

  

Unrealized
Appreciation/
(Depreciation)

 
JPY  Buy  05/02/2013  SSG  $472   $478   $6 
JPY  Buy  12/12/2013  UBS   918    879    (39)
JPY  Sell  12/12/2013  BCLY   1,576    1,396    180 
JPY  Sell  12/12/2013  CBK   710    634    76 
JPY  Sell  12/12/2013  DEUT   769    648    121 
JPY  Sell  12/12/2013  JPM   1,229    1,090    139 
JPY  Sell  12/12/2013  MSC   769    648    121 
JPY  Sell  12/12/2013  UBS   833    791    42 
                      $702 

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
BCLY Barclays  
CBK Citibank NA  
CSFB Credit Suisse First Boston Corp.
DEUT Deutsche Bank Securities, Inc.  
JPM JP Morgan Chase & Co.  
MSC Morgan Stanley  
NAB National Australia Bank
SSG State Street Global Markets LLC  
UBS UBS AG  
   
Currency Abbreviations:
CAD Canadian Dollar  
CHF Swiss Franc  
EUR EURO  
GBP British Pound  
HKD Hong Kong Dollar  
JPY Japanese Yen  
 
Other Abbreviations:
ADR American Depositary Receipt
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
REIT Real Estate Investment Trust

 

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

 

10

  

The Hartford Capital Appreciation II Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Automobiles and Components  $21,733   $18,025   $3,708   $ 
Banks   25,318    21,556    3,762     
Capital Goods   60,514    49,099    11,415     
Commercial and Professional Services   9,013    9,013         
Consumer Durables and Apparel   19,937    13,931    6,006     
Consumer Services   16,758    16,692    66     
Diversified Financials   51,956    47,982    3,970    4 
Energy   83,938    68,985    14,953     
Food and Staples Retailing   13,320    10,704    2,616     
Food, Beverage and Tobacco   35,318    22,193    13,125     
Health Care Equipment and Services   35,791    35,791         
Household and Personal Products   3,191    3,191         
Insurance   47,761    40,272    7,489     
Materials   40,929    34,249    6,680     
Media   22,514    20,693    1,821     
Pharmaceuticals, Biotechnology and Life Sciences   91,261    74,768    16,493     
Real Estate   11,983    8,812    3,171     
Retailing   50,966    48,263    960    1,743 
Semiconductors and Semiconductor Equipment   27,546    27,546         
Software and Services   93,354    87,989    5,365     
Technology Hardware and Equipment   48,309    43,049    5,260     
Telecommunication Services   6,842    2,203    4,639     
Transportation   36,768    36,768         
Utilities   13,900    12,215    1,685     
Total   868,920    753,989    113,184    1,747 
Warrants                
Short-Term Investments   32,597        32,597     
Total  $901,517   $753,989   $145,781   $1,747 
Foreign Currency Contracts*   742        742     
Total  $742   $   $742   $ 
Liabilities:                    
Foreign Currency Contracts*   40        40     
Total  $40   $   $40   $ 

  

For the six-month period ended April 30, 2013, investments valued at $3,974 were transferred from Level 2 to Level 1, and there were no transfers from Level 1 to Level 2. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3
   Transfers
Out of
Level 3
   Balance
as of
April 30,
2013

 

Assets:                                             
Common Stocks  $2,632   $(1,496)  $1,999*  $   $   $(1,388)  $   $   $1,747 
Total  $2,632   $(1,496)  $1,999   $   $   $(1,388)  $   $   $1,747 

 

*Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $(364).

 

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

11

 

The Hartford Capital Appreciation II Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $802,525)  $901,517 
Cash   1 
Foreign currency on deposit with custodian (cost $–)    
Unrealized appreciation on foreign currency contracts   742 
Receivables:     
Investment securities sold   14,188 
Fund shares sold   764 
Dividends and interest   913 
Other assets   142 
Total assets   918,267 
Liabilities:     
Unrealized depreciation on foreign currency contracts   40 
Payables:     
Investment securities purchased   19,568 
Fund shares redeemed   1,052 
Investment management fees   127 
Administrative fees   1 
Distribution fees   69 
Accrued expenses   217 
Total liabilities   21,074 
Net assets  $897,193 
Summary of Net Assets:     
Capital stock and paid-in-capital  $873,864 
Distributions in excess of net investment loss   (809)
Accumulated net realized loss   (75,523)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   99,661 
Net assets  $897,193 
      
Shares authorized   1,000,000 
Par value  $   0.001 
Class A: Net asset value per share/Maximum offering price per share   

$16.51/$17.47

 
Shares outstanding   27,206 
Net assets  $449,200 
Class B: Net asset value per share  $15.53 
Shares outstanding   3,591 
Net assets  $55,755 
Class C: Net asset value per share  $15.62 
Shares outstanding   15,162 
Net assets  $236,865 
Class I: Net asset value per share  $16.83 
Shares outstanding   6,179 
Net assets  $104,001 
Class R3: Net asset value per share  $16.34 
Shares outstanding   1,719 
Net assets  $28,091 
Class R4: Net asset value per share  $16.66 
Shares outstanding   653 
Net assets  $10,879 
Class R5: Net asset value per share  $16.90 
Shares outstanding   66 
Net assets  $1,114 
Class Y: Net asset value per share  $17.03 
Shares outstanding   663 
Net assets  $11,288 

 

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

 

12

 

The Hartford Capital Appreciation II Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $7,674 
Interest   15 
Less: Foreign tax withheld   (212)
Total investment income   7,477 
      
Expenses:     
Investment management fees   3,679 
Administrative services fees     
Class R3   26 
Class R4   8 
Class R5   1 
Transfer agent fees     
Class A   412 
Class B   78 
Class C   177 
Class I   59 
Class R3   2 
Class R4    
Class R5    
Class Y    
Distribution fees     
Class A   530 
Class B   267 
Class C   1,130 
Class R3   65 
Class R4   13 
Custodian fees   19 
Accounting services fees   59 
Registration and filing fees   56 
Board of Directors' fees   12 
Audit fees   11 
Other expenses   93 
Total expenses (before waivers and fees paid indirectly)   6,697 
Expense waivers   (508)
Transfer agent fee waivers    
Commission recapture   (34)
Custodian fee offset    
Total waivers and fees paid indirectly   (542)
Total expenses, net   6,155 
Net Investment Income   1,322 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   60,271 
Net realized loss on foreign currency contracts   (162)
Net realized gain on other foreign currency transactions   85 
Net Realized Gain on Investments and Foreign Currency Transactions   60,194 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   83,389 
Net unrealized appreciation of foreign currency contracts   816 
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies   (46)
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   84,159 
Net Gain on Investments and Foreign Currency Transactions   144,353 
Net Increase in Net Assets Resulting from Operations  $145,675 

 

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

 

13

 

The Hartford Capital Appreciation II Fund

Statement of Changes in Net Assets

 
(000’s Omitted)

  

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the 
Year Ended
 October 31, 2012
 
Operations:          
Net investment income  $1,322   $181 
Net realized gain on investments and foreign currency transactions   60,194    33,731 
Net unrealized appreciation of investments and foreign currency transactions   84,159    40,437 
Net Increase in Net Assets Resulting from Operations   145,675    74,349 
Distributions to Shareholders:          
From net investment income          
Class A   (1,569)    
Class I   (534)    
Class R3   (83)    
Class R4   (55)    
Class R5   (7)    
Class Y   (72)    
Total distributions   (2,320)    
Capital Share Transactions:          
Class A   (35,094)   (92,746)
Class B   (5,171)   (14,612)
Class C   (24,135)   (63,368)
Class I   1,600    (34,210)
Class R3   (575)   2,261 
Class R4   (1,252)   (3,229)
Class R5   (351)   (74)
Class Y   (2,668)   (23,007)
Net decrease from capital share transactions   (67,646)   (228,985)
Net Increase (Decrease) in Net Assets   75,709    (154,636)
Net Assets:          
Beginning of period   821,484    976,120 
End of period  $897,193   $821,484 
Undistributed (distribution in excess of) net investment income (loss)  $(809)  $189 

 

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

 

14

 

The Hartford Capital Appreciation II Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the

 

15

 

The Hartford Capital Appreciation II Fund

Notes to Financial Statements (Continued)

April 30, 2013 (Unaudited)
(000’s Omitted)

 

Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

17

 

The Hartford Capital Appreciation II Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)
(000’s Omitted)

 

c)Investment Transactions and Investment Income – Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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

 

18

 

 

 

(“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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a value at least equal to the amount of the commitment. As of April 30, 2013, the Fund had no outstanding when-issued or delayed-delivery investments.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are

 

19

 

The Hartford Capital Appreciation II Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)
(000’s Omitted)

 

marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:
 
   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency
contracts
  $   $742   $   $   $   $   $742 
Total  $   $742   $   $   $   $   $742 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $40   $   $   $   $   $40 
Total  $   $40   $   $   $   $   $40 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

  

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:
   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Loss on Derivatives Recognized as a Result of Operations:
Net realized loss on foreign currency contracts  $   $(162)  $   $   $   $   $(162)
Total  $   $(162)  $   $   $   $   $(162)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation of foreign currency contracts  $   $816   $   $   $   $   $816 
Total  $   $816   $   $   $   $   $816 

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

20

 

 

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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)Components of Distributable Earnings – The Fund’s components of distributable earnings (deficit) on a tax basis at October 31, 2012, are as follows:
   Amount 
Undistributed Ordinary Income  $895 
Accumulated Capital Losses *   (111,378)
Unrealized Depreciation †   (9,543)
Total Accumulated Deficit  $(120,026)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. Adjustments are made to reflect the impact these items have on

 

21

 

The Hartford Capital Appreciation II Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)
(000’s Omitted)

 

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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $149 
Accumulated Net Realized Gain (Loss)   55 
Capital Stock and Paid-in-Capital   (204)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2017  $111,378 
Total  $111,378 

 

During the year ended October 31, 2012, the Fund utilized $20,590 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides

 

22

 

 

 

administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets   Annual Fee 
On first $250 million   0.9500% 
On next $250 million   0.9000% 
On next $500 million   0.8000% 
On next $1.5 billion   0.7500% 
On next $2.5 billion   0.7000% 
On next $5 billion   0.6800% 
Over $10 billion   0.6750% 

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 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%   1.35%   1.05%   0.95%   0.90%

 

d)Fees Paid Indirectly The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, are included in the Statement of Operations.

 

23

 

The Hartford Capital Appreciation II Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)
(000’s Omitted)

 

The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.24%
Class B   2.00 
Class C   2.00 
Class I   0.99 
Class R3   1.34 
Class R4   1.04 
Class R5   0.94 
Class Y   0.89 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $522 and contingent deferred sales charges of $34 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with

 

24

 

 

 

respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $575,748 
Sales Proceeds Excluding U.S. Government Obligations   655,466 

 

9.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

  

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   1,610    103    (4,067)       (2,354)   3,837        (10,779)       (6,942)
Amount  $24,515   $1,520   $(61,129)  $   $(35,094)  $51,605   $   $(144,352)  $   $(92,747)
Class B                                                  
Shares   36        (399)       (363)   85        (1,234)       (1,149)
Amount  $508   $   $(5,679)  $   $(5,171)  $1,075   $   $(15,687)  $   $(14,612)
Class C                                                  
Shares   524        (2,234)       (1,710)   1,103        (6,076)       (4,973)
Amount  $7,565   $   $(31,700)  $   $(24,135)  $13,969   $   $(77,337)  $   $(63,368)
Class I                                                  
Shares   1,542    31    (1,527)       46    1,691        (4,196)       (2,505)
Amount  $24,499   $462   $(23,361)  $   $1,600   $22,735   $   $(56,945)  $   $(34,210)
Class R3                                                  
Shares   240    5    (283)       (38)   723        (561)       162 
Amount  $3,564   $82   $(4,221)  $   $(575)  $9,643   $   $(7,382)  $   $2,261 
Class R4                                                  
Shares   60    3    (146)       (83)   290        (509)       (219)
Amount  $916   $49   $(2,217)  $   $(1,252)  $3,914   $   $(7,143)  $   $(3,229)
Class R5                                                  
Shares   5    1    (29)       (23)   30        (37)       (7)
Amount  $77   $7   $(435)  $   $(351)  $430   $   $(504)  $   $(74)
Class Y                                                  
Shares   15    5    (203)       (183)   177        (1,889)       (1,712)
Amount  $224   $72   $(2,964)  $   $(2,668)  $2,473   $   $(25,480)  $   $(23,007)
Total                                                  
Shares   4,032    148    (8,888)       (4,708)   7,936        (25,281)       (17,345)
Amount  $61,868   $2,192   $(131,706)  $   $(67,646)  $105,844   $   $(334,830)  $   $(228,986)

25

 

The Hartford Capital Appreciation II Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)
(000’s Omitted)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   12   $189 
For the Year Ended October 31, 2012   60   $802 

 

10.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

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.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

13.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

26

 

 

 

14.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

  

27

  

The Hartford Capital Appreciation II Fund

Financial Highlights

- Selected Per-Share Data (A)-

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited)
A  $13.93   $0.04   $2.60   $2.64   $(0.06)  $   $   $(0.06)  $16.51 
B   13.10    (0.02)   2.45    2.43                    15.53 
C   13.18    (0.02)   2.46    2.44                    15.62 
I   14.22    0.06    2.64    2.70    (0.09)           (0.09)   16.83 
R3   13.79    0.03    2.57    2.60    (0.05)           (0.05)   16.34 
R4   14.07    0.06    2.61    2.67    (0.08)           (0.08)   16.66 
R5   14.28    0.10    2.62    2.72    (0.10)           (0.10)   16.90 
Y   14.40    0.12    2.62    2.74    (0.11)           (0.11)   17.03 
                                              
For the Year Ended October 31, 2012                                  
A   12.80    0.03    1.10    1.13                    13.93 
B   12.14    (0.08)   1.04    0.96                    13.10 
C   12.21    (0.07)   1.04    0.97                    13.18 
I   13.04    0.08    1.10    1.18                    14.22 
R3   12.69    0.01    1.09    1.10                    13.79 
R4   12.91    0.06    1.10    1.16                    14.07 
R5   13.09    0.08    1.11    1.19                    14.28 
Y   13.18    0.19    1.03    1.22                    14.40 
                                              
For the Year Ended October 31, 2011                                  
A   12.94    (0.03)   (0.11)   (0.14)                   12.80 
B   12.37    (0.14)   (0.09)   (0.23)                   12.14 
C   12.42    (0.12)   (0.09)   (0.21)                   12.21 
I   13.13    0.02    (0.11)   (0.09)                   13.04 
R3   12.86    (0.06)   (0.11)   (0.17)                   12.69 
R4   13.04    (0.02)   (0.11)   (0.13)                   12.91 
R5   13.18    0.02    (0.11)   (0.09)                   13.09 
Y   13.25    0.03    (0.10)   (0.07)                   13.18 
                                              
For the Year Ended October 31, 2010                                  
A   10.74    (0.03)   2.23    2.20                    12.94 
B   10.35    (0.14)   2.16    2.02                    12.37 
C   10.39    (0.12)   2.15    2.03                    12.42 
I   10.86    0.02    2.25    2.27                    13.13 
R3   10.71    (0.05)   2.20    2.15                    12.86 
R4   10.82    (0.02)   2.24    2.22                    13.04 
R5   10.91    0.02    2.25    2.27                    13.18 
Y   10.96    0.04    2.25    2.29                    13.25 
                                              
For the Year Ended October 31, 2009                                  
A   8.73        2.01    2.01                    10.74 
B   8.47    (0.06)   1.94    1.88                    10.35 
C   8.50    (0.06)   1.95    1.89                    10.39 
I   8.80    0.03    2.03    2.06                    10.86 
R3   8.73    (0.03)   2.01    1.98                    10.71 
R4   8.79        2.03    2.03                    10.82 
R5   8.84    0.02    2.05    2.07                    10.91 
Y   8.86    0.04    2.06    2.10                    10.96 
                                              
For the Year Ended October 31, 2008                                  
A  $16.95   $0.02   $(7.07)  $(7.05)  $   $(1.17)  $   $(1.17)  $8.73 
B   16.62    (0.09)   (6.89)   (6.98)       (1.17)       (1.17)   8.47 
C   16.66    (0.07)   (6.92)   (6.99)       (1.17)       (1.17)   8.50 
I   17.02    0.04    (7.09)   (7.05)       (1.17)       (1.17)   8.80 
R3   17.00    (0.01)   (7.09)   (7.10)       (1.17)       (1.17)   8.73 
R4   17.05    0.01    (7.10)   (7.09)       (1.17)       (1.17)   8.79 
R5   17.10    0.04    (7.13)   (7.09)       (1.17)       (1.17)   8.84 
Y   17.12        (7.09)   (7.09)       (1.17)       (1.17)   8.86 

 

28

 

Ratios and Supplemental Data -

  

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
  
 18.96%(E)  $449,200    1.38%(F)   1.25%(F)   0.53%(F)   69%
 18.55(E)   55,755    2.23(F)   2.00(F)   (0.22)(F)    
 18.51(E)   236,865    2.09(F)   2.00(F)   (0.22)(F)    
 19.09(E)   104,001    1.06(F)   1.00(F)   0.78(F)    
 18.87(E)   28,091    1.65(F)   1.35(F)   0.42(F)    
 19.04(E)   10,879    1.34(F)   1.05(F)   0.75(F)    
 19.16(E)   1,114    1.06(F)   0.95(F)   0.87(F)    
 19.12(E)   11,288    0.94(F)   0.90(F)   0.87(F)    
                            
                            
 8.83    411,923    1.41    1.32    0.23    135 
 7.91    51,815    2.26    2.10    (0.55)    
 7.94    222,460    2.12    2.06    (0.51)    
 9.05    87,227    1.10    1.05    0.49     
 8.67    24,232    1.69    1.45    0.11     
 8.99    10,362    1.37    1.18    0.37     
 9.09    1,276    1.09    1.00    0.57     
 9.26    12,189    0.97    0.95    0.63     
                            
                            
 (1.08)   467,407    1.41    1.41    (0.19)   140 
 (1.86)   61,934    2.25    2.25    (1.03)    
 (1.69)   266,634    2.13    2.13    (0.91)    
 (0.69)   112,597    1.11    1.11    0.12     
 (1.32)   20,237    1.72    1.70    (0.48)    
 (1.00)   12,333    1.40    1.40    (0.17)    
 (0.68)   1,255    1.11    1.10    0.13     
 (0.53)   33,723    0.99    0.99    0.23     
                            
                            
 20.48    516,406    1.44    1.44    (0.20)   155 
 19.52    73,313    2.28    2.28    (1.04)    
 19.54    310,899    2.15    2.15    (0.91)    
 20.90    107,796    1.11    1.11    0.13     
 20.07    13,520    1.74    1.73    (0.50)    
 20.52    8,486    1.40    1.40    (0.18)    
 20.81    777    1.12    1.11    0.12     
 20.89    46,353    1.00    1.00    0.25     
                            
                            
 23.02    497,959    1.54    1.54    0.02    168 
 22.20    72,940    2.44    2.22    (0.67)    
 22.23    297,280    2.25    2.25    (0.70)    
 23.41    95,280    1.16    1.16    0.37     
 22.68    8,057    1.81    1.81    (0.30)    
 23.09    5,308    1.43    1.43    0.04     
 23.42    816    1.14    1.14    0.29     
 23.70    54,222    1.02    1.02    0.49     
                            
                            
 (44.43)   479,795    1.40    1.40    0.12    159 
 (44.92)   66,057    2.27    2.27    (0.75)    
 (44.87)   269,662    2.14    2.14    (0.62)    
 (44.23)   79,436    1.08    1.08    0.43     
 (44.60)   4,148    1.77    1.77    (0.28)    
 (44.40)   1,232    1.43    1.43    0.08     
 (44.26)   151    1.16    1.16    0.37     
 (44.20)   21,827    1.01    1.01    0.51     

 

29

 

The Hartford Capital Appreciation II Fund

Financial Highlights – (continued)

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Not annualized.
(F)Annualized.

 

30

 

The Hartford Capital Appreciation II Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

31

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

32

  

 

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)            
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
  Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,189.60   $6.80   $1,000.00   $1,018.58   $6.27    1.25%  181    365 
Class B  $1,000.00   $1,185.50   $10.86   $1,000.00   $1,014.86   $10.01    2.00   181    365 
Class C  $1,000.00   $1,185.10   $10.86   $1,000.00   $1,014.86   $10.01    2.00   181    365 
Class I  $1,000.00   $1,190.90   $5.44   $1,000.00   $1,019.83   $5.02    1.00   181    365 
Class R3  $1,000.00   $1,188.70   $7.34   $1,000.00   $1,018.09   $6.77    1.35   181    365 
Class R4  $1,000.00   $1,190.40   $5.71   $1,000.00   $1,019.58   $5.27    1.05   181    365 
Class R5  $1,000.00   $1,191.60   $5.17   $1,000.00   $1,020.08   $4.77    0.95   181    365 
Class Y  $1,000.00   $1,191.20   $4.90   $1,000.00   $1,020.32   $4.52    0.90   181    365 

 

34

 

The Hartford Capital Appreciation II Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Capital Appreciation II Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard,

 

35

 

The Hartford Capital Appreciation II Fund

Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

36

 

The Hartford Capital Appreciation II Fund

Principal Riskss (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Small/Mid-cap Stock Risk: Small- and mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

37
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-CAII13 4/13 113965 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

5

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD CHECKS AND BALANCES FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Checks and Balances Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 4
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 5
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 6
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 7
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 8
Notes to Financial Statements (Unaudited) 9
Financial Highlights (Unaudited) 18
Directors and Officers (Unaudited) 20
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 22
Quarterly Portfolio Holdings Information (Unaudited) 22
Expense Example (Unaudited) 23
Approval of New Investment Management Agreement (Unaudited) 24
Principal Risks (Unaudited) 26

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

  

 

 

The Hartford Checks and Balances Fund  inception 05/31/2007
(advised by Hartford Financial Services, LLC)
 
Investment objective – Seeks long-term capital appreciation and income.

 

Performance Overview 5/31/07 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   Since
Inception▲
 
Checks and Balances A#   12.35%       14.71%       4.32%       3.90%    
Checks and Balances A##        8.40%       3.15%       2.91%    
Checks and Balances B#   11.97%       13.86%       3.48%       3.08%    
Checks and Balances B##        8.86%       3.13%       2.94%    
Checks and Balances C#   11.96%       13.89%       3.54%       3.14%    
Checks and Balances C##        12.89%       3.54%       3.14%    
Checks and Balances I#   12.51%       15.14%       4.62%       4.16%    
Checks and Balances R3#   12.19%       14.35%       4.01%       3.64%    
Checks and Balances R4#   12.34%       14.70%       4.30%       3.88%    
Checks and Balances R5#   12.41%       15.04%       4.59%       4.13%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       5.73%       6.13%    
Russell 3000 Index   15.16%       17.21%       5.63%       3.17%    
S&P 500 Index   14.41%       16.88%       5.20%       2.94%    

 

Not Annualized
Inception: 05/31/2007
# Without sales charge
## With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 2/29/08. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 8/29/08. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays 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 chart and table do not reflect the deductions 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.

 

2

 

 The Hartford Checks and Balances Fund
Manager Discussion
October 31, 2012 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Checks and Balances Class A   1.03%       1.03%    
Checks and Balances Class B   1.84%       1.84%    
Checks and Balances Class C   1.78%       1.78%    
Checks and Balances Class I   0.78%       0.78%    
Checks and Balances Class R3   1.38%       1.38%    
Checks and Balances Class R4   1.09%       1.09%    
Checks and Balances Class R5   0.78%       0.78%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Manager
Vernon J. Meyer, CFA
Senior Vice President of Hartford Funds Management Company, LLC (“HFMC”),
Chairman of the HFMC Investment Oversight Committee

 

How did the Fund perform?

The Class A shares of The Hartford Checks and Balances Fund returned 12.35%, before sales charge, for the six-month period ended April 30, 2013, versus 10.46% for the Lipper Mixed-Asset Target Allocation Growth Funds average, 0.91% for the Barclays U.S. Aggregate Bond Index, 14.41% for the S&P 500 Index, and 15.16% for the Russell 3000 Index.

 

Why did the Fund perform this way?

The Fund makes equal allocations of its assets to Class Y shares of certain 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 and fixed income and money market securities. The Fund is not actively managed, and the Fund’s assets will be rebalanced back to one-third in each Underlying Fund 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 www.hartfordfunds.com for the shareholder report of each Underlying Fund.

 

Composition by Investments

as of April 30, 2013 

Fund Name  Percentage of Net
Assets
 
The Hartford Capital Appreciation Fund, Class Y   33.5%
The Hartford Dividend and Growth Fund, Class Y   33.5 
The Hartford Total Return Bond Fund, Class Y   33.1 
Other Assets and Liabilities   (0.1)
Total   100.0%

   

3

 

The Hartford Checks and Balances Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount     Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 100.1%        
EQUITY FUNDS - 67.0%          
 14,043   The Hartford Capital Appreciation Fund, Class Y       $601,465 
 25,480   The Hartford Dividend and Growth Fund, Class Y        601,065 
              1,202,530 
     Total equity funds          
     (cost $869,344)       $1,202,530 
                
FIXED INCOME FUNDS - 33.1%          
 53,489    The Hartford Total Return Bond Fund, Class Y       $592,655 
                
     Total fixed income funds          
     (cost $576,140)       $592,655 
                
     Total investments in affiliated investment companies          
     (cost $1,445,484)       $1,795,185 
                
     Total long-term investments          
      (cost $1,445,484)       $1,795,185 
                
     Total investments          
     (cost $1,445,484) ▲   100.1%  $1,795,185 
     Other assets and liabilities   (0.1)%   (1,114)
     Total net assets   100.0%  $1,794,071 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $1,517,604 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $277,581 
Unrealized Depreciation    
Net Unrealized Appreciation  $277,581 

 

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
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Affiliated Investment Companies  $1,795,185   $1,795,185   $   $ 
Total   $1,795,185   $1,795,185   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  

  

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

 

5

 

The Hartford Checks and Balances Fund
Statement of Assets and Liabilities
April 30, 2013  (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in underlying affiliated funds, at market value (cost $1,445,484)  $1,795,185 
Receivables:     
Investment securities sold   739 
Fund shares sold   1,012 
Dividends and interest   1,473 
Other assets   57 
Total assets   1,798,466 
Liabilities:     
Payables:     
Investment securities purchased   434 
Fund shares redeemed   3,546 
Administrative fees    
Distribution fees   124 
Accrued expenses   291 
Total liabilities   4,395 
Net assets  $1,794,071 
Summary of Net Assets:     
Capital stock and paid-in-capital  $1,459,338 
Distributions in excess of net investment loss   (12,458)
Accumulated net realized loss   (2,510)
Unrealized appreciation of investments   349,701 
Net assets  $1,794,071 
      

Shares authorized   1,000,000 
Par value  $   0.001 
Class A: Net asset value per share/Maximum offering price per share   

$10.92/$11.56

 
Shares outstanding   122,844 
Net assets  $1,341,598 
Class B: Net asset value per share  $10.86 
Shares outstanding   10,873 
Net assets  $118,058 
Class C: Net asset value per share  $10.87 
Shares outstanding   27,328 
Net assets  $296,924 
Class I: Net asset value per share  $10.94 
Shares outstanding   2,235 
Net assets  $24,446 
Class R3: Net asset value per share  $10.89 
Shares outstanding   1,056 
Net assets  $11,497 
Class R4: Net asset value per share  $10.91 
Shares outstanding   130 
Net assets  $1,415 
Class R5: Net asset value per share  $10.93 
Shares outstanding   12 
Net assets  $133 

 

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

 

6

 

The Hartford Checks and Balances Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends from underlying affiliated funds  $19,773 
Total investment income   19,773 
      
Expenses:     
Administrative services fees    
Class R3   11 
Class R4   1 
Class R5    
Transfer agent fees    
Class A   785 
Class B   104 
Class C   174 
Class I   13 
Class R3   1 
Class R4    
Class R5    
Distribution fees     
Class A   1,609 
Class B   574 
Class C   1,424 
Class R3   28 
Class R4   2 
Custodian fees    
Accounting services fees   103 
Registration and filing fees   73 
Board of Directors' fees   18 
Audit fees   13 
Other expenses   124 
Total expenses   5,057 
Net Investment Income   14,716 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   25,642 
Net realized gain on investments in underlying affiliated funds   43,970 
Net Realized Gain on Investments   69,612 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   116,481 
Net Changes in Unrealized Appreciation of Investments   116,481 
Net Gain on Investments   186,093 
Net Increase in Net Assets Resulting from Operations  $200,809 

 

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 Six-Month

Period Ended
April 30, 2013
(Unaudited)

   For the 
Year Ended 
October 31, 2012
 
Operations:          
Net investment income  $14,716   $34,677 
Net realized gain on investments   69,612    1,769 
Net unrealized appreciation of investments   116,481    134,531 
Net Increase in Net Assets Resulting from Operations   200,809    170,977 
Distributions to Shareholders:          
From net investment income          
Class A   (21,516)   (27,865)
Class B   (1,711)   (1,578)
Class C   (4,229)   (4,139)
Class I   (379)   (488)
Class R3   (181)   (174)
Class R4   (22)   (21)
Class R5   (2)   (3)
Total from net investment income   (28,040)   (34,268)
From net realized gain on investments          
Class A   (4,265)   (5,889)
Class B   (386)   (545)
Class C   (954)   (1,371)
Class I   (71)   (90)
Class R3   (37)   (41)
Class R4   (5)   (4)
Class R5       (1)
Total from net realized gain on investments   (5,718)   (7,941)
Total distributions   (33,758)   (42,209)
Capital Share Transactions:          
Class A   (61,185)   (155,595)
Class B   (7,571)   (17,230)
Class C   (14,472)   (48,250)
Class I   973    (70)
Class R3   (347)   787 
Class R4   (87)   476 
Class R5   2    3 
Net decrease from capital share transactions   (82,687)   (219,879)
Net Increase (Decrease) in Net Assets   84,364    (91,111)
Net Assets:          
Beginning of period   1,709,707    1,800,818 
End of period  $1,794,071   $1,709,707 
Undistributed (distribution in excess of) net investment income (loss)  $(12,458)  $866 

 

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

 

8

 

The Hartford Checks and Balances Fund
Notes to Financial Statements
April 30, 2013  (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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”, 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 Funds Management Company, LLC (“HFMC”). Effective January 1, 2013, HFMC replaced Hartford Investment Financial Services, LLC (“HIFSCO”), a wholly-owned indirect subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”).

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

9

 

The Hartford Checks and Balances Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

10

 

 

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, quarterly and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds in direct proportion to the amount of assets the Fund allocates to each Underlying Fund. The market values of the Underlying Funds may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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.

 

11

 

The Hartford Checks and Balances Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

b)Net Investment Income (Loss), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $34,268   $23,994 
Long-Term Capital Gains ‡   7,941     

 

The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $866 
Undistributed Long-Term Capital Gain   5,716 
Unrealized Appreciation *   161,100 
Total Accumulated Earnings  $167,682 

 

*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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund had no reclassifications.

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

12

 

 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, HFMC replaced HIFSCO as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford. As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. The Fund is managed by HFMC in accordance with the Fund’s investment objective and policies. The Fund does not currently pay any fees to HFMC for managing the Fund.

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5 
 1.25%      2.00%      2.00%      1.00%      1.40%      1.10%      0.80%   

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

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

 

13

 

The Hartford Checks and Balances Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $2,153 and contingent deferred sales charges of $116 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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 April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R5   100%

 

14

 

 

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $125,011 
Sales Proceeds Excluding U.S. Government Obligations   200,178 

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

  

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   6,000    2,567    (14,462)       (5,895)   12,905    3,577    (32,702)       (16,220)
Amount  $61,943   $25,520   $(148,648)  $   $(61,185)  $123,073   $33,189   $(311,857)  $   $(155,595)
Class B                                                  
Shares   72    206    (1,009)       (731)   180    225    (2,208)       (1,803)
Amount  $738   $2,040   $(10,349)  $   $(7,571)  $1,715   $2,051   $(20,996)  $   $(17,230)
Class C                                                  
Shares   1,246    502    (3,159)       (1,411)   2,394    572    (8,017)       (5,051)
Amount  $12,868   $4,975   $(32,315)  $   $(14,472)  $22,748   $5,228   $(76,226)  $   $(48,250)
Class I                                                  
Shares   414    35    (355)       94    771    48    (829)       (10)
Amount  $4,289   $345   $(3,661)  $   $973   $7,363   $450   $(7,883)  $   $(70)
Class R3                                                  
Shares   132    22    (185)       (31)   580    23    (517)       86 
Amount  $1,357   $218   $(1,922)  $   $(347)  $5,553   $215   $(4,981)  $   $787 
Class R4                                                  
Shares   18    3    (30)       (9)   65    3    (18)       50 
Amount  $182   $27   $(296)  $   $(87)  $622   $25   $(171)  $   $476 
Class R5                                                  
Shares                                        
Amount  $   $2   $   $   $2   $   $3   $   $   $3 
Total                                                  
Shares   7,882    3,335    (19,200)       (7,983)   16,895    4,448    (44,291)       (22,948)
Amount  $81,377   $33,127   $(197,191)  $   $(82,687)  $161,074   $41,161   $(422,114)  $   $(219,879)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013    22   $234 
For the Year Ended October 31, 2012    63   $607 

 

15

 

The Hartford Checks and Balances Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

9.Line of Credit:

 

The Fund is one of several Hartford funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

16

 

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17

  

The Hartford Checks and Balances Fund
Financial Highlights

- Selected Per-Share Data (A) -

  

Class  Net Asset Value at
Beginning of
Period
   Net Investment
 Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
 
For the Six-Month Period Ended April 30, 2013 (Unaudited)
A  $9.92   $0.09   $1.11   $1.20   $(0.17)  $(0.03)  $   $(0.20)  $10.92 
B   9.88    0.05    1.11    1.16    (0.15)   (0.03)       (0.18)   10.86 
C   9.89    0.05    1.11    1.16    (0.15)   (0.03)       (0.18)   10.87 
I   9.93    0.11    1.11    1.22    (0.18)   (0.03)       (0.21)   10.94 
R3   9.90    0.07    1.12    1.19    (0.17)   (0.03)       (0.20)   10.89 
R4   9.91    0.10    1.10    1.20    (0.17)   (0.03)       (0.20)   10.91 
R5   9.93    0.11    1.10    1.21    (0.18)   (0.03)       (0.21)   10.93 
 
For the Year Ended October 31, 2012
A   9.22    0.20    0.74    0.94    (0.20)   (0.04)       (0.24)   9.92 
B   9.19    0.13    0.72    0.85    (0.12)   (0.04)       (0.16)   9.88 
C   9.19    0.13    0.74    0.87    (0.13)   (0.04)       (0.17)   9.89 
I   9.23    0.23    0.74    0.97    (0.23)   (0.04)       (0.27)   9.93 
R3   9.20    0.17    0.74    0.91    (0.17)   (0.04)       (0.21)   9.90 
R4   9.22    0.20    0.73    0.93    (0.20)   (0.04)       (0.24)   9.91 
R5   9.23    0.23    0.74    0.97    (0.23)   (0.04)       (0.27)   9.93 
 
For the Year Ended October 31, 2011
A   9.22    0.13        0.13    (0.13)           (0.13)   9.22 
B   9.18    0.05    0.02    0.07    (0.06)           (0.06)   9.19 
C   9.19    0.06        0.06    (0.06)           (0.06)   9.19 
I   9.22    0.15    0.02    0.17    (0.16)           (0.16)   9.23 
R3   9.21    0.10        0.10    (0.11)           (0.11)   9.20 
R4   9.21    0.12    0.02    0.14    (0.13)           (0.13)   9.22 
R5   9.22    0.15    0.02    0.17    (0.16)           (0.16)   9.23 
 
For the Year Ended October 31, 2010 (G)
A   8.29    0.13    0.93    1.06    (0.13)           (0.13)   9.22 
B   8.26    0.06    0.92    0.98    (0.06)           (0.06)   9.18 
C   8.26    0.07    0.92    0.99    (0.06)           (0.06)   9.19 
I   8.29    0.15    0.93    1.08    (0.15)           (0.15)   9.22 
R3   8.29    0.10    0.92    1.02    (0.10)           (0.10)   9.21 
R4   8.29    0.14    0.91    1.05    (0.13)           (0.13)   9.21 
R5   8.29    0.16    0.92    1.08    (0.15)           (0.15)   9.22 
 
For the Year Ended October 31, 2009
A   7.32    0.19    1.03    1.22    (0.20)   (0.05)       (0.25)   8.29 
B   7.29    0.13    1.04    1.17    (0.15)   (0.05)       (0.20)   8.26 
C   7.29    0.13    1.04    1.17    (0.15)   (0.05)       (0.20)   8.26 
I   7.32    0.21    1.03    1.24    (0.22)   (0.05)       (0.27)   8.29 
R3   7.31    0.17    1.04    1.21    (0.18)   (0.05)       (0.23)   8.29 
R4   7.32    0.19    1.03    1.22    (0.20)   (0.05)       (0.25)   8.29 
R5   7.32    0.21    1.03    1.24    (0.22)   (0.05)       (0.27)   8.29 
 
For the Year Ended October 31, 2008
A   10.51    0.21    (3.17)   (2.96)   (0.23)           (0.23)   7.32 
B   10.49    0.15    (3.19)   (3.04)   (0.16)           (0.16)   7.29 
C   10.49    0.15    (3.18)   (3.03)   (0.17)           (0.17)   7.29 
I(H)   9.89    0.14    (2.57)   (2.43)   (0.14)           (0.14)   7.32 
R3(I)   9.38    0.03    (2.06)   (2.03)   (0.04)           (0.04)   7.31 
R4(I)   9.38    0.03    (2.05)   (2.02)   (0.04)           (0.04)   7.32 
R5(I)   9.38    0.03    (2.04)   (2.01)   (0.05)           (0.05)   7.32 

 

(A) Information presented relates to a share outstanding throughout the indicated period.
(B) Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C) Ratios do not include expenses of the Underlying Funds.
(D) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E) Not annualized.
(F) Annualized.
(G) Per share amounts have been calculated using average shares outstanding method.
(H) Commenced operations on February 29, 2008.
(I) Commenced operations on August 29, 2008.

 

18

  

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net
Assets(C)
   Portfolio 
Turnover
Rate(D)
 
  
  
 12.35%(E)  $1,341,598    0.41%(F)   0.41%(F)   1.88%(F)   7%
 11.97(E)   118,058    1.22(F)   1.22(F)   1.09(F)    
 11.96(E)   296,924    1.16(F)   1.16(F)   1.14(F)    
 12.51(E)   24,446    0.15(F)   0.15(F)   2.10(F)    
 12.19(E)   11,497    0.75(F)   0.75(F)   1.56(F)    
 12.34(E)   1,415    0.46(F)   0.46(F)   1.88(F)    
 12.41(E)   133    0.15(F)   0.15(F)   2.12(F)    
                           
                            
 10.43    1,277,312    0.41    0.41    2.15    12 
 9.45    114,693    1.22    1.22    1.35     
 9.63    284,190    1.16    1.16    1.41     
 10.70    21,254    0.16    0.16    2.38     
 10.08    10,764    0.76    0.76    1.71     
 10.29    1,375    0.47    0.47    1.92     
 10.70    119    0.16    0.16    2.37     
                           
                            
 1.44    1,337,009    0.41    0.41    1.36    19 
 0.71    123,183    1.21    1.21    0.55     
 0.66    310,632    1.16    1.16    0.61     
 1.81    19,854    0.15    0.15    1.61     
 1.05    9,211    0.76    0.76    1.00     
 1.53    822    0.47    0.46    1.29     
 1.83    107    0.15    0.15    1.62     
                           
                            
 12.85    1,429,438    0.42    0.42    1.51    19 
 11.87    143,627    1.23    1.23    0.69     
 12.06    355,504    1.16    1.16    0.75     
 13.09    21,297    0.17    0.17    1.75     
 12.40    2,206    0.81    0.78    1.15     
 12.76    241    0.50    0.47    1.75     
 13.13    115    0.16    0.15    1.76     
                           
                            
 17.34    1,073,060    0.46    0.46    2.45    3 
 16.56    141,845    1.31    1.23    1.68     
 16.56    298,931    1.22    1.22    1.76     
 17.68    19,988    0.20    0.20    2.61     
 17.18    598    0.87    0.78    1.46     
 17.30    112    0.49    0.48    2.48     
 17.65    98    0.17    0.17    2.84     
                           
                            
 (28.70)   649,297    0.42    0.41    2.08    6 
 (29.32)   88,364    1.26    1.23    1.22     
 (29.29)   211,502    1.17    1.17    1.26     
 (23.71)(E)   8,293    0.16(F)   0.16(F)   2.09(F)    
 (21.19)(E)   80    0.81(F)   0.80(F)   1.93(F)    
 (21.06)(E)   79    0.51(F)   0.50(F)   2.23(F)    
 (21.04)(E)   79    0.21(F)   0.21(F)   2.52(F)    

  

19

 

The Hartford Checks and Balances Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

  

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

20

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

21

 

The Hartford Checks and Balances Fund
Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, if any, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

   

   Actual return   Hypothetical (5% return before expenses)             
  

Beginning

Account Value
October 31, 2012

   Ending Account
 Value
April 30, 2013
  

Expenses paid

during the period
October 31, 2012
through
April 30, 2013

   Beginning
Account Value
October 31, 2012
  

Ending Account

Value
April 30, 2013

  

Expenses paid

during the

period
October 31, 2012
through
April 30, 2013

   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
 
Class A   $1,000.00   $1,123.50   $2.16   $1,000.00   $1,022.76   $2.06     0.41%  181  365  
Class B   $1,000.00   $1,119.70   $6.41   $1,000.00   $1,018.74   $6.11     1.22   181  365  
Class C   $1,000.00   $1,119.60   $6.10   $1,000.00   $1,019.04   $5.81     1.16   181  365  
Class I   $1,000.00   $1,125.10   $0.81   $1,000.00   $1,024.03   $0.77     0.15   181  365  
Class R3   $1,000.00   $1,121.90   $3.96   $1,000.00   $1,021.07   $3.77     0.75   181  365  
Class R4   $1,000.00   $1,123.40   $2.42   $1,000.00   $1,022.52   $2.30     0.46   181  365  
Class R5   $1,000.00   $1,124.10   $0.80   $1,000.00   $1,024.04   $0.76     0.15   181  365  

 

23

 

The Hartford Checks and Balances Fund

Approval of New 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”), approve the mutual fund’s investment advisory agreement. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management agreement for The Hartford Checks and Balances Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser (the “Post-Restructuring Adviser”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management agreement and enter into a new investment management agreement with HFMC (the “New Agreement”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreement at the Board’s meeting held on November 8, 2012. 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 HIFSCO and its affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreement.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreement was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreement.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreement would involve no changes to (i) the contractual terms of the Fund’s investment management agreement; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management agreement; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreement: (i) nature, extent and quality of services provided by HIFSCO; (ii) performance of the Fund and HIFSCO; (iii) costs of the services and profitability of HIFSCO; (iv) comparative services rendered

 

24

 

 

 

and comparative total expense ratios; and (v) the realization of economies of scale by HIFSCO with respect to the Fund and whether the expense levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Adviser and its affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreement. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

25

 

The Hartford Checks and Balances Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

26
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-CB13 4/13 113966 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

6

 

 

 
 

 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD CONSERVATIVE ALLOCATION FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Conservative Allocation Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 9
Notes to Financial Statements (Unaudited) 10
Financial Highlights (Unaudited) 20
Directors and Officers (Unaudited) 22
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 24
Quarterly Portfolio Holdings Information (Unaudited) 24
Expense Example (Unaudited) 25
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 26
Principal Risks (Unaudited) 28

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Conservative Allocation Fund inception 05/28/2004

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks current income and long-term capital appreciation.

 

Performance Overview 5/28/04 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

  6 Month†   1 Year   5 year   Since
Inception▲
 
Conservative Allocation A#   3.37%       5.01%       4.28%       5.17%    
Conservative Allocation A##        -0.76%       3.11%       4.51%    
Conservative Allocation B#   2.90%       4.12%       3.45%       4.49%*    
Conservative Allocation B##        -0.86%       3.09%       4.49%*    
Conservative Allocation C#   2.90%       4.16%       3.51%       4.42%    
Conservative Allocation C##        3.16%       3.51%       4.42%    
Conservative Allocation I#   3.53%       5.25%       4.56%       5.38%    
Conservative Allocation R3#   3.19%       4.64%       3.89%       4.87%    
Conservative Allocation R4#   3.31%       4.86%       4.22%       5.13%    
Conservative Allocation R5#   3.40%       5.20%       4.53%       5.35%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       5.73%       5.50%    
MSCI All Country World Index   13.78%       15.69%       2.09%       7.09%    

 

Not Annualized
Inception: 05/28/2004
# Without sales charge
## With sales charge
* Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Conservative Allocation Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Conservative Allocation Class A   1.21%       1.21%    
Conservative Allocation Class B   2.02%       2.02%    
Conservative Allocation Class C   1.96%       1.96%    
Conservative Allocation Class I   0.93%       0.93%    
Conservative Allocation Class R3   1.56%       1.56%    
Conservative Allocation Class R4   1.26%       1.26%    
Conservative Allocation Class R5   0.96%       0.96%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Richard P. Meagher, CFA Wendy M. Cromwell, CFA
Vice President, Asset Allocation Strategist and Portfolio Manager Senior Vice President, Director of Strategic Asset Allocation, Asset Allocation Strategies Group, and Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Conservative Allocation Fund returned 3.37%, before sales charge, for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. The Fund also underperformed the average return for the Lipper Mixed-Asset Target Conservative Funds category, a group of funds investment strategies similar to those of the Fund, which returned 5.77%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis.

 

In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose .02% while shorter term yields declined anywhere between .02% - .08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the stock/bond mix of the Fund was approximately 30% equities

 

3

 

The Hartford Conservative Allocation Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

and 70% fixed income. A modest underweight allocation (i.e. the Fund’s position was less than the benchmark position) to fixed income and overweight to equities contributed as equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative performance in the World Bond, Total Return Bond and Capital Appreciation Funds more than offset weak benchmark-relative results from the International Opportunities and MidCap Value Funds.

 

What is the outlook?

During the quarter we modestly reduced exposure to fixed income funds and increased exposure to international equity funds. We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

 

Composition by Investments

as of April 30, 2013 

Fund Name  Percentage of Net
Assets
 
The Hartford Alternative Strategies Fund, Class Y   10.0%
The Hartford Capital Appreciation Fund, Class Y   2.7 
The Hartford Dividend and Growth Fund, Class Y   4.3 
The Hartford Emerging Markets Research Fund, Class Y   2.3 
The Hartford Global Real Asset Fund, Class Y   12.3 
The Hartford Inflation Plus Fund, Class Y   22.6 
The Hartford International Opportunities Fund, Class Y   6.1 
The Hartford International Small Company Fund, Class Y   1.9 
The Hartford MidCap Value Fund, Class Y   0.9 
The Hartford Small Company Fund, Class Y   0.9 
The Hartford Strategic Income Fund, Class Y   2.0 
The Hartford Total Return Bond Fund, Class Y   14.0 
The Hartford World Bond Fund, Class Y   20.0 
Other Assets and Liabilities   0.0 
Total   100.0%

 

4

 

The Hartford Conservative Allocation Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount          Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 100.0%             
EQUITY FUNDS - 31.4%             
 169   The Hartford Capital Appreciation Fund, Class Y          $7,240 
 493   The Hartford Dividend and Growth Fund, Class Y           11,620 
 685   The Hartford Emerging Markets Research Fund, Class Y           6,087 
 3,144   The Hartford Global Real Asset Fund, Class Y           32,984 
 987   The Hartford International Opportunities Fund, Class Y           16,431 
 316   The Hartford International Small Company Fund, Class Y           4,961 
 163   The Hartford MidCap Value Fund, Class Y           2,477 
 103   The Hartford Small Company Fund, Class Y           2,418 
                 84,218 
     Total equity funds             
     (cost $75,202)          $84,218 
                   
FIXED INCOME FUNDS - 68.6%             
 2,592   The Hartford Alternative Strategies Fund, Class Y          $26,719 
 4,928   The Hartford Inflation Plus Fund, Class Y           60,719 
 566   The Hartford Strategic Income Fund, Class Y           5,380 
 3,382   The Hartford Total Return Bond Fund, Class Y           37,476 
 4,952   The Hartford World Bond Fund, Class Y           53,677 
                 183,971 
     Total fixed income funds             
     (cost $179,905)          $183,971 
                   
     Total investments in affiliated investment companies             
     (cost $255,107)          $268,189 
                   
     Total long-term investments             
     (cost $255,107)          $268,189 
                   
     Total investments          
     (cost $255,107) ▲   100.0 %$ 268,189  
     Other assets and liabilities    %   22  
     Total net assets  100.0 %$ 268,211  

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $255,856 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $13,082 
Unrealized Depreciation   (749)
Net Unrealized Appreciation  $12,333 

 

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 Conservative Allocation Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Affiliated Investment Companies  $268,189   $268,189   $   $ 
Total  $268,189   $268,189   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.

 

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

 

6

 

The Hartford Conservative Allocation Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in underlying affiliated funds, at market value (cost $255,107)  $268,189 
Receivables:     
Investment securities sold   372 
Fund shares sold   222 
Dividends and interest   94 
Other assets   54 
Total assets   268,931 
Liabilities:     
Payables:     
Investment securities purchased   24 
Fund shares redeemed   627 
Investment management fees   7 
Administrative fees   1 
Distribution fees   20 
Accrued expenses   41 
Total liabilities   720 
Net assets  $268,211 
Summary of Net Assets:     
Capital stock and paid-in-capital  $252,273 
Distributions in excess of net investment loss   (5,399)
Accumulated net realized gain   8,255 
Unrealized appreciation of investments   13,082 
Net assets  $268,211 
      
Shares authorized   400,000 
Par value  $ 0.001 
Class A: Net asset value per share/Maximum offering price per share 

$11.17/$11.82

Shares outstanding   14,982 
Net assets  $167,317 
Class B: Net asset value per share  $11.15 
Shares outstanding   1,290 
Net assets  $14,390 
Class C: Net asset value per share  $11.13 
Shares outstanding   5,361 
Net assets  $59,680 
Class I: Net asset value per share  $11.16 
Shares outstanding   158 
Net assets  $1,766 
Class R3: Net asset value per share  $11.19 
Shares outstanding   944 
Net assets  $10,564 
Class R4: Net asset value per share  $11.15 
Shares outstanding   982 
Net assets  $10,956 
Class R5: Net asset value per share  $11.17 
Shares outstanding   317 
Net assets  $3,538 

 

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

 

7

 

The Hartford Conservative Allocation Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends from underlying affiliated funds  $2,903 
Total investment income   2,903 
      
Expenses:     
Investment management fees   201 
Administrative services fees    
Class R3   10 
Class R4   10 
Class R5   2 
Transfer agent fees    
Class A   87 
Class B   14 
Class C   29 
Class I   1 
Class R3    
Class R4    
Class R5    
Distribution fees     
Class A   206 
Class B   80 
Class C   291 
Class R3   25 
Class R4   16 
Custodian fees    
Accounting services fees   16 
Registration and filing fees   42 
Board of Directors' fees   4 
Audit fees   6 
Other expenses   20 
Total expenses   1,060 
Net Investment Income   1,843 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   5,341 
Net realized gain on investments in underlying affiliated funds   4,323 
Net Realized Gain on Investments   9,664 
Net Changes in Unrealized Depreciation of Investments:     
Net unrealized depreciation of investments in underlying affiliated funds   (3,008)
Net Changes in Unrealized Depreciation of Investments   (3,008)
Net Gain on Investments   6,656 
Net Increase in Net Assets Resulting from Operations  $8,499 

 

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

 

8

 

The Hartford Conservative Allocation Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $1,843   $2,447 
Net realized gain on investments   9,664    16,934 
Net unrealized depreciation of investments   (3,008)   (101)
Net Increase in Net Assets Resulting from Operations   8,499    19,280 
Distributions to Shareholders:          
From net investment income          
Class A   (4,708)   (2,414)
Class B   (396)   (175)
Class C   (1,444)   (518)
Class I   (51)   (22)
Class R3   (273)   (104)
Class R4   (369)   (205)
Class R5   (109)   (79)
Total from net investment income   (7,350)   (3,517)
From net realized gain on investments          
Class A   (3,331)    
Class B   (346)    
Class C   (1,181)    
Class I   (30)    
Class R3   (187)    
Class R4   (283)    
Class R5   (85)    
Total from net realized gain on investments   (5,443)    
Total distributions   (12,793)   (3,517)
Capital Share Transactions:          
Class A   3,080    (6,564)
Class B   (2,861)   (5,026)
Class C   1,553    (148)
Class I   309    147 
Class R3   1,102    1,732 
Class R4   (3,002)   182 
Class R5   (586)   (857)
Net decrease from capital share transactions   (405)   (10,534)
Net Increase (Decrease) in Net Assets   (4,699)   5,229 
Net Assets:          
Beginning of period   272,910    267,681 
End of period  $268,211   $272,910 
Undistributed (distribution in excess of) net investment income (loss)  $(5,399)  $108 

 

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

 

9

 

The Hartford Conservative Allocation Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

10
 

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

11

 

The Hartford Conservative Allocation Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, quarterly and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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.

 

12

 

 

 

b)Net Investment Income (Loss), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $3,517   $6,086 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $108 
Undistributed Long-Term Capital Gain   5,441 
Accumulated Capital Losses *   (658)
Unrealized Appreciation †   15,341 
Total Accumulated Earnings  $20,232 

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $860 
Accumulated Net Realized Gain (Loss)   (860)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

13

 

The Hartford Conservative Allocation Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2016  $658 
Total  $658 

 

As a result of mergers in the Fund, certain provisions in the IRC may limit the future utilization of capital losses.  During the year ended October 31, 2012, the Fund utilized $9,512 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.15%   
On next $500 million   0.10%   
On next $1.5 billion   0.09%   
On next $2.5 billion   0.08%   
On next $2.5 billion   0.07%   
On next $2.5 billion   0.06%   
Over $10 billion   0.05%   

 

14

 

 

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class A Class B Class C Class I Class R3 Class R4  Class R5
 1.35%      2.10%      2.10%      1.10%      1.60%      1.30%      1.00%   

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

d)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $337 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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.

 

15

 

The Hartford Conservative Allocation Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

e)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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 April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R5   3%

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $39,995 
Sales Proceeds Excluding U.S. Government Obligations   46,508 

 

16

 

 

 

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   1,715    713    (2,141)       287    3,016    218    (3,830)       (596)
Amount  $19,036   $7,843   $(23,799)  $   $3,080   $33,106   $2,344   $(42,014)  $   $(6,564)
Class B                                                  
Shares   35    65    (358)       (258)   103    15    (573)       (455)
Amount  $404   $713   $(3,978)  $   $(2,861)  $1,120   $162   $(6,308)  $   $(5,026)
Class C                                                  
Shares   556    223    (636)       143    1,071    45    (1,128)       (12)
Amount  $6,157   $2,450   $(7,054)  $   $1,553   $11,739   $474   $(12,361)  $   $(148)
Class I                                                  
Shares   68    7    (48)       27    64    2    (52)       14 
Amount  $766   $77   $(534)  $   $309   $703   $19   $(575)  $   $147 
Class R3                                                  
Shares   191    41    (133)       99    521    10    (368)       163 
Amount  $2,126   $460   $(1,484)  $   $1,102   $5,683   $104   $(4,055)  $   $1,732 
Class R4                                                  
Shares   84    59    (414)       (271)   659    19    (654)       24 
Amount  $943   $651   $(4,596)  $   $(3,002)  $7,230   $205   $(7,253)  $   $182 
Class R5                                                  
Shares   25    18    (95)       (52)   53    7    (138)       (78)
Amount  $277   $194   $(1,057)  $   $(586)  $581   $79   $(1,517)  $   $(857)
Total                                                  
Shares   2,674    1,126    (3,825)       (25)   5,487    316    (6,743)       (940)
Amount  $29,709   $12,388   $(42,502)  $   $(405)  $60,162   $3,387   $(74,083)  $   $(10,534)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   81   $903 
For the Year Ended October 31, 2012   61   $676 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

17

 

The Hartford Conservative Allocation Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

18

 

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19

 

The Hartford Conservative Allocation Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
 Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
 
For the Six–Month Period Ended April 30, 2013 (Unaudited) (E)
A  $11.35   $0.09   $0.28   $0.37   $(0.32)  $(0.23)  $   $(0.55)  $11.17 
B   11.33    0.05    0.27    0.32    (0.27)   (0.23)       (0.50)   11.15 
C   11.32    0.05    0.27    0.32    (0.28)   (0.23)       (0.51)   11.13 
I   11.34    0.09    0.29    0.38    (0.33)   (0.23)       (0.56)   11.16 
R3   11.37    0.06    0.29    0.35    (0.30)   (0.23)       (0.53)   11.19 
R4   11.33    0.09    0.27    0.36    (0.31)   (0.23)       (0.54)   11.15 
R5   11.36    0.11    0.26    0.37    (0.33)   (0.23)       (0.56)   11.17 
                                              
For the Year Ended October 31, 2012
A   10.71    0.12    0.68    0.80    (0.16)           (0.16)   11.35 
B   10.71    0.03    0.68    0.71    (0.09)           (0.09)   11.33 
C   10.70    0.04    0.68    0.72    (0.10)           (0.10)   11.32 
I   10.69    0.16    0.67    0.83    (0.18)           (0.18)   11.34 
R3   10.74    0.08    0.68    0.76    (0.13)           (0.13)   11.37 
R4   10.69    0.11    0.69    0.80    (0.16)           (0.16)   11.33 
R5   10.71    0.15    0.68    0.83    (0.18)           (0.18)   11.36 
                                              
For the Year Ended October 31, 2011
A   10.55    0.21    0.22    0.43    (0.27)           (0.27)   10.71 
B   10.55    0.13    0.21    0.34    (0.18)           (0.18)   10.71 
C   10.54    0.13    0.22    0.35    (0.19)           (0.19)   10.70 
I   10.54    0.23    0.22    0.45    (0.30)           (0.30)   10.69 
R3   10.59    0.18    0.21    0.39    (0.24)           (0.24)   10.74 
R4   10.54    0.21    0.20    0.41    (0.26)           (0.26)   10.69 
R5   10.55    0.23    0.23    0.46    (0.30)           (0.30)   10.71 
                                              
For the Year Ended October 31, 2010
A   9.57    0.23    0.98    1.21    (0.23)           (0.23)   10.55 
B   9.57    0.15    0.97    1.12    (0.14)           (0.14)   10.55 
C   9.56    0.15    0.98    1.13    (0.15)           (0.15)   10.54 
I   9.56    0.28    0.95    1.23    (0.25)           (0.25)   10.54 
R3   9.61    0.18    1.00    1.18    (0.20)           (0.20)   10.59 
R4   9.56    0.22    0.98    1.20    (0.22)           (0.22)   10.54 
R5   9.57    0.25    0.98    1.23    (0.25)           (0.25)   10.55 
                                              
For the Year Ended October 31, 2009 (E)
A   8.30    0.25    1.28    1.53    (0.26)           (0.26)   9.57 
B   8.30    0.19    1.27    1.46    (0.19)           (0.19)   9.57 
C   8.29    0.19    1.27    1.46    (0.19)           (0.19)   9.56 
I   8.29    0.26    1.29    1.55    (0.28)           (0.28)   9.56 
R3   8.28    0.17    1.32    1.49    (0.16)           (0.16)   9.61 
R4   8.29    0.25    1.27    1.52    (0.25)           (0.25)   9.56 
R5   8.30    0.26    1.29    1.55    (0.28)           (0.28)   9.57 
                                              
For the Year Ended October 31, 2008
A   11.63    0.33    (2.84)   (2.51)   (0.42)   (0.40)       (0.82)   8.30 
B   11.62    0.24    (2.82)   (2.58)   (0.34)   (0.40)       (0.74)   8.30 
C   11.62    0.23    (2.81)   (2.58)   (0.35)   (0.40)       (0.75)   8.29 
I   11.61    0.39    (2.86)   (2.47)   (0.45)   (0.40)       (0.85)   8.29 
R3   11.61    0.32    (2.86)   (2.54)   (0.39)   (0.40)       (0.79)   8.28 
R4   11.62    0.34    (2.85)   (2.51)   (0.42)   (0.40)       (0.82)   8.29 
R5   11.63    0.39    (2.87)   (2.48)   (0.45)   (0.40)       (0.85)   8.30 

 

(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 expenses of the Underlying Funds.
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)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 merged into the Fund on February 20, 2009.  These sales are excluded from the portfolio turnover rate calculation.

 

20

 

- Ratios and Supplemental Data -

 

Total Return(B)    Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net
Assets(C)
   Portfolio
Turnover
Rate(D)
 
 
 
 3.37 %(F)  $167,317     0.57%(G)     0.57%(G)    1.59%(G)   15%
2.90  (F)   14,390     1.39 (G)   1.39(G)   0.88 (G)   
 2.90  (F)   59,680     1.31 (G)    1.31 (G)    0.84 (G)    
 3.53  (F)   1,766     0.29 (G)    0.29 (G)    1.69 (G)    
 3.19  (F)   10,564     0.92 (G)    0.92(G)    1.15 (G)    
 3.31  (F)   10,956     0.62(G)    0.62(G)    1.65 (G)    
 3.40  (F)   3,538     0.32 (G)    0.32 (G)    2.02 (G)    
                            
                            
 7.55     166,842    0.58     0.58     1.13     83 
 6.69     17,538    1.39     1.39     0.38      
 6.78     59,053    1.33     1.33     0.37      
 7.89     1,481    0.30     0.30     1.39      
 7.18     9,608    0.93     0.93     0.62      
 7.55     14,196    0.63     0.63     1.00      
 7.86     4,192    0.33     0.33     1.43      
                            
                            
 4.09     163,779    0.58     0.58     1.99     41 
 3.24     21,454    1.37     1.37     1.20      
 3.32     55,946    1.32     1.32     1.23      
 4.29     1,248    0.30     0.30     2.16      
 3.67     7,324    0.93     0.93     1.48      
 3.95     13,142    0.62     0.62     1.93      
 4.36     4,788    0.32     0.32     2.30      
                            
                            
 12.74     163,353    0.58     0.58     2.26     28 
 11.83     23,697    1.38     1.38     1.48      
 11.92     53,036    1.33     1.33     1.51      
 13.02     741    0.33     0.33     2.51      
 12.41     3,357    0.94     0.93     1.75      
 12.71     12,932    0.62     0.62     2.19      
 13.02     6,107    0.32     0.32     2.51      
                            
                            
 18.90     134,824    0.62     0.62     3.00     20(H)
 18.01     24,438    1.46     1.38     2.26      
 18.04     46,279    1.39     1.38     2.28      
 19.19     908    0.36     0.36     3.17      
 18.22     680    1.02     1.02     2.06      
 18.89     8,078    0.66     0.66     2.94      
 19.22     4,895    0.36     0.36     3.10      
                            
                            
 (22.99 )   107,922    0.57     0.57     3.09     27 
 (23.55 )   20,703    1.40     1.40     2.29      
 (23.57 )   40,054    1.33     1.33     2.23      
 (22.73 )   418    0.31     0.31     4.43      
 (23.28 )   269    0.97     0.97     2.01      
 (23.01 )   4,900    0.63     0.63     2.21      
 (22.81 )   2,097    0.34     0.34     2.84      

 

21

 

The Hartford Conservative Allocation Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

22

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

23

 

The Hartford Conservative Allocation Fund
Directors and Officers (Unaudited) – (continued))

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC, HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)          
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized 
expense
ratio
  Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,033.70   $2.89   $1,000.00   $1,021.96   $2.87     0.57% 181  365
Class B  $1,000.00   $1,029.00   $7.01   $1,000.00   $1,017.88   $6.97     1.39  181  365
Class C  $1,000.00   $1,029.00   $6.61   $1,000.00   $1,018.27   $6.58     1.31  181  365
Class I  $1,000.00   $1,035.30   $1.44   $1,000.00   $1,023.38   $1.43     0.29  181  365
Class R3  $1,000.00   $1,031.90   $4.65   $1,000.00   $1,020.22   $4.62     0.92  181  365
Class R4  $1,000.00   $1,033.10   $3.12   $1,000.00   $1,021.73   $3.10     0.62  181  365
Class R5  $1,000.00   $1,034.00   $1.61   $1,000.00   $1,023.22   $1.60     0.32  181  365

 

25

 

The Hartford Conservative Allocation Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Conservative Allocation Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

26

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

27

 

The Hartford Conservative Allocation Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

28

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-CAL13 4/13 113967 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

7

 

 

 
 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD DISCIPLINED EQUITY FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Disciplined Equity Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   7
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   9
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   10
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   11
Notes to Financial Statements (Unaudited)   12
Financial Highlights (Unaudited)   26
Directors and Officers (Unaudited)   28
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   30
Quarterly Portfolio Holdings Information (Unaudited)   30
Expense Example (Unaudited)   31
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   32
Principal Risks (Unaudited)   34

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Disciplined Equity Fund inception 04/30/1998

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks growth of capital.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary form what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
Disciplined Equity A#   14.52%       16.04%       5.21%       7.29%    
Disciplined Equity A##        9.65%       4.03%       6.68%    
Disciplined Equity B#   14.04%       15.14%       4.50%       6.75%*    
Disciplined Equity B##        10.14%       4.17%       6.75%*    
Disciplined Equity C#   14.13%       15.23%       4.41%       6.51%    
Disciplined Equity C##        14.23%       4.41%       6.51%    
Disciplined Equity R3#   14.41%       15.89%       5.01%       7.35%    
Disciplined Equity R4#   14.57%       16.21%       5.27%       7.53%    
Disciplined Equity R5#   14.76%       16.54%       5.63%       7.76%    
Disciplined Equity Y#   14.80%       16.58%       5.69%       7.81%    
S&P 500 Index   14.41%       16.88%       5.20%       7.88%    

 

Not Annualized
# Without sales charge
## With sales charge
* Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Disciplined Equity Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Disciplined Equity Class A   1.35%       1.44%    
Disciplined Equity Class B   2.10%       2.50%    
Disciplined Equity Class C   2.09%       2.09%    
Disciplined Equity Class R3   1.50%       1.70%    
Disciplined Equity Class R4   1.20%       1.31%    
Disciplined Equity Class R5   0.90%       1.01%    
Disciplined Equity Class Y   0.85%       0.85%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Manager
Mammen Chally, CFA
Vice President and Equity Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Disciplined Equity Fund returned 14.52%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the S&P 500 Index, which returned 14.41% for the same period. The Fund also outperformed the 13.98% average return 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?

U.S. equities surged during the period, ending at an all-time high. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. U.S. housing data continued to provide evidence that the sector at the epicenter of the financial crisis could be a key engine of economic recovery in 2013. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

The Fund’s favorable stock selection in the Consumer Staples, Industrials, and Consumer Discretionary sectors contributed to relative performance. This was partially offset by weak stock selection in the Information Technology, Materials, and Telecommunication Services sectors. Overall sector allocation, a result of the bottom up stock selection process, contributed modestly to relative returns during the period in part due to our overweight (i.e. the Fund’s sector position was greater than the benchmark position) to Health Care. The Fund’s modest cash position also detracted from relative performance in an upward-trending market.

 

The top contributors to relative performance were Gilead Sciences (Health Care), Abercrombie & Fitch (Consumer Discretionary), and Walgreen (Consumer Staples). Shares of Gilead Sciences, a biopharmaceutical company, moved steadily higher alongside positive news flows, including news that the firm's hepatitis C single tablet regimen had passed its first hurdle. Shares of youth-market focused retailer Abercrombie & Fitch outperformed after the company raised fiscal year 2012 earnings guidance. Shares of drugstore operator Walgreen performed well as the market became increasingly comfortable that the company’s core retail operations have turned the corner and its strategic relationship with Alliance Boots continues to bear fruit. The market was also supportive of the company’s new strategic relationship and long-term supply agreement with distributor AmerisourceBergen. In addition, the Fund’s position in Time Warner (Consumer Discretionary) was a top contributor to absolute performance (i.e. total return).

 

The top detractors from relative performance were Teradata (Information Technology), Newmont Mining (Materials), and Newfield Exploration (Energy). Shares of Teradata, a provider of analytic data and business applications, underperformed after the company posted weaker-than-expected revenue and issued guidance below analysts’ estimates. Shares of Newmont Mining, a gold and copper exploration and

 

3

 

The Hartford Disciplined Equity Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

production company, fell as investors feared that rising costs, primarily higher costs to extract gold, will continue to cause the company’s incremental returns to be challenged. Shares of Newfield Exploration, a diversified oil and gas exploration and production company, fell after the company reported fourth quarter earnings below expectations on lower oil and gas volume. In addition, our position in Apple (Information Technology) was a top detractor to absolute performance.

 

What is the outlook?

We believe the medium-term growth prospects in the U.S. are favorable. The consumer is expected to be resilient this year, helped by improving net worth from rising house and equity market prices as well as steady job gains. The key drivers of U.S. growth are expected to be capital spending and the housing and automotive sectors over the course of the next year. We believe capital investment spending should finally rise as capacity utilization levels normalize, while vehicle sales and new home constructions, despite their strong recent advance, still have a lot of pent-up demand behind them. An improving economy and healing labor market notwithstanding, we believe the U.S. Federal Reserve Board (Fed) is unlikely to abandon its quantitative easing program any time soon.

 

We focus on stock selection as the key driver of returns and we use proprietary fundamental and quantitative research in a disciplined framework to build a portfolio of stocks we believe are attractive. Sector exposures are residuals from this bottom-up stock selection process and are not explicit management decisions. Based on individual stock decisions, the Fund ended the period most overweight the Health Care, Industrials, and Consumer Staples sectors, and most underweight Financials, Energy, and Telecommunication Services relative to the S&P 500 Index, the Fund’s benchmark.

 

Diversification by Industry

as of April 30, 2013

Industry (Sector)  Percentage of
Net Assets
 
Banks (Financials)   3.9%
Capital Goods (Industrials)   7.1 
Commercial and Professional Services (Industrials)   2.5 
Consumer Durables and Apparel (Consumer Discretionary)   1.1 
Consumer Services (Consumer Discretionary)   1.7 
Diversified Financials (Financials)   6.1 
Energy (Energy)   9.0 
Food and Staples Retailing (Consumer Staples)   4.3 
Food, Beverage and Tobacco (Consumer Staples)   6.8 
Health Care Equipment and Services (Health Care)   4.0 
Insurance (Financials)   4.0 
Materials (Materials)   2.6 
Media (Consumer Discretionary)   2.7 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   13.9 
Retailing (Consumer Discretionary)   6.2 
Software and Services (Information Technology)   12.6 
Technology Hardware and Equipment (Information Technology)   4.6 
Telecommunication Services (Services)   1.7 
Transportation (Industrials)   0.6 
Utilities (Utilities)   3.7 
Short-Term Investments   0.3 
Other Assets and Liabilities   0.6 
Total   100.0%

 

4

 

The Hartford Disciplined Equity Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount Market Value ╪ 
COMMON STOCKS - 99.1%     
     Banks - 3.9%     
 24   PNC Financial Services Group, Inc.  $1,653 
 58   Wells Fargo & Co.   2,192 
 22   Zions Bancorporation   547 
         4,392 
     Capital Goods - 7.1%     
 19   AMETEK, Inc.   774 
 13   Boeing Co.   1,164 
 12   Dover Corp.   835 
 16   Eaton Corp. plc   957 
 13   Illinois Tool Works, Inc.   826 
 6   Parker-Hannifin Corp.   536 
 7   TransDigm Group, Inc.   1,009 
 21   United Technologies Corp.   1,954 
         8,055 
     Commercial and Professional Services - 2.5%     
 18   Equifax, Inc. ●   1,075 
 16   Towers Watson & Co.   1,184 
 9   Verisk Analytics, Inc. ●   573 
         2,832 
     Consumer Durables and Apparel - 1.1%     
 10   PVH Corp.   1,211 
           
     Consumer Services - 1.7%     
 19   McDonald's Corp.   1,966 
           
     Diversified Financials - 6.1%     
 13   Ameriprise Financial, Inc.   994 
 4   BlackRock, Inc.   1,103 
 38   Citigroup, Inc.   1,788 
 44   JP Morgan Chase & Co.   2,139 
 36   Morgan Stanley   795 
         6,819 
     Energy - 9.0%     
 17   Anadarko Petroleum Corp.   1,455 
 31   Chesapeake Energy Corp.   613 
 22   Chevron Corp.   2,624 
 28   Cobalt International Energy, Inc. ●Θ   778 
 22   Exxon Mobil Corp.   1,916 
 19   Halliburton Co.   804 
 11   National Oilwell Varco, Inc.   702 
 22   Newfield Exploration Co. ●   478 
 13   Phillips 66   764 
         10,134 
     Food and Staples Retailing - 4.3%     
 13   Costco Wholesale Corp.   1,434 
 31   CVS Caremark Corp.   1,780 
 34   Walgreen Co.   1,667 
         4,881 
     Food, Beverage and Tobacco - 6.8%     
 36   Altria Group, Inc.   1,298 
 17   Constellation Brands, Inc. Class A ●Θ   827 
 16   Hillshire (The) Brands Co.   563 
 14   Lorillard, Inc.   596 
 20   Monster Beverage Corp. ●Θ   1,118 
 13   PepsiCo, Inc.   1,034 
 23   Philip Morris International, Inc.   2,245 
         7,681 
     Health Care Equipment and Services - 4.0%     
 14   Covidien plc   911 
 12   McKesson Corp.   1,221 
 25   UnitedHealth Group, Inc. Θ   1,520 
 11   Zimmer Holdings, Inc.   839 
         4,491 
     Insurance - 4.0%     
 11   ACE Ltd.   968 
 30   American International Group, Inc. ●   1,251 
 23   Aon plc   1,414 
 14   Prudential Financial, Inc.   819 
         4,452 
     Materials - 2.6%     
 18   Crown Holdings, Inc. ●   779 
 34   Dow Chemical Co.   1,136 
 12   Newmont Mining Corp.   400 
 4   Sherwin-Williams Co.   650 
         2,965 
     Media - 2.7%     
 33   Time Warner, Inc.   1,964 
 17   Viacom, Inc. Class B   1,080 
         3,044 
     Pharmaceuticals, Biotechnology and Life Sciences - 13.9%     
 13   Actavis, Inc. ●   1,339 
 14   Agilent Technologies, Inc.   575 
 14   Amgen, Inc.   1,429 
 6   Biogen Idec, Inc. ●   1,222 
 16   Cubist Pharmaceuticals, Inc. ●   731 
 31   Eli Lilly & Co.   1,734 
 34   Forest Laboratories, Inc. ●   1,277 
 41   Gilead Sciences, Inc. ●   2,062 
 58   Merck & Co., Inc.   2,738 
 44   Pfizer, Inc.   1,266 
 3   Regeneron Pharmaceuticals, Inc. ●   607 
 13   Salix Pharmaceuticals Ltd. ●   658 
         15,638 
     Retailing - 6.2%     
 6   Amazon.com, Inc. ●   1,448 
 27   Dollar Tree, Inc. ●   1,304 
 44   Lowe's Co., Inc.   1,683 
 16   Ross Stores, Inc.   1,078 
 29   TJX Cos., Inc.   1,427 
         6,940 
     Software and Services - 12.6%     
 22   Accenture plc   1,806 
 22   Automatic Data Processing, Inc.   1,512 
 10   Cognizant Technology Solutions Corp. ●   662 
 18   eBay, Inc. ●   931 
 53   Genpact Ltd.   984 
 2   Google, Inc. ●   1,897 
 20   Intuit, Inc.   1,222 
 2   Mastercard, Inc.   1,067 
 17   Microsoft Corp.   569 
 61   Oracle Corp.   1,998 
 13   Teradata Corp. ●   646 
 20   VeriSign, Inc. ●   908 
         14,202 
     Technology Hardware and Equipment - 4.6%     
 5   Apple, Inc.   2,046 

 

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

 

5

 

The Hartford Disciplined Equity Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount   Market Value ╪ 
COMMON STOCKS - 99.1% - (continued)     
     Technology Hardware and Equipment - 4.6% - (continued)     
 77   Cisco Systems, Inc.  $1,602 
 41   EMC Corp. ●   915 
 11   Qualcomm, Inc.   667 
         5,230 
     Telecommunication Services - 1.7%     
 50   AT&T, Inc.   1,889 
           
     Transportation - 0.6%     
 27   Hertz Global Holdings, Inc. ●Θ   640 
           
     Utilities - 3.7%     
 24   American Electric Power Co., Inc.   1,215 
 10   NextEra Energy, Inc.   860 
 10   Pinnacle West Capital Corp.   591 
 48   Xcel Energy, Inc.   1,522 
         4,188 
     Total common stocks     
     (cost $87,084)  $111,650 
           
     Total long-term investments     
     (cost $87,084)  $111,650 
           
SHORT-TERM INVESTMENTS - 0.3%     
 Repurchase Agreements - 0.3%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
5/01/2013 in the amount of $12,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $12)
     
$12   0.17%, 4/30/2013  $12 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $32, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -
2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$33)
     
 32   0.15%, 4/30/2013   32 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $62, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $63)
     
 62   0.15%, 4/30/2013   62 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $86,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $87)
     
 85   0.14%, 4/30/2013   85 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $15, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $16)
     
 15   0.17%, 4/30/2013   15 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $52, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $53)
     
 52   0.14%, 4/30/2013   52 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$37, collateralized by U.S. Treasury Note
0.25% - 1.88%, 2014 - 2019, value of $37)
     
 37   0.17%, 4/30/2013   37 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$1, collateralized by U.S. Treasury Note
3.88%, 2018, value of $1)
     
 1   0.13%, 4/30/2013   1 
         296 
     Total short-term investments     
     (cost $296)  $296 
                   
     Total investments             
     (cost $87,380) ▲     99.4 %  $111,946 
     Other assets and liabilities     0.6 %   666 
     Total net assets     100.0 %  $112,612 

 

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

 

6

 

The Hartford Disciplined Equity Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $87,591 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $25,573 
Unrealized Depreciation   (1,218)
Net Unrealized Appreciation  $24,355 

 

Non-income producing.
   
Θ At April 30, 2013, this security, or a portion of this security, is designated to cover written call options in the table below:

 

Description  Option Type  Exercise
Price/ Rate
   Expiration
Date
  Number of
Contracts*
   Market
Value ╪
   Premiums
Received
   Unrealized
Appreciation
(Depreciation)
 
Cobalt International Energy, Inc. Option  Equity  $32.50   05/18/2013   39   $   $1   $1 
Constellation Brands, Inc. Option  Equity  $52.50   05/18/2013   24        1    1 
Hertz Global Holdings, Inc. Option  Equity  $26.00   05/18/2013   46    1    2    1 
Monster Beverage Corp. Option  Equity  $60.00   05/18/2013   19    2    2     
UnitedHealth Group, Inc. Option  Equity  $65.00   05/18/2013   17        1    1 
                   $3   $7   $4 

 

* The number of contracts does not omit 000's.  Number of contracts shown in  U.S. dollars unless otherwise noted.

 

Written Put Option Contracts Outstanding at April 30, 2013

 

Description  Option Type  Exercise
Price/ Rate
   Expiration
Date
  Number of
Contracts*
   Market
Value ╪
   Premiums
Received
   Unrealized
Appreciation
(Depreciation)
 
Amazon.com, Inc. Option  Equity  $235.00   05/18/2013   4   $1   $2   $1 
American International Group, Inc. Option  Equity  $36.00   05/18/2013   28        1    1 
Anadarko Petroleum Corp. Option  Equity  $72.50   05/18/2013   12        1    1 
Apple, Inc. Option  Equity  $370.00   05/18/2013   2        2    2 
Chesapeake Energy Corp. Option  Equity  $19.00   05/18/2013   49    2    3    1 
Cognizant Technology Solutions Corp. Option  Equity  $70.00   05/18/2013   14    9    1    (8)
Monster Beverage Corp. Option  Equity  $40.00   05/18/2013   22        1    1 
Parker-Hannifin Corp. Option  Equity  $80.00   05/18/2013   12        1    1 
Phillips 66 Option  Equity  $55.00   05/18/2013   18    1    2    1 
                   $13   $14   $1 

 

* The number of contracts does not omit 000's.  Number of contracts shown in U.S. dollars unless otherwise noted.

 

Cash of $516 was pledged as collateral for open written put option contracts at April 30, 2013.

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)  
   
Other Abbreviations:  
FHLB Federal Home Loan Bank    
FHLMC Federal Home Loan Mortgage Corp.  
FNMA Federal National Mortgage Association  

 

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

 

7

 

The Hartford Disciplined Equity Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks ‡  $111,650   $111,650   $   $ 
Short-Term Investments   296        296     
Total  $111,946   $111,650   $296   $ 
Written Options *   13    13         
Total  $13   $13   $   $ 
Liabilities:                    
Written Options *   8    8         
Total  $8   $8   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  
The Fund has all or primarily all of the equity securities categorized in a particular level.  Refer to the Schedule of Investments for further industry breakout.
* Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

8

 

The Hartford Disciplined Equity Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $87,380)  $111,946 
Cash   517*
Receivables:     
Investment securities sold   663 
Fund shares sold   113 
Dividends and interest   81 
Other assets   77 
Total assets   113,397 
Liabilities:     
Payables:     
Investment securities purchased   666 
Fund shares redeemed   38 
Investment management fees   14 
Administrative fees    
Distribution fees   6 
Accrued expenses   45 
Written options (proceeds $21)   16 
Total liabilities   785 
Net assets  $112,612 
Summary of Net Assets:     
Capital stock and paid-in-capital  $115,709 
Undistributed net investment income   185 
Accumulated net realized loss   (27,853)
Unrealized appreciation of investments   24,571 
Net assets  $112,612 
      
Shares authorized   450,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $16.52/$17.48 
Shares outstanding   5,633 
Net assets  $93,060 
Class B: Net asset value per share  $15.60 
Shares outstanding   171 
Net assets  $2,664 
Class C: Net asset value per share  $15.54 
Shares outstanding   862 
Net assets  $13,391 
Class R3: Net asset value per share  $16.86 
Shares outstanding   17 
Net assets  $282 
Class R4: Net asset value per share  $16.89 
Shares outstanding   77 
Net assets  $1,303 
Class R5: Net asset value per share  $17.02 
Shares outstanding   10 
Net assets  $170 
Class Y: Net asset value per share  $17.07 
Shares outstanding   102 
Net assets  $1,742 

 

* Cash of  $516 was designated to cover open put options written at April 30, 2013.
   
The accompanying notes are an integral part of these financial statements.

 

9

 

The Hartford Disciplined Equity Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $1,113 
Interest   1 
Total investment income   1,114 
      
Expenses:     
Investment management fees   391 
Administrative services fees     
Class R3    
Class R4    
Class R5    
Transfer agent fees     
Class A   126 
Class B   9 
Class C   13 
Class R3    
Class R4    
Class R5    
Distribution fees     
Class A   108 
Class B   13 
Class C   61 
Class R3   1 
Class R4   1 
Custodian fees   3 
Accounting services fees   8 
Registration and filing fees   33 
Board of Directors' fees   2 
Audit fees   6 
Other expenses   16 
Total expenses (before waivers and fees paid indirectly)   791 
Expense waivers   (34)
Transfer agent fee waivers   (4)
Commission recapture    
Total waivers and fees paid indirectly   (38)
Total expenses, net   753 
Net Investment Income   361 
Net Realized Gain on Investments and Other Financial Instruments:     
Net realized gain on investments in securities   3,080 
Net realized gain on futures   41 
Net realized gain on written options   23 
Net Realized Gain on Investments and Other Financial Instruments   3,144 
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments:     
Net unrealized appreciation of investments   10,727 
Net unrealized depreciation of written options   (1)
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments   10,726 
Net Gain on Investments and Other Financial Instruments   13,870 
Net Increase in Net Assets Resulting from Operations  $14,231 

 

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

 

10

 

The Hartford Disciplined Equity Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $361   $1,104 
Net realized gain on investments and other financial instruments   3,144    23,248 
Net unrealized appreciation (depreciation) of investments and other financial instruments   10,726    (7,562)
Net Increase in Net Assets Resulting from Operations   14,231    16,790 
Distributions to Shareholders:          
From net investment income          
Class A   (851)   (200)
Class B   (4)    
Class C   (39)    
Class R3   (2)   (1)
Class R4   (2)    
Class R5   (2)   (1)
Class Y   (20)   (598)
Total distributions   (920)   (800)
Capital Share Transactions:          
Class A   (1,514)   (7,859)
Class B   (446)   (1,708)
Class C   (125)   (848)
Class R3   44    17 
Class R4   1,081    13 
Class R5   7    10 
Class Y   (68)   (73,727)
Net decrease from capital share transactions   (1,021)   (84,102)
Net Increase (Decrease) in Net Assets   12,290    (68,112)
Net Assets:          
Beginning of period   100,322    168,434 
End of period  $112,612   $100,322 
Undistributed (distribution in excess of) net investment income (loss)  $185   $744 

 

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

 

11

 

The Hartford Disciplined Equity Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current

 

12

 

 

or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

13

 

The Hartford Disciplined Equity Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class

 

14

 

 

specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a value at least equal to the amount of the commitment. As of April 30, 2013, the Fund had no outstanding when-issued or delayed-delivery investments.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

15

 

The Hartford Disciplined Equity Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

a)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. As of April 30, 2013, the Fund had no outstanding futures contracts.

 

b)Options 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) an investment or other financial asset at an agreed-upon price during a specific period of time or on a specific date. The Fund may write (sell) covered call and put options on futures, swaps (“swaptions”), securities, commodities or currencies. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying investments or currency or an option to purchase the same underlying investments 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 investments having a value equal to or greater than the fluctuating market value of the option investment or currency. Writing put options increases the Fund’s exposure to the underlying instrument. Writing call options decreases the Fund’s exposure to the underlying instrument. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options that are exercised or closed are added to the proceeds or offset amounts paid on the underlying futures, swap, investment or currency transaction to determine the realized gain or loss. The Fund as a writer of an option has no control over whether the underlying instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the instrument underlying the written option. There is the risk the Fund may not be able to enter into a closing transaction because of an illiquid market. The Fund may also purchase put and call options. Purchasing call options increases the Fund’s exposure to the underlying instrument. Purchasing put options decreases the Fund’s exposure to the underlying instrument. The Fund pays a premium, which is included on the Fund’s Statement of Assets and Liabilities as an investment and is subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options that expire are treated as realized losses. Certain options may be purchased with premiums to be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. The risk associated with purchasing put and call options is generally limited to the premium paid. Premiums paid for purchasing options that are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss. Entering into over-the-counter options also exposes the Fund to counterparty risk. Counterparty risk is the possibility that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements. The Fund had no outstanding purchased options contracts as of April 30, 2013. The Fund, as shown on the Schedule of Investments, had outstanding written options contracts as of April 30, 2013. Transactions involving written options contracts during the six-month period ended April 30, 2013, are summarized below:

 

16

 

 

Options Contract Activity During the Six-Month Period Ended April 30, 2013:   
Call Options Written During the Period  Number of Contracts*   Premium Amounts 
Beginning of the period   102   $5 
Written   599    31 
Expired   (218)   (16)
Closed   (199)   (7)
Exercised   (139)   (6)
End of Period   145   $7 
           
Put Options Written During the Period   

Number of Contracts*

    

Premium Amounts

 
Beginning of the period   98   $7 
Written   644    39 
Expired   (440)   (23)
Closed   (141)   (9)
Exercised        
End of Period   161   $14 

 

* The number of contracts does not omit 000's.

 

  c) Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Liabilities:                                   
Written options, market value  $   $   $   $16   $   $   $16 
Total  $   $   $   $16   $   $   $16 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain on Derivatives Recognized as a Result of Operations:      
Net realized gain on futures  $   $   $   $41   $   $   $41 
Net realized gain on written options               23            23 
Total  $   $   $   $64   $   $   $64 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations: 
Net change in unrealized depreciation of written options  $   $   $   $(1)  $   $   $(1)
Total  $   $   $   $(1)  $   $   $(1)

 

17

 

The Hartford Disciplined Equity Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $800   $291 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

  

Amount

 
Undistributed Ordinary Income  $744 
Accumulated Capital Losses *   (30,786)
Unrealized Appreciation †   13,634 
Total Accumulated Deficit  $(16,408)

 

  * The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
  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.

 

18

 

 

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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(163)
Accumulated Net Realized Gain (Loss)   163 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2017  $30,786 
Total  $30,786 

 

During the year ended October 31, 2012, the Fund utilized $23,129 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the

 

19

 

The Hartford Disciplined Equity Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A Class B Class C Class R3 Class R4 Class R5 Class Y
1.35% 2.10% 2.10% 1.50% 1.20% 0.90% 0.85%

 

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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, are included in the Statement of Operations.

 

20

 

 

The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.35%
Class B   2.10 
Class C   2.06 
Class R3   1.50 
Class R4   1.20 
Class R5   0.90 
Class Y   0.85 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $89 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any

 

21

 

The Hartford Disciplined Equity Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

  

related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R3   47%
Class R4   12 
Class R5   90 
Class Y   9 

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, the Fund's aggregate purchases and sales of investment securities (excluding short-term investments) were as follows:

 

   Amount 
Cost of Purchases Excluding U.S. Government Obligations  $18,247 
Sales Proceeds Excluding U.S. Government Obligations   19,795 

 

22

 

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   362    56    (517)       (99)   747    16    (1,331)       (568)
Amount  $5,550   $840   $(7,904)  $   $(1,514)  $10,145   $196   $(18,200)  $   $(7,859)
Class B                                                  
Shares   12        (43)       (31)   35        (166)       (131)
Amount  $171   $4   $(621)  $   $(446)  $464   $   $(2,172)  $   $(1,708)
Class C                                                  
Shares   79    2    (91)       (10)   189        (249)       (60)
Amount  $1,136   $36   $(1,297)  $   $(125)  $2,359   $   $(3,207)  $   $(848)
Class R3                                                  
Shares   3                3    4        (3)       1 
Amount  $45   $2   $(3)  $   $44   $50   $1   $(34)  $   $17 
Class R4                                                  
Shares   73        (7)       66    1                1 
Amount  $1,196   $2   $(117)  $   $1,081   $13   $   $   $   $13 
Class R5                                                  
Shares                       1                1 
Amount  $5   $2   $   $   $7   $11   $1   $(2)  $   $10 
Class Y                                                  
Shares   16    1    (21)       (4)   1,434    46    (6,853)       (5,373)
Amount  $248   $20   $(336)  $   $(68)  $19,671   $598   $(93,996)  $   $(73,727)
Total                                                  
Shares   545    59    (679)       (75)   2,411    62    (8,602)       (6,129)
Amount  $8,351   $906   $(10,278)  $   $(1,021)  $32,713   $796   $(117,611)  $   $(84,102)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   21   $322 
For the Year Ended October 31, 2012   56   $785 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.Industry Classifications:

 

Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds,” equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s.

 

23

 

The Hartford Disciplined Equity Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

24

 

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25

 

The Hartford Disciplined Equity Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                              
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)           
A  $14.57   $0.06   $2.04   $2.10   $(0.15)     $    $(0.15)  $16.52 
B   13.70        1.92    1.92    (0.02)           (0.02)   15.60 
C   13.66    0.01    1.92    1.93    (0.05)           (0.05)   15.54 
R3   14.86    0.05    2.08    2.13    (0.13)           (0.13)   16.86 
R4   14.91    0.04    2.11    2.15    (0.17)           (0.17)   16.89 
R5   15.04    0.10    2.10    2.20    (0.22)           (0.22)   17.02 
Y   15.05    0.10    2.11    2.21    (0.19)           (0.19)   17.07 
                                              
For the Year Ended October 31, 2012 (E)                                
A   12.77    0.09    1.74    1.83    (0.03)           (0.03)   14.57 
B   12.07    (0.01)   1.64    1.63                    13.70 
C   12.03    (0.01)   1.64    1.63                    13.66 
R3   13.05    0.08    1.77    1.85    (0.04)           (0.04)   14.86 
R4   13.07    0.12    1.78    1.90    (0.06)           (0.06)   14.91 
R5   13.18    0.16    1.79    1.95    (0.09)           (0.09)   15.04 
Y   13.20    0.15    1.80    1.95    (0.10)           (0.10)   15.05 
                                              
For the Year Ended October 31, 2011 (E)                          
A   11.90    0.07    0.82    0.89    (0.02)           (0.02)   12.77 
B   11.32    (0.03)   0.79    0.76    (0.01)           (0.01)   12.07 
C   11.28    (0.03)   0.79    0.76    (0.01)           (0.01)   12.03 
R3   12.18    0.04    0.85    0.89    (0.02)           (0.02)   13.05 
R4   12.16    0.08    0.86    0.94    (0.03)           (0.03)   13.07 
R5   12.24    0.13    0.84    0.97    (0.03)           (0.03)   13.18 
Y   12.25    0.13    0.85    0.98    (0.03)           (0.03)   13.20 
                                              
For the Year Ended October 31, 2010 (E)                          
A   10.44    0.08    1.58    1.66    (0.20)           (0.20)   11.90 
B   9.89        1.50    1.50    (0.07)           (0.07)   11.32 
C   9.84        1.49    1.49    (0.05)           (0.05)   11.28 
R3   10.71    0.05    1.63    1.68    (0.21)           (0.21)   12.18 
R4   10.68    0.09    1.61    1.70    (0.22)           (0.22)   12.16 
R5   10.75    0.12    1.65    1.77    (0.28)           (0.28)   12.24 
Y   10.76    0.14    1.64    1.78    (0.29)           (0.29)   12.25 
                                              
For the Year Ended October 31, 2009 (E)                          
A   9.31    0.12    1.06    1.18    (0.05)           (0.05)   10.44 
B   8.80    0.08    1.01    1.09                    9.89 
C   8.80    0.04    1.00    1.04                    9.84 
R3   9.56    0.09    1.11    1.20    (0.05)           (0.05)   10.71 
R4   9.60    0.10    1.09    1.19    (0.11)           (0.11)   10.68 
R5   9.62    0.14    1.10    1.24    (0.11)           (0.11)   10.75 
Y   9.64    0.15    1.09    1.24    (0.12)           (0.12)   10.76 
                                              
For the Year Ended October 31, 2008                          
A   14.91    0.05    (5.63)   (5.58)   (0.02)           (0.02)   9.31 
B   14.16    (0.05)   (5.31)   (5.36)                   8.80 
C   14.17    (0.06)   (5.31)   (5.37)                   8.80 
R3   15.33    0.01    (5.78)   (5.77)                   9.56 
R4   15.37    0.06    (5.79)   (5.73)   (0.04)           (0.04)   9.60 
R5   15.41    0.10    (5.81)   (5.71)   (0.08)           (0.08)   9.62 
Y   15.43    0.12    (5.81)   (5.69)   (0.10)           (0.10)   9.64 

 

(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, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C) Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E) Per share amounts have been calculated using average shares outstanding method.
(F) Not annualized.
(G) Annualized.

 

26

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
                      
 14.52%(F)  $93,060    1.42%(G)   1.35%(G)   0.79%(G)   18%
 14.04(F)   2,664    2.51(G)   2.10(G)   0.06(G)    
 14.13(F)   13,391    2.09(G)   2.06(G)   0.08(G)    
 14.41(F)   282    1.69(G)   1.50(G)   0.60(G)    
 14.57(F)   1,303    1.29(G)   1.20(G)   0.53(G)    
 14.76(F)   170    1.01(G)   0.90(G)   1.22(G)    
 14.80(F)   1,742    0.88(G)   0.85(G)   1.30(G)    
                            
                            
 14.39    83,534    1.44    1.35    0.69    46 
 13.50    2,761    2.50    2.10    (0.08)    
 13.55    11,913    2.09    2.09    (0.06)    
 14.22    209    1.70    1.50    0.53     
 14.57    167    1.31    1.20    0.85     
 14.93    144    1.01    0.90    1.14     
 14.90    1,594    0.85    0.85    1.04     
                            
                            
 7.50    80,470    1.44    1.35    0.51    56 
 6.69    4,020    2.42    2.10    (0.21)    
 6.72    11,221    2.10    2.09    (0.23)    
 7.30    165    1.65    1.50    0.34     
 7.70    134    1.28    1.20    0.64     
 7.94    117    0.96    0.90    0.96     
 8.03    72,307    0.86    0.85    0.98     
                            
                            
 16.00    81,949    1.47    1.35    0.71    41 
 15.18    5,770    2.46    2.10    (0.04)    
 15.18    11,519    2.12    2.10    (0.04)    
 15.77    113    1.66    1.55    0.47     
 16.01    105    1.25    1.23    0.82     
 16.55    105    0.95    0.92    1.09     
 16.63    45,376    0.85    0.85    1.21     
                            
                            
 12.82    85,080    1.58    1.17    1.27    59 
 12.39    8,165    2.65    1.60    0.86     
 11.82    12,025    2.22    2.03    0.41     
 12.65    20    2.04    1.38    0.98     
 12.65    55    1.29    1.29    1.09     
 13.12    8    0.95    0.95    1.47     
 13.13    62,100    0.86    0.86    1.57     
                            
                            
 (37.46)   92,476    1.44    1.40    0.36    69 
 (37.85)   11,931    2.39    1.95    (0.18)    
 (37.90)   13,691    2.13    2.13    (0.36)    
 (37.64)   11    1.87    1.65    0.12     
 (37.37)   8    1.28    1.28    0.48     
 (37.23)   7    0.99    0.99    0.77     
 (37.09)   67,966    0.89    0.89    0.88     

 

27

 

The Hartford Disciplined Equity Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

28

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

29

 

The Hartford Disciplined Equity Fund

Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

 (2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

30

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,145.20   $7.19   $1,000.00   $1,018.09   $6.77    1.35%  181  365
Class B  $1,000.00   $1,140.40   $11.16   $1,000.00   $1,014.36   $10.51    2.10   181  365
Class C  $1,000.00   $1,141.30   $10.94   $1,000.00   $1,014.58   $10.29    2.06   181  365
Class R3  $1,000.00   $1,144.10   $7.99   $1,000.00   $1,017.34   $7.51    1.50   181  365
Class R4  $1,000.00   $1,145.70   $6.39   $1,000.00   $1,018.83   $6.02    1.20   181  365
Class R5  $1,000.00   $1,147.60   $4.80   $1,000.00   $1,020.32   $4.52    0.90   181  365
Class Y  $1,000.00   $1,148.00   $4.53   $1,000.00   $1,020.57   $4.27    0.85   181  365

 

31

 

The Hartford Disciplined Equity Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Disciplined Equity Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

32

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

33

 

 

The Hartford Disciplined Equity Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

Quantitative Analysis Risk: The Fund uses quantitative analysis in its securities selection; securities selected by this method may perform differently from the broader stock market.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

34
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-DE13 4/13 113968 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

8

 

 

 
 

 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD DIVERSIFIED INTERNATIONAL FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Diversified International Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 14
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 16
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 17
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 18
Notes to Financial Statements (Unaudited) 19
Financial Highlights (Unaudited) 32
Directors and Officers (Unaudited) 35
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 37
Quarterly Portfolio Holdings Information (Unaudited) 37
Expense Example (Unaudited) 38
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 39
Principal Risks (Unaudited) 41

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Diversified International Fund inception 06/30/2008

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks long-term capital appreciation.

 

Performance Overview 6/30/08 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   Since
Inception▲
 
Diversified International A#   13.83%       13.83%       -0.53%    
Diversified International A##        7.57%       -1.69%    
Diversified International B#   13.40%       12.99%       -1.24%    
Diversified International B##        7.99%       -1.64%    
Diversified International C#   13.50%       12.96%       -1.25%    
Diversified International C##        11.96%       -1.25%    
Diversified International I#   13.95%       14.23%       -0.15%    
Diversified International R3#   13.76%       13.62%       -0.76%    
Diversified International R4#   13.91%       13.91%       -0.48%    
Diversified International R5#   14.07%       14.20%       -0.21%    
Diversified International Y#   13.98%       14.25%       -0.14%    
MSCI All Country World ex USA Index   13.03%       14.69%       1.03%    

 

Not Annualized
Inception: 06/30/2008
#Without sales charge
##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

MSCI All Country World ex USA 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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Diversified International Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Diversified International Class A   1.45%       2.11%    
Diversified International Class B   2.20%       2.80%    
Diversified International Class C   2.20%       2.83%    
Diversified International Class I   1.20%       1.69%    
Diversified International Class R3   1.65%       2.39%    
Diversified International Class R4   1.35%       2.08%    
Diversified International Class R5   1.05%       1.77%    
Diversified International Class Y   1.00%       1.67%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers      
Cheryl M. Duckworth, CFA Kent M. Stahl, CFA Jean-Marc Berteaux Theodore B.P. Jayne, CFA
Senior Vice President and Associate Director of Global Industry Research Senior Vice President and Director of Investments and Risk Management Senior Vice President and Equity Portfolio Manager Director and Equity Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Diversified International Fund returned 13.83%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the MSCI All Country World ex U.S. Index, which returned 13.03% for the same period. The Fund outperformed the 12.03% average return in the Lipper International Multi-Cap Growth peer group, a group of funds with investment strategies similar to those of the Fund.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Investors’ enthusiasm for stocks was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, the market responded favorably to the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

Eight out of ten sectors within the MSCI All Country World ex-USA Index posted positive returns for the period. The Health Care (+21.0%), Consumer Discretionary (+20.5%), and Financials (+19.3%) sectors posted the largest gains while the Materials (-4.2%), Energy (-0.3%), and Utilities (+9.1%) sectors lagged on a relative basis.

 

Security selection was the primary driver of relative outperformance versus the benchmark during the period. Stock selection was strongest within Industrials, Materials, and Information Technology. This was partially offset by weaker selection in the Consumer Staples, Health Care, and Consumer Discretionary sectors. Overall, sector allocation also contributed to benchmark-relative returns. The benefit of being underweight (i.e. the Fund’s sector position was less than the benchmark position) the lagging Materials and Energy sectors and overweight the Consumer Discretionary sector were partially offset by negative consequences of an underweight to both the Financials and Consumer Staples sectors. A modest cash position also detracted in a rising market.

 

Top contributors to absolute (i.e. total return) and benchmark relative performance during the period included Methanex (Materials), MUFG (Financials), and Shionogi & Co (Health Care). Shares of Methanex, a Canada-based supplier of methanol, benefited from higher forecasts for the price of methanol and improved supply and demand dynamics. Shares of MUFG, a Japan-based bank, rose after the company posted strong quarterly results driven by depreciation in the yen and strong results from Japanese stocks, which boosted the value of their equity portfolio. Shares of Shionogi & Co, a Japan-based pharmaceutical company, gained after the U.S. Food and Drug Administration (FDA) granted a priority review designation to the company's drug to treat the HIV infection.

 

3

 

The Hartford Diversified International Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

The largest detractors from relative performance were Fresnillo (Materials), AuRico (Materials), and Toyota Motor (Consumer Discretionary). Shares of Fresnillo, a Mexican-based silver and gold mining company, fell during the period as investors were concerned about the downward pressure on gold prices; additionally analyst downgrades negatively impacted the stock price. Shares of AuRico, a Canada-based gold producer, dropped because of challenges with assets in Mexico and leadership changes. The stock of Toyota Motor, a Japan-based auto company, rose sharply due to yen depreciation. Our underweight position in this benchmark component during the period hurt benchmark-relative performance. Mando (Consumer Discretionary) also detracted from absolute performance.

 

What is the outlook?

The Fund comprises multiple specialized portfolios, each of which is run independently of the others. Collectively, these strategies offer a diverse set of exposures to non-U.S. stocks across industries, regions, and market caps.

 

The Fund ended the period most overweight the Industrials, Consumer Discretionary, and Information Technology sectors and most underweight the Financials, Energy, and Consumer Staples sectors relative to its benchmark. On a regional basis, the Fund was most overweight Europe ex the UK and most underweight Asia Pacific ex Japan, primarily Australia.

 

Diversification by Industry

as of April 30, 2013 

Industry (Sector)  Percentage of
Net Assets
 
Automobiles and Components (Consumer Discretionary)   4.3%
Banks (Financials)   9.2 
Capital Goods (Industrials)   9.1 
Commercial and Professional Services (Industrials)   2.4 
Consumer Durables and Apparel (Consumer Discretionary)   3.6 
Consumer Services (Consumer Discretionary)   1.5 
Diversified Financials (Financials)   1.6 
Energy (Energy)   6.7 
Food and Staples Retailing (Consumer Staples)   1.7 
Food, Beverage and Tobacco (Consumer Staples)   6.0 
Health Care Equipment and Services (Health Care)   1.6 
Household and Personal Products (Consumer Staples)   0.6 
Insurance (Financials)   5.2 
Materials (Materials)   7.4 
Media (Consumer Discretionary)   1.0 
Other Investment Pools and Funds (Financials)   0.7 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   6.9 
Real Estate (Financials)   3.3 
Retailing (Consumer Discretionary)   3.2 
Semiconductors and Semiconductor Equipment (Information Technology)   4.2 
Software and Services (Information Technology)   3.1 
Technology Hardware and Equipment (Information Technology)   2.3 
Telecommunication Services (Services)   4.4 
Transportation (Industrials)   3.7 
Utilities (Utilities)   2.2 
Short-Term Investments   3.5 
Other Assets and Liabilities   0.6 
Total   100.0%

 

4

 

The Hartford Diversified International Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 94.7%

 
     Australia - 1.7%     
 16   Aquarius Platinum Ltd.  $10 
 3   Bank of Queensland Ltd.   30 
 4   Brambles Ltd.   32 
 2   Caltex Australia Ltd.   48 
 5   Domino's Pizza Enterprises Ltd.   65 
 4   Energy Resources of Australia Ltd. ●   4 
 6   Karoon Gas Australia Ltd. ●   25 
 2   Myer Holdings Ltd.   6 
 4   Seek Ltd.   41 
 8   Tox Free Solutions Ltd.   28 
 3   Transurban Group   23 
 2   Westfield Group REIT   29 
 9   Whitehaven Coal Ltd.   17 
 2   Woolworths Ltd.   90 
 1   WorleyParsons Ltd.   32 
         480 
     Austria - 0.2%     
 1   Erste Group Bank AG   29 
 2   Fleetwood Corp., Ltd   19 
 1   Zumbotel AG   15 
         63 
     Belgium - 1.9%     
 2   Ageas   83 
 8   Agfa Gevaert N.V. ●☼   15 
 2   Anheuser-Busch InBev N.V.   224 
    Delhaize-Le Lion S.A.   21 
 1   Nyrstar N.V. - Strip VVPR ⌂●†    
 3   UCB S.A. ●   196 
         539 
     Brazil - 2.9%     
 3   Banco ABC Brasil S.A.   23 
 5   Banco do Estado do Rio Grande do Sul S.A.   38 
 17   Banco Santander Brasil S.A.   127 
 2   BR Malls Participacoes S.A. ●   27 
 9   BR Properties S.A.   95 
 9   Brasil Insurance Participacoes e Administracao S.A.   98 
 3   CCR S.A.   31 
    Cia de Bebidas das Americas ADR   8 
 1   Cia de Saneamento Basico do Estado de Sao Paulo ADR   19 
 2   Cia. Hering   36 
 2   Cosan Ltd.   38 
 3   GOL Linhas Aereas Inteligentes S.A. ADR ●   19 
 3   HRT Participacoes em Petroleo S.A. ●   6 
 4   Hypermarcas S.A. ●   29 
 4   Itau Unibanco Banco Multiplo S.A. ADR   62 
 2   Kroton Educacional S.A.   29 
 1   Mills Estruturas e Servicos de Engenharia S.A.   24 
 5   Petroleo Brasileiro S.A. ADR   95 
 1   Totvs S.A.   21 
         825 
     Canada - 2.9%     
 4   AuRico Gold, Inc.   23 
 2   Barrick Gold Corp.   33 
 2   CGI Group, Inc. Class A ●   57 
 4   Continental Gold Ltd. ●   17 
 2   EcoSynthetix, Inc. ●   5 
 1   EnCana Corp.   22 
 3   Imperial Oil Ltd. ‡   134 
 6   Methanex Corp.   265 
 1   Northern Dynasty Minerals Ltd. ●   3 
 1   Pacific Rubiales Energy Corp.   18 
 2   Painted Pony Petroleum Ltd. ●   15 
 10   Rubicon Minerals Corp. ●   17 
 20   Torex Gold Resources, Inc. ●   28 
 1   Tourmaline Oil Corp. ●   36 
 10   Trican Well Service Ltd.   134 
 3   Uranium Participation Corp. ●   13 
         820 
     Chile - 0.1%     
 1   S.A.C.I. Falabella   16 
           
     China - 2.4%     
    Baidu, Inc. ADR ●   19 
 50   China Construction Bank   42 
 30   China Pacific Insurance Co., Ltd.   109 
 25   China Shanshui Cement Group   14 
 1   Ctrip.com International Ltd. ADR ●   20 
 23   Dongfeng Motor Group Co., Ltd.   34 
 10   First Tractor Co.   7 
 1   Giant Interactive Group, Inc. ADR ●   11 
 17   Golden Eagle Retail Group Ltd.   30 
 162   Greatview Aseptic Packaging Co., Ltd.   97 
 139   Maoye International Holdings   30 
 1   NetEase, Inc. ADR   69 
 1   New Oriental Education & Technology Group, Inc. ADR   22 
 22   New World Department Store China   11 
 2   Pactera Technology International Ltd. ●   8 
 65   Sinotrans Ltd.   14 
 3   Sinovac Biotech Ltd. ●   10 
 1   Sohu.com, Inc. ●   32 
 5   Stella International Holdings Ltd.   13 
 2   WuXi PharmaTech Cayman, Inc. ●   42 
 21   Zhuzhou CSR Times Electric   58 
         692 
     Colombia - 0.4%     
 5   Almacenes Exito S.A.   80 
 3   Cemex Latam Holdings S.A. ●   21 
         101 
     Denmark - 1.0%     
 9   DSV A/S   226 
 2   H. Lundbeck A/S   48 
    Jyske Bank A/S ●   17 
         291 
     Finland - 0.5%     
 1   Kone Oyj Class B   51 
 6   Outotec Oyj   87 
         138 
     France - 7.3%     
    Air Liquide   9 
    Alten Ltd.   14 
 6   AXA S.A.   103 
 5   BNP Paribas   265 
    Bureau Veritas S.A.   40 
 1   Capital Gemini S.A.   58 

 

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

 

5

 

The Hartford Diversified International Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 94.7% - (continued)

 
     France - 7.3% - (continued)     
 2   Carrefour S.A.  $67 
    Christian Dior   48 
 1   Cie Generale d'Optique Essilor International S.A.   75 
    Ciments Francais S.A.   12 
 5   Club Mediterranee S.A. ●   93 
 1   Compagnie De Saint-Gobain   37 
    Dassault Systemes S.A.   34 
    Devoteam S.A. ●   5 
 3   Edenred   103 
 2   France Telecom S.A.   17 
 4   GDF Suez   90 
 1   GFI Informatique S.A.   6 
 1   Groupe Steria SCA   15 
 1   Lafarge S.A. ☼   51 
 1   Lagardere S.C.A.   28 
 2   Legrand S.A.   74 
    LVMH Moet Hennessy Louis Vuitton S.A. ☼   72 
 1   Metropole Television S.A.   19 
 1   Pernod-Ricard S.A.   73 
 3   Peugeot S.A.   25 
    Pinault-Printemps-Redoute S.A.   21 
    Renault S.A.   34 
 1   Rexel S.A.   20 
    S.p.A.Group S.A.   8 
 2   Safran S.A.   123 
 1   Sanofi-Aventis S.A.   107 
 1   Schneider Electric S.A.   87 
 1   Societe Generale Class A   28 
 1   Thales S.A.   32 
 1   Total S.A.   69 
    Vallourec S.A.   20 
 1   Vinci S.A.   39 
 1   Vivendi S.A.   19 
    Zodiac Aerospace   38 
         2,078 
     Germany - 5.0%     
 1   Adidas AG   55 
    Allianz SE   31 
 1   BASF SE   96 
 1   Bayerische Motoren Werke (BMW) AG   63 
    Bertrandt AG   17 
 1   Brenntag AG   207 
    Continental AG ●   30 
 1   Deutsche Bank AG   38 
 1   Deutsche Lufthansa AG   14 
 2   Deutsche Post AG   50 
 3   E.On SE   61 
 1   Elmos Semiconductor AG   8 
 1   ElringKlinger AG   17 
    Gerresheimer AG   22 
 1   GSW Immobilien AG   27 
    HeidelbergCement AG   32 
    Hugo Boss AG   33 
 11   Infineon Technologies AG   90 
 1   MTU Aero Engines Holdings AG   48 
 1   NORMA Group   21 
    Pfeiffer Vacuum Technology AG   22 
    Rational AG   12 
 3   Rhoen-Klinikum AG   62 
    RWE AG   17 
    Salzgitter AG   15 
 2   SAP AG   194 
 1   Siemens AG   81 
 2   Tom Tailor Holding AG   52 
         1,415 
     Hong Kong - 5.4%     
 16   AAC Technologies Holdings, Inc.   76 
 57   AIA Group Ltd.   254 
 56   AMVIG Holdings Ltd.   21 
 5   ASM Pacific Technology Ltd.   46 
 48   Baoxin Automotive Group Ltd. ●   41 
 31   Cathay Pacific Airways Ltd.   55 
 5   Cheung Kong Infrastructure Holdings Ltd.   36 
 80   China High Precision Automation Group Ltd. ⌂†   10 
 36   China Liansu Group Holdings Ltd.   21 
 49   China Overseas Grand Oceans Group Ltd.   78 
 48   China State Construction International Holdings Ltd.   70 
 19   China Unicom Ltd.   27 
 9   Clear Media Ltd.   6 
 10   Dah Chong Hong Holdings Ltd.   9 
 3   Dah Sing Financial Group   15 
 110   Guangdong Investment Ltd.   107 
 139   Huabao International Holdings Ltd.   64 
 56   Intime Department Store Group Co., Ltd.   67 
 5   Lifestyle International   11 
 10   Link (The) REIT   55 
 11   MGM China Holdings Ltd.   25 
 66   Oriental Watch Holdings Ltd.   22 
 9   Samsonite International S.A.   23 
 13   Shanghai Industrial Holdings Ltd.   41 
 33   SmarTones Telecommunications Holding Ltd.   59 
 5   Sun Hung Kai Properties Ltd.   69 
 28   Techtronic Industries Co., Ltd.   66 
 48   Vinda International Holdings Ltd.   63 
 8   Wynn Macau Ltd. ●   25 
 47   Xingda International Holdings   18 
 10   Yingde Gases   10 
 22   Zhongsheng Group Holdings Ltd.   31 
         1,521 
     India - 1.4%     
 5   Allahabad Bank Ltd.   13 
 1   Axis Bank Ltd.   41 
 7   Bharti Infratel Ltd.   24 
 9   Bharti Televentures   53 
 2   Canara Bank Ltd.   13 
 2   Corp. Bank   12 
 1   Grasim Industries Ltd.   30 
 3   Jammu & Kashmir Bank Ltd.   63 
 20   Manappuram Finance Ltd.   7 
 2   Maruti Suzuki India Ltd.   58 
 1   Oil India Ltd.   11 
 4   Reliance Industries Ltd.   59 
    United Spirits Ltd.   6 
         390 

 

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

 

6

  

     
Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 94.7% - (continued)

 
     Indonesia - 1.4%     
 396   Bumi Serpong Damai PT  $70 
 44   Matahari Department Store Tbk ●   55 
 241   Perusahaan Perkebunan London Sumatra Indonesia Tbk   38 
 120   PT Bank Negara Indonesia Tbk   67 
 13   PT Gudang Garam Tbk   67 
 110   PT XL Axiata Tbk ●   57 
 29   Semen Indonesia   54 
         408 
     Ireland - 0.9%     
 9   AER Lingus Group plc   16 
 1   CRH plc   25 
 6   Elan Corp. plc ADR ●   74 
 4   Experian plc   65 
 2   Grafton Group plc   15 
 3   Smurfit Kappa Group plc   49 
         244 
     Israel - 1.0%     
 54   Bezeq Israeli Telecommunication Corp., Ltd.   79 
 1   Check Point Software Technologies Ltd. ADR ●   23 
 1   EZchip Semiconductor Ltd. ●   21 
 1   Orbotech Ltd. ●   14 
 4   Teva Pharmaceutical Industries Ltd. ADR   144 
         281 
     Italy - 1.2%     
 1   Ansaldo STS S.p.A.   11 
 1   Banca Generali S.p.A.   17 
 1   Banca Popolare dell'Emilia Tomagna Scrl   9 
 1   Brunello Cucinelli S.p.A. ●   14 
 1   Buzzi Unicem S.p.A.   17 
    DiaSorin S.p.A.   12 
 1   Eni S.p.A.   29 
 2   Finmeccanica S.p.A.   12 
 5   Geox S.p.A.   14 
 13   Intesa Sanpaolo   24 
 2   Italcementi S.p.A.   12 
 3   Salvatore Ferragamo Italia S.p.A.   95 
 6   Saras S.p.A.   8 
 10   Unicredit S.p.A.   51 
 3   Unione di Banche Italiane ScpA   11 
         336 
     Japan - 17.8%     
 1   AEON Delight Co., Ltd.   12 
    AEON Mall Co., Ltd.   10 
 1   Aizawa Securities Co., Ltd.   6 
 1   Alfresa Holdings Corp.   30 
    Alpha Systems, Inc.   4 
 2   Alpine Electronics, Inc.   15 
 2   Amada Co., Ltd.   13 
 2   Anritsu Corp.   22 
 1   Askul Corp.   16 
 4   Bridgestone Corp.   160 
 1   Canon, Inc.   25 
 1   Cawachi Ltd.   14 
 1   Chubu Steel Plate Co., Ltd.   5 
    CyberAgent, Inc.   55 
 10   Daiichi Sankyo Co., Ltd.   198 
 3   Dainippon Screen Manufacturing Co., Ltd.   15 
 1   Don Quijote Co.   41 
 1   Doshisha Co., Ltd.   13 
 1   DTS Corp.   12 
 4   Eighteenth (The) Bank Ltd.   10 
 6   Eisai Co., Ltd.   286 
    En-Japan, Inc.   7 
 2   Exedy Corp.   48 
 2   Fuji Machine Manufacturing Co.   16 
    Fuji Media Holdings, Inc.   43 
 1   Fuji Photo Film Co., Ltd.   30 
 1   Fujimi, Inc.   13 
 6   Fujitsu Ltd.   25 
 1   Funai Electric Co., Ltd.   17 
 2   Futaba Corp.   21 
 1   Gendai Agency, Inc.   6 
 3   Higashi-Nippon Bank Ltd.   8 
 1   Hisaka Works Ltd.   9 
 1   Hitachi Chemical Co., Ltd.   22 
 1   Hitachi High-Technologies Co.   28 
 6   Hitachi Ltd.   38 
 3   Hitachi Metals Ltd.   26 
 1   Honda Motor Co., Ltd.   38 
 1   Honeys Co., Ltd.   15 
 2   Hosiden Corp.   13 
    Inpex Corp.   24 
 16   Isuzu Motors Ltd.   108 
 5   Itochu Corp.   67 
 1   Japan Digital Laboratory Co., Ltd.   15 
 1   Japan Petroleum Exploration Co., Ltd.   28 
 3   Japan Tobacco, Inc. ☼   112 
 2   JSR Corp.   51 
 23   JX Holdings, Inc.   124 
 2   Kakaku.com, Inc.   42 
 1   Keihin Corp.   21 
 2   Kinden Corp.   15 
 1   Kirin Brewery Co., Ltd.   24 
 1   Komatsu Ltd.   14 
 1   K's Holdings Corp.   36 
    Kyocera Corp.   12 
    M3, Inc.   45 
 1   Medipal Holdings Corp.   14 
 2   Mimasu Semiconductor Industry Co., Ltd.   15 
 1   Miraial Co., Ltd.   12 
 1   Mitsubishi Corp.   16 
 1   Mitsubishi Electric Corp.   13 
 5   Mitsubishi Gas Chemical Co.   40 
 45   Mitsubishi UFJ Financial Group, Inc.   303 
 12   Mitsubishi UFJ Lease & Finance Co., Ltd.   69 
 24   Mitsui Chemicals, Inc. ☼   55 
 4   Mitsui Fudosan Co., Ltd.   129 
 2   Mitsumi Electric Co., Ltd.   13 
 1   mixi, Inc.   19 
 3   Net One Systems Co., Ltd.   28 
 1   NEXT Co., Ltd.   8 
    Nintendo Co., Ltd.   22 
 3   Nippon Shokubai Co., Ltd.   26 
 1   Nippon Telegraph & Telephone Corp.   25 
 2   Nishimatsuya Chain Co., Ltd.   15 
 12   Nissan Motor Co., Ltd.   125 

 

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

 

7

 

The Hartford Diversified International Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 94.7% - (continued)

 
     Japan - 17.8% - (continued)     
 1   Nok Corp.  $20 
 2   Nomura Holdings, Inc.   16 
 1   NSD Co., Ltd.   11 
 3   Oita Bank Ltd.   12 
 1   Olympus Corp.   28 
 1   Ono Pharmaceutical Co., Ltd.   43 
    Pal Co., Ltd.   15 
    Point, Inc.   9 
 1   Pola Orbis Holdings, Inc.   25 
 1   Proto Corp.   12 
 1   Rakuten, Inc.   11 
 1   Rohm Co., Ltd.   25 
 1   Roland Corp.   11 
 1   Sankyo Co., Ltd.   23 
    Sega Sammy Holdings, Inc.   12 
    Septeni Holdings Co., Ltd.   3 
 2   Seven & I Holdings Co., Ltd.   80 
    Shin-Etsu Chemical Co., Ltd.   7 
 3   Shin-Etsu Polymer Co., Ltd.   12 
 3   Shinkawa Ltd.   18 
 3   Shinko Electric Industries Co., Ltd.   28 
 9   Shionogi & Co., Ltd.   232 
 34   Showa Denko K.K.   55 
    Simplex Holdings, Inc.   13 
    SMC Corp. of America   48 
 2   SoftBank Corp.   115 
 1   Stanley Electric Co., Ltd.   27 
 1   Sugi Holdings Co., Ltd.   54 
 1   Sumisho Computer Systems Corp. ☼   12 
 3   Sumitomo Mitsui Financial Group, Inc.   132 
    Suzuken Co., Ltd.   12 
 5   T&D Holdings, Inc.   57 
 1   Tachi-S Co., Ltd.   12 
 23   Taiheyo Cement Corp.   60 
 1   TDK Corp. ☼   19 
 2   THK Co., Ltd.   39 
 2   Tochigi (The) Bank Ltd.   8 
 1   Tokai Rika Co., Ltd.   14 
 2   Tokai Rubber Industries Ltd.   17 
 6   Tokio Marine Holdings, Inc. ☼   180 
 1   Tokyo Electron Ltd.   41 
 7   Tokyo Gas Co., Ltd.   41 
 1   Tokyo Ohka Kogyo Co., Ltd.   20 
 1   Tokyo Seimitsu Co., Ltd.   22 
 4   Toshiba Corp.   23 
 1   Toyota Boshoku Corp.   11 
 2   Toyota Motor Corp.   134 
    Tri-Stage, Inc.   3 
 2   Ushio, Inc.   17 
    Wacom Co., Ltd.   28 
 1   XEBIO Co., Ltd.   17 
    Yahoo Japan Corp.   13 
 2   Yamanashi (The) Chuo Bank Ltd.   9 
 1   Yamato Kogyo Co.   41 
 1   Zuken, Inc.   6 
         5,023 
     Jersey - 0.2%     
 9   Glencore Xstrata plc   44 
    Randgold Resources Ltd. ADR   5 
         49 
     Luxembourg - 0.2%     
 4   ArcelorMittal ADR   46 
           
     Malaysia - 1.4%     
 225   AirAsia Berhad   217 
 17   AMMB Holdings Berhad   37 
 35   Axiata Group Berhad   78 
 31   Malaysia Airports Holdings BHD   60 
         392 
     Mexico - 1.5%     
 11   Alfa S.A.B. de C.V.   25 
 15   Alsea S.A.B. de C.V. ●   45 
 5   Banregio Grupo Financiero S.A. ●   28 
 4   Cemex S.A.B. de C.V. ADR ●   49 
 5   Concentradora Fibra Hotelera   10 
 13   Empresas ICA, S.A.B. de C.V. ●   34 
 10   Fibra Uno Administracion S.A. REIT   38 
    Fomento Economico Mexicano S.A.B. de C.V. ADR   46 
 5   Grupo Financiero Banorte S.A.B. de C.V.   38 
 10   Infraestructura Energetica Nova, SAB de C.V. ●   36 
 14   Macquarie Mexico Real Estate Management S.A. de C.V. REIT ●   34 
 11   OHL Mexico S.A.B. de C.V. ●   32 
         415 
     Netherlands - 2.6%     
 8   AerCap Holdings N.V. ●   134 
 1   Akzo Nobel N.V.   46 
 3   ASML Holding N.V.   194 
 2   Delta Lloyd N.V.   37 
 1   European Aeronautic Defence & Space Co. N.V.   27 
 1   Heineken N.V.   97 
 8   ING Groep N.V. ●   65 
 1   Koninklijke Philips Electronics N.V.   32 
 2   NXP Semiconductors N.V. ●   54 
    Unilever N.V.   14 
 2   USG People N.V.   17 
 1   Wolters Kluwer N.V.   21 
         738 
     Norway - 1.2%     
 1   Kongsberg Gruppen ASA   10 
 4   Storebrand ASA   18 
 14   Telenor ASA   315 
         343 
     Panama - 0.9%     
 2   Copa Holdings S.A. Class A   266 
           
     Papua New Guinea - 0.3%     
 2   New Britain Palm Oil Ltd.   10 
 8   Oil Search Ltd.   65 
         75 
     Peru - 0.2%     
 8   Alicorp S.A.   31 
    Credicorp Ltd.   27 
         58 

 

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

 

8

 

     
Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 94.7% - (continued)

 
     Philippines - 0.7%     
 31   BDO Unibank, Inc.  $68 
 210   Robinsons Land Corp.   131 
         199 
     Poland - 0.2%     
 2   Alior Bank S.A. ●   39 
 1   Warsaw Stock Exchange   7 
         46 
     Portugal - 0.9%     
 64   Banco Espirito Santo S.A. ●   74 
 5   Galp Energia SGPS S.A.   81 
 1   Jeronimo Martins   26 
 13   Portugal Telecom SGPS S.A.   68 
         249 
     Singapore - 0.7%     
 30   Biosensors International Group Ltd. ●   29 
 16   Fortune REIT   15 
 1   Jardine Cycle & Carriage Ltd.   24 
 16   Oversea-Chinese Banking Corp., Ltd.   141 
         209 
     South Africa - 0.8%     
 8   Discovery Ltd.   74 
 18   Life Healthcare Group Holdings Pte Ltd.   77 
 1   Naspers Ltd.   51 
 7   Raubex Group Ltd.   14 
         216 
     South Korea - 3.7%     
 1   Daum Communications Corp.   78 
    Doosan Corp.   48 
 1   GS Holdings Corp.   68 
 4   Hana Financial Holdings   123 
    Hyundai Department Store Co., Ltd.   11 
 1   Hyundai Development Co.   19 
 1   Hyundai Home Shopping Network Corp.   76 
 1   Hyundai Motor Co., Ltd.   128 
 1   KB Financial Group, Inc.   18 
 1   Mando Corp.   39 
    Samsung Electronics Co., Ltd.   329 
 3   Shinhan Financial Group Co., Ltd.   87 
    SK Telecom Co., Ltd.   17 
         1,041 
     Spain - 1.4%     
 3   Almirall S.A.   36 
 16   Banco Popular Espanol   13 
 10   Iberdrola S.A.   54 
    Industria de Diseno Textil S.A.   29 
 6   Repsol S.A. ●   137 
 8   Telefonica S.A. ●   122 
         391 
     Sweden - 2.5%     
 3   Alfa Laval Ab   73 
 4   Assa Abloy Ab   143 
 3   Atlas Copco Ab   91 
 1   Avanza Bank Holding Ab   13 
 1   Axis Communications Ab   30 
 4   Electrolux Ab Series B   107 
 1   Hennes & Mauritz Ab   28 
 5   Nordea Bank Ab   58 
 4   Skf Ab Class B   89 
 1   Swedish Match Ab   45 
 3   Telefonaktiebolaget LM Ericsson Class B   34 
         711 
     Switzerland - 4.5%     
 1   Adecco S.A.   71 
    Belimon Holding AG   16 
 2   Cie Financiere Richemont   128 
    Geberit AG ☼   17 
    Holcim Ltd.   30 
    Inficon Holdings AG   11 
 1   Julius Baer Group Ltd. ☼   52 
    Kuehne & Nagel International AG   12 
    Lindt & Spruengli AG   12 
 2   Micronas Semiconductor Holding AG   12 
 3   Nestle S.A.   208 
 1   Novartis AG   48 
    Partners Group   20 
 1   Roche Holding AG   219 
    SGS S.A.   36 
    Swatch Group AG   44 
 3   Swiss Re Ltd.   213 
    Tecan Group AG   23 
 5   UBS AG   90 
         1,262 
     Taiwan - 1.0%     
 17   Chroma Ate, Inc.   36 
 29   Taiwan Semiconductor Manufacturing Co., Ltd.   108 
 4   Taiwan Semiconductor Manufacturing Co., Ltd. ADR   80 
 1   TPK Holding Co., Ltd.   12 
 40   WPG Holdings Co., Ltd.   49 
         285 
     Thailand - 1.2%     
 237   Asian Property Development Public Co., Ltd.   76 
 6   Bangkok Bank plc   43 
 53   Bank of Ayudhya plc   59 
 36   PTT Chemical Public Co., Ltd.   91 
 19   Total Access Communication Public Co., Ltd.   74 
         343 
     Turkey - 0.0%     
 1   Turkcell Iletisim Hizmetleri A.S. ADR ●   13 
           
     United Kingdom - 13.0%     
 2   Aberdeen Asset Management plc   15 
 8   Amlin plc   53 
 4   Arm Holdings plc   62 
 1   AstraZeneca plc   58 
 3   AstraZeneca plc ADR   160 
 4   Babcock International Group plc   64 
 8   BAE Systems plc   45 
 12   Barclays Bank plc ADR   53 
 15   BG Group plc   245 
 1   BHP Billiton plc   34 
 38   BP plc   278 
 6   British American Tobacco plc   334 
 4   Burberry Group plc   85 
 8   Capita plc   113 
 1   Catlin Group Ltd.   11 
 4   Compass Group plc   53 

 

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

 

9

 

The Hartford Diversified International Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 94.7% - (continued)

 
     United Kingdom - 13.0% - (continued)     
 5   Countrywide plc ●  $33 
 1   Croda International plc   30 
 5   Diageo Capital plc   149 
 11   Direct Line Insurance Group plc   35 
    easyJet plc   3 
 1   Ensco plc   35 
 4   Fresnillo plc   65 
 2   Halma plc   18 
 3   Hammerson plc REIT   27 
 10   Hays plc   14 
 5   Home Retail Group   11 
 9   HSBC Holdings plc   103 
 4   Imperial Tobacco Group plc   161 
 2   International Consolidated Airlines Group S.A. ●   7 
 1   Intertek Group plc   30 
 1   Jardine Lloyd Thompson Group plc   20 
 4   Luxfer Holdings plc   69 
 12   Marks & Spencer Group plc   74 
 3   Mothercare plc   14 
 6   NMC Health plc ●   31 
 9   Old Mutual plc   29 
 6   Ophilr Energy plc ●   39 
 5   Persimmon plc   83 
 4   Prudential plc   62 
 1   Reckitt Benckiser Group plc   62 
 2   Redrow plc ●   8 
 1   Renishaw plc   17 
 3   Rexam plc   25 
 3   Rio Tinto plc   129 
 5   Rolls-Royce Holdings plc   84 
    Rotork plc   7 
 3   Severn Trent plc   94 
 8   SIG plc   21 
 3   Smith & Nephew plc   30 
 1   Spectris plc   42 
 1   Spirax-Sarco Engineering plc   36 
 6   Standard Chartered plc   150 
 18   Taylor Wimpey plc   26 
 7   Tesco plc   37 
 9   Thomas Cook Group plc   17 
 1   Victrex plc   17 
 24   Vodafone Group plc   72 
         3,679 
     United States - 0.2%     
 1   Home Inns & Hotels Management, Inc. ●   22 
 1   SouFun Holdings Ltd.   34 
         56 
     Total common stocks     
     (cost $23,260)  $26,743 
           

PREFERRED STOCKS - 0.5%

 
     Brazil - 0.3%     
 5   Cia Paranaense de Energie  $80 
           
     Germany - 0.2%     
 1   ProSieben Sat.1 Media AG   21 
    Volkswagen AG N.V.   44 
         65 
     Total preferred stocks     
     (cost $135)  $145 
           

WARRANTS - 0.0%

 
     Russia - 0.0%     
 4   Micex AP Generis Warrant ■☼  $5 
           
     Total warrants     
     (cost $5)  $5 
           

EXCHANGE TRADED FUNDS - 0.7%

 
     United States - 0.7%     
 4   iShares MSCI ACWI Index Fund  $191 
           
     Total exchange traded funds     
     (cost $184)  $191 
           
     Total long-term investments     
     (cost $23,584)  $27,084 
           
SHORT-TERM INVESTMENTS - 3.5% 
     Repurchase Agreements - 3.5%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing
on 05/01/2013 in the amount of $40,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $40)
     
$40   0.17%, 4/30/2013  $40 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $108, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -
2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$110)
     
 108   0.15%, 4/30/2013   108 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $207, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $211)
     
 207   0.15%, 4/30/2013   207 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $288,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $294)
     
 288   0.14%, 4/30/2013   288 

 

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

 

10

 

         
Shares or Principal Amount      Market Value ╪ 
SHORT-TERM INVESTMENTS - 3.5% - (continued)      
     Repurchase Agreements - 3.5% - (continued)          
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $52, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $53)
          
$52   0.17%, 4/30/2013       $52 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $175, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $179)
          
 175   0.14%, 4/30/2013        175 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$123, collateralized by U.S. Treasury Note
0.25% - 1.88%, 2014 - 2019, value of $126)
          
 123   0.17%, 4/30/2013        123 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$2, collateralized by U.S. Treasury Note
3.88%, 2018, value of $2)
          
 2   0.13%, 4/30/2013        2 
              995 
     Total short-term investments          
     (cost $995)       $995 
                
     Total investments          
     (cost $24,579) ▲   99.4%  $28,079 
     Other assets and liabilities   0.6%   175 
     Total net assets   100.0%  $28,254 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $25,166 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $4,314 
Unrealized Depreciation   (1,401)
Net Unrealized Appreciation  $2,913 

 

These securities were valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $10, which rounds to zero percent 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.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $5, which rounds to zero percent of total net assets.

 

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

 

11

 

The Hartford Diversified International Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(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 Acquired  Shares/ Par   Security  Cost Basis 
09/2011 - 10/2011   80   China High Precision Automation Group Ltd.  $31 
03/2011   1   Nyrstar N.V. - Strip VVPR    

 

At April 30, 2013, the aggregate value of these securities was $10, which rounds to zero percent of total net assets.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $73 at April 30, 2013.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
AUD  Sell  05/02/2013  JPM  $6   $6   $ 
CHF  Buy  05/02/2013  DEUT   3    3     
CHF  Sell  05/06/2013  DEUT   3    3     
CHF  Sell  05/03/2013  NAB   1    1     
EUR  Buy  05/02/2013  BCLY            
EUR  Buy  05/03/2013  JPM   49    49     
EUR  Buy  05/06/2013  JPM   3    3     
EUR  Sell  05/02/2013  BCLY   21    22    (1)
EUR  Sell  05/03/2013  BCLY   2    2     
GBP  Buy  05/01/2013  DEUT   28    28     
GBP  Buy  05/02/2013  DEUT   3    3     
GBP  Sell  05/03/2013  BCLY   6    6     
GBP  Sell  05/01/2013  DEUT   10    10     
GBP  Sell  05/02/2013  DEUT   1    1     
HKD  Buy  05/03/2013  BCLY   11    11     
JPY  Buy  05/07/2013  CSFB   2    2     
JPY  Buy  05/01/2013  HSBC   17    17     
JPY  Buy  05/02/2013  SSG   19    19     
JPY  Sell  06/14/2013  BCLY   44    43    1 
JPY  Sell  05/07/2013  CSFB   5    5     
JPY  Sell  05/17/2013  DEUT   40    38    2 
JPY  Sell  06/24/2013  DEUT   72    58    14 
JPY  Sell  07/01/2013  DEUT   146    137    9 
JPY  Sell  07/17/2013  DEUT   58    58     
JPY  Sell  07/01/2013  MSC   18    17    1 
JPY  Sell  05/02/2013  SSG   2    2     
                      $26 

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
BCLY Barclays
CSFB Credit Suisse First Boston Corp.
DEUT Deutsche Bank Securities, Inc.
HSBC HSBC Bank USA
JPM JP Morgan Chase & Co.
MSC Morgan Stanley
NAB National Australia Bank
SSG State Street Global Markets LLC

 

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

12

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
Currency Abbreviations:
AUD Australian Dollar
CHF Swiss Franc
EUR EURO
GBP British Pound
HKD Hong Kong Dollar
JPY Japanese Yen
 
Index Abbreviations:
ACWI All Country World
 
Other Abbreviations:
ADR American Depositary Receipt
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
MSCI Morgan Stanley Capital International
REIT Real Estate Investment Trust

 

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

 

13

 

The Hartford Diversified International Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Australia  $480   $65   $387   $28 
Austria   63    19    44     
Belgium   539    15    524     
Brazil   825    825         
Canada   820    820         
Chile   16    16         
China   692    244    448     
Colombia   101    101         
Denmark   291    48    243     
Finland   138        138     
France   2,078    39    2,039     
Germany   1,415        1,415     
Hong Kong   1,521        1,511    10 
India   390    93    297     
Indonesia   408    112    296     
Ireland   244    90    154     
Israel   281    202    79     
Italy   336        336     
Japan   5,023    3    5,020     
Jersey   49    5    44     
Luxembourg   46    46         
Malaysia   392    97    295     
Mexico   415    415         
Netherlands   738    188    550     
Norway   343    10    333     
Panama   266    266         
Papua New Guinea   75    10    65     
Peru   58    58         
Philippines   199    131    68     
Poland   46        46     
Portugal   249    26    223     
Singapore   209    15    194     
South Africa   216    91    125     
South Korea   1,041        1,041     
Spain   391        391     
Sweden   711    30    681     
Switzerland   1,262    39    1,223     
Taiwan   285    80    205     
Thailand   343        343     
Turkey   13    13         
United Kingdom   3,679    394    3,285     
United States   56    56         
Total   26,743    4,662    22,043    38 
Exchange Traded Funds   191    191         
Preferred Stocks   145        145     
Warrants   5    5         
Short-Term Investments   995        995     
Total  $28,079   $4,858   $23,183   $38 
Foreign Currency Contracts*   27        27     
Total  $27   $   $27   $ 
Liabilities:                    
Foreign Currency Contracts*   1        1     
Total  $1   $   $1   $ 

 

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

 

14

 

For the six-month period ended April 30, 2013, investments valued at $124 were transferred from Level 1 to Level 2, and investments valued at $242 were transferred from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3 *
   Transfers
Out of
Level 3 *
   Balance
as of
April 30,
2013
 
Assets:                                             
Common Stocks  $12   $   $  $   $26   $   $   $   $38 
Total  $12   $   $   $   $26   $   $   $   $38 

 

*Investments are transferred into and out of Level 3 for a variety of reasons including, but not limited to:
1)Investments where trading has been halted (transfer into Level 3) or investments where trading has resumed (transfer out of Level 3).
2)Broker quoted investments (transfer into Level 3) or quoted prices in active markets (transfer out of Level 3).
3)Investments that have certain restrictions on trading (transfer into Level 3) or investments where trading restrictions have expired (transfer out of Level 3).
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 rounds to zero.

 

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

 

15

 

The Hartford Diversified International Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $24,579)  $28,079 
Cash   1 
Foreign currency on deposit with custodian (cost $32)   33 
Unrealized appreciation on foreign currency contracts   27 
Receivables:     
Investment securities sold   82 
Fund shares sold   22 
Dividends and interest   136 
Other assets   87 
Total assets   28,467 
Liabilities:     
Unrealized depreciation on foreign currency contracts   1 
Payables:     
Investment securities purchased   168 
Fund shares redeemed   21 
Investment management fees   4 
Administrative fees    
Distribution fees   1 
Accrued expenses   18 
Total liabilities   213 
Net assets  $28,254 
Summary of Net Assets:     
Capital stock and paid-in-capital  $28,047 
Distributions in excess of net investment loss   (16)
Accumulated net realized loss   (3,303)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   3,526 
Net assets  $28,254 
      
Shares authorized   525,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $9.29/$9.83 
Shares outstanding   1,118 
Net assets  $10,388 
Class B: Net asset value per share  $9.25 
Shares outstanding   140 
Net assets  $1,298 
Class C: Net asset value per share  $9.23 
Shares outstanding   230 
Net assets  $2,121 
Class I: Net asset value per share  $9.32 
Shares outstanding   141 
Net assets  $1,316 
Class R3: Net asset value per share  $9.30 
Shares outstanding   123 
Net assets  $1,143 
Class R4: Net asset value per share  $9.31 
Shares outstanding   114 
Net assets  $1,062 
Class R5: Net asset value per share  $9.32 
Shares outstanding   106 
Net assets  $990 
Class Y: Net asset value per share  $9.32 
Shares outstanding   1,066 
Net assets  $9,936 

 

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

 

16

 

The Hartford Diversified International Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $382 
Interest    
Less: Foreign tax withheld   (34)
Total investment income   348 
      
Expenses:     
Investment management fees   116 
Administrative services fees     
Class R3   1 
Class R4   1 
Class R5    
Transfer agent fees     
Class A   8 
Class B   1 
Class C   1 
Class I    
Class R3    
Class R4    
Class Y    
Distribution fees     
Class A   12 
Class B   6 
Class C   9 
Class R3   3 
Class R4   1 
Custodian fees   14 
Accounting services fees   2 
Registration and filing fees   40 
Board of Directors' fees   1 
Audit fees   11 
Other expenses   6 
Total expenses (before waivers and fees paid indirectly)   233 
Expense waivers   (63)
Commission recapture    
Total waivers and fees paid indirectly   (63)
Total expenses, net   170 
Net Investment Income   178 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   635 
Net realized gain on foreign currency contracts   43 
Net realized loss on other foreign currency transactions   (3)
Net Realized Gain on Investments and Foreign Currency Transactions   675 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   2,486 
Net unrealized appreciation of foreign currency contracts   21 
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   2,505 
Net Gain on Investments and Foreign Currency Transactions   3,180 
Net Increase in Net Assets Resulting from Operations  $3,358 

 

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

 

17

 

The Hartford Diversified International Fund

Statement of Changes in Net Assets

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the 
Year Ended 
October 31, 2012
 
Operations:          
Net investment income  $178   $310 
Net realized gain (loss) on investments and foreign currency transactions   675    (581)
Net unrealized appreciation of investments and foreign currency transactions   2,505    1,378 
Net Increase in Net Assets Resulting from Operations   3,358    1,107 
Distributions to Shareholders:          
From net investment income          
Class A   (158)   (58)
Class B   (13)    
Class C   (22)    
Class I   (26)   (11)
Class R3   (17)   (4)
Class R4   (19)   (7)
Class R5   (20)   (9)
Class Y   (202)   (96)
Total distributions   (477)   (185)
Capital Share Transactions:          
Class A   957    (53)
Class B   50    (73)
Class C   151    172 
Class I   61    137 
Class R3   61    35 
Class R4   28    29 
Class R5   20    9 
Class Y   202    96 
Net increase from capital share transactions   1,530    352 
Net Increase in Net Assets   4,411    1,274 
Net Assets:          
Beginning of period   23,843    22,569 
End of period  $28,254   $23,843 
Undistributed (distribution in excess of) net investment income (loss)  $(16)  $283 

 

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

 

18

 

The Hartford Diversified International Fund

Notes to Financial Statements

April 30, 2013  (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the

 

19

 

The Hartford Diversified International Fund

Notes to Financial Statements – (continued)

April 30, 2013  (Unaudited)

(000’s Omitted)

 

Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along

 

20

 

with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

21

 

The Hartford Diversified International Fund

Notes to Financial Statements – (continued)

April 30, 2013  (Unaudited)

(000’s Omitted)

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial

 

22

 

 account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

23

 

The Hartford Diversified International Fund

Notes to Financial Statements – (continued)

April 30, 2013  (Unaudited)

(000’s Omitted)

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $27   $   $   $   $   $27 
Total  $   $27   $   $   $   $   $27 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $1   $   $   $   $   $1 
Total  $   $1   $   $   $   $   $1 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain on Derivatives Recognized as a Result of Operations:
Net realized gain on foreign currency contracts  $   $43   $   $   $   $   $43 
Total  $   $43   $   $   $   $   $43 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation of foreign currency contracts  $   $21   $   $   $   $   $21 
Total  $   $21   $   $   $   $   $21 

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

24

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $185   $210 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

 

   Amount 
Undistributed Ordinary Income  $347 
Accumulated Capital Losses *   (3,450)
Unrealized Appreciation †   429 
Total Accumulated Deficit  $(2,674)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $11 
Accumulated Net Realized Gain (Loss)   (11)

 

25

 

The Hartford Diversified International Fund

Notes to Financial Statements – (continued)

April 30, 2013  (Unaudited)

(000’s Omitted)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

   Amount 
Short Term Capital Loss Carryforward  $417 
Long Term Capital Loss Carryforward   46 
Total  $463 

 

Capital loss carryforwards with expiration:

 

Year of Expiration  Amount 
2017  $2,987 
Total  $2,987 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

26

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.9000%  
On next $4.5 billion   0.8500%  
On next $5 billion   0.8475%  
Over $10 billion   0.8450%  

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.020% 
On next $5 billion   0.018% 
Over $10 billion   0.016% 

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.45%      2.20%      2.20%      1.20%      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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, are included in the Statement of Operations.

 

27

 

The Hartford Diversified International Fund

Notes to Financial Statements – (continued)

April 30, 2013  (Unaudited)

(000’s Omitted)

 

The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.42%
Class B   2.11 
Class C   2.15 
Class I   1.04 
Class R3   1.65 
Class R4   1.35 
Class R5   1.05 
Class Y   1.00 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $22 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. These fees are accrued daily and paid monthly.

 

28

 

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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class A   38%
Class B   73 
Class C   44 
Class I   76 
Class R3   85 
Class R4   92 
Class R5   100 
Class Y   100 

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $10,400 
Sales Proceeds Excluding U.S. Government Obligations   9,740 

 

29

 

The Hartford Diversified International Fund

Notes to Financial Statements – (continued)

April 30, 2013  (Unaudited)

(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   181    18    (91)       108    167    8    (184)       (9)
Amount  $1,594   $157   $(794)  $   $957   $1,333   $58   $(1,444)  $   $(53)
Class B                                                  
Shares   6    2    (3)       5    6        (15)       (9)
Amount  $60   $13   $(23)  $   $50   $42   $   $(115)  $   $(73)
Class C                                                  
Shares   22    3    (8)       17    39        (17)       22 
Amount  $193   $22   $(64)  $   $151   $303   $   $(131)  $   $172 
Class I                                                  
Shares   12    3    (8)       7    18    2    (3)       17 
Amount  $109   $26   $(74)  $   $61   $148   $11   $(22)  $   $137 
Class R3                                                  
Shares   5    2            7    4                4 
Amount  $45   $17   $(1)  $   $61   $31   $4   $   $   $35 
Class R4                                                  
Shares   1    2            3    6    1    (3)       4 
Amount  $13   $18   $(3)  $   $28   $45   $7   $(23)  $   $29 
Class R5                                                  
Shares       2            2        1            1 
Amount  $   $20   $   $   $20   $   $9   $   $   $9 
Class Y                                                  
Shares       24            24    1    13    (1)       13 
Amount  $   $202   $   $   $202   $4   $96   $(4)  $   $96 
Total                                                  
Shares   227    56    (110)       173    241    25    (223)       43 
Amount  $2,014   $475   $(959)  $   $1,530   $1,906   $185   $(1,739)  $   $352 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   2   $16 
For the Year Ended October 31, 2012   2   $16 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

30

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

31

 

The Hartford Diversified International Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited)
A  $8.31   $0.06   $1.08   $1.14   $(0.16)  $   $   $(0.16)  $9.29 
B   8.25    0.03    1.07    1.10    (0.10)           (0.10)   9.25 
C   8.23    0.03    1.07    1.10    (0.10)           (0.10)   9.23 
I   8.36    0.07    1.08    1.15    (0.19)           (0.19)   9.32 
R3   8.31    0.05    1.08    1.13    (0.14)           (0.14)   9.30 
R4   8.33    0.06    1.09    1.15    (0.17)           (0.17)   9.31 
R5   8.35    0.07    1.09    1.16    (0.19)           (0.19)   9.32 
Y   8.36    0.07    1.08    1.15    (0.19)           (0.19)   9.32 
                                              
For the Year Ended October 31, 2012 (G)
A   7.98    0.10    0.29    0.39    (0.06)           (0.06)   8.31 
B   7.92    0.04    0.29    0.33                    8.25 
C   7.90    0.04    0.29    0.33                    8.23 
I   8.03    0.13    0.29    0.42    (0.09)           (0.09)   8.36 
R3   7.98    0.08    0.29    0.37    (0.04)           (0.04)   8.31 
R4   8.00    0.11    0.28    0.39    (0.06)           (0.06)   8.33 
R5   8.03    0.13    0.28    0.41    (0.09)           (0.09)   8.35 
Y   8.03    0.14    0.28    0.42    (0.09)           (0.09)   8.36 
                                              
For the Year Ended October 31, 2011 (G)
A   8.46    0.07    (0.48)   (0.41)   (0.07)           (0.07)   7.98 
B   8.39    0.01    (0.47)   (0.46)   (0.01)           (0.01)   7.92 
C   8.39    0.01    (0.48)   (0.47)   (0.02)           (0.02)   7.90 
I   8.50    0.11    (0.48)   (0.37)   (0.10)           (0.10)   8.03 
R3   8.46    0.05    (0.48)   (0.43)   (0.05)           (0.05)   7.98 
R4   8.48    0.08    (0.49)   (0.41)   (0.07)           (0.07)   8.00 
R5   8.49    0.10    (0.47)   (0.37)   (0.09)           (0.09)   8.03 
Y   8.50    0.11    (0.48)   (0.37)   (0.10)           (0.10)   8.03 
                                              
For the Year Ended October 31, 2010 (G)
A   7.35    0.05    1.14    1.19    (0.08)           (0.08)   8.46 
B   7.31    (0.01)   1.13    1.12    (0.04)           (0.04)   8.39 
C   7.31    (0.01)   1.13    1.12    (0.04)           (0.04)   8.39 
I   7.38    0.07    1.15    1.22    (0.10)           (0.10)   8.50 
R3   7.35    0.02    1.15    1.17    (0.06)           (0.06)   8.46 
R4   7.36    0.04    1.16    1.20    (0.08)           (0.08)   8.48 
R5   7.37    0.06    1.15    1.21    (0.09)           (0.09)   8.49 
Y   7.38    0.07    1.15    1.22    (0.10)           (0.10)   8.50 
                                              
For the Year Ended October 31, 2009 (G)
A   5.88    0.06    1.43    1.49    (0.02)           (0.02)   7.35 
B   5.87    0.02    1.42    1.44                    7.31 
C   5.87    0.02    1.42    1.44                    7.31 
I   5.89    0.10    1.41    1.51    (0.02)           (0.02)   7.38 
R3   5.87    0.06    1.42    1.48                    7.35 
R4   5.88    0.07    1.42    1.49    (0.01)           (0.01)   7.36 
R5   5.88    0.09    1.42    1.51    (0.02)           (0.02)   7.37 
Y   5.89    0.10    1.42    1.52    (0.03)           (0.03)   7.38 
                                              
From June 30, 2008 (commencement of operations), through October 31, 2008
A(H)   10.00    0.01    (4.13)   (4.12)                   5.88 
B(H)   10.00    (0.01)   (4.12)   (4.13)                   5.87 
C(H)   10.00    (0.01)   (4.12)   (4.13)                   5.87 
I(H)   10.00    0.01    (4.12)   (4.11)                   5.89 
R3(H)   10.00        (4.13)   (4.13)                   5.87 
R4(H)   10.00        (4.12)   (4.12)                   5.88 
R5(H)   10.00    0.01    (4.13)   (4.12)                   5.88 
Y(H)   10.00    0.01    (4.12)   (4.11)                   5.89 

 

32

 

- Ratios and Supplemental Data -

 

Total Return(B)     Net Assets at End of
Period (000's)
    Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements
and Including Expenses not Subject to
Cap
    Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap
    Ratio of Net Investment Income
to Average Net Assets
    Portfolio Turnover
Rate(D)
 
   
 
  13.83 %(E)   $ 10,388       1.90 %(F)     1.42 %(F)     1.31 %(F)     39 %
  13.40 (E)     1,298       2.59 (F)     2.11 (F)     0.59 (F)      
  13.50 (E)     2,121       2.63 (F)     2.15 (F)     0.57 (F)      
  13.95 (E)     1,316       1.52 (F)     1.04 (F)     1.65 (F)      
  13.76 (E)     1,143       2.20 (F)     1.65 (F)     1.05 (F)      
  13.91 (E)     1,062       1.89 (F)     1.35 (F)     1.34 (F)      
  14.07 (E)     990       1.58 (F)     1.05 (F)     1.64 (F)      
  13.98 (E)     9,936       1.48 (F)     1.00 (F)     1.69 (F)      
                                             
                                             
  4.94       8,397       2.11       1.44       1.26       85  
  4.17       1,111       2.80       2.13       0.57        
  4.18       1,753       2.83       2.16       0.53        
  5.39       1,119       1.69       1.02       1.67        
  4.68       963       2.39       1.65       1.05        
  5.02       924       2.08       1.35       1.34        
  5.23       868       1.77       1.05       1.64        
  5.42       8,708       1.67       1.00       1.69        
                                             
                                             
  (4.87 )     8,137       2.01       1.41       0.84       89  
  (5.47 )     1,141       2.72       2.12       0.14        
  (5.67 )     1,513       2.75       2.15       0.13        
  (4.43 )     941       1.61       1.01       1.26        
  (5.10 )     890       2.31       1.65       0.60        
  (4.87 )     859       2.01       1.35       0.91        
  (4.40 )     824       1.70       1.05       1.21        
  (4.44 )     8,264       1.60       1.00       1.26        
                                             
                                             
  16.31       8,005       2.29       1.58       0.58       155  
  15.36       1,177       3.01       2.32       (0.18 )      
  15.43       1,452       3.05       2.33       (0.20 )      
  16.69       880       1.90       1.21       0.90        
  16.02       906       2.59       1.81       0.30        
  16.38       877       2.29       1.55       0.57        
  16.61       863       1.99       1.28       0.83        
  16.69       8,650       1.89       1.20       0.92        
                                             
                                             
  25.40       8,740       3.10       1.65       0.99       161  
  24.53       989       3.80       2.40       0.34        
  24.53       1,127       3.80       2.40       0.36        
  25.84       755       2.70       1.30       1.55        
  25.26       735       3.39       1.90       0.96        
  25.43       745       3.09       1.65       1.20        
  25.81       740       2.80       1.40       1.46        
  25.86       7,408       2.70       1.30       1.55        
                                             
                                             
  (41.20 )(E)     2,528       2.01 (F)     1.57 (F)     0.26 (F)     67  
  (41.30 )(E)     591       2.74 (F)     2.31 (F)     (0.48 )(F)      
  (41.30 )(E)     611       2.75 (F)     2.32 (F)     (0.49 )(F)      
  (41.10 )(E)     589       1.74 (F)     1.30 (F)     0.53 (F)      
  (41.30 )(E)     588       2.44 (F)     1.90 (F)     (0.07 )(F)      
  (41.20 )(E)     588       2.14 (F)     1.65 (F)     0.18 (F)      
  (41.20 )(E)     588       1.84 (F)     1.40 (F)     0.43 (F)      
  (41.10 )(E)     5,886       1.74 (F)     1.30 (F)     0.52 (F)      

 

33

 

The Hartford Diversified International Fund

Financial Highlights – (continued)

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Not annualized.
(F)Annualized.
(G)Per share amounts have been calculated using average shares outstanding method.
(H)Commenced operations on June 30, 2008.

 

34

  

The Hartford Diversified International Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

35

 

The Hartford Diversified International Fund

Directors and Officers (Unaudited) – (continued)

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

36

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,138.30   $7.53   $1,000.00   $1,017.75   $7.11    1.42%   181     365  
Class B  $1,000.00   $1,134.00   $11.19   $1,000.00   $1,014.31   $10.56    2.11    181     365  
Class C  $1,000.00   $1,135.00   $11.36   $1,000.00   $1,014.15   $10.72    2.15    181     365  
Class I  $1,000.00   $1,139.50   $5.52   $1,000.00   $1,019.64   $5.21    1.04    181     365  
Class R3  $1,000.00   $1,137.60   $8.76   $1,000.00   $1,016.60   $8.26    1.65    181     365  
Class R4  $1,000.00   $1,139.10   $7.17   $1,000.00   $1,018.09   $6.77    1.35    181     365  
Class R5  $1,000.00   $1,140.70   $5.58   $1,000.00   $1,019.58   $5.27    1.05    181     365  
Class Y  $1,000.00   $1,139.80   $5.31   $1,000.00   $1,019.83   $5.02    1.00    181     365  

 

38

 

The Hartford Diversified International Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Diversified International Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the

 

39

 

The Hartford Diversified International Fund

Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

40

 

The Hartford Diversified International Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Small/Mid-cap Stock Risk: Small- and mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

41
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-DI13 4/13 113969 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

9

 

 

 
 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD DIVIDEND AND GROWTH FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Dividend and Growth Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   8
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   9
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   10
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   11
Notes to Financial Statements (Unaudited)   12
Financial Highlights (Unaudited)   24
Directors and Officers (Unaudited)   27
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   29
Quarterly Portfolio Holdings Information (Unaudited)   29
Expense Example (Unaudited)   30
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   31
Principal Risks (Unaudited)   33

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Dividend and Growth Fund inception 07/22/1996
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks a high level of current income consistent with growth of capital.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

    6 Month†    1 Year    5 year    10 year 
Dividend & Growth A#   14.23%       17.28%       4.80%       8.71%    
Dividend & Growth A##        10.83%       3.62%       8.10%    
Dividend & Growth B#   13.75%       16.29%       3.90%       8.01%*    
Dividend & Growth B##        11.29%       3.56%       8.01%*    
Dividend & Growth C#   13.77%       16.40%       4.02%       7.92%    
Dividend & Growth C##        15.40%       4.02%       7.92%    
Dividend & Growth I#   14.35%       17.57%       5.10%       8.93%    
Dividend & Growth R3#   14.05%       16.97%       4.50%       8.68%    
Dividend & Growth R4#   14.26%       17.29%       4.84%       8.91%    
Dividend & Growth R5#   14.39%       17.65%       5.15%       9.12%    
Dividend & Growth Y#   14.44%       17.76%       5.25%       9.19%    
Russell 1000 Value Index   16.31%       21.80%       4.17%       8.42%    
S&P 500 Index   14.41%       16.88%       5.20%       7.88%    

 

Not Annualized
# Without sales charge
## With sales charge
* Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund's Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

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. The Russell 1000 Index is an unmanaged index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, which measures the performance of the 3,000 largest U.S. companies, based on total market capitalizations.

 

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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Dividend and Growth Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Dividend & Growth Class A   1.08%       1.08%    
Dividend & Growth Class B   1.95%       2.02%    
Dividend & Growth Class C   1.82%       1.82%    
Dividend & Growth Class I   0.81%       0.81%    
Dividend & Growth Class R3   1.35%       1.36%    
Dividend & Growth Class R4   1.05%       1.05%    
Dividend & Growth Class R5   0.75%       0.75%    
Dividend & Growth Class Y   0.65%       0.65%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers    
Edward P. Bousa, CFA Donald J. Kilbride Matthew G. Baker
Senior Vice President and Equity Portfolio Manager Senior Vice President and Equity Portfolio Manager Senior Vice President and Equity Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Dividend and Growth Fund returned 14.23%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmarks, the S&P 500 Index, which returned 14.41% and the Russell 1000 Value Index which returned 16.31% for the same period. The Fund outperformed the 13.75% average return 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?

U.S. equities surged during the period, ending at an all-time high. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. U.S. housing data continued to provide evidence that the sector at the epicenter of the financial crisis could be a key engine of economic recovery in 2013. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

Overall equity market performance was positive for the period across all market capitalizations: large cap equities (+14%), mid caps (+19%), and small caps (+17%) all rose as represented by the S&P 500, S&P 400 MidCap, and Russell 2000 Indices, respectively. During the six-month period, all ten sectors within the S&P 500 Index posted positive returns, led by Consumer Discretionary (+20%), Health Care (+20%), and Financials (+19%). Information Technology (+7%), Energy (+8%), and Materials (+11%) lagged on a relative basis.

 

The Fund’s underperformance relative to the S&P 500 was primarily due to weak stock selection in the Health Care, Materials, and Energy sectors, which was partially offset by strong stock selection in the Information Technology, Telecommunications Services, and Industrials sectors. Overall sector allocation, a residual of bottom-up stock selection, was modestly positive driven in part by our underweight (i.e. the Fund’s sector position was less than the benchmark position) to Information Technology and our overweight to Health Care. A modest cash position detracted from relative results in an upward-trending market.

 

The Fund’s top detractors from benchmark-relative performance included Barrick Gold (Materials), Merck (Health Care), and EnCana (Energy). Shares of Barrick Gold, a Canada-based goal exploration and mining company, fell as investors feared that rising costs, primarily higher costs to extract gold, will continue to cause Barrick’s incremental returns to be challenged. Downward pressure on gold prices due to the strong dollar also weighed on the stock. Shares of Merck, a global pharmaceutical company, underperformed after the company announced a delay of Odanacatib (treatment for osteoporosis and bone metastasis). Odanacatib represents

 

3

 

The Hartford Dividend and Growth Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

an important opportunity in Merck’s late stage pipeline. EnCana, a North American energy producer, underperformed after the company reported mixed earnings for the quarter and lowered its 2013 liquids and cash flow guidance. Top absolute detractors also included department store operator JC Penney.

 

The Fund’s top contributors to benchmark-relative performance during the period were Apple (Information Technology), BlackRock (Financials), and Time Warner (Consumer Discretionary). Shares of Apple, a designer, manufacturer, and retailer of a range of interconnected computing devices and personal electronic products, moved lower after the company missed revenue expectations and issued disappointing earnings guidance. Our underweight position in the stock contributed to relative performance during the period. Shares of BlackRock, an investment management firm, benefited after the company reported better-than-expected fourth quarter revenue and earnings, in part due to strong markets. The firm posted strong organic net cash inflows and announced a 12% hike in its dividend. Time Warner, a U.S.-based media and entertainment company, saw its shares rise after the company posted solid quarterly earnings, boosted its dividend, and authorized a $4 billion share buyback. JPMorgan Chase, a U.S.-based global financial services company, and Pfizer, a global pharmaceutical company, were also top contributors to absolute results (i.e. total return).

 

What is the outlook?

We believe the medium-term growth prospects in the U.S. are favorable. The consumer is expected to be resilient this year, helped by improving net worth from rising house and equity market prices as well as steady job gains. The key drivers of U.S. growth are expected to be capital spending and the housing and automotive sectors over the course of the next year. We believe capital investment spending should finally rise as capacity utilization levels normalize, while vehicle sales and new home constructions, despite their strong recent advance, still have a lot of pent-up demand behind them. An improving economy and healing labor market notwithstanding, we believe the U.S. Federal Reserve Board is unlikely to abandon its quantitative easing program any time soon.

 

The economic turn-around in Europe is disappointingly slow, yet, we still predict a modest recovery over the course of the next year. The world economy is slowly but steadily emerging from a post-bubble overhang. Overall, we expect a return of a world economy that is determined by regional macro fundamentals rather than by swings in global risk sentiment.

 

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 were to Financials, Health Care, and Utilities, while we remained underweight Information Technology, Consumer Staples, and Consumer Discretionary, relative to the benchmark.

 

Diversification by Industry

as of April 30, 2013 

Industry (Sector)  Percentage of
Net Assets
 
Automobiles and Components (Consumer Discretionary)   1.3%
Banks (Financials)   6.4 
Capital Goods (Industrials)   6.7 
Commercial and Professional Services (Industrials)   0.3 
Diversified Financials (Financials)   7.4 
Energy (Energy)   10.6 
Food and Staples Retailing (Consumer Staples)   1.5 
Food, Beverage and Tobacco (Consumer Staples)   5.1 
Health Care Equipment and Services (Health Care)   3.4 
Household and Personal Products (Consumer Staples)   1.6 
Insurance (Financials)   5.6 
Materials (Materials)   1.8 
Media (Consumer Discretionary)   6.0 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   12.6 
Retailing (Consumer Discretionary)   2.5 
Semiconductors and Semiconductor Equipment (Information Technology)   2.5 
Software and Services (Information Technology)   7.7 
Technology Hardware and Equipment (Information Technology)   3.9 
Telecommunication Services (Services)   3.1 
Transportation (Industrials)   3.3 
Utilities (Utilities)   4.4 
Short-Term Investments   2.1 
Other Assets and Liabilities   0.2 
Total   100.0%

 

4

 

The Hartford Dividend and Growth Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 97.7%     
     Automobiles and Components - 1.3%     
 5,535   Ford Motor Co.  $75,888 
 532   Johnson Controls, Inc.   18,619 
         94,507 
     Banks - 6.4%     
 1,869   PNC Financial Services Group, Inc.   126,842 
 1,272   US Bancorp   42,336 
 7,421   Wells Fargo & Co.   281,844 
         451,022 
     Capital Goods - 6.7%     
 550   Boeing Co.   50,276 
 782   Deere & Co.   69,864 
 1,043   Eaton Corp. plc   64,035 
 4,021   General Electric Co.   89,623 
 1,222   Honeywell International, Inc.   89,850 
 1,255   Raytheon Co.   77,057 
 340   Siemens AG ADR   35,553 
         476,258 
     Commercial and Professional Services - 0.3%     
 388   Equifax, Inc. ●   23,767 
           
     Diversified Financials - 7.4%     
 1,153   Ameriprise Financial, Inc.   85,961 
 2,732   Bank of America Corp.   33,629 
 393   BlackRock, Inc.   104,668 
 1,299   Citigroup, Inc.   60,611 
 4,260   JP Morgan Chase & Co.   208,765 
 1,286   Morgan Stanley   28,484 
         522,118 
     Energy - 10.6%     
 1,462   Anadarko Petroleum Corp.   123,892 
 1,442   Baker Hughes, Inc.   65,461 
 1,747   BP plc ADR   76,182 
 1,483   Cameco Corp.   28,926 
 1,254   Chevron Corp.   152,966 
 1,336   EnCana Corp. ADR   24,656 
 2,188   Exxon Mobil Corp.   194,721 
 205   Halliburton Co.   8,764 
 840   Occidental Petroleum Corp.   74,950 
         750,518 
     Food and Staples Retailing - 1.5%     
 1,826   CVS Caremark Corp.   106,220 
           
     Food, Beverage and Tobacco - 5.1%     
 1,509   General Mills, Inc.   76,072 
 496   Kraft Foods Group, Inc.   25,554 
 1,231   PepsiCo, Inc.   101,554 
 931   Philip Morris International, Inc.   88,952 
 1,567   Unilever N.V. NY Shares ADR   66,563 
         358,695 
     Health Care Equipment and Services - 3.4%     
 1,985   Cardinal Health, Inc.   87,793 
 2,436   Medtronic, Inc.   113,715 
 694   UnitedHealth Group, Inc.   41,597 
         243,105 
     Household and Personal Products - 1.6%     
 1,513   Procter & Gamble Co.   116,169 
           
     Insurance - 5.6%     
 1,355   ACE Ltd.   120,753 
 860   American International Group, Inc. ●  35,624 
 967   Marsh & McLennan Cos., Inc.   36,737 
 1,164   MetLife, Inc.   45,391 
 1,765   Principal Financial Group, Inc.   63,731 
 1,586   Prudential Financial, Inc.   95,822 
         398,058 
     Materials - 1.8%     
 1,545   Barrick Gold Corp.   30,459 
 2,915   Dow Chemical Co.   98,854 
         129,313 
     Media - 6.0%     
 3,180   Comcast Corp. Class A   131,329 
 783   Omnicom Group, Inc.   46,782 
 426   Time Warner Cable, Inc.   40,004 
 1,888   Time Warner, Inc.   112,868 
 1,521   Walt Disney Co.   95,610 
         426,593 
     Pharmaceuticals, Biotechnology and Life Sciences - 12.6%     
 1,535   AstraZeneca plc ADR   79,712 
 1,352   Bristol-Myers Squibb Co.   53,692 
 2,210   Eli Lilly & Co.   122,378 
 2,046   Johnson & Johnson   174,345 
 4,595   Merck & Co., Inc.   215,987 
 6,550   Pfizer, Inc.   190,410 
 1,376   Teva Pharmaceutical Industries Ltd. ADR   52,687 
         889,211 
     Retailing - 2.5%     
 2,495   Buck Holdings L.P. ⌂●†   782 
 2,318   Lowe's Co., Inc.   89,063 
 1,233   Target Corp.   86,999 
         176,844 
     Semiconductors and Semiconductor Equipment - 2.5%     
 3,957   Intel Corp.   94,776 
 2,252   Texas Instruments, Inc.   81,527 
         176,303 
     Software and Services - 7.7%     
 377   Accenture plc   30,682 
 839   Automatic Data Processing, Inc.   56,520 
 874   eBay, Inc. ●   45,780 
 808   IBM Corp.   163,596 
 4,837   Microsoft Corp.   160,102 
 1,254   Oracle Corp.   41,104 
 1,793   Yahoo!, Inc. ●   44,333 
         542,117 
     Technology Hardware and Equipment - 3.9%     
 127   Apple, Inc.   56,260 
 4,903   Cisco Systems, Inc.   102,573 
 3,978   Corning, Inc.   57,686 
 2,714   EMC Corp. ●   60,867 
         277,386 
     Telecommunication Services - 3.1%     
 4,131   Verizon Communications, Inc.   222,684 
           
     Transportation - 3.3%     
 1,053   CSX Corp.   25,887 
 2,452   Delta Air Lines, Inc. ●   42,034 
 769   FedEx Corp.   72,306 
 1,049   United Parcel Service, Inc. Class B   90,055 
         230,282 

 

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

 

5

 

The Hartford Dividend and Growth Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 97.7% - (continued) 
     Utilities - 4.4%     
 1,408   Dominion Resources, Inc.  $86,824 
 590   Edison International   31,721 
 1,654   Exelon Corp.   62,049 
 1,046   NextEra Energy, Inc.   85,800 
 1,305   Xcel Energy, Inc.   41,485 
         307,879 
     Total common stocks     
     (cost $5,256,395)  $6,919,049 
           
     Total long-term investments     
     (cost $5,256,395)  $6,919,049 
           
SHORT-TERM INVESTMENTS - 2.1% 
Repurchase Agreements - 2.1%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $5,849,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $5,966)
     
$5,849    0.17%, 4/30/2013  $5,849 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $15,936, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $16,255)
     
 15,936    0.15%, 4/30/2013   15,936 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $30,693, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 -
2021, value of $31,307)
     
 30,693    0.15%, 4/30/2013   30,693 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $42,630,
collateralized by U.S. Treasury Note
0.75% - 2.13%, 2015 - 2019, value of
$43,482)
     
 42,630    0.14%, 4/30/2013   42,630 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $7,665,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value of
$7,819)
     
 7,665    0.17%, 4/30/2013   7,665 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $25,976, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 -
2022, value of $26,496)
     
 25,976    0.14%, 4/30/2013   25,976 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $18,263, collateralized by U.S.
Treasury Note 0.25% - 1.88%, 2014 -
2019, value of $18,628)
     
18,263    0.17%, 4/30/2013  18,263 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$326, collateralized by U.S. Treasury Note
3.88%, 2018, value of $333)
     
 326    0.13%, 4/30/2013   326 
        147,338 
     Total short-term investments     
     (cost $147,338)  $147,338 
              
        Total investments      
        (cost $5,403,733) ▲ 99.8 % $7,066,387 
        Other assets and liabilities 0.2 %  14,720 
        Total net assets 100.0 % $7,081,107 
                  

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

 

6

  

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $5,440,511 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $1,720,670 
Unrealized Depreciation   (94,794)
Net Unrealized Appreciation  $1,625,876 

 

These securities were valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors. At April 30, 2013, the aggregate value of these securities was $782, which rounds to zero percent of total net assets.

 

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 Acquired  Shares/ Par   Security  Cost Basis 
06/2007   2,495   Buck Holdings L.P.  $178 

 

At April 30, 2013, the aggregate value of these securities was $782, which rounds to zero percent of total net assets.

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Other Abbreviations:
ADR American Depositary Receipt
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association

 

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

 

7

 

The Hartford Dividend and Growth Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks ‡  $6,919,049   $6,918,267   $   $782 
Short-Term Investments   147,338        147,338     
Total  $7,066,387   $6,918,267   $147,338   $782 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.
The Fund has all or primarily all of the equity securities categorized in a particular 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
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3
   Transfers
Out of
Level 3
   Balance
as of
April 30,
2013
 
Assets:                                             
Common Stocks  $2,405   $1,538   $(1,249)*  $   $   $(1,912)  $   $   $782 
Total  $2,405   $1,538   $(1,249)  $   $   $(1,912)  $   $   $782 

 

* Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $(1,249).

 

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

 

8

 

The Hartford Dividend and Growth Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $5,403,733)  $7,066,387 
Cash    
Receivables:     
Investment securities sold   30,112 
Fund shares sold   8,290 
Dividends and interest   8,743 
Other assets   153 
Total assets   7,113,685 
Liabilities:     
Payables:     
Investment securities purchased   23,042 
Fund shares redeemed   7,537 
Investment management fees   704 
Administrative fees   8 
Distribution fees   221 
Accrued expenses   1,066 
Total liabilities   32,578 
Net assets  $7,081,107 
Summary of Net Assets:     
Capital stock and paid-in-capital  $5,271,564 
Undistributed net investment income   11,540 
Accumulated net realized gain   135,349 
Unrealized appreciation of investments   1,662,654 
Net assets  $7,081,107 
      
Shares authorized   1,000,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $23.24/$24.59  
Shares outstanding   138,172 
Net assets  $3,211,403 
Class B: Net asset value per share  $22.87 
Shares outstanding   4,572 
Net assets  $104,555 
Class C: Net asset value per share  $22.75 
Shares outstanding   16,507 
Net assets  $375,596 
Class I: Net asset value per share  $23.16 
Shares outstanding   62,056 
Net assets  $1,437,484 
Class R3: Net asset value per share  $23.43 
Shares outstanding   3,429 
Net assets  $80,340 
Class R4: Net asset value per share  $23.53 
Shares outstanding   5,668 
Net assets  $133,363 
Class R5: Net asset value per share  $23.58 
Shares outstanding   6,692 
Net assets  $157,810 
Class Y: Net asset value per share  $23.59 
Shares outstanding   66,991 
Net assets  $1,580,556 

 

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

 

9

 

The Hartford Dividend and Growth Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

Investment Income:    
Dividends  $94,465 
Interest   118 
Less: Foreign tax withheld   (840)
Total investment income   93,743 
      
Expenses:     
Investment management fees   20,517 
Administrative services fees    
Class R3   75 
Class R4   93 
Class R5   71 
Transfer agent fees    
Class A   2,508 
Class B   195 
Class C   270 
Class I   1,341 
Class R3   3 
Class R4   1 
Class R5    
Class Y   15 
Distribution fees     
Class A   3,749 
Class B   523 
Class C   1,740 
Class R3   186 
Class R4   155 
Custodian fees   7 
Accounting services fees   453 
Registration and filing fees   155 
Board of Directors' fees   70 
Audit fees   31 
Other expenses   429 
Total expenses (before waivers and fees paid indirectly)   32,587 
Expense waivers    
Transfer agent fee waivers   (40)
Commission recapture   (33)
Total waivers and fees paid indirectly   (73)
Total expenses, net   32,514 
Net Investment Income   61,229 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   243,099 
Net realized loss on foreign currency contracts   (1)
Net realized gain on other foreign currency transactions    
Net Realized Gain on Investments and Foreign Currency Transactions   243,098 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments   610,432 
Net Changes in Unrealized Appreciation of Investments   610,432 
Net Gain on Investments   853,530 
Net Increase in Net Assets Resulting from Operations  $914,759 

 

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

 

10

 

The Hartford Dividend and Growth Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $61,229   $114,584 
Net realized gain on investments and foreign currency transactions   243,098    229,925 
Net unrealized appreciation of investments   610,432    512,086 
Net Increase in Net Assets Resulting from Operations   914,759    856,595 
Distributions to Shareholders:          
From net investment income          
Class A   (25,086)   (49,181)
Class B   (414)   (1,007)
Class C   (1,714)   (3,322)
Class I   (13,008)   (28,293)
Class R3   (516)   (967)
Class R4   (1,038)   (1,768)
Class R5   (1,373)   (2,645)
Class Y   (16,032)   (28,067)
Total from net investment income   (59,181)   (115,250)
From net realized gain on investments          
Class A   (48,692)    
Class B   (1,796)    
Class C   (5,743)    
Class I   (22,402)    
Class R3   (1,187)    
Class R4   (1,977)    
Class R5   (2,121)    
Class Y   (25,685)    
Total from net realized gain on investments   (109,603)    
Total distributions   (168,784)   (115,250)
Capital Share Transactions:          
Class A   (63,046)   (179,089)
Class B   (15,450)   (42,938)
Class C   (2,760)   (6,975)
Class I   (56,880)   (241,474)
Class R3   (872)   7,611 
Class R4   (2,496)   31,185 
Class R5   (1,437)   27,213 
Class Y   (150,181)   274,983 
Net decrease from capital share transactions   (293,122)   (129,484)
Net Increase in Net Assets   452,853    611,861 
Net Assets:          
Beginning of period   6,628,254    6,016,393 
End of period  $7,081,107   $6,628,254 
Undistributed (distribution in excess of) net investment income (loss)  $11,540   $9,492 

 

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

 

11

 

The Hartford Dividend and Growth Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the

 

12

 

 

fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

  · Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

13

 

The Hartford Dividend and Growth Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments held. Exchange rate fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements.

 

14

 

 

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.

 

  e) Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, quarterly and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3. Securities and Other Investments:

 

  a) Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price

 

15

 

The Hartford Dividend and Growth Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

  a) Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 held no foreign currency contracts during the period or as of April 30, 2013.

 

5.Principal Risks:

 

  a) Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of

 

16

 

 

equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $115,250   $87,022 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $9,492 
Undistributed Long-Term Capital Gain   109,600 
Accumulated Capital Losses *   (70,968)
Unrealized Appreciation †   1,015,444 
Total Accumulated Earnings  $1,063,568 

 

  * The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
  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 Dividend and Growth Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(419)
Accumulated Net Realized Gain (Loss)   419 
      

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2015  $51,957 
2016   19,011 
Total  $70,968 

 

As a result of mergers in the Fund, certain provisions in the IRC may limit the future utilization of capital losses.  During the year ended October 31, 2012, the Fund utilized $120,485 of prior year capital loss carryforwards.

  

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment

 

18

 

 

Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 $1.5 billion   0.6000%  
On next $2.5 billion   0.5950%  
On next $5 billion   0.5900%  
Over $10 billion   0.5850%  

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B  Class C  Class I   Class R3   Class R4   Class R5   Class Y  
 1.25%     NA  NA   1.00%      1.35%      1.05%      0.75%     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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, are included in the Statement of Operations.

 

19

 

The Hartford Dividend and Growth Fund

Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.06%
Class B   1.94 
Class C   1.80 
Class I   0.84 
Class R3   1.35 
Class R4   1.05 
Class R5   0.74 
Class Y   0.65 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $3,279 and contingent deferred sales charges of $53 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/dealers of The Hartford for distributing the Fund's shares were $1. These commissions are in turn paid to sales representatives of the broker/dealers.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount

 

20

 

 

paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage
of Fund
 
Class Y   14%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $941,307 
Sales Proceeds Excluding U.S. Government Obligations   1,352,502 

 

21

 

The Hartford Dividend and Growth Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares Sold   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   6,613    3,533    (12,969)       (2,823)   15,470    2,426    (26,864)       (8,968)
Amount  $143,170   $72,660   $(278,876)  $   $(63,046)  $306,467   $48,151   $(533,707)  $   $(179,089)
Class B                                                  
Shares   77    107    (904)       (720)   292    50    (2,532)       (2,190)
Amount  $1,635   $2,139   $(19,224)  $   $(15,450)  $5,700   $968   $(49,606)  $   $(42,938)
Class C                                                  
Shares   932    352    (1,409)       (125)   2,583    160    (3,093)       (350)
Amount  $19,797   $7,031   $(29,588)  $   $(2,760)  $50,090   $3,095   $(60,160)  $   $(6,975)
Class I                                                  
Shares   8,056    1,686    (12,179)       (2,437)   17,955    1,381    (31,820)       (12,484)
Amount  $173,708   $34,632   $(265,220)  $   $(56,880)  $355,563   $27,294   $(624,331)  $   $(241,474)
Class R3                                                  
Shares   415    75    (527)       (37)   1,096    45    (749)       392 
Amount  $9,090   $1,562   $(11,524)  $   $(872)  $21,841   $891   $(15,121)  $   $7,611 
Class R4                                                  
Shares   947    93    (1,155)       (115)   2,973    60    (1,472)       1,561 
Amount  $20,730   $1,929   $(25,155)  $   $(2,496)  $59,796   $1,212   $(29,823)  $   $31,185 
Class R5                                                  
Shares   1,460    113    (1,633)       (60)   2,822    96    (1,532)       1,386 
Amount  $31,688   $2,379   $(35,504)  $   $(1,437)  $56,259   $1,935   $(30,981)  $   $27,213 
Class Y                                                  
Shares   5,472    1,923    (13,915)       (6,520)   28,645    1,285    (15,264)       14,666 
Amount  $118,472   $40,280   $(308,933)  $   $(150,181)  $559,781   $25,967   $(310,765)  $   $274,983 
Total                                                  
Shares   23,972    7,882    (44,691)       (12,837)   71,836    5,503    (83,326)       (5,987)
Amount  $518,290   $162,612   $(974,024)  $   $(293,122)  $1,415,497   $109,513   $(1,654,494)  $   $(129,484)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   239   $5,212 
For the Year Ended October 31, 2012   647   $12,882 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

22

 

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

23

 

The Hartford Dividend and Growth Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class   Net Asset Value at
Beginning of
Period
    Net Investment
Income (Loss)
    Net Realized and
Unrealized Gain
(Loss) on
Investments
    Total from
Investment
Operations
    Dividends from Net
Investment Income
    Distributions from
Realized Capital
Gains
    Distributions from
Capital
    Total Distributions    Net Asset Value at
End of Period
 
                                              
For the Six-Month Period Ended April 30, 2013 (Unaudited)                               
A  $20.87   $0.19   $2.71   $2.90   $(0.18)  $(0.35)  $   $(0.53)  $23.24 
B   20.54    0.09    2.67    2.76    (0.08)   (0.35)       (0.43)   22.87 
C   20.45    0.10    2.65    2.75    (0.10)   (0.35)       (0.45)   22.75 
I   20.80    0.21    2.70    2.91    (0.20)   (0.35)       (0.55)   23.16 
R3   21.04    0.15    2.74    2.89    (0.15)   (0.35)       (0.50)   23.43 
R4   21.12    0.19    2.75    2.94    (0.18)   (0.35)       (0.53)   23.53 
R5   21.17    0.22    2.75    2.97    (0.21)   (0.35)       (0.56)   23.58 
Y   21.18    0.24    2.74    2.98    (0.22)   (0.35)       (0.57)   23.59 
                                              
For the Year Ended October 31, 2012                    
A   18.61    0.34    2.26    2.60    (0.34)          (0.34)   20.87 
B   18.32    0.17    2.21    2.38    (0.16)           (0.16)   20.54 
C   18.25    0.18    2.22    2.40    (0.20)           (0.20)   20.45 
I   18.56    0.40    2.23    2.63    (0.39)           (0.39)   20.80 
R3   18.76    0.28    2.29    2.57    (0.29)           (0.29)   21.04 
R4   18.84    0.34    2.29    2.63    (0.35)           (0.35)   21.12 
R5   18.88    0.39    2.30    2.69    (0.40)           (0.40)   21.17 
Y   18.88    0.41    2.31    2.72    (0.42)           (0.42)   21.18 
                                              
For the Year Ended October 31, 2011 (G)                    
A   17.93    0.27    0.67    0.94    (0.26)           (0.26)   18.61 
B   17.64    0.10    0.66    0.76    (0.08)           (0.08)   18.32 
C   17.58    0.13    0.66    0.79    (0.12)           (0.12)   18.25 
I   17.87    0.32    0.68    1.00    (0.31)           (0.31)   18.56 
R3   18.08    0.22    0.67    0.89    (0.21)           (0.21)   18.76 
R4   18.14    0.28    0.69    0.97    (0.27)           (0.27)   18.84 
R5   18.18    0.34    0.68    1.02    (0.32)           (0.32)   18.88 
Y   18.18    0.36    0.68    1.04    (0.34)           (0.34)   18.88 
                                              
For the Year Ended October 31, 2010                    
A   16.03    0.25    1.90    2.15    (0.25)           (0.25)   17.93 
B   15.76    0.11    1.86    1.97    (0.09)           (0.09)   17.64 
C   15.72    0.12    1.86    1.98    (0.12)           (0.12)   17.58 
I   15.98    0.29    1.90    2.19    (0.30)           (0.30)   17.87 
R3   16.18    0.19    1.93    2.12    (0.22)           (0.22)   18.08 
R4   16.22    0.25    1.93    2.18    (0.26)           (0.26)   18.14 
R5   16.24    0.29    1.96    2.25    (0.31)           (0.31)   18.18 
Y   16.25    0.32    1.93    2.25    (0.32)           (0.32)   18.18 
                                              
For the Year Ended October 31, 2009                    
A   14.56    0.26    1.47    1.73    (0.26)           (0.26)   16.03 
B   14.32    0.14    1.44    1.58    (0.14)           (0.14)   15.76 
C   14.28    0.15    1.45    1.60    (0.16)           (0.16)   15.72 
I   14.52    0.33    1.44    1.77    (0.31)           (0.31)   15.98 
R3   14.71    0.25    1.46    1.71    (0.24)           (0.24)   16.18 
R4   14.73    0.28    1.48    1.76    (0.27)           (0.27)   16.22 
R5   14.75    0.33    1.47    1.80    (0.31)           (0.31)   16.24 
Y   14.75    0.35    1.48    1.83    (0.33)           (0.33)   16.25 
                                              
For the Year Ended October 31, 2008                    
A   23.12    0.31    (7.32)   (7.01)   (0.31)   (1.24)       (1.55)   14.56 
B   22.76    0.14    (7.21)   (7.07)   (0.13)   (1.24)       (1.37)   14.32 
C   22.72    0.17    (7.21)   (7.04)   (0.16)   (1.24)       (1.40)   14.28 
I   23.07    0.34    (7.27)   (6.93)   (0.38)   (1.24)       (1.62)   14.52 
R3   23.37    0.23    (7.40)   (7.17)   (0.25)   (1.24)       (1.49)   14.71 
R4   23.39    0.32    (7.42)   (7.10)   (0.32)   (1.24)       (1.56)   14.73 
R5   23.41    0.35    (7.40)   (7.05)   (0.37)   (1.24)       (1.61)   14.75 
Y   23.41    0.37    (7.40)   (7.03)   (0.39)   (1.24)       (1.63)   14.75 

 

24

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
  
                            
  14.23%(E)  $3,211,403     1.06%(F)    1.06%(F)    1.72%(F)   14%
  13.75(E)   104,555     2.02(F)    1.94(F)    0.87(F)    
  13.77(E)   375,596     1.80(F)    1.80(F)    0.98(F)    
  14.35(E)   1,437,484     0.84(F)    0.84(F)    1.94(F)    
  14.05(E)   80,340     1.35(F)    1.35(F)    1.43(F)    
  14.26(E)   133,363     1.05(F)    1.05(F)    1.74(F)    
  14.39(E)   157,810     0.75(F)    0.75(F)    2.02(F)    
  14.44(E)   1,580,556     0.65 (F)    0.65(F)    2.15(F)    
                            
                            
  14.07    2,942,844    1.08    1.08    1.69    28 
  13.03    108,710    2.02    1.95    0.84     
  13.20    340,069    1.82    1.82    0.94     
  14.30    1,341,707    0.81    0.81    1.96     
  13.77    72,926    1.36    1.35    1.40     
  14.04    122,160    1.05    1.05    1.68     
  14.39    142,940    0.75    0.75    1.99     
  14.55    1,556,898    0.65    0.65    2.08     
                            
                            
  5.22    2,791,444    1.08    1.08    1.42    30 
  4.32    137,071    2.01    1.96    0.55     
  4.49    309,846    1.83    1.83    0.68     
  5.60    1,428,333    0.80    0.80    1.69     
  4.94    57,684    1.37    1.35    1.14     
  5.32    79,535    1.06    1.05    1.43     
  5.62    101,281    0.76    0.75    1.75     
  5.71    1,111,199    0.66    0.66    1.84     
                            
                            
  13.46    2,850,636    1.11    1.11    1.46    33 
  12.54    182,506    2.02    1.97    0.63     
  12.65    314,729    1.85    1.85    0.71     
  13.78    1,129,059    0.82    0.82    1.71     
  13.15    33,933    1.39    1.38    1.06     
  13.51    57,684    1.07    1.06    1.46     
  13.93    65,379    0.78    0.78    0.81     
  13.96    1,018,263    0.67    0.67    1.88     
                            
                            
  12.17    2,635,571    1.17    1.17    1.88     33 (H)
  11.22    236,026    2.14    1.99    1.10     
  11.37    286,465    1.92    1.92    1.13     
  12.52    658,690    0.85    0.85    1.96     
  11.84    5,171    1.47    1.47    1.26     
  12.27    19,372    1.09    1.09    1.85     
  12.55    1,947    0.80    0.80    2.07     
  12.73    746,004    0.69    0.69    2.30     
                            
                            
  (32.24   2,214,358    1.09    1.09    1.62    36 
  (32.85)   222,732    1.97    1.97    0.73     
  (32.80   221,895    1.83    1.83    0.87     
  (32.02   167,989    0.82    0.82    1.77     
  (32.53   455    1.58    1.50    1.16     
  (32.25   8,410    1.09    1.09    1.63     
  (32.06   310    0.80    0.80    1.94     
  (31.99   494,110    0.69    0.69    2.01     

 

25

 

The Hartford Dividend and Growth Fund
Financial Highlights – (continued)

  

(A) Information presented relates to a share outstanding throughout the indicated period.
(B) Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C) Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E) Not annualized.
(F) Annualized.
(G) Per share amounts have been calculated using average shares outstanding method.
(H) 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.

 

26

 

The Hartford Dividend and Growth Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

27

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

28

 

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return     Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,142.30   $5.64   $1,000.00   $1,019.53   $5.32     1.06%  181   365 
Class B  $1,000.00   $1,137.50   $10.29   $1,000.00   $1,015.16   $9.70     1.94   181   365 
Class C  $1,000.00   $1,137.70   $9.54   $1,000.00   $1,015.87   $9.00     1.80   181   365 
Class I  $1,000.00   $1,143.50   $4.47   $1,000.00   $1,020.63   $4.21     0.84   181   365 
Class R3  $1,000.00   $1,140.50   $7.18   $1,000.00   $1,018.09   $6.77     1.35   181   365 
Class R4  $1,000.00   $1,142.60   $5.56   $1,000.00   $1,019.61   $5.24     1.05   181   365 
Class R5  $1,000.00   $1,143.90   $3.96   $1,000.00   $1,021.10   $3.73     0.75   181   365 
Class Y  $1,000.00   $1,144.40   $3.44   $1,000.00   $1,021.59   $3.24     0.65   181   365 
                                              

 

30

 

 The Hartford Dividend and Growth Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Dividend and Growth Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard,

 

31

 

The Hartford Dividend and Growth Fund
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

32

 

The Hartford Dividend and Growth Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

Dividend Paying Security Investment Risk: Dividends are not guaranteed and are subject to change. Dividend paying securities as a group can fall out of favor with the market, causing the Fund to underperform.

 

33
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-DG13 4/13 113970 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

10

 

 

 
 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD EMERGING MARKETS LOCAL DEBT FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Emerging Markets Local Debt Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 6
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 20
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 21
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 22
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 23
Notes to Financial Statements (Unaudited) 24
Financial Highlights (Unaudited) 38
Directors and Officers (Unaudited) 40
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 42
Quarterly Portfolio Holdings Information (Unaudited) 42
Expense Example (Unaudited) 43
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 44
Principal Risks (Unaudited) 46

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Emerging Markets Local Debt Fund inception 05/31/2011

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks capital appreciation and income.

 

Performance Overview 5/31/11 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   Since
Inception▲
 
Emerging Markets Local Debt A#   7.47%       13.86%       6.42%    
Emerging Markets Local Debt A##        8.74%       3.89%    
Emerging Markets Local Debt C#   7.12%       13.08%       5.61%    
Emerging Markets Local Debt C##        12.08%       5.61%    
Emerging Markets Local Debt I#   7.62%       14.18%       6.64%    
Emerging Markets Local Debt R3#   7.31%       13.52%       6.02%    
Emerging Markets Local Debt R4#   7.47%       13.86%       6.33%    
Emerging Markets Local Debt R5#   7.63%       14.08%       6.64%    
Emerging Markets Local Debt Y#   7.68%       14.18%       6.55%    
JP Morgan GBI Emerging Markets Global Diversified Index   7.02%       10.31%       5.76%    

 

Not Annualized
Inception: 05/31/2011
# Without sales charge
## With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 4.50% and returns for Class C reflect a contingent deferred sales charge of 1.00%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

JP Morgan GBI Emerging Markets Global Diversified Index tracks local currency bonds issued by Emerging Markets governments. It is an investable index that includes only those countries that are directly accessible by most of the international investor base. The index excludes countries with explicit capital controls, but does not factor in regulatory/tax hurdles in assessing eligibility.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Emerging Markets Local Debt Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Emerging Markets Local Debt Class A   1.25%       1.65%    
Emerging Markets Local Debt Class C   2.00%       2.38%    
Emerging Markets Local Debt Class I   1.00%       1.37%    
Emerging Markets Local Debt Class R3   1.55%       2.02%    
Emerging Markets Local Debt Class R4   1.25%       1.72%    
Emerging Markets Local Debt Class R5   0.95%       1.42%    
Emerging Markets Local Debt Class Y   0.90%       1.31%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses as of the date of the Fund's most recent prospectus and reflect contractual expense waivers/reimbursements in instances when these reductions reduce the Fund's gross expenses. Certain contractual waivers/reimbursements remain in effect until February 28, 2014. Other contractual waivers/reimbursements remain in effect until February 28, 2014, and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers        
Ricardo Adrogué, PhD*   James W. Valone, CFA   Tieu-Bich Nguyen, CFA
Vice President and Fixed Income Portfolio Manager   Senior Vice President, Fixed Income Portfolio Manager and Co-Director of Fixed Income   Senior Vice President and Fixed Income Credit Analyst
 
*Effective April 12, 2013, Mr. Adrogué no longer serves as a Portfolio Manager to the Fund.

 

How did the Fund perform?

The Class A shares of The Hartford Emerging Markets Local Debt Fund returned 7.47%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the JP Morgan GBI Emerging Markets Global Diversified Index, which returned 7.02% for the same period. The Fund also outperformed the 6.28% average return of the Lipper Emerging Markets Local Currency Debt Funds peer group, a group of funds that seek either current income or total return by investing at least 65% of total assets in debt issues denominated in the currency of their market of issuance.

 

Why did the Fund perform this way?

Local emerging markets debt outperformed external emerging market debt, with the JP Morgan GBI Emerging Markets Global Diversified Index generating total returns of 7.02% in U.S. Dollar terms. Declines in rates, coupon income and appreciation of emerging markets currencies versus the U.S. dollar all contributed to positive returns for the period. Local rates rallied later in the period as weaker economic data and declines in commodity prices opened more room for easing. Latin America was the best performing region in the index (9.86%) while Asia lagged (3.60%). From a country perspective, Mexico (18.68%), Nigeria (10.30%), and the Philippines (9.94%) were the best performers in the Index while Chile (1.85%), Malaysia (2.16%), and Indonesia (2.25%) lagged. During the period, a number of emerging markets (EM) central banks lowered interest rates in an attempt to help their weak economies, including Colombia (1.50% to 3.25%), Mexico (0.50% to 4.00%), Poland (1.50% to 3.25%), Hungary (1.50% to 4.75%), and Turkey (0.75% to 5.00%), while Brazil instead hiked rates (0.25% to 7.50%).

 

Emerging market corporate debt finished the period with a return of 3.59% as measured by the JP Morgan Corporate Emerging Markets Bond Index Broad Diversified Index. Credit spreads tightened by 0.07% to 3.29% during the period.

 

Within the Fund, during the period, security selection and currency contributed positively to benchmark-relative performance offsetting negative relative performance in duration strategies. The Fund’s structural allocation to corporate bonds had a negative impact on relative performance as generally speaking corporate bonds underperformed the local bond component of the JP Morgan GBI Emerging Markets Global Diversified Index. Our security selection of the corporate bonds in the Fund versus the EM corporate market (JP Morgan CEMBI Broad Diversified Index) contributed positively to relative performance for the period, although this was partially offset by the negative contribution from country allocation.

 

Our interest rate and credit positioning is primarily implemented through cash bond positions and derivatives such as interest rate and total return swaps and credit default swap contracts. We use local currency denominated cash bonds and currency forwards (deliverable and non-deliverable) to express our views on currency.

 

3

 

The Hartford Emerging Markets Local Debt Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

An exposure to long-dated sovereign debt in Greece aided results. In the Philippines, an overweight (i.e. the Fund’s position was greater than the benchmark position) duration positioning and security selection with exposure to the longer-end of the curve contributed to overall performance. In Poland, an overweight duration exposure contributed to overall performance outweighing the negative contribution from security selection.

 

In contrast, in Brazil, our overweight duration position and security selection along with an underweight to the Brazilian Real earlier in the period detracted from performance. In Czech Republic, our short duration exposure and security selection which favored paying fixed interest rate swaps on the longer end of the curve hurt performance. In Mexico, underweight duration exposure, based on what we believe to be stretched valuation, detracted from relative performance.

 

What is the outlook?

We continue to have a constructive outlook on emerging markets fundamentals. Most countries continue to have low debt burdens, solid fiscal management, and abundant reserves. EM growth indicators have disappointed so far in 2013, but we expect to see that trend improve as the year progresses. In the meantime, we expect that inflation, broadly speaking, will be contained at manageable levels. The global economy is fragile, though we expect that the European Central Bank will ultimately provide sufficient liquidity to ease fears of an extreme event, and a 0.25% cut in the refinance rate last month served as a confirmation of that belief. Our longer-term economic outlook for the U.S. remains positive, while Japan growth may surprise on the upside. Policy tightening in China is likely to contain upside growth potential in that market. In light of the potential for some economic weakness and uncertain policy direction in Europe, we are slightly more cautious on EM currencies over the near term.

 

At the end of the period, we remained overweight duration in the Fund. Limited inflation pressures should help keep EM interest rates relatively stable, particularly in Latin America and parts of Eastern Europe. In particular, we favor nominal interest rates in Peru, Israel and Poland. We also favor inflation-linked bonds in Brazil, where inflation has been trending higher, and Chile, where real rates are high and fundamentals are sound. We ended the period with an overweight duration exposure in Russia as we believe the economy is decelerating. Our pay fixed rate swaps position in Czech continued to serve as a balance against long duration positions elsewhere in the region. We continued with our long-held underweight to duration in Asia, though we have added a bit to Indonesia as yields there have underperformed others in the region. We also continued to hold our position in Greek bonds, though the exposure size has been reduced at the margin.

 

We continue to favor EM corporates due to their strong fundamentals and attractive valuations. We favor EM corporates particularly in Brazil, Columbia, Russia, and Hong Kong. Within sectors, we favor corporate exposure in Consumer, Industrials, and Oil and Gas sectors.

 

Our view on currencies remains cautious. We believe that improving global growth trends and abundant global liquidity should drive a number of currencies to appreciate from current levels over the longer term, but we balance that with some of the near-term risks in the global macro environment, which could cause EM currencies to underperform in the coming months. Within Latin currencies, we favor the Colombia Peso and Peruvian new Sol, where we believe valuations are attractive on back of the favorable fundamentals. At the end of the period, our overall underweight to Eastern European currencies remained in place, particularly following events in Europe i.e. Cyprus; short positions in Croatia Kuna and Czech Koruna along with underweights to Hungarian Forint and Russia Ruble act as hedges on a negative euro view. Finally, we continued to be underweight currency exposure in Asia for the region as a whole. In particular, we increased the level of underweight in the Philippines Peso where the valuation remains unattractive.

 

Distribution by Credit Quality

as of April 30, 2013

Credit Rating *  Percentage of
Net Assets
 
Aaa / AAA   0.3%
Aa / AA   3.0 
A   13.7 
Baa / BBB   33.0 
Ba / BB   18.8 
B   4.3 
Caa / CCC or Lower   0.2 
Unrated   19.4 
Non-Debt Securities and Other Short-Term Instruments   4.6 
Other Assets & Liabilities   2.7 
Total   100.0%

 

* Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

4

 

 

Diversification by Industry

as of April 30, 2013

Industry  Percentage of
Net Assets
 
Fixed Income Securities     
Administrative Waste Management and Remediation   0.2%
Agriculture, Forestry, Fishing and Hunting   0.8 
Air Transportation   0.1 
Arts, Entertainment and Recreation   0.3 
Beverage and Tobacco Product Manufacturing   0.4 
Chemical Manufacturing   1.0 
Construction   1.3 
Electrical Equipment, Appliance Manufacturing   0.1 
Finance and Insurance   12.5 
Food Manufacturing   1.1 
Health Care and Social Assistance   0.2 
Information   1.5 
Mining   0.7 
Miscellaneous Manufacturing   0.6 
Nonmetallic Mineral Product Manufacturing   0.5 
Petroleum and Coal Products Manufacturing   4.1 
Pipeline Transportation   0.2 
Plastics and Rubber Products Manufacturing   0.1 
Primary Metal Manufacturing   0.2 
Rail Transportation   0.2 
Real Estate, Rental and Leasing   0.7 
Retail Trade   0.4 
Support Activities For Transportation   0.1 
Transportation Equipment Manufacturing   0.1 
Utilities   3.4 
Water Transportation   0.2 
Wholesale Trade   0.9 
Total   31.9%
Foreign Government Obligations   60.8 
Short-Term Investments   4.6 
Other Assets and Liabilities   2.7 
Total   100.0%

 

5

 

The Hartford Emerging Markets Local Debt Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 31.9%     
     Argentina - 0.0%     
     Banco Hipotecario S.A.     
EUR12   6.00%, 12/01/2013  $15 
           
     Austria - 0.1%     
     OGX Austria GmbH     
$200   8.38%, 04/01/2022 ■  $122 
           
     Bermuda - 0.3%     
     Digicel Ltd.     
 445   6.00%, 04/15/2021 ■   446 
     GeoPark Latin America Ltd. Agencia en Chile     
 270   7.50%, 02/11/2020 ■   279 
         725 
     Brazil - 2.9%     
     Banco BMG S.A.     
 355   9.95%, 11/05/2019 §   336 
     Banco BTG Pactual S.A.     
 200   5.75%, 09/28/2022 ■   198 
 200   5.75%, 09/28/2022 §   198 
     Banco do Brasil     
 590   5.88%, 01/26/2022 §   642 
 405   6.25%, 04/15/2024 ■♠   404 
 200   6.25%, 04/15/2024 §♠   200 
     Brasil Telecom S.A.     
BRL300   9.75%, 09/15/2016 ■   156 
     Centrais Eletricas Brasileiras S.A.     
 200   5.75%, 10/27/2021 §   218 
     Fibria Overseas Finance Ltd.     
 655   6.75%, 03/03/2021 §   731 
     Globo Communicacao e Participacoes S.A.     
 425   6.25%, 07/20/2015 §♠   454 
     Hypermarcas S.A.     
 315   6.50%, 04/20/2021 §   339 
     Itau Unibanco Holding S.A.     
 400   6.20%, 12/21/2021 §   445 
     Net Servicos De Comnicacao S.A.     
 532   7.50%, 01/27/2020 ╦   599 
     Petrobras International Finance Co.     
 405   7.88%, 03/15/2019 ╦   504 
     RBS-Zero Hora Editora Journalistica     
BRL575   11.25%, 06/15/2017 §   298 
     Samarco Mineracao S.A.     
 205   4.13%, 11/01/2022 ■   201 
 200   4.13%, 11/01/2022 §   196 
     Votorantim Cimentos S.A.     
 315   7.25%, 04/05/2041 §   358 
     VRG Linhas Aereas S.A.     
 290   10.75%, 02/12/2023 ■   261 
         6,738 
     British Virgin Islands - 1.8%     
     CLP Power Hong Kong Ltd.     
 300   4.75%, 03/19/2020 §   338 
     CNPC General Capital     
 400   3.95%, 04/19/2022 §   427 
     Fita International Ltd.     
 425   7.00%, 02/10/2020   499 
     FPT Finance Ltd.     
 540   6.38%, 09/28/2020 §   601 
     Gerdau Trade, Inc.     
 510   4.75%, 04/15/2023 ■   505 
     Henson Finance Ltd.     
 495   5.50%, 09/17/2019   554 
     HLP Finance Ltd.     
 200   4.75%, 06/25/2022 §   218 
     Hong Kong Electric Finance Ltd.     
 310   4.25%, 12/14/2020 §   343 
     QGOG Atlantic/Alaskan Rigs Ltd.     
 165   5.25%, 07/30/2018 ■   172 
     Skysea International Capital Management     
 230   4.88%, 12/07/2021 §   260 
     Star Energy Geothermal Wayang Windu Ltd.     
 325   6.13%, 03/27/2020 ■   337 
         4,254 
     Canada - 0.6%     
     First Quantum Minerals Ltd.     
 200   7.25%, 10/15/2019 ■   200 
 200   7.25%, 10/15/2019 §   200 
     Pacific Rubiales Energy Corp.     
 330   5.13%, 03/28/2023 ■   340 
 143   7.25%, 12/12/2021 ■   163 
 410   7.25%, 12/12/2021 §   467 
         1,370 
     Cayman Islands - 1.2%     
     Agile Property Holdings Ltd.     
 285   8.88%, 04/28/2017 §   307 
     Alliance Global Group, Inc.     
 610   6.50%, 08/18/2017   663 
     Greentown China Holdings Ltd.     
 310   8.50%, 02/04/2018 §   332 
     Grupo Aval Ltd.     
 365   4.75%, 09/26/2022 ■   368 
     UOB Cayman Ltd.     
 600   5.80%, 03/15/2016 §♠   637 
     Virgolino de Oliveira Finance Ltd.     
 400   11.75%, 02/09/2022 §   410 
         2,717 
     Chile - 3.2%     
     AES Gener S.A.     
 105   5.25%, 08/15/2021 ■   116 
 195   5.25%, 08/15/2021 §   216 
     Automotores Gildemeister S.A.     
 200   8.25%, 05/24/2021 ■   217 
 300   8.25%, 05/24/2021 §   326 
     Bonos del Banco Central de Chile en Pesos     
CLP2,105,000   6.00%, 02/01/2016 - 03/01/2022   4,680 
     Bonos del Banco Central de Chile en UF     
CLP401,397   3.00%, 02/01/2016 ◄   858 
     CFR International S.p.A.     
 220   5.13%, 12/06/2022 ■   228 
 200   5.13%, 12/06/2022 §   207 
     E CL S.A.     
 500   5.63%, 01/15/2021 §   560 
         7,408 
     China - 0.3%     
     Country Garden Holdings Co.     
 235   7.50%, 01/10/2023 ■   245 

 

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

 

6

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 31.9% - (continued)     
     China - 0.3% - (continued)     
     Longfor Properties Co., Ltd.     
$400   6.88%, 10/18/2019 §  $429 
         674 
     Colombia - 1.9%     
     Banco Davivienda S.A.     
 200   5.88%, 07/09/2022 ■   211 
 200   5.88%, 07/09/2022 §   211 
     Banco de Bogota S.A.     
 400   5.00%, 01/15/2017 §   432 
     Bancolombia S.A.     
 75   5.13%, 09/11/2022   77 
 676   6.13%, 07/26/2020 ‡   740 
     Emgesa S.A.     
COP2,406,000   8.75%, 01/25/2021 §   1,596 
     Empresa de Energia de Bogota     
 435   6.13%, 11/10/2021 §   484 
     Empresa de Telecomunicaciones de Bogota S.A.     
COP518,000   7.00%, 01/17/2023 ■   301 
     Empresas Publicas de Medellin E.S.P.     
COP448,000   8.38%, 02/01/2021 §   289 
         4,341 
     Croatia - 0.2%     
     Agrokor D.D.     
 225   8.88%, 02/01/2020 ■   251 
 200   8.88%, 02/01/2020 §   224 
         475 
           
     Georgia - 0.1%     
     JSC Georgian Railway     
 200   7.75%, 07/11/2022 §   233 
           
     Hong Kong - 2.3%     
     Bank of East Asia Ltd.     
 200   6.38%, 05/04/2022 §   226 
     CNPC HK Overseas Capital Ltd.     
 260   3.95%, 04/19/2022 ■   278 
     Country Garden Holdings Co.     
 200   7.50%, 01/10/2023 §☼   208 
     Hongkong (The) Land Finance Co., Ltd.     
 235   4.50%, 10/07/2025   249 
     Hutchison Whampoa International Ltd.     
 1,175   6.00%, 10/28/2015 §♠   1,278 
     Metropolitan Light International     
 300   5.25%, 01/17/2018 §   303 
     PCCW Capital Ltd.     
 610   5.75%, 04/17/2022 §   684 
     Sino Ltd.     
 400   3.25%, 09/21/2017 §☼   409 
     Sun Hung Kai Properties Capital Market Ltd.     
 670   4.50%, 02/14/2022 §   727 
     Yingde Gases Investment Ltd.     
 345   8.13%, 04/22/2018 ■   358 
     Zijin International Finance Co., Ltd.     
 540   4.25%, 06/30/2016 §   574 
         5,294 
     India - 0.8%     
     Bank of India London     
 320   3.63%, 09/21/2018 ■   323 
 300   4.13%, 08/01/2017 ■   313 
     Bharti Airtel International     
 300   5.13%, 03/11/2023 ■   308 
     ICICI Bank Ltd.     
 200   4.70%, 02/21/2018 ■   213 
 525   4.70%, 02/21/2018 §   558 
     State Bank of Indian London     
 200   4.13%, 08/01/2017 §   208 
         1,923 
     Indonesia - 0.3%     
     Gajah Tunggal TBK     
 300   7.75%, 02/06/2018 ■   323 
     Theta Capital Pte Ltd.     
 250   6.13%, 11/14/2020 §   260 
         583 
     Ireland - 0.7%     
     EDC Finance Ltd.     
 350   4.88%, 04/17/2020 ■   353 
     EuroChem Mineral & Chemical Co.     
 200   5.13%, 12/12/2017 ■   205 
 200   5.13%, 12/12/2017 §   205 
     Metalloinvest Finance Ltd.     
 345   5.63%, 04/17/2020 ■   344 
     Sibur Securities Ltd.     
 350   3.91%, 01/31/2018 ■   344 
 200   3.91%, 01/31/2018 §   197 
         1,648 
     Israel - 0.7%     
     Israel Electric Corp. Ltd.     
 500   7.75%, 12/15/2027 §   574 
 800   9.38%, 01/28/2020 §   1,044 
         1,618 
     Jersey - 0.2%     
     West China Cement Ltd.     
 400   7.50%, 01/25/2016 §   412 
           
     Kazakhstan - 0.5%     
     Halyk Savings Bank of Kazakhstan JSC     
 155   9.25%, 10/16/2013 §   159 
     Kazakhstan Temir Zholy     
 200   6.95%, 07/10/2042 §   237 
     Kazatomprom Natsionalnaya     
 275   6.25%, 05/20/2015 §   294 
     KazMunayGas National Co.     
 425   7.00%, 05/05/2020 §   512 
         1,202 
     Luxembourg - 1.6%     
     ALROSA Finance S.A.     
 200   7.75%, 11/03/2020 §   232 
     Altice Financing S.A.     
 205   9.88%, 12/15/2020 ■   233 
 215   9.88%, 12/15/2020 §   245 
     Cosan Luxembourg S.A.     
 470   5.00%, 03/14/2023 ■   479 
     European Investment Bank     
ZAR475   8.76%, 12/31/2018 ○   39 

 

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

 

7

 

The Hartford Emerging Markets Local Debt Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 31.9% - (continued)     
     Luxembourg - 1.6% - (continued)     
     Gaz Capital S.A.     
$450   9.25%, 04/23/2019 §  $586 
     International Bank for Reconstruction & Development     
ZMK1,500,000   6.75%, 12/06/2013   275 
     Minerva Luxembourg S.A.     
 250   7.75%, 01/31/2023 ■   267 
     VTB Capital S.A.     
 815   6.88%, 05/29/2018 §   914 
     Yasar Holdings S.A. Via Willow No 2     
 400   9.63%, 10/07/2015 §   426 
         3,696 
     Malaysia - 0.6%     
     Axiata SPV1 Labuan Ltd.     
 300   5.38%, 04/28/2020 §   344 
     Malayan Banking Berhad     
 415   3.25%, 09/20/2022 §   420 
     Public Bank Bhd     
 535   6.84%, 08/22/2036   567 
         1,331 
     Mexico - 1.6%     
     Alpek S.A. de C.V.     
 200   4.50%, 11/20/2022 §   209 
     BBVA Bancomer S.A. Texas     
 300   6.75%, 09/30/2022 §   345 
     Controladora Mabe S.A. de C.V.     
 1,553   7.88%, 10/28/2019 §   1,813 
     Empresas ICA, S.A.B. de C.V.     
 190   8.38%, 07/24/2017 §   185 
 253   8.90%, 02/04/2021 §   245 
     Mexichem S.A.B. de C.V.     
 400   4.88%, 09/19/2022 §   435 
     Sigma Alimentos S.A.     
 450   5.63%, 04/14/2018 §   509 
         3,741 
     Netherlands - 0.7%     
     Access Finance B.V.     
 200   7.25%, 07/25/2017 ■   213 
     AJE Group     
 260   6.50%, 05/14/2022 ■   284 
     Ajecorp B.V.     
 300   6.50%, 05/14/2022 §   328 
     Marfrig Holding Europe B.V.     
 375   9.88%, 07/24/2017 ■   351 
     Vimpelcom Holdings     
 530   5.95%, 02/13/2023 ■   538 
         1,714 
     Panama - 0.1%     
     AES Panama S.A.     
 270   6.35%, 12/21/2016 §   294 
           
     Paraguay - 0.1%     
     Banco Continental S.A.E.C.A     
 150   8.88%, 10/15/2017 §   166 
           
     Peru - 1.0%     
     Banco de Credito del Peru/Panama     
 220   5.38%, 09/16/2020 §   242 
 190   6.88%, 09/16/2026 ■   218 
 711   6.88%, 09/16/2026 §   816 
     BBVA Banco Continental S.A.     
 180   3.25%, 04/08/2018 ■   180 
     Corporacion Jose R. Lindley S.A.     
 87   6.75%, 11/23/2021 ■   102 
 445   6.75%, 11/23/2021 §   519 
     Transport De Gas Peru     
 335   4.25%, 04/30/2028 ■   335 
         2,412 
     Philippines - 0.2%     
     SM Investments Corp.     
 200   4.25%, 10/17/2019 §   199 
 265   5.50%, 10/13/2017   281 
         480 
     Qatar (State of) - 0.5%     
     Nakilat, Inc.     
 417   6.27%, 12/31/2033 §   502 
     Ras Laffan Liquefied Natural Gas Co., Ltd.     
 500   5.84%, 09/30/2027 §   593 
         1,095 
     Russia - 1.3%     
     Gazprom Neft OAO via GPN Capital S.A.     
 345   4.38%, 09/19/2022 ■   345 
 465   4.38%, 09/19/2022 §   466 
     Lukoil International Finance B.V.     
 335   4.56%, 04/24/2023 ■   339 
     Phosagro OAO     
 475   4.20%, 02/13/2018 ■   486 
     Rosneft Oil Co.     
 290   4.20%, 03/06/2022 ■   292 
 220   4.20%, 03/06/2022 §   221 
     Russian Agricultural Bank OJSC     
RUB9,400   8.70%, 03/17/2016 §   314 
     RZD Capital Ltd.     
RUB9,300   8.30%, 04/02/2019 §   313 
     SB Capital S.A.     
 200   5.72%, 06/16/2021 §   221 
         2,997 
     Singapore - 0.9%     
     DBS Bank Ltd.     
 400   3.63%, 09/21/2022 ╦§   419 
     DBS Group Holdings Ltd.     
 450   3.63%, 09/21/2022 ■   471 
     Oversea-Chinese Banking Corp., Ltd.     
 833   3.75%, 11/15/2022   883 
     TBG Global PTE Ltd.     
 330   4.63%, 04/03/2018 ■   334 
         2,107 
     South Africa - 0.1%     
     Eskom Holdings Ltd.     
ZAR900   10.01%, 12/31/2018 ○   65 
ZAR2,060   10.63%, 08/18/2027 ○   68 
ZAR700   10.73%, 12/31/2032 ○   15 
     Transnet Ltd.     
ZAR1,000   10.00%, 03/30/2029   119 
         267 

 

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

 

8

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 31.9% - (continued)     
     South Korea - 1.3%     
     Doosan Infracore Co., Ltd.     
$465   3.25%, 10/05/2042 §Δ  $475 
     Export-Import Bank of Korea     
 200   5.00%, 04/11/2022   231 
     Korea Development Bank     
 600   3.88%, 05/04/2017 ╦   649 
     Korea Hydro & Nuclear Power Co., Ltd.     
 500   3.00%, 09/19/2022 §   498 
     Korea National Oil Corp.     
 400   3.13%, 04/03/2017 §   419 
     Shinhan Bank     
 585   6.82%, 09/20/2036 §   643 
         2,915 
     Spain - 0.3%     
     Banco Santander S.A.     
 205   4.13%, 11/09/2022 ■   207 
 150   4.13%, 11/09/2022 §   151 
     Cemex Espana Luxembourg     
 330   9.25%, 05/12/2020 §   363 
         721 
     Sweden - 0.1%     
     Eileme 2 AB     
 265   11.63%, 01/31/2020 §   315 
           
     Thailand - 0.2%     
     PTT Global Chemical PCL     
 400   4.25%, 09/19/2022 §   426 
           
     Turkey - 1.1%     
     Akbank T.A.S.     
 615   5.00%, 10/24/2022 §   655 
     Arcelik AS     
 435   5.00%, 04/03/2023 ■   447 
     Turkiye Garanti Bankasi A.S.     
 210   5.25%, 09/13/2022 ■   228 
 405   5.25%, 09/13/2022 §   440 
     Turkiye Halk Bankasi A.S.     
 265   3.88%, 02/05/2020 ■   266 
     Turkiye Is Bankasi     
 375   6.00%, 10/24/2022 ■   410 
 200   6.00%, 10/24/2022 §   219 
         2,665 
     United Arab Emirates - 0.6%     
     Abu Dhabi National Energy Co.     
 200   3.63%, 01/12/2023 ■   203 
 430   5.88%, 12/13/2021 §   512 
     Dolphin Energy Ltd.     
 200   5.50%, 12/15/2021 ■   237 
 200   5.50%, 12/15/2021 §   237 
     DP World Ltd.     
 250   6.85%, 07/02/2037 §   300 
         1,489 
     United Kingdom - 0.4%     
     DTEK Finance plc     
 335   7.88%, 04/04/2018 ■   331 
     European Bank for Reconstruction & Development     
ZAR550   8.76%, 12/31/2020 ○   39 
     Standard Bank plc     
 400   8.13%, 12/02/2019   472 
         842 
     United States - 1.0%     
     African Development Bank     
GHS900   14.00%, 08/25/2015 ╦   433 
     Cemex Finance LLC     
 345   9.38%, 10/12/2022 ■   396 
     Reliance Holdings USA, Inc.     
 750   4.50%, 10/19/2020 §   805 
 250   5.40%, 02/14/2022 §   282 
     Sasol Financing International plc     
 410   4.50%, 11/14/2022   421 
         2,337 
     Venezuela - 0.1%     
     Petroleos de Venezuela S.A.     
 275   5.38%, 04/12/2027 §   193 
           
     Total corporate bonds     
     (cost $72,067)  $73,955 
           
FOREIGN GOVERNMENT OBLIGATIONS - 60.8%     
     Argentina - 0.1%     
     City of Buenos Aires     
$400   9.95%, 03/01/2017 §   352 
           
     Brazil - 3.9%     
     Brazil (Republic of)     
BRL6,675   6.00%, 05/15/2015 - 08/15/2050 ◄  $3,833 
BRL2,983   8.14%, 01/01/2016 ○   1,190 
BRL7,965   10.00%, 01/01/2017 - 01/01/2021   4,107 
         9,130 
     Colombia - 1.4%     
     Colombia (Republic of)     
COP1,050,409   4.25%, 05/17/2017 ◄   631 
COP286,100   7.25%, 06/15/2016   171 
COP3,012,900   7.50%, 08/26/2026   1,998 
COP575,200   11.00%, 07/24/2020   431 
         3,231 
     Ghana - 0.2%     
     Ghana (Republic of)     
 450   21.00%, 10/29/2015 ■   451 
           
     Greece - 0.8%     
     Greece (Republic of)     
EUR3,304   2.00%, 02/24/2034 - 02/24/2042   1,846 
           
     Hungary - 7.7%     
     Hungary (Republic of)     
HUF651,430   5.50%, 02/12/2014 - 12/22/2016   2,919 
HUF284,750   6.50%, 06/24/2019   1,347 
HUF1,293,850   6.75%, 08/22/2014 - 10/22/2028   6,079 
HUF290,660   7.00%, 06/24/2022   1,427 
HUF332,180   7.50%, 11/12/2020   1,665 
HUF592,580   7.75%, 08/24/2015   2,800 
HUF330,900   8.00%, 02/12/2015   1,546 
         17,783 

 

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

 

9

 

The Hartford Emerging Markets Local Debt Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
FOREIGN GOVERNMENT OBLIGATIONS - 60.8% - (continued)     
     Indonesia - 2.2%     
     Indonesia (Republic of)     
IDR14,116,000   5.25%, 05/15/2018  $1,474 
IDR14,099,000   5.63%, 05/15/2023   1,465 
IDR18,423,000   8.25%, 06/15/2032   2,272 
         5,211 
     Israel - 1.9%     
     Israel (Government of)     
ILS235   5.00%, 01/31/2020   74 
ILS7,722   5.50%, 01/31/2022 - 01/31/2042   2,421 
ILS205   6.00%, 02/28/2019   68 
ILS5,386   6.25%, 10/30/2026   1,858 
         4,421 
     Malaysia - 2.4%     
     Malaysia (Government of)     
MYR719   3.74%, 02/27/2015   240 
MYR2,026   4.01%, 09/15/2017   688 
MYR2,983   4.24%, 02/07/2018   1,024 
MYR2,211   4.26%, 09/15/2016   756 
MYR8,255   5.09%, 04/30/2014   2,770 
         5,478 
     Mexico - 4.6%     
     United Mexican States     
MXN19,422   4.00%, 11/15/2040 ◄   2,283 
 852   5.13%, 01/15/2020   1,018 
MXN16,908   6.00%, 06/18/2015   1,450 
MXN3,954   7.50%, 06/03/2027   415 
MXN53,888   8.00%, 12/19/2013   4,550 
MXN7,940   8.50%, 05/31/2029   912 
         10,628 
     Nigeria - 1.7%     
     Nigeria (Federal Republic of)     
 250   7.00%, 10/25/2019 ■   314 
NGN103,335   7.00%, 10/23/2019   518 
NGN124,405   10.00%, 07/23/2030   687 
 491   16.00%, 07/02/2019 ■   562 
NGN45,345   16.00%, 06/29/2019   335 
NGN192,095   16.39%, 01/27/2022   1,516 
         3,932 
     Peru - 4.1%     
     Peru (Republic of)     
PEN4,520   5.20%, 09/12/2023   1,860 
PEN3,188   6.85%, 02/12/2042   1,517 
PEN4,335   6.90%, 08/12/2037   2,067 
PEN6,833   6.95%, 08/12/2031 ☼   3,220 
PEN601   7.84%, 08/12/2020   285 
PEN884   8.20%, 08/12/2026   465 
         9,414 
     Philippines - 0.5%     
     Philippines (Republic of)     
PHP4,730   4.13%, 11/08/2017   122 
PHP11,360   4.63%, 07/05/2017   299 
PHP15,730   5.00%, 08/18/2018   425 
PHP11,960   5.88%, 01/31/2018   335 
         1,181 
     Poland - 7.2%     
     Poland (Republic of)     
PLN8,400   4.75%, 10/25/2016   2,829 
PLN6,956   5.25%, 10/25/2017 - 10/25/2020   2,487 
PLN5,350   5.50%, 04/25/2015 - 10/25/2019   1,824 
PLN25,736   5.75%, 04/25/2014 - 04/25/2029   9,545 
         16,685 
     Romania - 2.0%     
     Romania (Republic of)     
RON6,170   5.80%, 10/26/2015   1,911 
RON2,570   5.85%, 07/28/2014   791 
RON6,010   5.95%, 06/11/2021   1,905 
         4,607 
     Russia - 5.3%     
     Russia (Federation of)     
RUB32,595   7.05%, 01/19/2028   1,075 
RUB80,000   7.85%, 03/10/2018 §   2,773 
RUB235,371   8.15%, 02/03/2027 Δ   8,554 
         12,402 
     South Africa - 5.3%     
     South Africa (Republic of)     
ZAR37,537   6.25%, 03/31/2036   3,588 
ZAR35,400   7.00%, 02/28/2031   3,827 
ZAR9,020   7.75%, 02/28/2023   1,113 
ZAR1,885   8.00%, 12/21/2018   232 
ZAR22,255   8.75%, 02/28/2048   2,762 
ZAR5,425   10.50%, 12/21/2026   804 
         12,326 
     South Korea - 3.0%     
     Korea (Republic of)     
KRW2,748,580   3.25%, 12/10/2014   2,524 
KRW2,203,930   3.50%, 06/10/2014 - 03/10/2017   2,039 
KRW414,580   4.00%, 09/10/2015   389 
KRW1,970,990   4.50%, 03/10/2015   1,853 
KRW195,180   5.25%, 09/10/2015   188 
         6,993 
     Turkey - 6.5%     
     Turkey (Republic of)     
TRY3,359   2.50%, 05/04/2016 ◄   1,991 
TRY6,031   3.00%, 02/23/2022 ◄   3,961 
TRY5,622   4.00%, 04/29/2015 - 04/01/2020 ◄   3,607 
TRY2,615   9.00%, 03/05/2014 - 01/27/2016   1,515 
TRY6,780   10.00%, 12/04/2013   3,894 
         14,968 
     Total foreign government obligations     
     (cost $135,722)  $141,039 
           
     Total long-term investments     
     (cost $207,789)  $214,994 
           
SHORT-TERM INVESTMENTS - 4.6%     
     Repurchase Agreements - 3.5%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $326,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $332)
     
$326   0.17%, 4/30/2013  $326 

 

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

 

10

 

 

Shares or Principal Amount ╬  Market Value ╪ 
SHORT-TERM INVESTMENTS - 4.6% - (continued)     
     Repurchase Agreements - 3.5% - (continued)     
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $888, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note
0.75%, 2013, value of $905)
     
$888   0.15%, 4/30/2013  $888 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $1,710, collateralized by
U.S. Treasury Note 0.88% - 3.13%, 2017
- 2021, value of $1,744)
     
 1,710   0.15%, 4/30/2013   1,710 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $2,375,
collateralized by U.S. Treasury Note
0.75% - 2.13%, 2015 - 2019, value of
$2,422)
     
 2,374   0.14%, 4/30/2013   2,374 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $427,
collateralized by FHLMC 3.00% -
5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $436)
     
 427   0.17%, 4/30/2013   427 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $1,447, collateralized by
U.S. Treasury Note 1.00% - 2.25%, 2016
- 2022, value of $1,476)
     
 1,447   0.14%, 4/30/2013   1,447 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $1,017, collateralized by
U.S. Treasury Note 0.25% - 1.88%, 2014
- 2019, value of $1,038)
     
 1,017   0.17%, 4/30/2013   1,017 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount
of $18, collateralized by U.S. Treasury
Note 3.88%, 2018, value of $19)
     
 18   0.13%, 4/30/2013   18 
         8,207 
           
     Commercial Paper - 1.1%     
     Foreign Governments - 1.1%     
     Nigeria (Federal Republic of)     
NGN46,360   10.80%, 11/7/2013 - 12/19/2013 ○  275 
NGN164,283   10.90%, 1/9/2014 - 3/20/2014 ○   948 
NGN199,127   11.72%, 4/10/2014 ○   1,141 
         2,364 
     Total short-term investments     
     (cost $10,582)  $10,571 
           
     Total investments             
     (cost $218,371) ▲     97.3 %  $225,565 
     Other assets and liabilities     2.7 %   6,232 
     Total net assets     100.0 %  $231,797 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $218,375 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $8,225 
Unrealized Depreciation   (1,035)
Net Unrealized Appreciation  $7,190 

 

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

 

11

 

The Hartford Emerging Markets Local Debt Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.
   
Δ Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.
   
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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $18,602, which represents 8.0% of total net assets.  
   
§ These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $45,810, which represents 19.8% of total net assets.  
   
Perpetual maturity security.  Maturity date shown is the first call date.
   
The principal amount for this security is adjusted for inflation and the 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.
   
This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $641 at April 30, 2013.
   
All principal or contract amounts are in U.S. dollars unless otherwise indicated.
   
This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.  In addition, cash of $313 was received from broker(s) as collateral in connection with swap contracts.  Securities valued at $574, held on behalf of the Fund at the custody bank, were designated by broker(s) as collateral in connection with swap contracts.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
ARS  Buy  07/10/2013  BOA  $492   $515   $23 
ARS  Buy  08/30/2013  BOA   466    471    5 
ARS  Buy  01/10/2014  UBS   291    292    1 
ARS  Sell  08/30/2013  BOA   47    46    1 
ARS  Sell  08/30/2013  BOA   413    424    (11)
ARS  Sell  07/10/2013  UBS   716    724    (8)
ARS  Sell  01/10/2014  UBS   311    292    19 
AUD  Buy  06/19/2013  BCLY   631    635    4 
AUD  Sell  06/19/2013  UBS   182    181    1 
AUD  Sell  06/19/2013  UBS   108    108     
AUD  Sell  06/19/2013  WEST   4,175    4,214    (39)
BRL  Buy  05/08/2013  BOA   274    275    1 
BRL  Buy  06/04/2013  DEUT   502    500    (2)
BRL  Buy  06/04/2013  JPM   348    341    (7)
BRL  Buy  06/19/2013  MSC            
BRL  Buy  05/08/2013  SSG   351    345    (6)
BRL  Buy  05/08/2013  UBS   1,666    1,675    9 
BRL  Buy  05/08/2013  UBS   384    379    (5)
BRL  Buy  06/04/2013  UBS   1,208    1,222    14 
BRL  Buy  06/04/2013  UBS   12,729    12,612    (117)
BRL  Sell  05/08/2013  CBK   844    836    8 
BRL  Sell  06/04/2013  CBK   399    398    1 

 

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

 

12

 

 

Foreign Currency Contracts Outstanding at April 30, 2013 - (continued)

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
BRL  Sell  06/04/2013  UBS  $3,253   $3,223   $30 
BRL  Sell  06/04/2013  UBS   3,261    3,265    (4)
CAD  Buy  06/19/2013  UBS   637    649    12 
CAD  Sell  06/19/2013  JPM   286    288    (2)
CAD  Sell  06/19/2013  UBS   3,237    3,306    (69)
CLP  Buy  12/09/2013  BOA   1,326    1,360    34 
CLP  Buy  06/19/2013  CSFB   300    302    2 
CLP  Buy  06/07/2013  SCB   5,498    5,570    72 
CLP  Buy  12/09/2013  SSG   3,963    4,079    116 
CLP  Buy  06/06/2013  UBS   5,293    5,570    277 
CLP  Buy  08/08/2013  UBS   5,287    5,525    238 
CLP  Buy  10/22/2013  UBS   5,351    5,516    165 
CLP  Sell  06/07/2013  BOA   1,358    1,393    (35)
CLP  Sell  08/08/2013  BOA   1,344    1,381    (37)
CLP  Sell  10/22/2013  CBK   5,482    5,516    (34)
CLP  Sell  12/09/2013  SCB   5,368    5,438    (70)
CLP  Sell  06/07/2013  SSG   4,048    4,178    (130)
CLP  Sell  08/08/2013  SSG   4,022    4,143    (121)
CLP  Sell  06/06/2013  UBS   5,327    5,570    (243)
CLP  Sell  06/19/2013  UBS   7,620    7,667    (47)
CNY  Buy  11/14/2014  JPM   2,550    2,640    90 
CNY  Sell  11/14/2014  DEUT   824    830    (6)
CNY  Sell  11/14/2014  JPM   1,800    1,810    (10)
COP  Buy  06/19/2013  BOA   5,245    5,188    (57)
COP  Buy  05/08/2013  DEUT   162    162     
COP  Buy  05/08/2013  SSG   165    164    (1)
COP  Buy  05/08/2013  UBS   229    226    (3)
COP  Buy  06/19/2013  UBS   698    702    4 
COP  Buy  06/19/2013  UBS   527    526    (1)
COP  Sell  06/19/2013  BOA   1,136    1,124    12 
COP  Sell  06/19/2013  CBK   227    229    (2)
COP  Sell  06/19/2013  CSFB   193    193     
COP  Sell  05/08/2013  UBS   230    227    3 
COP  Sell  06/19/2013  UBS   1,549    1,571    (22)
CZK  Buy  06/19/2013  DEUT   2,326    2,382    56 
CZK  Buy  06/19/2013  SCB   186    188    2 
CZK  Sell  06/19/2013  CBK   1,088    1,117    (29)
CZK  Sell  06/19/2013  JPM   1,751    1,759    (8)
CZK  Sell  06/19/2013  UBS   161    163    (2)
EUR  Buy  06/19/2013  CSFB   338    344    6 
EUR  Buy  06/19/2013  SCB   1,343    1,357    14 
EUR  Buy  06/19/2013  UBS   28    28     
EUR  Sell  05/06/2013  CBK   131    130    1 
EUR  Sell  05/06/2013  CBK   897    915    (18)
EUR  Sell  05/15/2013  CBK   332    323    9 
EUR  Sell  08/13/2013  CBK   471    495    (24)
EUR  Sell  05/06/2013  JPM   327    329    (2)
EUR  Sell  06/19/2013  JPM   8,547    8,686    (139)
EUR  Sell  06/19/2013  UBS   395    402    (7)
HRK  Buy  06/19/2013  JPM   2,548    2,611    63 
HRK  Sell  06/19/2013  JPM   4,499    4,565    (66)
HUF  Buy  06/19/2013  CSFB   81    81     
HUF  Buy  06/19/2013  JPM   3,011    3,142    131 
HUF  Sell  05/03/2013  CSFB   82    82     
HUF  Sell  06/19/2013  JPM   7,813    8,124    (311)
HUF  Sell  10/29/2013  JPM   780    756    24 
HUF  Sell  06/19/2013  NAB   375    393    (18)
HUF  Sell  06/19/2013  SCB   2,437    2,434    3 

 

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

 

13

 

The Hartford Emerging Markets Local Debt Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Foreign Currency Contracts Outstanding at April 30, 2013 - (continued)

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
HUF  Sell  06/19/2013  UBS  $35   $34   $1 
HUF  Sell  06/19/2013  UBS   550    572    (22)
IDR  Buy  05/22/2013  BCLY   7,429    7,414    (15)
IDR  Buy  05/22/2013  JPM   398    399    1 
IDR  Buy  05/22/2013  UBS   10,556    10,531    (25)
IDR  Sell  06/19/2013  BCLY   4,307    4,314    (7)
IDR  Sell  06/19/2013  CSFB   1,949    1,962    (13)
ILS  Sell  06/19/2013  JPM   3,832    3,938    (106)
ILS  Sell  06/19/2013  NAB   381    391    (10)
INR  Buy  06/19/2013  BOA   4,100    4,163    63 
INR  Buy  06/19/2013  JPM   453    460    7 
INR  Buy  06/19/2013  UBS   2,261    2,294    33 
INR  Sell  06/19/2013  BCLY   724    727    (3)
INR  Sell  06/19/2013  CBK   204    207    (3)
INR  Sell  06/19/2013  JPM   2,077    2,115    (38)
ISN  Buy  05/06/2013  CBK   1,035    1,157    122 
ISN  Buy  05/15/2013  CBK   1,895    1,952    57 
ISN  Buy  07/02/2013  CBK   1,103    1,177    74 
ISN  Buy  08/13/2013  CBK   599    678    79 
ISN  Buy  11/06/2013  CBK   277    290    13 
ISN  Sell  05/06/2013  CBK   1,137    1,156    (19)
JPY  Buy  06/19/2013  BNP   1,096    1,060    (36)
JPY  Sell  06/19/2013  BCLY   973    953    20 
JPY  Sell  06/19/2013  UBS   110    107    3 
KRW  Sell  06/19/2013  UBS   1,020    1,035    (15)
KRW  Sell  06/19/2013  WEST   5,723    5,770    (47)
KZT  Buy  05/21/2013  JPM   281    280    (1)
KZT  Sell  05/21/2013  CBK   1,955    1,956    (1)
KZT  Sell  05/21/2013  JPM   133    133     
KZT  Sell  05/21/2013  JPM   124    125    (1)
MXN  Buy  06/19/2013  JPM   12,709    13,086    377 
MXN  Buy  06/19/2013  RBC   896    922    26 
MXN  Buy  06/19/2013  UBS   2,809    2,849    40 
MXN  Buy  06/19/2013  UBS   331    330    (1)
MXN  Sell  06/19/2013  CBK   1,019    1,022    (3)
MXN  Sell  06/19/2013  DEUT   248    254    (6)
MXN  Sell  06/19/2013  SSG   3,618    3,649    (31)
MXN  Sell  06/19/2013  UBS   615    631    (16)
MYR  Buy  06/19/2013  BCLY   181    183    2 
MYR  Buy  10/25/2013  BOA   396    393    (3)
MYR  Buy  06/19/2013  DEUT   1,153    1,151    (2)
MYR  Buy  06/19/2013  GSC   1,567    1,605    38 
MYR  Buy  06/19/2013  JPM   14,360    14,812    452 
MYR  Sell  06/19/2013  BCLY   3,527    3,520    7 
MYR  Sell  06/19/2013  CBK   321    321     
MYR  Sell  06/19/2013  JPM   530    540    (10)
NGN  Sell  06/19/2013  JPM   336    341    (5)
NZD  Buy  06/19/2013  BCLY   812    824    12 
NZD  Sell  06/19/2013  JPM   406    415    (9)
NZD  Sell  06/19/2013  WEST   4,124    4,309    (185)
PEN  Buy  06/19/2013  SSG   3,196    3,126    (70)
PEN  Buy  06/19/2013  UBS   460    449    (11)
PEN  Sell  06/19/2013  CBK   273    268    5 
PEN  Sell  06/19/2013  SCB   790    770    20 
PEN  Sell  06/19/2013  SSG   6,132    6,001    131 
PEN  Sell  06/19/2013  UBS   569    558    11 
PHP  Buy  06/19/2013  BCLY   411    412    1 
PHP  Buy  06/19/2013  DEUT   2,346    2,312    (34)

 

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

 

14

 

 

Foreign Currency Contracts Outstanding at April 30, 2013 - (continued)

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
PHP  Sell  07/03/2013  CBK  $76   $78   $(2)
PHP  Sell  08/06/2013  DEUT   1,113    1,133    (20)
PHP  Sell  06/19/2013  JPM   1,413    1,387    26 
PHP  Sell  07/03/2013  JPM   1,003    1,029    (26)
PHP  Sell  08/06/2013  JPM   299    306    (7)
PHP  Sell  06/19/2013  SCB   1,846    1,830    16 
PHP  Sell  07/03/2013  SCB   841    864    (23)
PLN  Buy  06/19/2013  BCLY   228    230    2 
PLN  Buy  06/19/2013  CSFB   11,197    11,303    106 
PLN  Buy  06/19/2013  JPM   411    426    15 
PLN  Buy  06/19/2013  UBS   233    236    3 
PLN  Sell  06/19/2013  CBK   683    679    4 
PLN  Sell  06/19/2013  CSFB   3,647    3,718    (71)
PLN  Sell  06/19/2013  GSC   450    467    (17)
PLN  Sell  06/19/2013  JPM   1,109    1,125    (16)
PLN  Sell  06/19/2013  SCB   4,119    4,123    (4)
PLN  Sell  06/19/2013  SSG   295    302    (7)
RON  Sell  06/19/2013  CBK   743    765    (22)
RON  Sell  06/19/2013  DEUT   2,727    2,867    (140)
RON  Sell  06/19/2013  JPM   1,972    2,032    (60)
RUB  Buy  06/19/2013  CSFB   320    319    (1)
RUB  Buy  05/21/2013  JPM   1,453    1,423    (30)
RUB  Buy  06/19/2013  JPM   3,479    3,500    21 
RUB  Buy  06/19/2013  JPM   5,965    5,924    (41)
RUB  Sell  06/19/2013  CBK   629    634    (5)
RUB  Sell  06/19/2013  JPM   2,688    2,673    15 
RUB  Sell  06/19/2013  JPM   304    304     
RUB  Sell  06/19/2013  SCB   2,809    2,877    (68)
SGD  Buy  06/19/2013  BCLY   344    345    1 
SGD  Sell  06/19/2013  BNP   2,092    2,119    (27)
SGD  Sell  06/19/2013  JPM   157    158    (1)
THB  Buy  06/19/2013  BCLY   1,085    1,096    11 
THB  Buy  06/19/2013  BNP   737    737     
THB  Buy  06/19/2013  BOA   917    927    10 
THB  Buy  06/19/2013  CBK   1,650    1,666    16 
THB  Buy  06/19/2013  DEUT   658    664    6 
THB  Buy  06/19/2013  JPM   2,691    2,722    31 
THB  Buy  06/19/2013  JPM   221    221     
THB  Buy  06/19/2013  MSC   5,581    5,637    56 
THB  Buy  06/19/2013  UBS   1,016    1,028    12 
THB  Sell  06/19/2013  BCLY   2,228    2,193    35 
THB  Sell  06/19/2013  SCB   152    154    (2)
TRY  Buy  06/04/2013  BCLY   274    272    (2)
TRY  Buy  06/04/2013  BOA   224    222    (2)
TRY  Buy  06/19/2013  CSFB   10,971    11,107    136 
TRY  Buy  06/04/2013  DEUT   1,967    2,200    233 
TRY  Buy  06/19/2013  JPM   3,022    3,054    32 
TRY  Buy  06/19/2013  UBS   447    455    8 
TRY  Sell  06/19/2013  CBK   1,365    1,364    1 
TRY  Sell  06/19/2013  CSFB   296    296     
TRY  Sell  06/19/2013  JPM   4,303    4,377    (74)
TRY  Sell  06/19/2013  UBS   5,098    5,134    (36)
UYU  Buy  06/18/2013  JPM   315    315     
UYU  Sell  06/27/2013  CBK   405    408    (3)
UYU  Sell  07/11/2013  CBK   946    951    (5)
UYU  Sell  06/18/2013  JPM   361    367    (6)
UYU  Sell  06/20/2013  JPM   134    136    (2)
UYU  Sell  06/27/2013  JPM   358    361    (3)

 

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

 

15

 

The Hartford Emerging Markets Local Debt Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Foreign Currency Contracts Outstanding at April 30, 2013 - (continued)

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
VND  Buy  05/28/2013  CBK  $541   $551   $10 
VND  Buy  05/28/2013  CBK   238    238     
VND  Buy  09/30/2013  CBK   67    67     
VND  Buy  09/30/2013  JPM   150    149    (1)
ZAR  Buy  06/19/2013  CBK   3,085    3,178    93 
ZAR  Buy  06/19/2013  CBK   1,630    1,626    (4)
ZAR  Buy  06/19/2013  JPM   9,170    9,444    274 
ZAR  Buy  06/19/2013  UBS   914    939    25 
ZAR  Sell  06/19/2013  CBK   512    521    (9)
ZAR  Sell  06/19/2013  CSFB   536    555    (19)
ZAR  Sell  06/19/2013  JPM   4,672    4,790    (118)
                      $909 

 

Credit Default Swap Contracts Outstanding at April 30, 2013

 

Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate /
Implied Credit
Spread (b)
  Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on single-name issues:
Buy protection:                             
China (People's Republic of)  BCLY  $580   (1.00)% / 0.60%  09/20/17  $12   $(10)  $(22)
China (People's Republic of)  BCLY   650   (1.00)% / 0.65%  12/20/17   (8)   (11)   (3)
China (People's Republic of)  BOA   465   (1.00)% / 0.65%  12/20/17   (6)   (8)   (2)
China (People's Republic of)  DEUT   1,166   (1.00)% / 0.60%  09/20/17   1    (20)   (21)
Total                $(1)  $(49)  $(48)
Sell protection:                             
China (People's Republic of)  BCLY  $650   1.00% / 0.26%  12/20/14  $11   $8   $(3)
China (People's Republic of)  BOA   451   1.00% / 0.26%  12/20/14   8    6    (2)
China (People's Republic of)  DEUT   1,100   1.00% / 0.23%  09/20/14   16    12    (4)
Total                $35   $26   $(9)
Total single name issues                $34   $(23)  $(57)

 

(a)The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.  Notional shown in U.S. dollars unless otherwise noted.

 

(b)Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues, U.S. municipal issues or sovereign government issues as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood of risk of default for the credit derivative.  The implied credit spread of a particular entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement.  Wider credit spreads represent a deterioration of the reference entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.  The percentage shown is the implied credit spread on April 30, 2013.  For credit default swap agreements on indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk.

 

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

 

16

 

 

Interest Rate Swap Contracts Outstanding at April 30, 2013

 

Counterparty  Payments made by Fund  Payments received by
Fund
  Notional
Amount *
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
BCLY  3.05% Fixed  KRW CD KSDA  KRW1,085,714   09/06/22  $   $(7)  $(7)
BCLY  3.44% Fixed  KRW CD KSDA  KRW264,538   07/03/22       (14)   (14)
BCLY  3.69% Fixed  KRW CD KSDA  KRW99,625   08/12/31       (11)   (11)
BCLY  3M TELBOR  5.09% Fixed  ILS2,845   12/20/22       26    26 
BOA  3.27% Fixed  KRW CD KSDA  KRW2,449,505   12/04/22       (32)   (32)
BOA  BZDIOVRA  8.23% Fixed  BRL7,941   01/02/15       31    31 
BOA  BZDIOVRA  8.95% Fixed  BRL1,873   01/02/23       (33)   (33)
CBK  6M WIBOR PLN  3.52% Fixed  PLN4,720   03/20/18       49    49 
CBK  CLICP Camara  5.44% Fixed  CLP311,360   03/20/18       16    16 
DEUT  2.30% Fixed  CLICP Camara  CLP115,870   12/06/17       (2)   (2)
DEUT  2.33% Fixed  CLICP Camara  CLP115,895   12/07/17       (3)   (3)
DEUT  3.10% Fixed  KRW CD KSDA  KRW1,003,708   08/31/32       (29)   (29)
DEUT  3.24% Fixed  KRW CD KSDA  KRW1,591,985   12/04/22       (19)   (19)
DEUT  3.27% Fixed  KRW CD KSDA  KRW7,547,086   08/23/22       (110)   (110)
DEUT  3.71% Fixed  KRW CD KSDA  KRW275,100   11/03/31       (31)   (31)
DEUT  3.79% Fixed  KRW CD KSDA  KRW598,543   04/03/22       (47)   (47)
DEUT  3M TELBOR  4.41% Fixed  ILS1,415   05/04/22       44    44 
DEUT  7.22% Fixed  BZDIOVRA  BRL30,467   07/01/13       1    1 
DEUT  BZDIOVRA  10.50% Fixed  BRL333   01/02/17       18    18 
DEUT  BZDIOVRA  10.55% Fixed  BRL692   01/02/17       39    39 
DEUT  BZDIOVRA  10.61% Fixed  BRL347   01/02/17       20    20 
DEUT  BZDIOVRA  9.12% Fixed  BRL7,875   01/02/17       77    77 
DEUT  CLICP Camara  5.35% Fixed  CLP115,870   12/06/17       5    5 
DEUT  CLICP Camara  5.37% Fixed  CLP115,895   12/07/17       5    5 
DEUT  CLICP Camara  5.38% Fixed  CLP172,670   01/11/18       8    8 
DEUT  CLICP Camara  5.38% Fixed  CLP172,670   01/16/18       8    8 
DEUT  CLICP Camara  5.40% Fixed  CLP552,975   03/20/18       27    27 
DEUT  KRW CD KSDA  2.65% Fixed  KRW4,961,760   09/06/15       11    11 
DEUT  KRW CD KSDA  2.73% Fixed  KRW4,961,445   09/03/15       19    19 
GSC  1.38% Fixed  6M CZK PRIBOR Reference Banks  CZK20,820   03/20/23       (19)   (19)
GSC  1.45% Fixed  6M CZK PRIBOR Reference Banks  CZK21,335   03/20/23       (27)   (27)
GSC  1.56% Fixed  6M CZK PRIBOR Reference Banks  CZK47,600   03/20/23       (87)   (87)
GSC  1.81% Fixed  3M TELBOR  ILS7,080   06/19/15       (7)   (7)
GSC  1.99% Fixed  CLICP Camara  CLP114,070   09/24/17       (4)   (4)
GSC  2.13% Fixed  CLICP Camara  CLP120,660   09/10/17       (3)   (3)
GSC  2.13% Fixed  CLICP Camara  CLP115,952   10/23/17       (3)   (3)
GSC  2.15% Fixed  CLICP Camara  CLP244,290   11/20/17       (3)   (3)
GSC  2.18% Fixed  6M CZK PRIBOR Reference Banks  CZK27,050   06/08/22       (44)   (44)
GSC  2.19% Fixed  CLICP Camara  CLP244,440   11/23/17       (4)   (4)
GSC  2.20% Fixed  CLICP Camara  CLP244,340   11/21/17       (4)   (4)
GSC  2.23% Fixed  6M CZK PRIBOR Reference Banks  CZK40,358   09/07/22       (65)   (65)
GSC  3M JIBAR  7.00% Fixed  ZAR7,109   08/21/27       11    11 
GSC  3M TELBOR  5.06% Fixed  ILS4,240   03/21/23       32    32 
GSC  6M WIBOR PLN  4.48% Fixed  PLN3,135   08/10/22       116    116 
GSC  6M WIBOR PLN  4.49% Fixed  PLN3,132   08/10/22       117    117 
GSC  6M WIBOR PLN  4.73% Fixed  PLN1,771   06/20/17       43    43 
GSC  BZDIOVRA  10.64% Fixed  BRL2,177   01/02/17       33    33 
GSC  CLICP Camara  5.02% Fixed  CLP120,700   09/10/17       2    2 
GSC  CLICP Camara  5.13% Fixed  CLP124,860   10/23/17       3    3 
GSC  CLICP Camara  5.15% Fixed  CLP261,610   11/20/17       7    7 
GSC  CLICP Camara  5.16% Fixed  CLP114,105   09/24/17       3    3 
GSC  CLICP Camara  5.20% Fixed  CLP261,610   11/21/17       8    8 

 

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

 

17

 

The Hartford Emerging Markets Local Debt Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Interest Rate Swap Contracts Outstanding at April 30, 2013  - (continued)

 

Counterparty  Payments made by Fund  Payments received by
Fund
  Notional
Amount *
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
GSC  CLICP Camara  5.22% Fixed  CLP261,605   11/23/17     $9   $9 
GSC  CLICP Camara  5.38% Fixed  CLP264,780   01/17/18       12    12 
GSC  CLICP Camara  5.42% Fixed  CLP552,975   03/20/18       28    28 
JPM  2.08% Fixed  6M CZK PRIBOR Reference Banks  CZK53,650   12/19/22       (60)   (60)
JPM  2.12% Fixed  6M CZK PRIBOR Reference Banks  CZK46,075   03/21/23       (51)   (51)
JPM  2.18% Fixed  6M CZK PRIBOR Reference Banks  CZK12,640   08/21/22       (19)   (19)
JPM  2.23% Fixed  6M CZK PRIBOR Reference Banks  CZK12,645   08/21/22       (21)   (21)
JPM  2.25% Fixed  6M CZK PRIBOR Reference Banks  CZK18,965   08/21/22       (32)   (32)
JPM  2.30% Fixed  6M CZK PRIBOR Reference Banks  CZK33,954   08/21/22       (61)   (61)
JPM  2.32% Fixed  6M CZK PRIBOR Reference Banks  CZK6,940   08/21/22       (13)   (13)
JPM  2.34% fixed  6M CZK PRIBOR Reference Banks  CZK15,650   05/21/22       (32)   (32)
JPM  2.39% Fixed  6M CZK PRIBOR Reference Banks  CZK11,440   05/21/22       (25)   (25)
JPM  3M TELBOR  5.03% Fixed  ILS6,335   12/20/22       53    53 
JPM  3M TELBOR  5.06% Fixed  ILS1,760   12/20/22       15    15 
JPM  3M TELBOR  5.11% Fixed  ILS1,685   12/20/22       16    16 
JPM  4.13% Fixed  KRW CD KSDA  KRW371,000   06/21/31       (61)   (61)
JPM  6M CZK PRIBOR Reference Banks  0.92% Fixed  CZK39,210   11/06/17       20    20 
JPM  6M WIBOR PLN  3.55% Fixed  PLN7,515   03/20/18       80    80 
JPM  6M WIBOR PLN  4.53% Fixed  PLN9,515   12/20/22       147    147 
MSC  2.58% Fixed  6M CZK PRIBOR Reference Banks  CZK8,000   05/09/22       (21)   (21)
MSC  2.60% Fixed  6M CZK PRIBOR Reference Banks  CZK34,520   05/09/22       (93)   (93)
                 $   $62   $62 

 

* Notional shown in U.S. dollars unless otherwise noted.

 

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.

 

18

 

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)  
   
Counterparty Abbreviations:  
BCLY Barclays  
BNP BNP Paribas Securities  
BOA Banc of America Securities LLC  
CBK Citibank NA  
CSFB Credit Suisse First Boston Corp.  
DEUT Deutsche Bank Securities, Inc.  
GSC Goldman Sachs & Co.  
JPM JP Morgan Chase & Co.  
MSC Morgan Stanley  
NAB National Australia Bank  
RBC RBC Dominion Securities  
SCB Standard Chartered Bank  
SSG State Street Global Markets LLC  
UBS UBS AG  
WEST Westpac International  
   
Currency Abbreviations:  
ARS Argentine Peso  
AUD Australian Dollar  
BRL Brazilian Real  
CAD Canadian Dollar  
CLP Chilean Peso  
CNY Chinese Yuan Renminbi  
COP Colombian Peso  
CZK Czech Koruna  
EUR EURO  
GHS Ghanaian Cedi  
HRK Croatian Kuna  
HUF Hungarian Forint  
IDR Indonesian New Rupiah  
ILS Israeli New Shekel  
INR Indian Rupee  
ISN Icelandic Krona  
JPY Japanese Yen  
KRW South Korean Won  
KZT Kazakhstani Tenge  
MXN Mexican New Peso  
MYR Malaysian Ringgit  
NGN Nigerian Naira  
NZD New Zealand Dollar  
PEN Peruvian New Sol  
PHP Philippine Peso  
PLN Polish New Zloty  
RON New Romanian Leu  
RUB New Ruble  
SGD Singapore Dollar  
THB Thai Baht  
TRY Turkish New Lira  
UYU Uruguayan Peso  
VND Vietnamese Dong  
ZAR South African Rand  
ZMK Zambian Kwacha  
   
Other Abbreviations:  
BZDIOVRA Brazil Cetip Interbank Deposit Rate  
CLICP Sinacofi Chile Interbank Offered Rate  
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.  
FNMA Federal National Mortgage Association  
JIBAR Johannesburg Interbank Agreed Rate  
KSDA Korea Securities Dealers Association  
PRIBOR Prague Interbank Offered Rate  
TELBOR Tel Aviv Interbank Offered Rate  
WIBOR Warsaw Interbank Offered Rate  

 

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

 

19

 

The Hartford Emerging Markets Local Debt Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Corporate Bonds   73,955        73,175    780 
Foreign Government Obligations   141,039        139,712    1,327 
Short-Term Investments   10,571        10,571     
Total  $225,565   $   $223,458   $2,107 
Foreign Currency Contracts *   4,244        4,244     
Interest Rate Swaps *   1,159        1,159     
Total  $5,403   $   $5,403   $ 
Liabilities:                    
Credit Default Swaps *   57        57     
Foreign Currency Contracts *   3,335        3,335     
Interest Rate Swaps *   1,097        1,097     
Total  $4,489   $   $4,489   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  
* Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3 *
   Transfers
Out of
Level 3 *
   Balance
as of
April 30,
2013
 
Assets:                                    
Corporate Bonds and Foreign Government Obligations  $4,847   $231   $(69)†  $4   $505   $(2,898)  $   $(512)  $2,108 
Total  $4,847   $231   $(69)  $4   $505   $(2,898)  $   $(512)  $2,108 

 

*Investments are transferred into and out of Level 3 for a variety of reasons including, but not limited to:
1)Investments where trading has been halted (transfer into Level 3) or investments where trading has resumed (transfer out of Level 3).
2)Broker quoted investments (transfer into Level 3) or quoted prices in active markets (transfer out of Level 3).
3)Investments that have certain restrictions on trading (transfer into Level 3) or investments where trading restrictions have expired (transfer out of Level 3).
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $320.

 

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

 

20

 

The Hartford Emerging Markets Local Debt Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted) 

 

Assets:     
Investments in securities, at market value (cost $218,371)  $225,565 
Foreign currency on deposit with custodian (cost $639)   640 
Unrealized appreciation on foreign currency contracts   4,244 
Unrealized appreciation on swap contracts   1,159 
Receivables:     
Investment securities sold   2,058 
Fund shares sold   1,386 
Dividends and interest   3,708 
Swap premiums paid   48 
Other assets   63 
Total assets   238,871 
Liabilities:     
Unrealized depreciation on foreign currency contracts   3,335 
Unrealized depreciation on swap contracts   1,154 
Bank overdraft   869 
Payables:     
Investment securities purchased   944 
Fund shares redeemed   321 
Investment management fees   38 
Dividends   34 
Administrative fees    
Distribution fees   2 
Collateral received from broker   313 
Accrued expenses   32 
Swap premiums received   14 
Other liabilities   18 
Total liabilities   7,074 
Net assets  $231,797 
Summary of Net Assets:     
Capital stock and paid-in-capital  $218,197 
Undistributed net investment income   184 
Accumulated net realized gain   5,303 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   8,113 
Net assets  $231,797 
      
Shares authorized   450,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $10.51/$11.01 
Shares outstanding   2,531 
Net assets  $26,594 
Class C: Net asset value per share  $10.50 
Shares outstanding   527 
Net assets  $5,535 
Class I: Net asset value per share  $10.50 
Shares outstanding   3,832 
Net assets  $40,217 
Class R3: Net asset value per share  $10.50 
Shares outstanding   217 
Net assets  $2,280 
Class R4: Net asset value per share  $10.50 
Shares outstanding   214 
Net assets  $2,250 
Class R5: Net asset value per share  $10.50 
Shares outstanding   215 
Net assets  $2,263 
Class Y: Net asset value per share  $10.47 
Shares outstanding   14,581 
Net assets  $152,658 

 

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

 

21

 

The Hartford Emerging Markets Local Debt Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Interest  $5,015 
Less: Foreign tax withheld   (259)
Total investment income   4,756 
      
Expenses:     
Investment management fees   902 
Administrative services fees    
Class R3   2 
Class R4   2 
Class R5   1 
Transfer agent fees    
Class A   11 
Class C   2 
Class I   14 
Class R3    
Class Y   1 
Distribution fees     
Class A   28 
Class C   23 
Class R3   5 
Class R4   3 
Custodian fees   43 
Accounting services fees   18 
Registration and filing fees   44 
Board of Directors' fees   2 
Audit fees   7 
Other expenses   8 
Total expenses (before waivers)   1,116 
Expense waivers   (211)
Total waivers   (211)
Total expenses, net   905 
Net Investment Income   3,851 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities   4,275 
Net realized gain on swap contracts   80 
Net realized gain on foreign currency contracts   1,402 
Net realized gain on other foreign currency transactions   7 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   5,764 
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   2,787 
Net unrealized depreciation of swap contracts   (231)
Net unrealized appreciation of foreign currency contracts   553 
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies   (17)
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions   3,092 
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   8,856 
Net Increase in Net Assets Resulting from Operations  $12,707 

 

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

 

22

 

The Hartford Emerging Markets Local Debt Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $3,851   $3,544 
Net realized gain on investments, other financial instruments and foreign currency transactions   5,764    989 
Net unrealized appreciation of investments, other financial instruments and foreign currency transactions   3,092    6,781 
Net Increase in Net Assets Resulting from Operations   12,707    11,314 
Distributions to Shareholders:          
From net investment income          
Class A   (438)   (522)
Class C   (72)   (91)
Class I   (609)   (623)
Class R3   (38)   (56)
Class R4   (40)   (61)
Class R5   (44)   (67)
Class Y   (2,443)   (1,485)
Total from net investment income   (3,684)   (2,905)
From net realized gain on investments          
Class A   (118)    
Class C   (22)    
Class I   (136)    
Class R3   (12)    
Class R4   (12)    
Class R5   (12)    
Class Y   (455)    
Total from net realized gain on investments   (767)    
Total distributions   (4,451)   (2,905)
Capital Share Transactions:          
Class A   5,131    1,200 
Class C   1,475    (608)
Class I   15,220    13,211 
Class R3   64    61 
Class R4   52    61 
Class R5   56    67 
Class Y   72,082    57,056 
Net increase from capital share transactions   94,080    71,048 
Net Increase in Net Assets   102,336    79,457 
Net Assets:          
Beginning of period   129,461    50,004 
End of period  $231,797   $129,461 
Undistributed (distribution in excess of) net investment income (loss)  $184   $17 

 

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

 

23

 

The Hartford Emerging Markets Local Debt Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Emerging Markets Local Debt 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 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 primarily through advisory fee-based wrap programs. Class 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.

 

2.Significant Accounting Policies:

 

The following is a summary of significant accounting policies of the Fund in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

  a) Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

  b) Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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

 

24

 

 

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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

  · Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

  · Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along

 

25

 

The Hartford Emerging Markets Local Debt Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

  c) Investment Transactions and Investment Income – Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

26

 

 

  d) 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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

  e) Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

  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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Dividends from net investment income are declared and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

  a) Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial

 

27

 

The Hartford Emerging Markets Local Debt Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

  b) Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

  c) Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

  d) Inflation Indexed Bonds – The Fund may invest in inflation indexed bonds. Inflation indexed bonds are fixed income investments whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation indexed bond will be included as interest income on the Statement of Operations, even though investors do not receive the principal amount until maturity. The Fund, as shown on the Schedule of Investments, had inflation indexed bonds as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

  a) Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

28

 

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

  b) Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

Cross Currency Swap Contracts – The Fund may enter into cross currency swap contracts to gain or mitigate exposure on currency risk. Cross currency swap contracts involve two parties exchanging two different currencies with an agreement to reverse the exchange at a later date at specified exchange rates. The exchange of currencies at the inception date of the contract takes place at the current spot rate. The re-exchange at maturity may take place at the same exchange rate, a specified rate, or the then current spot rate. Interest payments, if applicable, are made between the parties based on interest rate terms in the two currencies at the inception of the contract. The terms of cross currency swap contracts may extend for many years. The Fund had no outstanding cross currency swaps as of April 30, 2013.

 

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 investment or index in the event of a credit event, such as payment default or bankruptcy.

 

Under a credit default swap contract, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying investment 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

 

29

 

The Hartford Emerging Markets Local Debt Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

the protection receives periodic payments and agrees to assume the credit risk of an issuer upon the occurrence of certain events. Although specified events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. These potential amounts would be partially offset by any recovery values of the respective referenced obligations or upfront payments received upon entering into the contract.

 

Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap contracts on corporate issues, sovereign government issues or U.S. municipal issues as of period-end are disclosed in the notes to the Schedule of Investments, as applicable, and serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the contract. Wider credit spreads represent a deterioration of the referenced entity’s soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. For credit default swap contracts on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced equity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. The Fund, as shown on the Schedule of Investments, had outstanding credit default swaps as of April 30, 2013.

 

Interest Rate Swap Contracts 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 or inflation benchmark (e.g. London Interbank Offered Rate (“LIBOR”)), 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 contracts is recorded as a realized gain or loss. 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 contract 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 contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The Fund, as shown on the Schedule of Investments, had outstanding interest rate swaps as of April 30, 2013.

 

30

 

 

  c) Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $4,244   $   $   $   $   $4,244 
Unrealized appreciation on swap contracts   1,159                        1,159 
Total  $1,159   $4,244   $   $   $   $   $5,403 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $3,335   $   $   $   $   $3,335 
Unrealized depreciation on swap contracts   1,097        57                1,154 
Total  $1,097   $3,335   $57   $   $   $   $4,489 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain on Derivatives Recognized as a Result of Operations:                 
Net realized gain (loss) on swap contracts  $140   $   $(60)  $   $   $   $80 
Net realized gain on foreign currency contracts       1,402                    1,402 
Total  $140   $1,402   $(60)  $   $   $   $1,482 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:      
Net change in unrealized appreciation (depreciation) of swap contracts  $(203)  $5   $(33)  $   $   $   $(231)
Net change in unrealized appreciation of foreign currency contracts       553                    553 
Total  $(203)  $558   $(33)  $   $   $   $322 

 

5.Principal Risks:

 

  a) Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

  b) Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a

 

31

 

The Hartford Emerging Markets Local Debt Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011 *
 
Ordinary Income  $2,903   $382 
Tax Return of Capital       70 

 

* Commenced operations on May 31, 2011.

 

32

 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $330 
Undistributed Long-Term Capital Gain   437 
Unrealized Appreciation *   4,577 
Total Accumulated Earnings  $5,344 

 

  * 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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(727)
Accumulated Net Realized Gain (Loss)   727 

 

  e) Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. Additionally, capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had no capital loss carryforwards for U.S. federal income tax purposes.

 

During the year ended October 31, 2012, the Fund utilized $1,172 of prior year short term capital loss carryforwards and $749 of prior year long term capital loss carryforwards.

 

  f) Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

  a) Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment

 

33

 

The Hartford Emerging Markets Local Debt Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 $4.5 billion   0.9000%   
On next $5 billion   0.8975%   
Over $10 billion   0.8950%   

 

The investment manager contractually agreed to waive investment management fees of 0.10% of average daily net assets until February 28, 2014.

 

  b) Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.020%   
On next $5 billion   0.018%   
Over $10 billion   0.016%   

 

  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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.25%     2.00%     1.00%     1.55%     1.25%     0.95%     0.90%  

 

  d) Distribution and Service Plan for Class A, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $62 and contingent deferred sales charges in an amount that rounds to zero from the Fund.

 

34

 

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class A, 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 0.25% of average daily net assets. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class A   17%
Class C   40 
Class R3   98 
Class R4   100 
Class R5   100 
Class Y   2 

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $169,652 
Sales Proceeds Excluding U.S. Government Obligations   78,582 

 

35

 

The Hartford Emerging Markets Local Debt Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   1,050    54    (612)       492    1,043    55    (995)       103 
Amount  $10,820   $554   $(6,243)  $   $5,131   $10,018   $516   $(9,334)  $   $1,200 
Class C                                                  
Shares   168    9    (34)       143    57    10    (135)       (68)
Amount  $1,732   $90   $(347)  $   $1,475   $542   $90   $(1,240)  $   $(608)
Class I                                                  
Shares   1,855    65    (452)       1,468    1,711    66    (377)       1,400 
Amount  $19,158   $662   $(4,600)  $   $15,220   $16,172   $623   $(3,584)  $   $13,211 
Class R3                                                  
Shares   1    5            6    1    6            7 
Amount  $15   $50   $(1)  $   $64   $5   $56   $   $   $61 
Class R4                                                  
Shares       5            5        6            6 
Amount  $   $52   $   $   $52   $   $61   $   $   $61 
Class R5                                                  
Shares       5            5        7            7 
Amount  $   $56   $   $   $56   $   $67   $   $   $67 
Class Y                                                  
Shares   9,408    278    (2,641)       7,045    6,404    156    (479)       6,081 
Amount  $96,444   $2,834   $(27,196)  $   $72,082   $59,837   $1,485   $(4,266)  $   $57,056 
Total                                                  
Shares   12,482    421    (3,739)       9,164    9,216    306    (1,986)       7,536 
Amount  $128,169   $4,298   $(38,387)  $   $94,080   $86,574   $2,898   $(18,424)  $   $71,048 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees

 

36

 

 

and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

13.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

14.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

37

 

The Hartford Emerging Markets Local Debt Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited)                
A  $10.02   $0.20   $0.54   $0.74   $(0.19)  $(0.06)  $   $(0.25)  $10.51 
C   10.01    0.16    0.54    0.70    (0.15)   (0.06)       (0.21)   10.50 
I   10.01    0.21    0.54    0.75    (0.20)   (0.06)       (0.26)   10.50 
R3   10.01    0.19    0.53    0.72    (0.17)   (0.06)       (0.23)   10.50 
R4   10.01    0.21    0.53    0.74    (0.19)   (0.06)       (0.25)   10.50 
R5   10.01    0.22    0.53    0.75    (0.20)   (0.06)       (0.26)   10.50 
Y   9.98    0.22    0.54    0.76    (0.21)   (0.06)       (0.27)   10.47 
                                              
For the Year Ended October 31, 2012 (F)                
A   9.24    0.37    0.71    1.08    (0.30)           (0.30)   10.02 
C   9.24    0.30    0.70    1.00    (0.23)           (0.23)   10.01 
I   9.23    0.40    0.71    1.11    (0.33)           (0.33)   10.01 
R3   9.24    0.34    0.70    1.04    (0.27)           (0.27)   10.01 
R4   9.24    0.37    0.70    1.07    (0.30)           (0.30)   10.01 
R5   9.24    0.40    0.70    1.10    (0.33)           (0.33)   10.01 
Y   9.21    0.41    0.69    1.10    (0.33)           (0.33)   9.98 
                                              
From May 31, 2011 (commencement of operations), through October 31, 2011                 
A(G)   10.00    0.01    (0.77)   (0.76)   0.02        (0.02)       9.24 
C(G)   10.00    0.11    (0.77)   (0.66)   (0.08)       (0.02)   (0.10)   9.24 
I(G)   10.00    0.14    (0.77)   (0.63)   (0.12)       (0.02)   (0.14)   9.23 
R3(G)   10.00    0.14    (0.79)   (0.65)   (0.09)       (0.02)   (0.11)   9.24 
R4(G)   10.00    0.15    (0.78)   (0.63)   (0.11)       (0.02)   (0.13)   9.24 
R5(G)   10.00    0.16    (0.78)   (0.62)   (0.12)       (0.02)   (0.14)   9.24 
Y(G)   10.00    0.15    (0.80)   (0.65)   (0.12)       (0.02)   (0.14)   9.21 

 

(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) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(D) Not annualized.
(E) Annualized.
(F) Per share amounts have been calculated using average shares outstanding method.
(G) Commenced operations on May 31, 2011.

 

38

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(C)
 
                      
                            
 7.47%(D)  $26,594    1.48%(E)   1.25%(E)   4.03%(E)   49%
 7.12(D)   5,535    2.20(E)   1.97(E)   3.31(E)    
 7.62(D)   40,217    1.23(E)   0.99(E)   4.27(E)    
 7.31(D)   2,280    1.84(E)   1.55(E)   3.75(E)    
 7.47(D)   2,250    1.54(E)   1.25(E)   4.05(E)    
 7.63(D)   2,263    1.24(E)   0.95(E)   4.35(E)    
 7.68(D)   152,658    1.13(E)   0.90(E)   4.34(E)    
                            
                            
 11.96    20,430    1.65    1.24    3.96    99 
 11.03    3,846    2.38    1.97    3.22     
 12.28    23,655    1.37    0.96    4.27     
 11.48    2,112    2.02    1.55    3.65     
 11.81    2,094    1.72    1.25    3.95     
 12.15    2,103    1.42    0.95    4.25     
 12.25    75,221    1.31    0.90    4.37     
                            
                            
 (6.37)(D)   17,895    1.66(E)   1.20(E)   3.77(E)   61 
 (6.64)(D)   4,178    2.40(E)   1.94(E)   3.00(E)    
 (6.37)(D)   8,900    1.52(E)   1.00(E)   3.86(E)    
 (6.50)(D)   1,888    2.05(E)   1.55(E)   3.48(E)    
 (6.39)(D)   1,872    1.75(E)   1.25(E)   3.78(E)    
 (6.28)(D)   1,874    1.45(E)   0.95(E)   4.08(E)    
 (6.56)(D)   13,397    1.36(E)   0.90(E)   4.13(E)    

 

39

 

The Hartford Emerging Markets Local Debt Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

40

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

41

 

The Hartford Emerging Markets Local Debt Fund

Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

42

 

The Hartford Emerging Markets Local Debt 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,074.70   $6.42   $1,000.00   $1,018.60   $6.25    1.25%  181  365
Class C  $1,000.00   $1,071.20   $10.12   $1,000.00   $1,015.02   $9.85    1.97   181  365
Class I  $1,000.00   $1,076.20   $5.12   $1,000.00   $1,019.87   $4.98    0.99   181  365
Class R3  $1,000.00   $1,073.10   $7.98   $1,000.00   $1,017.10   $7.76    1.55   181  365
Class R4  $1,000.00   $1,074.70   $6.44   $1,000.00   $1,018.59   $6.26    1.25   181  365
Class R5  $1,000.00   $1,076.30   $4.90   $1,000.00   $1,020.08   $4.76    0.95   181  365
Class Y  $1,000.00   $1,076.80   $4.64   $1,000.00   $1,020.33   $4.51    0.90   181  365

 

43

 

The Hartford Emerging Markets Local Debt Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Emerging Markets Local Debt Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

44

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

45

 

The Hartford Emerging Markets Local Debt Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early).

 

Foreign Investment, Emerging Markets and Sovereign Debt Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks. Sovereign debt investments are subject to credit risk and the risk of default.

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

Non-Diversified Risk: The Fund is non-diversified, so it may be more exposed to the risks associated with individual issuers than a diversified fund.

 

46
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-EMLD13 4/13 113971 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

11

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD EMERGING MARKETS RESEARCH FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Emerging Markets Research Fund

  

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 9
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 11
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 12
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 13
Notes to Financial Statements (Unaudited) 14
Financial Highlights (Unaudited) 28
Directors and Officers (Unaudited) 30
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 32
Quarterly Portfolio Holdings Information (Unaudited) 32
Expense Example (Unaudited) 33
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 34
Principal Risks (Unaudited) 36

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Emerging Markets Research Fund inception 05/31/2011

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks long-term capital  appreciation.

 

Performance Overview    5/31/11 - 4/30/13

  

Z:\Vineyard\Live jobs\2013\06 June\19 June\Shift III\v348149-Hartford Mutual Fund N-CSRS\Draft\03-Production

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   Since
Inception▲
 
Emerging Markets Research A#   5.96%      5.21%      -5.70%   
Emerging Markets Research A##        -0.57%      -8.44%   
Emerging Markets Research C#   5.64%      4.51%      -6.39%   
Emerging Markets Research C##        3.51%      -6.39%   
Emerging Markets Research I#   6.16%      5.53%      -5.41%   
Emerging Markets Research R3#   5.97%      5.09%      -5.95%   
Emerging Markets Research R4#   5.98%      5.23%      -5.71%   
Emerging Markets Research R5#   6.15%      5.52%      -5.43%   
Emerging Markets Research Y#   6.18%      5.68%      -5.34%   
MSCI Emerging Markets Index   5.40%      4.34%      -3.23%   

 

Not Annualized
Inception: 05/31/2011
# Without sales charge
## With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

  

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Class C reflect a contingent deferred sales charge of 1.00%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index that is designed to measure equity market performance in the global emerging markets, consisting of 24 emerging market country indices. This index is unmanaged and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Emerging Markets Research Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Emerging Markets Research  Class A   1.65%     2.05%  
Emerging Markets Research  Class C   2.40%     2.78%  
Emerging Markets Research  Class I   1.40%     1.73%  
Emerging Markets Research  Class R3   1.85%     2.42%  
Emerging Markets Research  Class R4   1.55%     2.12%  
Emerging Markets Research  Class R5   1.25%     1.82%  
Emerging Markets Research  Class Y   1.20%     1.38%  

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

  

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses as of the date of the Fund's most recent prospectus and reflect contractual expense waivers/reimbursements in instances when these reductions reduce the Fund's gross expenses. Certain contractual waivers/reimbursements remain in effect until February 28, 2014. Other contractual waivers/reimbursements remain in effect until February 28, 2014, and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Manager
Cheryl M. Duckworth, CFA
Senior Vice President and Associate Director of Global Industry Research

 

How did the Fund perform?

The Class A shares of The Hartford Emerging Markets Research Fund returned 5.96%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the MSCI Emerging Markets Index, which returned 5.40% for the same period. The Fund underperformed the average return of the Lipper’s Emerging Markets Equity Funds peer group of 7.18%, a group of funds with investment strategies similar to those of the Fund.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Investors’ enthusiasm for stocks was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, the market responded favorably to the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

Emerging Markets equities (+5.4%) lagged the broader global equity markets, which were up 13.8% for the period, as measured by the MSCI All Country World Index. Within the benchmark, eight of ten sectors posted positive returns for the period. Financials (+12.4%), Consumer Staples (+11.3%), and Information Technology (+11.2%) led the index higher, while Materials (-6.0%) and Energy (-3.4%) declined.

 

The Fund’s outperformance relative to the MSCI Emerging Markets Index was driven primarily by strong stock selection in the Financials, Utilities, and Information Technology sectors. This was partially offset by weaker stock selection in Materials and Energy.

 

Top contributors to the Fund’s benchmark-relative performance were PTT Global Chemical (Materials), Discovery Holdings (Financials), and ENN Energy Holdings (Utilities). Shares of Thailand-based PTT Global Chemical, a fully integrated petrochemical and chemical company, moved higher as both the demand for oil and government investment in domestic infrastructure increased during the period. Shares of South Africa-based Discovery Holdings, a health and life insurance company, rose after the company announced that normalized profit from operations rose by 21% for the first half of their fiscal year. Shares of China-based ENN Energy Holdings, a natural gas distributor in China, rose as the demand for and growth potential of natural gas in China remained strong. Korea-based Samsung Electronics (Information Technology) and Taiwan Semiconductor Manufacturing (Information Technology) were also top contributors to the Fund’s absolute performance.

 

Perseus Mining (Materials), Continental Gold (Materials), and China Shenhua Energy (Energy) were the top detractors from both benchmark-relative and absolute performance during the period. Shares of Perseus Mining, a gold developer in Australia, declined during the period over concerns about lower short-term production at their Edikan gold mine in Ghana. Shares of Canada-based Continental Gold, an exploration company, declined as the price of gold fell. Shares

 

3

 

The Hartford Emerging Markets Research Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

of China Shenhua Energy, an integrated coal-based energy company focusing on the coal and power businesses in China, declined after the company reported lackluster earnings as a result of falling coal prices.

 

What is the outlook?

As the recovery since the global financial crisis continues, we believe the deleveraging process is more advanced than may be generally perceived. Although we believe further deleveraging will need to take place within the banking systems of peripheral European countries, we have seen a great deal of progress made in the euro area’s banking system which, in aggregate, is close to being self-funded. We look forward to better growth momentum in the euro area and, in general, a more stable and diversified global macroeconomic environment in 2013. Some of the increase in macroeconomic stability should be attributed to China and other emerging markets, which have steadily gained share in the global economy while the developed world has delevered. Wage increases and credit expansion are fueling an increase in domestic consumption in many emerging markets. We also see initial signs that policy initiatives to spur growth in Brazil’s industrial sector are beginning to gain traction. We do, however, see increased regulatory interventions throughout the emerging world and these can impact profitability of certain sectors.

 

Based on individual stock decisions, the Fund ended the period most overweight (i.e. the Fund’s sector position was greater than the benchmark position) the Energy sector and most underweight the Industrials sector relative to the Fund’s benchmark. In terms of regional allocation, the Fund ended the period most overweight Asia/Pacific and most underweight Latin America relative to the Fund’s benchmark.

  

Diversification by Industry

as of April 30, 2013

Industry (Sector)

Percentage of
Net Assets

Automobiles and Components (Consumer Discretionary) 1.9%
Banks (Financials) 17.6
Capital Goods (Industrials) 2.0
Consumer Durables and Apparel (Consumer Discretionary) 1.6
Consumer Services (Consumer Discretionary) 1.1
Diversified Financials (Financials) 2.5
Energy (Energy) 14.5
Food and Staples Retailing (Consumer Staples) 0.9
Food, Beverage and Tobacco (Consumer Staples) 5.9
Health Care Equipment and Services (Health Care) 0.2
Household and Personal Products (Consumer Staples) 1.5
Insurance (Financials) 6.0
Materials (Materials) 10.5
Pharmaceuticals, Biotechnology and Life Sciences (Health Care) 1.1
Real Estate (Financials) 2.4
Retailing (Consumer Discretionary) 3.0
Semiconductors and Semiconductor Equipment (Information Technology) 10.3
Software and Services (Information Technology) 0.6
Technology Hardware and Equipment (Information Technology) 3.6
Telecommunication Services (Services) 7.3
Transportation (Industrials) 0.1
Utilities (Utilities) 4.8
Short-Term Investments 0.6
Other Assets and Liabilities 0.0
Total 100.0%

4

 

The Hartford Emerging Markets Research Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 97.2%     
     Argentina - 0.2%     
 5   Mercadolibre, Inc.   $489 
           
     Australia - 1.6%     
 2,776   Perseus Mining Ltd. ●   3,923 
           
     Brazil - 8.0%     
 345   Banco Santander Brasil S.A.    2,558 
 188   Braskem S.A. ●   1,635 
 181   Cia de Saneamento Basico do Estado de Sao Paulo ADR    2,583 
 61   Cia Paranaense de Energia-Copel    1,081 
 306   HRT Participacoes em Petroleo S.A. ●   675 
 13   Localiza Rent a Car S.A.    231 
 18   Lojas Americanas S.A.    155 
 765   Petroleo Brasileiro S.A.    7,631 
 72   Souza Cruz S.A.    1,100 
 70   Telefonica Brasil S.A.    1,853 
         19,502 
     British Virgin Islands - 0.1%     
 18   Arcos Dorados Holdings, Inc. Class A    244 
           
     Canada - 0.6%     
 308   Continental Gold Ltd. ●   1,520 
           
     Chile - 0.5%     
 105   S.A.C.I. Falabella    1,200 
           
     China - 9.4%     
 4,604   China Construction Bank    3,864 
 1,592   China Pacific Insurance Co., Ltd.    5,739 
 1,840   China Shenhua Energy Co., Ltd.    6,524 
 434   Dongfeng Motor Group Co., Ltd.    648 
 2,918   Greatview Aseptic Packaging Co., Ltd.    1,743 
 4,847   Industrial & Commercial Bank of China Ltd.    3,416 
 396   Shandong Weigao Group Medical Polymer Co., Ltd.    382 
 268   Stella International Holdings Ltd.    789 
         23,105 
     Czech Republic - 1.0%     
 12   Komercni Banka A.S.    2,354 
           
     Hong Kong - 13.0%     
 5,376   AMVIG Holdings Ltd.    2,079 
 115   ASM Pacific Technology Ltd.    1,189 
 373   China Mobile Ltd.    4,097 
 918   China Overseas Grand Oceans Group Ltd.    1,447 
 824   China Taiping Insurance Holdings Co., Ltd. ●   1,405 
 574   China Unicom Ltd.    828 
 2,597   CNOOC Ltd.    4,863 
 383   Daphne International Holdings Ltd.    399 
 495   ENN Energy Holdings Ltd.    2,866 
 51   Galaxy Entertainment Group Ltd. ●   229 
 2,057   GOME Electrical Appliances Holdings Ltd. ●   207 
 2,534   Guangdong Investment Ltd.    2,453 
 1,397   Huabao International Holdings Ltd.    642 
 471   Intime Department Store Group Co., Ltd.    559 
 1,502   Lenovo Group Ltd.    1,374 
 359   MGM China Holdings Ltd.    846 
 750   Oriental Watch Holdings Ltd.    245 
 308   Sun Art Retail Group Ltd.    431 
 646   Vinda International Holdings Ltd.    846 
 517   Yingde Gases    499 
 3,015   Zhongsheng Group Holdings Ltd.    4,195 
         31,699 
     India - 11.4%     
 75   Axis Bank Ltd.    2,089 
 355   Cairn India Ltd.    2,062 
 9   Colgate Palmolive India Ltd.    243 
 48   Dr. Reddy's Laboratories Ltd. ADR    1,814 
 22   Glaxosmithkline Consumer Healthcare Ltd.    1,676 
 73   HCL Technologies Ltd.    982 
 1,071   ITC Ltd.    6,546 
 602   Marico Ltd.    2,519 
 198   Nava Bharat Ventures Ltd.    603 
 491   NTPC Ltd.    1,435 
 413   Oil & Natural Gas Corp., Ltd.    2,511 
 349   Reliance Industries Ltd.    5,109 
 7   United Spirits Ltd.    294 
         27,883 
     Indonesia - 1.5%     
 874   Astra International Tbk PT    661 
 11,072   Bekasi Fajar Industrial Estate Tbk PT ●   1,139 
 259   Mayora Indah PT    800 
 286   Mitra Adiperkasa TBK PT    243 
 20   P.T. Telekomunikasi Indonesia ADR    957 
         3,800 
     Ireland - 0.3%     
 1,620   Kenmare Resources plc ●   670 
           
     Kazakhstan - 1.2%     
 196   KCell JSC GDR ■●   2,967 
           
     Kenya - 0.3%     
 9,928   Safaricom Ltd.    812 
           
     Malaysia - 3.1%     
 1,627   AMMB Holdings Berhad    3,583 
 578   Axiata Group Berhad    1,286 
 65   British American Tobacco Malaysia Berhad    1,343 
 1,062   Genting Malaysia Berhad    1,314 
         7,526 
     Mexico - 1.4%     
 111   America Movil S.A.B. de C.V. ADR ‡   2,371 
 302   Wal-Mart de Mexico S.A.B. de C.V.    957 
         3,328 
     Nigeria - 0.8%     
 15,073   Zenith Bank plc    1,923 
           
     Papua New Guinea - 0.1%     
 61   New Britain Palm Oil Ltd.    343 
           
     Philippines - 2.5%     
 925   Ayala Land, Inc.    731 
 2,524   LT Group, Inc. ●   1,490 
 787   Metropolitan Bank & Trust Co.    2,382 
 307   Puregold Price Club, Inc.    298 
 2,148   Robinsons Land Corp.    1,341 
         6,242 

 

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

 

5

 

The Hartford Emerging Markets Research Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 97.2% - (continued) 
     Poland - 1.8%     
 71   Alior Bank S.A. ●  $1,597 
 57   Bank Pekao S.A.    2,735 
         4,332 
     Russia - 0.9%     
 39   Pharmstandard GDR ●§   808 
 73   Sberbank of Russia ■   939 
 39   Sberbank of Russia ADR    499 
         2,246 
     Singapore - 0.2%     
 76   Guinness Anchor Berhad    462 
           
     South Africa - 4.7%     
 14   Anglo American Platinum Ltd.    545 
 447   Discovery Ltd. ☼   4,074 
 40   Impala Platinum Holdings Ltd.    553 
 26   Massmart Holdings Ltd.    547 
 1,083   Old Mutual plc    3,444 
 56   Sasol Ltd.    2,408 
         11,571 
     South Korea - 17.8%     
 56   Coway Co., Ltd.    2,841 
 19   Doosan Corp.    2,095 
 74   GS Holdings Corp.    3,660 
 188   Hana Financial Holdings    6,037 
 60   Hynix Semiconductor, Inc.    1,626 
 4   Hyundai Department Store Co., Ltd.    603 
 14   Hyundai Motor Co., Ltd.    3,290 
 44   KB Financial Group, Inc.    1,435 
 17   LG Chem Ltd.    4,126 
 9   Samsung Electronics Co., Ltd.    12,630 
 112   Shinhan Financial Group Co., Ltd.    3,866 
 38   Shinhan Financial Group Co., Ltd. ADR    1,293 
         43,502 
     Sri Lanka - 0.2%     
 78   Ceylon Tobacco Co. plc    499 
           
     Taiwan - 9.1%     
 225   Advantech Co., Ltd.    1,077 
 261   AirTac International Group    1,386 
 129   Asustek Computer, Inc.    1,503 
 33   Chipbond Technology Corp.    84 
 242   Chroma Ate, Inc.    519 
 483   Chunghwa Telecom Co., Ltd.    1,542 
 477   Delta Electronics, Inc.    2,289 
 737   Far Eastern New Century Corp.    794 
 6   Hermes Microvision, Inc.    182 
 1,207   Oriental Union Chemical Corp.    1,332 
 2,551   Taiwan Semiconductor Manufacturing Co., Ltd.    9,468 
 29   TPK Holding Co., Ltd.    590 
 1,188   WPG Holdings Co., Ltd.    1,432 
         22,198 
     Thailand - 4.9%     
 97   Advanced Info Service Public Co., Ltd.    898 
 24   Bangkok Bank plc    183 
 418   Bangkok Bank Public Co. NVDR    3,227 
 118   Central Pattana Public Co., Ltd.    403 
 2,539   PTT Chemical Public Co., Ltd.    6,338 
 1,227   Supalai Public Co., Ltd.    858 
         11,907 
     Turkey - 0.6%     
 255   Turkiye Garanti Bankasi A.S.    1,412 
           
     Total common stocks     
     (cost $221,979)  $237,659 
           
PREFERRED STOCKS - 1.0%     
     Brazil - 1.0%     
 72   Banco Itau Holding   $1,213 
 72   Cia Paranaense de Energie    1,285 
         2,498 
     Total preferred stocks     
     (cost $2,340)  $2,498 
           
WARRANTS - 0.1%     
     Russia - 0.1%     
 204   Micex AP Generis Warrant ■☼  $291 
           
     Total warrants     
     (cost $287)  $291 
           
EXCHANGE TRADED FUNDS - 1.1%     
     United States - 1.1%     
 50   Ishares Core MSCI Emerging Markets ETF   $2,575 
           
     Total exchange traded funds     
     (cost $2,454)  $2,575 
           
     Total long-term investments     
     (cost $227,060)  $243,023 
           
SHORT-TERM INVESTMENTS - 0.6%     
     Repurchase Agreements - 0.6%     
    

Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $57,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $58)

     
$57   0.17%, 4/30/2013  $57 
    

Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $156, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -
2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value
of $159)

     
 156    0.15%, 4/30/2013   156 
    

Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $300, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $306)

     
 300   0.15%, 4/30/2013   300 

 

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

 

6

 

Shares or Principal Amount      Market Value ╪ 
SHORT-TERM INVESTMENTS - 0.6% - (continued)          
     Repurchase Agreements - 0.6% - (continued)          
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $417,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $425)
          
$417   0.14%, 4/30/2013      $417 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $75, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $76)
          
 75   0.17%, 4/30/2013        75 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $254, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $259)
          
 254   0.14%, 4/30/2013        254 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$179, collateralized by U.S. Treasury Note
0.25% - 1.88%, 2014 - 2019, value of $182)
          
 179   0.17%, 4/30/2013        179 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$3, collateralized by U.S. Treasury Note
3.88%, 2018, value of $3)
          
 3   0.13%, 4/30/2013        3 
              1,441 
     Total short-term investments          
     (cost $1,441)       $1,441 
                
     Total investments          
     (cost $228,501) ▲   100.0%  $244,464 
     Other assets and liabilities    %   97 
     Total net assets   100.0%  $244,561 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $230,226 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $23,925 
Unrealized Depreciation   (9,687)
Net Unrealized Appreciation  $14,238 

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $4,197, which represents 1.7% of total net assets.

 

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

 

7

 

The Hartford Emerging Markets Research Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

§These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $808, which represents 0.3% of total net assets.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $672 at April 30, 2013.

 

Foreign Currency Contracts Outstanding at April 30, 2013
 
Currency  Buy / Sell  Delivery Date  Counterparty   Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
ZAR  Buy  05/08/2013  DEUT   $400   $400   $ 
ZAR  Sell  05/02/2013  HSBC    144    147    (3)
                        $(3)

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
DEUT Deutsche Bank Securities, Inc.  
HSBC HSBC Bank USA
 
Currency Abbreviations:
ZAR South African Rand
 
Other Abbreviations:
ADR American Depositary Receipt
ETF Exchange Traded Fund
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GDR Global Depositary Receipt
MSCI Morgan Stanley Capital International
NVDR Non-Voting Depositary Receipt

 

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

 

8

 

The Hartford Emerging Markets Research Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Argentina  $489   $489   $   $ 
Australia   3,923        3,923     
Brazil   19,502    19,502         
British Virgin Islands   244    244         
Canada   1,520    1,520         
Chile   1,200    1,200         
China   23,105        23,105     
Czech Republic   2,354        2,354     
Hong Kong   31,699        31,699     
India   27,883    4,870    23,013     
Indonesia   3,800    957    2,843     
Ireland   670        670     
Kazakhstan   2,967    2,967         
Kenya   812    812         
Malaysia   7,526    3,583    3,943     
Mexico   3,328    3,328         
Nigeria   1,923        1,923     
Papua New Guinea   343    343         
Philippines   6,242    2,831    3,411     
Poland   4,332        4,332     
Russia   2,246    1,747    499     
Singapore   462    462         
South Africa   11,571    547    11,024     
South Korea   43,502    4,134    39,368     
Sri Lanka   499    499         
Taiwan   22,198        22,198     
Thailand   11,907        11,907     
Turkey   1,412        1,412     
Total   237,659    50,035    187,624     
Exchange Traded Funds   2,575    2,575         
Preferred Stocks   2,498        2,498     
Warrants   291    291         
Short-Term Investments   1,441        1,441     
Total  $244,464   $52,901   $191,563   $ 
Foreign Currency Contracts*                
Total  $   $   $   $ 
Liabilities:                    
Foreign Currency Contracts*   3        3     
Total  $3   $   $3   $ 

 

For the six-month period ended April 30, 2013, investments valued at $2,346 were transferred from Level 1 to Level 2, and investments valued at $7,147 were transferred from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2) U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

  

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

 

9

 

The Hartford Emerging Markets Research Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3
   Transfers
Out of Level 3
   Balance
as of
April 30,
2013
 
Assets:                                    
Common Stocks  $   $(78)  $78   $   $   $   $   $   $ 
Total  $   $(78)  $78   $   $   $   $   $   $ 

 

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

 

10

 

The Hartford Emerging Markets Research Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $228,501)  $244,464 
Foreign currency on deposit with custodian (cost $200)   201 
Unrealized appreciation on foreign currency contracts    
Receivables:     
Investment securities sold   1,369 
Fund shares sold   61 
Dividends and interest   775 
Other assets   53 
Total assets   246,923 
Liabilities:     
Unrealized depreciation on foreign currency contracts   3 
Bank overdraft   154 
Payables:     
Investment securities purchased   1,804 
Fund shares redeemed   341 
Investment management fees   48 
Administrative fees    
Distribution fees   1 
Accrued expenses   11 
Total liabilities   2,362 
Net assets  $244,561 
Summary of Net Assets:     
Capital stock and paid-in-capital  $224,770 
Undistributed net investment income   73 
Accumulated net realized gain   3,750 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   15,968 
Net assets  $244,561 
      
Shares authorized   500,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $8.93/$9.45 
Shares outstanding   680 
Net assets  $6,077 
Class C: Net asset value per share  $8.81 
Shares outstanding   298 
Net assets  $2,624 
Class I: Net asset value per share  $8.90 
Shares outstanding   251 
Net assets  $2,237 
Class R3: Net asset value per share  $8.87 
Shares outstanding   211 
Net assets  $1,871 
Class R4: Net asset value per share  $8.89 
Shares outstanding   201 
Net assets  $1,787 
Class R5: Net asset value per share  $8.90 
Shares outstanding   202 
Net assets  $1,798 
Class Y: Net asset value per share  $8.89 
Shares outstanding   25,654 
Net assets  $228,167 

 

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

 

11

 

The Hartford Emerging Markets Research Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $2,078 
Interest   1 
Less: Foreign tax withheld   (270)
Total investment income   1,809 
      
Expenses:     
Investment management fees   1,242 
Administrative services fees    
Class R3   2 
Class R4   1 
Class R5   1 
Transfer agent fees    
Class A   6 
Class C   1 
Class I    
Class R3    
Class Y   2 
Distribution fees     
Class A   7 
Class C   12 
Class R3   5 
Class R4   2 
Custodian fees   37 
Accounting services fees   21 
Registration and filing fees   37 
Board of Directors' fees   2 
Audit fees   7 
Other expenses   14 
Total expenses (before waivers and fees paid indirectly)   1,399 
Expense waivers   (119)
Commission recapture    
Total waivers and fees paid indirectly   (119)
Total expenses, net   1,280 
Net Investment Income   529 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   6,969 
Net realized loss on foreign currency contracts   (107)
Net realized loss on other foreign currency transactions   (5)
Net Realized Gain on Investments and Foreign Currency Transactions   6,857 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   3,183 
Net unrealized depreciation of foreign currency contracts   (3)
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   8 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   3,188 
Net Gain on Investments and Foreign Currency Transactions   10,045 
Net Increase in Net Assets Resulting from Operations  $10,574 

 

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

 

12

 

The Hartford Emerging Markets Research Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $529   $1,520 
Net realized gain (loss) on investments and foreign currency transactions   6,857    (1,427)
Net unrealized appreciation of investments and foreign currency transactions   3,188    15,524 
Net Increase in Net Assets Resulting from Operations   10,574    15,617 
Distributions to Shareholders:          
From net investment income          
Class A   (1)   (2)
Class I   (17)   (3)
Class R3   (4)    
Class R4   (9)    
Class R5   (14)   (3)
Class Y   (1,775)   (14)
Total distributions   (1,820)   (22)
Capital Share Transactions:          
Class A   (2,310)   2,026 
Class C   410    157 
Class I   154    232 
Class R3   26    67 
Class R4   9     
Class R5   14    3 
Class Y   49,905    147,630 
Net increase from capital share transactions   48,208    150,115 
Net Increase in Net Assets   56,962    165,710 
Net Assets:          
Beginning of period   187,599    21,889 
End of period  $244,561   $187,599 
Undistributed (distribution in excess of) net investment income (loss)  $73   $1,364 

 

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

 

13

 

The Hartford Emerging Markets Research Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Emerging Markets Research 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 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 primarily through advisory fee-based wrap programs. Class 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.

 

2.Significant Accounting Policies:

 

The following is a summary of significant accounting policies of the Fund in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

  a) Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

  b) Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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

 

14

 

market prices at the close of the exchange on which a portfolio investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
  · Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
  · Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including

 

15

 

The Hartford Emerging Markets Research Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

  c) Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

  d) 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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

16

 

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.

 

  e) Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

  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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

  a) Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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

 

17

 

The Hartford Emerging Markets Research Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

    investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

  c) Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

  a) Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

18

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $   $   $   $   $   $ 
Total  $   $   $   $   $   $   $ 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $3   $   $   $   $   $3 
Total  $   $3   $   $   $   $   $3 

 

  The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

  The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Loss on Derivatives Recognized as a Result of Operations:
Net realized loss on foreign currency contracts  $   $(107)  $   $   $   $   $(107)
Total  $   $(107)  $   $   $   $   $(107)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:                
Net change in unrealized appreciation of futures  $   $   $   $   $   $   $ 
Net change in unrealized depreciation of foreign currency contracts       (3)                   (3)
Total  $   $(3)  $   $   $   $   $(3)

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of

 

19

 

The Hartford Emerging Markets Research Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011 *
 
Ordinary Income  $22   $ 

 

*Commenced operations on May 31, 2011.

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis are as follows:

 

   Amount 
Undistributed Ordinary Income  $1,815 
Accumulated Capital Losses    (1,833)
Unrealized Appreciation *   11,055 
Total Accumulated Earnings   $11,037 

 

*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.

 

20

 

 

  

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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(110)
Accumulated Net Realized Gain (Loss)   110 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. Additionally, capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

   Amount 
Short Term Capital Loss Carryforward  $1,590 
Long Term Capital Loss Carryforward   243 
Total  $1,833 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement

 

21

 

The Hartford Emerging Markets Research Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $250 million   1.2000%
On next $250 million   1.1500%
On next $500 million   1.1000%
On next $4 billion   1.0750%
On next $5 billion   1.0725%
Over $10 billion   1.0700%

 

HFMC has contractually agreed to waive investment management fees of 0.10% of average daily net assets until February 28, 2014.

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.020%
On next $5 billion   0.018%
Over $10 billion   0.016%

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.65%     2.40%     1.40%     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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, are included in the Statement of Operations.

  

22

 

The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended 
April 30, 2013
 
Class A   1.65%
Class C   2.29 
Class I   1.22 
Class R3   1.85 
Class R4   1.55 
Class R5   1.25 
Class Y   1.20 

 

e)Distribution and Service Plan for Class A, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $40 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class A, 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 0.25% of average daily net assets. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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 Emerging Markets Research Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class A   19%
Class C   67 
Class I   80 
Class R3   95 
Class R4   100 
Class R5   100 
Class Y    

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage
of Fund
 
Class Y   78%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, the Fund's aggregate purchases and sales of investment securities (excluding short-term investments) were as follows:

 

   Amount 
Cost of Purchases Excluding U.S. Government Obligations  $141,222 
Sales Proceeds Excluding U.S. Government Obligations   94,836 

 

24

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   248        (530)       (282)   327        (86)       241 
Amount  $2,209   $1   $(4,520)  $   $(2,310)  $2,712   $2   $(688)  $   $2,026 
Class C                                                  
Shares   54        (8)       46    32        (13)       19 
Amount  $485   $   $(75)  $   $410   $265   $   $(108)  $   $157 
Class I                                                  
Shares   21    2    (6)       17    37        (10)       27 
Amount  $188   $17   $(51)  $   $154   $312   $3   $(83)  $   $232 
Class R3                                                  
Shares   3                3    9        (1)       8 
Amount  $24   $4   $(2)  $   $26   $72   $   $(5)  $   $67 
Class R4                                                  
Shares       1            1                     
Amount  $   $9   $   $   $9   $   $   $   $   $ 
Class R5                                                  
Shares       2            2                     
Amount  $   $14   $   $   $14   $   $3   $   $   $3 
Class Y                                                  
Shares   7,782    200    (2,449)       5,533    22,428    2    (3,209)       19,221 
Amount  $69,655   $1,775   $(21,525)  $   $49,905   $173,581   $14   $(25,965)  $   $147,630 
Total                                                  
Shares   8,108    205    (2,993)       5,320    22,833    2    (3,319)       19,516 
Amount  $72,561   $1,820   $(26,173)  $   $48,208   $176,942   $22   $(26,849)  $   $150,115 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health

 

25

 

The Hartford Emerging Markets Research Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

26

 

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27

 

The Hartford Emerging Markets Research Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
 
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $8.43   $   $0.50   $0.50   $   $   $   $   $8.93 
C   8.34    (0.03)   0.50    0.47                    8.81 
I   8.45    0.02    0.50    0.52    (0.07)           (0.07)   8.90 
R3   8.39    (0.01)   0.51    0.50    (0.02)           (0.02)   8.87 
R4   8.43        0.50    0.50    (0.04)           (0.04)   8.89 
R5   8.45    0.02    0.50    0.52    (0.07)           (0.07)   8.90 
Y   8.46    0.02    0.50    0.52    (0.09)           (0.09)   8.89 
 
For the Year Ended October 31, 2012 (E)
A   8.22    0.09    0.12    0.21                    8.43 
C   8.20    0.02    0.12    0.14                    8.34 
I   8.23    0.11    0.13    0.24    (0.02)           (0.02)   8.45 
R3   8.21    0.06    0.12    0.18                    8.39 
R4   8.22    0.09    0.12    0.21                    8.43 
R5   8.23    0.11    0.12    0.23    (0.01)           (0.01)   8.45 
Y   8.23    0.16    0.09    0.25    (0.02)           (0.02)   8.46 
 
From May 31, 2011 (commencement of operations), through October 31, 2011
A(H)   10.00    (0.01)   (1.77)   (1.78)                   8.22 
C(H)   10.00    (0.03)   (1.77)   (1.80)                   8.20 
I(H)   10.00        (1.77)   (1.77)                   8.23 
R3(H)   10.00    (0.02)   (1.77)   (1.79)                   8.21 
R4(H)   10.00    (0.01)   (1.77)   (1.78)                   8.22 
R5(H)   10.00        (1.77)   (1.77)                   8.23 
Y(H)   10.00        (1.77)   (1.77)                   8.23 

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)Commenced operations on May 31, 2011.

 

28

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
  
                            
 5.96%(F)  $6,077    1.77%(G)   1.65%(G)   (0.05)%(G)   45%
 5.64(F)   2,624    2.39(G)   2.29(G)   (0.61)(G)    
 6.16(F)   2,237    1.33(G)   1.23(G)   0.41(G)    
 5.97(F)   1,871    2.02(G)   1.85(G)   (0.24)(G)    
 5.98(F)   1,787    1.71(G)   1.55(G)   0.06(G)    
 6.15(F)   1,798    1.41(G)   1.25(G)   0.36(G)    
 6.18(F)   228,167    1.31(G)   1.20(G)   0.55(G)    
                            
                           
 2.59    8,104    2.05    1.58    1.09    128 
 1.71    2,102    2.78    2.31    0.30     
 2.88    1,975    1.73    1.26    1.37     
 2.19    1,747    2.42    1.85    0.75     
 2.55    1,686    2.12    1.55    1.05     
 2.85    1,693    1.82    1.25    1.35     
 3.01    170,292    1.38    0.91    1.97     
                            
                           
 (17.80)(F)   5,931    1.97(G)   1.48(G)   (0.19)(G)   39 
 (18.00)(F)   1,909    2.71(G)   2.22(G)   (0.93)(G)    
 (17.70)(F)   1,708    1.69(G)   1.20(G)   0.06(G)    
 (17.90)(F)   1,642    2.38(G)   1.85(G)   (0.59)(G)    
 (17.80)(F)   1,644    2.08(G)   1.55(G)   (0.29)(G)    
 (17.70)(F)   1,646    1.78(G)   1.25(G)    –(G)     
 (17.70)(F)   7,409    1.69(G)   1.20(G)   0.05(G)    

 

29

 

The Hartford Emerging Markets Research Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

30

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

31

 

The Hartford Emerging Markets Research Fund

Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

32

 

The Hartford Emerging Markets Research 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
 
Class A  $1,000.00   $1,059.60   $8.44   $1,000.00   $1,016.60   $8.26    1.65%  181  365  
Class C  $1,000.00   $1,056.40   $11.66   $1,000.00   $1,013.45   $11.42    2.29   181  365  
Class I  $1,000.00   $1,061.60   $6.26   $1,000.00   $1,018.72   $6.13    1.23   181  365  
Class R3  $1,000.00   $1,059.70   $9.46   $1,000.00   $1,015.61   $9.26    1.85   181  365  
Class R4  $1,000.00   $1,059.80   $7.93   $1,000.00   $1,017.10   $7.76    1.55   181  365  
Class R5  $1,000.00   $1,061.50   $6.40   $1,000.00   $1,018.59   $6.26    1.25   181  365  
Class Y  $1,000.00   $1,061.80   $6.14   $1,000.00   $1,018.84   $6.01    1.20   181  365  

 

33

 

The Hartford Emerging Markets Research Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Emerging Markets Research Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

34

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

35

 

The Hartford Emerging Markets Research Fund

Principal Risks (Unaudited)

  

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Small/Mid-cap Stock Risk: Small- and mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

36
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-EMR13 4/13 113972 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

12

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD EQUITY INCOME FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Equity Income Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 8
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 9
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 10
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 11
Notes to Financial Statements (Unaudited) 12
Financial Highlights (Unaudited) 24
Directors and Officers (Unaudited) 27
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 29
Quarterly Portfolio Holdings Information (Unaudited) 29
Expense Example (Unaudited) 30
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 31
Principal Risks (Unaudited) 33

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Equity Income Fund inception 08/28/2003
(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks a high level of current income consistent with growth of capital.

 

Performance Overview 8/28/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

  

   6 Month†   1 Year   5 year   Since
Inception▲
 
Equity Income A#   14.58%       17.96%       6.69%       8.50%    
Equity Income A##        11.47%       5.49%       7.87%    
Equity Income B#   14.09%       16.91%       5.83%       7.83%*    
Equity Income B##        11.91%       5.51%       7.83%*    
Equity Income C#   14.18%       17.09%       5.92%       7.73%    
Equity Income C##        16.09%       5.92%       7.73%    
Equity Income I#   14.73%       18.22%       6.97%       8.70%    
Equity Income R3#   14.41%       17.57%       6.37%       8.47%    
Equity Income R4#   14.57%       17.87%       6.68%       8.68%    
Equity Income R5#   14.74%       18.28%       7.03%       8.91%    
Equity Income Y#   14.84%       18.35%       7.15%       8.99%    
Russell 1000 Value Index   16.31%       21.80%       4.17%       7.54%    

 

Not Annualized
Inception: 08/28/2003
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund's Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

The benchmark inception return is as of 8/31/03.

 

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. The Russell 1000 Index is an unmanaged index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, which measures the performance of the 3,000 largest U.S. companies, based on total market capitalizations.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Equity Income Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Equity Income Class A   1.11%     1.11%  
Equity Income Class B   2.00%     2.00%  
Equity Income Class C   1.84%     1.84%  
Equity Income Class I   0.81%     0.81%  
Equity Income Class R3   1.42%     1.42%  
Equity Income Class R4   1.11%     1.11%  
Equity Income Class R5   0.82%     0.82%  
Equity Income Class Y   0.72%     0.72%  

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers      
Karen H. Grimes, CFA   W. Michael Reckmeyer, III, CFA Ian R. Link, CFA
Senior Vice President and Equity Portfolio Manager   Senior Vice President and Equity Portfolio Manager Director and Equity Portfolio Manager  

 

How did the Fund perform?

The Class A shares of The Hartford Equity Income Fund returned 14.58%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmark, the Russell 1000 Value Index, which returned 16.31% for the same period. The Fund outperformed the 13.75% average return 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?

U.S. equities surged during the period, ending at an all-time high. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. U.S. housing data continued to provide evidence that the sector at the epicenter of the financial crisis could be a key engine of economic recovery in 2013. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the period all ten sectors within the Russell 1000 Value Index posted positive absolute returns, with Information Technology (+28.0%), Consumer Discretionary (+22.1%), and Consumer Staples (+19.5%) performing the best. Materials (+4.1%), Energy (+7.8%), and Telecommunication Services (+10.8%) lagged the index on a relative basis during the period.

 

Overall, underperformance versus the benchmark was driven by weak security selection, primarily within the information technology and financials sectors. This more than offset strong stock selection within Materials and Industrials. Sector allocation, driven by our bottom-up stock selection process, detracted from relative returns during the period, primarily due to an underweight to Financials and Consumer Discretionary. A modest cash position in an upward trending market also detracted from relative performance.

 

Top detractors from benchmark-relative returns during the period were Royal Dutch Shell (Energy), Merck (Health Care), and M&T Bank (Financials). Shares of Royal Dutch Shell, one of the world’s largest integrated oil and gas producers, fell after the company reported disappointing earnings due to weak upstream performance. The weakness was primarily due to soft North American realizations (Natural Gas and Heavy Oil) and higher costs. Merck, a global pharmaceutical company, lagged during the period. Shares underperformed due to the company's announcement of a delay of Odanacatib (treatment for osteoporosis and bone metastasis). Odanacatib represents an important opportunity in Merck's late stage pipeline. Shares of M&T Bank fell amid investor concern due to the uncertainty regarding the company’s proposed merger with Hudson City Bancorp. Stocks that detracted most from absolute returns also included Kohl’s (Consumer Discretionary) and Exxon Mobil (Energy).

 

3

 

The Hartford Equity Income Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

Top contributors to relative returns included BlackRock (Financials), Exxon Mobil (Energy), and Roche (Health Care). BlackRock, an investment management firm, outperformed during the period after the company reported strong revenue and earnings and posted strong organic net cash inflows and announced a 12% hike in its dividend. Exxon Mobil, a global integrated energy company, posted disappointing third quarter results related to its oil and gas production volumes, sending the stock price lower. However, we were underweight in the shares which contributed to benchmark relative performance. Roche, a large Swiss biotechnology and pharmaceutical company, outperformed as investors began to appreciate the company’s near-term product roll out and future drug pipeline, particularly from Roche’s innovative oncology portfolio. Top absolute contributors for the period also included Johnson & Johnson (Health Care) and JPMorgan (Financials).

 

What is the outlook?

We believe the medium-term growth prospects in the U.S. are favorable. The consumer is expected to be resilient this year, helped by improving net worth from rising house and equity market prices as well as steady job gains. The key drivers of U.S. growth are expected to be capital spending and the housing and automotive sectors over the course of the next year. We believe capital investment spending should finally rise as capacity utilization levels normalize, while vehicle sales and new home constructions, despite their strong recent advance, still have a lot of pent-up demand behind them. An improving economy and healing labor market notwithstanding, we believe the U.S. Federal Reserve Board (Fed) is unlikely to abandon its quantitative easing program any time soon.

 

Based on bottom-up stock decisions, we ended the period most overweight Industrials, Information Technology, and Health Care. Our largest underweights were Financials, Energy, and Consumer Discretionary relative to the Russell 1000 Value Index.

 

Diversification by Industry
as of April 30, 2013
Industry (Sector)  Percentage of
Net Assets
 
Banks (Financials)   8.4%
Capital Goods (Industrials)   11.5 
Commercial and Professional Services (Industrials)   0.7 
Consumer Durables and Apparel (Consumer Discretionary)   1.0 
Consumer Services (Consumer Discretionary)   0.5 
Diversified Financials (Financials)   5.7 
Energy (Energy)   13.0 
Food and Staples Retailing (Consumer Staples)   1.2 
Food, Beverage and Tobacco (Consumer Staples)   6.6 
Household and Personal Products (Consumer Staples)   0.5 
Insurance (Financials)   7.2 
Materials (Materials)   3.6 
Media (Consumer Discretionary)   3.0 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   12.9 
Retailing (Consumer Discretionary)   2.9 
Semiconductors and Semiconductor Equipment (Information Technology)   5.4 
Software and Services (Information Technology)   2.1 
Technology Hardware and Equipment (Information Technology)   1.6 
Telecommunication Services (Services)   2.4 
Transportation (Industrials)   1.1 
Utilities (Utilities)   5.9 
Short-Term Investments   2.5 
Other Assets and Liabilities   0.3 
Total   100.0%

 

4

 

The Hartford Equity Income Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 97.2%    
     Banks - 8.4%     
 846   BB&T Corp.  $26,031 
 322   M&T Bank Corp.   32,215 
 828   PNC Financial Services Group, Inc.   56,216 
 354   US Bancorp   11,768 
 1,965   Wells Fargo & Co.   74,644 
         200,874 
     Capital Goods - 11.5%     
 555   3M Co.   58,131 
 750   Eaton Corp. plc   46,086 
 1,859   General Electric Co.   41,443 
 470   Illinois Tool Works, Inc.   30,343 
 61   Lockheed Martin Corp.   6,083 
 147   Schneider Electric S.A.   11,208 
 431   Stanley Black & Decker, Inc.   32,223 
 555   United Technologies Corp.   50,697 
         276,214 
     Commercial and Professional Services - 0.7%     
 416   Waste Management, Inc.   17,036 
           
     Consumer Durables and Apparel - 1.0%     
 542   Mattel, Inc.   24,725 
           
     Consumer Services - 0.5%     
 116   McDonald's Corp.   11,889 
           
     Diversified Financials - 5.7%     
 274   Ameriprise Financial, Inc.   20,408 
 164   BlackRock, Inc.   43,681 
 1,478   JP Morgan Chase & Co.   72,415 
         136,504 
     Energy - 13.0%     
 441   BP plc ADR   19,242 
 809   Chevron Corp.   98,718 
 300   ConocoPhillips Holding Co.   18,141 
 773   Exxon Mobil Corp.   68,804 
 487   Occidental Petroleum Corp.   43,501 
 1,255   Royal Dutch Shell plc Class B   44,031 
 618   Suncor Energy, Inc.   19,257 
         311,694 
     Food and Staples Retailing - 1.2%     
 677   Sysco Corp.   23,612 
 91   Walgreen Co.   4,485 
         28,097 
     Food, Beverage and Tobacco - 6.6%     
 281   Altria Group, Inc.   10,262 
 525   General Mills, Inc.   26,465 
 642   Kraft Foods Group, Inc.   33,061 
 189   PepsiCo, Inc.   15,596 
 365   Philip Morris International, Inc.   34,876 
 874   Unilever N.V. NY Shares ADR   37,109 
         157,369 
     Household and Personal Products - 0.5%     
 164   Procter & Gamble Co.   12,582 
           
     Insurance - 7.2%     
 588   ACE Ltd.   52,392 
 507   Chubb Corp.   44,675 
 1,741   Marsh & McLennan Cos., Inc.   66,166 
 128   Swiss Re Ltd.   10,149 
         173,382 
     Materials - 3.6%     
 636   Dow Chemical Co.   21,552 
 363   E.I. DuPont de Nemours & Co.   19,766 
 550   International Paper Co.   25,843 
 410   Nucor Corp.   17,892 
         85,053 
     Media - 3.0%     
 688   Thomson Reuters Corp.   23,046 
 248   Time Warner Cable, Inc.   23,300 
 1,567   WPP plc   25,899 
         72,245 
     Pharmaceuticals, Biotechnology and Life Sciences - 12.9%     
 373   AstraZeneca plc ADR   19,363 
 1,276   Johnson & Johnson   108,771 
 1,642   Merck & Co., Inc.   77,165 
 2,194   Pfizer, Inc.   63,767 
 162   Roche Holding AG   40,651 
         309,717 
     Retailing - 2.9%     
 104   Kohl's Corp.   4,883 
 1,644   Lowe's Co., Inc.   63,169 
         68,052 
     Semiconductors and Semiconductor Equipment - 5.4%     
 1,009   Analog Devices, Inc.   44,376 
 1,814   Intel Corp.   43,436 
 376   Maxim Integrated Products, Inc.   11,621 
 234   Texas Instruments, Inc.   8,470 
 545   Xilinx, Inc.   20,680 
         128,583 
     Software and Services - 2.1%     
 1,528   Microsoft Corp.   50,582 
           
     Technology Hardware and Equipment - 1.6%     
 1,803   Cisco Systems, Inc.   37,726 
           
     Telecommunication Services - 2.4%     
 768   AT&T, Inc.   28,785 
 446   Verizon Communications, Inc.   24,022 
 157   Vodafone Group plc ADR   4,791 
         57,598 
     Transportation - 1.1%     
 314   United Parcel Service, Inc. Class B   26,916 
           
     Utilities - 5.9%     
 166   American Electric Power Co., Inc.   8,535 
 88   Dominion Resources, Inc.   5,451 
 2,228   National Grid plc   28,400 
 255   NextEra Energy, Inc.   20,897 
 397   Northeast Utilities   17,986 
 749   UGI Corp.   30,692 

 

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

 

5

 

The Hartford Equity Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount      Market Value ╪ 
COMMON STOCKS - 97.2% - (continued) 
     Utilities - 5.9% - (continued)          
 884   Xcel Energy, Inc.     $28,086 
              140,047 
     Total common stocks          
     (cost $1,886,517)       $2,326,885 
                
     Total long-term investments          
     (cost $1,886,517)       $2,326,885 
                
SHORT-TERM INVESTMENTS - 2.5%          
Repurchase Agreements - 2.5%          
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $2,406,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $2,454)
          
$2,406   0.17%, 4/30/2013       $2,406 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $6,557, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $6,688)
          
 6,556   0.15%, 4/30/2013        6,556 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $12,628, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 -
2021, value of $12,880)
          
 12,628   0.15%, 4/30/2013        12,628 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $17,539,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $17,890)
          
 17,539   0.14%, 4/30/2013        17,539 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $3,154,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value of
$3,217)
          
 3,154   0.17%, 4/30/2013        3,154 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $10,687, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 -
2022, value of $10,901)
          
 10,687   0.14%, 4/30/2013        10,687 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $7,514, collateralized by U.S.
Treasury Note 0.25% - 1.88%, 2014 -
2019, value of $7,664)
          
 7,514   0.17%, 4/30/2013        7,514 
    UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$134, collateralized by U.S. Treasury Note
3.88%, 2018, value of $137)
        
 134   0.13%, 4/30/2013      134 
              60,618 
     Total short-term investments          
     (cost $60,618)       $60,618 
                
     Total investments          
     (cost $1,947,135) ▲   99.7%  $2,387,503 
     Other assets and liabilities   0.3%   7,518 
     Total net assets   100.0%  $2,395,021 

 

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

 

6

 

 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $1,956,089 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $444,059 
Unrealized Depreciation   (12,645)
Net Unrealized Appreciation  $431,414 

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
CHF  Sell  05/06/2013  DEUT  $1,009   $1,009   $ 
CHF  Sell  05/03/2013  NAB   1,304    1,314    (10)
                      $(10)

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
DEUT Deutsche Bank Securities, Inc.
NAB National Australia Bank
 
Currency Abbreviations:
CHF Swiss Franc
 
Other Abbreviations:
ADR American Depositary Receipt
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association

 

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

 

7

 

The Hartford Equity Income Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks ‡  $2,326,885   $2,166,547   $160,338   $ 
Short-Term Investments   60,618        60,618     
Total  $2,387,503   $2,166,547   $220,956   $ 
Liabilities:                    
Foreign Currency Contracts *   10        10     
Total  $10   $   $10   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.
The Fund has all or primarily all of the equity securities categorized in a particular level.  Refer to the Schedule of Investments for further industry breakout.
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

8

 

The Hartford Equity Income Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $1,947,135)  $2,387,503 
Cash   1 
Receivables:     
Investment securities sold   18,331 
Fund shares sold   10,644 
Dividends and interest   2,633 
Other assets   104 
Total assets   2,419,216 
Liabilities:     
Unrealized depreciation on foreign currency contracts   10 
Payables:     
Investment securities purchased   21,416 
Fund shares redeemed   2,112 
Investment management fees   248 
Administrative fees   3 
Distribution fees   107 
Accrued expenses   299 
Total liabilities   24,195 
Net assets  $2,395,021 
Summary of Net Assets:     
Capital stock and paid-in-capital  $1,929,431 
Undistributed net investment income   4,600 
Accumulated net realized gain   20,619 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   440,371 
Net assets  $2,395,021 
      
Shares authorized   500,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share  $16.56/$17.52 
Shares outstanding   89,279 
Net assets  $1,478,092 
Class B: Net asset value per share  $16.53 
Shares outstanding   1,731 
Net assets  $28,626 
Class C: Net asset value per share  $16.51 
Shares outstanding   13,990 
Net assets  $230,924 
Class I: Net asset value per share  $16.49 
Shares outstanding   24,927 
Net assets  $411,155 
Class R3: Net asset value per share  $16.58 
Shares outstanding   2,320 
Net assets  $38,451 
Class R4: Net asset value per share  $16.59 
Shares outstanding   2,754 
Net assets  $45,698 
Class R5: Net asset value per share  $16.64 
Shares outstanding   1,573 
Net assets  $26,186 
Class Y: Net asset value per share  $16.67 
Shares outstanding   8,151 
Net assets  $135,889 

 

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

 

9

 

 

The Hartford Equity Income Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $32,624 
Interest   39 
Less: Foreign tax withheld   (398)
Total investment income   32,265 
      
Expenses:     
Investment management fees   6,464 
Administrative services fees    
Class R3   30 
Class R4   25 
Class R5   7 
Transfer agent fees    
Class A   908 
Class B   38 
Class C   112 
Class I   169 
Class R3   1 
Class R4   1 
Class R5    
Class Y   1 
Distribution fees     
Class A   1,629 
Class B   138 
Class C   938 
Class R3   75 
Class R4   43 
Custodian fees   6 
Accounting services fees   121 
Registration and filing fees   89 
Board of Directors' fees   18 
Audit fees   11 
Other expenses   140 
Total expenses (before fees paid indirectly)   10,964 
Commission recapture   (5)
Custodian fee offset    
Total fees paid indirectly   (5)
Total expenses, net   10,959 
Net Investment Income   21,306 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   29,600 
Net realized loss on foreign currency contracts   (22)
Net realized loss on other foreign currency transactions   (5)
Net Realized Gain on Investments and Foreign Currency Transactions   29,573 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   232,186 
Net unrealized depreciation of foreign currency contracts   (10)
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   13 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   232,189 
Net Gain on Investments and Foreign Currency Transactions   261,762 
Net Increase in Net Assets Resulting from Operations  $283,068 

 

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

 

10

 

The Hartford Equity Income Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $21,306   $31,992 
Net realized gain on investments and foreign currency transactions   29,573    87,658 
Net unrealized appreciation of investments and foreign currency transactions   232,189    96,883 
Net Increase in Net Assets Resulting from Operations   283,068    216,533 
Distributions to Shareholders:          
From net investment income          
Class A   (12,180)   (22,036)
Class B   (129)   (347)
Class C   (1,126)   (1,772)
Class I   (3,376)   (3,504)
Class R3   (233)   (284)
Class R4   (324)   (326)
Class R5   (131)   (160)
Class Y   (1,091)   (3,322)
Total from net investment income   (18,590)   (31,751)
From net realized gain on investments          
Class A   (17,897)    
Class B   (407)    
Class C   (2,426)    
Class I   (3,825)    
Class R3   (357)    
Class R4   (370)    
Class R5   (132)    
Class Y   (1,114)    
Total from net realized gain on investments   (26,528)    
Total distributions   (45,118)   (31,751)
Capital Share Transactions:          
Class A   130,454    235,324 
Class B   (2,242)   (5,296)
Class C   48,484    67,157 
Class I   128,055    175,370 
Class R3   11,670    14,731 
Class R4   16,816    17,349 
Class R5   15,481    5,734 
Class Y   49,276    (116,833)
Net increase from capital share transactions   397,994    393,536 
Net Increase in Net Assets   635,944    578,318 
Net Assets:          
Beginning of period   1,759,077    1,180,759 
End of period  $2,395,021   $1,759,077 
Undistributed (distribution in excess of) net investment income (loss)  $4,600   $1,884 

 

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

 

11

 

The Hartford Equity Income Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the

 

12

 

 

 

Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current

 

13

 

The Hartford Equity Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

14

 

 

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, quarterly and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments that serve

 

15

 

The Hartford Equity Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a value at least equal to the amount of the commitment. As of April 30, 2013, the Fund had no outstanding when-issued or delayed-delivery investments.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
                             
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $10   $   $   $   $   $10 
Total  $   $10   $   $   $   $   $10 

 

16

 

 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Loss on Derivatives Recognized as a Result of Operations:
Net realized loss on foreign currency contracts  $   $(22)  $   $   $   $   $(22)
Total  $   $(22)  $   $   $   $   $(22)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:      
Net change in unrealized depreciation of foreign currency contracts  $   $(10)  $   $   $   $   $(10)
Total  $   $(10)  $   $   $   $   $(10)

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to
17

 

The Hartford Equity Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $31,751   $19,274 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $1,884 
Undistributed Long-Term Capital Gain   26,528 
Unrealized Appreciation *   199,228 
Total Accumulated Earnings  $227,640 

 

*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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(51)
Accumulated Net Realized Gain (Loss)   51 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

18

 

 

 

During the year ended October 31, 2012, the Fund utilized $64,195 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $250 million   0.7500% 
On next $250 million   0.7000% 
On next $500 million   0.6500% 
On next $1.5 billion   0.6000% 
On next $2.5 billion   0.5900% 
Over $5 billion   0.5875% 

 

19

 

The Hartford Equity Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 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%     1.50%     1.20%     0.90%     0.85%  

 

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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.07%
Class B   1.96 
Class C   1.80 
Class I   0.79 
Class R3   1.39 
Class R4   1.08 
Class R5   0.79 
Class Y   0.68 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $3,186 and contingent deferred sales charges of $24 from the Fund.

 

20

 

 

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $519,596 
Sales Proceeds Excluding U.S. Government Obligations   154,577 

 

21

 

The Hartford Equity Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

9.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares Sold   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   14,358    2,002    (7,803)       8,557    28,626    1,534    (13,362)       16,798 
Amount  $220,805   $29,571   $(119,922)  $   $130,454   $401,677   $21,587   $(187,940)  $   $235,324 
Class B                                                  
Shares   87    35    (267)       (145)   417    24    (817)       (376)
Amount  $1,331   $516   $(4,089)  $   $(2,242)  $5,820   $333   $(11,449)  $   $(5,296)
Class C                                                  
Shares   3,761    221    (837)       3,145    5,965    115    (1,332)       4,748 
Amount  $58,025   $3,226   $(12,767)  $   $48,484   $84,327   $1,615   $(18,785)  $   $67,157 
Class I                                                  
Shares   10,519    439    (2,627)       8,331    14,996    216    (2,727)       12,485 
Amount  $161,636   $6,514   $(40,095)  $   $128,055   $210,870   $3,051   $(38,551)  $   $175,370 
Class R3                                                  
Shares   931    37    (204)       764    1,196    19    (176)       1,039 
Amount  $14,227   $553   $(3,110)  $   $11,670   $16,963   $270   $(2,502)  $   $14,731 
Class R4                                                  
Shares   1,265    35    (209)       1,091    1,590    15    (378)       1,227 
Amount  $19,572   $527   $(3,283)  $   $16,816   $22,514   $215   $(5,380)  $   $17,349 
Class R5                                                  
Shares   1,088    15    (130)       973    974    10    (584)       400 
Amount  $17,277   $219   $(2,015)  $   $15,481   $14,012   $148   $(8,426)  $   $5,734 
Class Y                                                  
Shares   3,668    131    (654)       3,145    5,252    218    (14,181)       (8,711)
Amount  $57,559   $1,968   $(10,251)  $   $49,276   $74,173   $3,065   $(194,071)  $   $(116,833)
Total                                                  
Shares   35,677    2,915    (12,731)       25,861    59,016    2,151    (33,557)       27,610 
Amount  $550,432   $43,094   $(195,532)  $   $397,994   $830,356   $30,284   $(467,104)  $   $393,536 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   30   $473 
For the Year Ended October 31, 2012   165   $2,309 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

22

 

 

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

23

 

The Hartford Equity Income Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class

  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
 
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $14.81   $0.16   $1.95   $2.11   $(0.14)  $(0.22)  $   $(0.36)  $16.56 
B   14.78    0.10    1.94    2.04    (0.07)   (0.22)       (0.29)   16.53 
C   14.77    0.11    1.94    2.05    (0.09)   (0.22)       (0.31)   16.51 
I   14.75    0.18    1.94    2.12    (0.16)   (0.22)       (0.38)   16.49 
R3   14.83    0.14    1.95    2.09    (0.12)   (0.22)       (0.34)   16.58 
R4   14.84    0.16    1.96    2.12    (0.15)   (0.22)       (0.37)   16.59 
R5   14.88    0.18    1.96    2.14    (0.16)   (0.22)       (0.38)   16.64 
Y   14.90    0.20    1.96    2.16    (0.17)   (0.22)       (0.39)   16.67 
                                              
For the Year Ended October 31, 2012
A   12.93    0.29    1.89    2.18    (0.30)           (0.30)   14.81 
B   12.91    0.18    1.86    2.04    (0.17)           (0.17)   14.78 
C   12.91    0.19    1.88    2.07    (0.21)           (0.21)   14.77 
I   12.89    0.31    1.89    2.20    (0.34)           (0.34)   14.75 
R3   12.96    0.24    1.90    2.14    (0.27)           (0.27)   14.83 
R4   12.97    0.28    1.89    2.17    (0.30)           (0.30)   14.84 
R5   12.99    0.32    1.91    2.23    (0.34)           (0.34)   14.88 
Y   13.01    0.55    1.69    2.24    (0.35)           (0.35)   14.90 
                                              
For the Year Ended October 31, 2011 (E)
A   11.99    0.25    0.93    1.18    (0.24)           (0.24)   12.93 
B   11.97    0.14    0.93    1.07    (0.13)           (0.13)   12.91 
C   11.97    0.15    0.94    1.09    (0.15)           (0.15)   12.91 
I   11.95    0.28    0.94    1.22    (0.28)           (0.28)   12.89 
R3   12.03    0.20    0.94    1.14    (0.21)           (0.21)   12.96 
R4   12.03    0.25    0.93    1.18    (0.24)           (0.24)   12.97 
R5   12.05    0.27    0.95    1.22    (0.28)           (0.28)   12.99 
Y   12.06    0.29    0.95    1.24    (0.29)           (0.29)   13.01 
                                              
For the Year Ended October 31, 2010
A   10.74    0.21    1.24    1.45    (0.20)           (0.20)   11.99 
B   10.72    0.13    1.23    1.36    (0.11)           (0.11)   11.97 
C   10.73    0.13    1.23    1.36    (0.12)           (0.12)   11.97 
I   10.72    0.23    1.23    1.46    (0.23)           (0.23)   11.95 
R3   10.78    0.15    1.27    1.42    (0.17)           (0.17)   12.03 
R4   10.78    0.21    1.24    1.45    (0.20)           (0.20)   12.03 
R5   10.79    0.21    1.29    1.50    (0.24)           (0.24)   12.05 
Y   10.81    0.26    1.24    1.50    (0.25)           (0.25)   12.06 
                                              
For the Year Ended October 31, 2009 (E)
A   10.35    0.24    0.41    0.65    (0.26)           (0.26)   10.74 
B   10.33    0.18    0.40    0.58    (0.19)           (0.19)   10.72 
C   10.34    0.17    0.41    0.58    (0.19)           (0.19)   10.73 
I   10.33    0.22    0.46    0.68    (0.29)           (0.29)   10.72 
R3   10.39    0.15    0.47    0.62    (0.23)           (0.23)   10.78 
R4   10.40    0.18    0.47    0.65    (0.27)           (0.27)   10.78 
R5   10.40    0.28    0.40    0.68    (0.29)           (0.29)   10.79 
Y   10.40    0.29    0.42    0.71    (0.30)           (0.30)   10.81 
                                              
For the Year Ended October 31, 2008
A   15.16    0.32    (4.42)   (4.10)   (0.31)   (0.40)       (0.71)   10.35 
B   15.12    0.21    (4.41)   (4.20)   (0.19)   (0.40)       (0.59)   10.33 
C   15.14    0.23    (4.42)   (4.19)   (0.21)   (0.40)       (0.61)   10.34 
I   15.12    0.35    (4.39)   (4.04)   (0.35)   (0.40)       (0.75)   10.33 
R3   15.21    0.27    (4.41)   (4.14)   (0.28)   (0.40)       (0.68)   10.39 
R4   15.22    0.32    (4.43)   (4.11)   (0.31)   (0.40)       (0.71)   10.40 
R5   15.22    0.36    (4.43)   (4.07)   (0.35)   (0.40)       (0.75)   10.40 
Y   15.23    0.39    (4.46)   (4.07)   (0.36)   (0.40)       (0.76)   10.40 

 

24

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
                            
 14.58%(F)  $1,478,092    1.07%(G)   1.07%(G)   2.14%(G)   8%
 14.09(F)   28,626    1.96(G)   1.96(G)   1.28(G)    
 14.18(F)   230,924    1.80(G)   1.80(G)   1.40(G)    
 14.73(F)   411,155    0.79(G)   0.79(G)   2.39(G)    
 14.41(F)   38,451    1.39(G)   1.39(G)   1.78(G)    
 14.57(F)   45,698    1.08(G)   1.08(G)   2.07(G)    
 14.74(F)   26,186    0.79(G)   0.79(G)   2.30(G)    
 14.84(F)   135,889    0.68(G)   0.68(G)   2.55(G)    
                            
                            
 17.00    1,195,106    1.11    1.11    2.12    27 
 15.90    27,731    2.00    2.00    1.27     
 16.13    160,153    1.84    1.84    1.35     
 17.25    244,794    0.81    0.81    2.31     
 16.63    23,077    1.42    1.42    1.72     
 16.90    24,672    1.11    1.11    2.01     
 17.33    8,931    0.82    0.82    2.48     
 17.41    74,613    0.72    0.72    2.68     
                            
                            
 9.87    826,555    1.17    1.17    1.93    18 
 8.94    29,071    2.05    2.00    1.11     
 9.13    78,710    1.89    1.89    1.20     
 10.24    52,965    0.88    0.88    2.21     
 9.49    6,694    1.50    1.50    1.57     
 9.87    5,651    1.18    1.18    1.92     
 10.16    2,597    0.88    0.88    2.11     
 10.33    178,516    0.77    0.77    2.28     
                            
                            
 13.63    716,700    1.20    1.20    1.86    27 
 12.73    31,038    2.08    2.00    1.07     
 12.75    57,416    1.92    1.92    1.13     
 13.76    16,462    0.93    0.93    2.06     
 13.28    1,719    1.55    1.55    1.37     
 13.59    2,926    1.20    1.20    1.80     
 14.06    694    0.87    0.87    1.70     
 14.01    71,899    0.79    0.79    2.27     
                            
                            
 6.62    639,106    1.26    1.25    2.51    37 
 5.91    34,086    2.19    1.92    1.86     
 5.85    47,708    1.98    1.98    1.79     
 6.98    5,946    0.96    0.96    2.28     
 6.31    506    1.63    1.60    1.62     
 6.58    1,456    1.21    1.21    1.84     
 6.96    8    0.89    0.89    2.88     
 7.22    59,703    0.81    0.81    3.00     
                            
                            
 (28.08)   563,703    1.19    1.14    2.49    53 
 (28.67)   32,097    2.06    2.00    1.63     
 (28.61)   43,493    1.92    1.87    1.76     
 (27.80)   1,449    0.90    0.85    2.80     
 (28.26)   78    1.55    1.50    2.14     
 (28.03)   8    1.18    1.13    2.50     
 (27.82)   8    0.90    0.85    2.78     
 (27.80)   62,258    0.80    0.75    2.90     

 

25

 

The Hartford Equity Income Fund
Financial Highlights – (continued)

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.

 

26

 

The Hartford Equity Income Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

27

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

28

 

 

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,145.80   $5.69   $1,000.00   $1,019.49   $5.36    1.07%   181     365  
Class B  $1,000.00   $1,140.90   $10.41   $1,000.00   $1,015.07   $9.80    1.96    181     365  
Class C  $1,000.00   $1,141.80   $9.55   $1,000.00   $1,015.87   $8.99    1.80    181     365  
Class I  $1,000.00   $1,147.30   $4.20   $1,000.00   $1,020.89   $3.95    0.79    181     365  
Class R3  $1,000.00   $1,144.10   $7.37   $1,000.00   $1,017.92   $6.94    1.39    181     365  
Class R4  $1,000.00   $1,145.70   $5.76   $1,000.00   $1,019.42   $5.42    1.08    181     365  
Class R5  $1,000.00   $1,147.40   $4.18   $1,000.00   $1,020.90   $3.94    0.79    181     365  
Class Y  $1,000.00   $1,148.40   $3.63   $1,000.00   $1,021.41   $3.42    0.68    181     365  

 

30

 

The Hartford Equity Income Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Equity Income Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

31

 

The Hartford Equity Income Fund
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

32

 

The Hartford Equity Income Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Value Investing Risk: Value investments are considered to be undervalued, but they may never attain their potential value. Value-style investing falls in and out of favor, which may result in periods of underperformance.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

Dividend Paying Security Investment Risk: Dividends are not guaranteed and are subject to change. Dividend paying securities as a group can fall out of favor with the market, causing the Fund to underperform.

 

33
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-EI13 4/13 113973 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

13

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD FLOATING RATE FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Floating Rate Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 6
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 16
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 17
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 18
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 19
Notes to Financial Statements (Unaudited) 20
Financial Highlights (Unaudited) 36
Directors and Officers (Unaudited) 39
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 41
Quarterly Portfolio Holdings Information (Unaudited) 41
Expense Example (Unaudited) 42
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 43
Principal Risks (Unaudited) 45

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

 

The Hartford Floating Rate Fund inception 04/29/2005
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks to provide high current income, and long-term total return.

 

Performance Overview 4/29/05 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those shares classes.

 

Average Annual Total Returns (as of 4/30/13)

 

  6 Month†   1 Year   5 year   Since
Inception▲
 
Floating Rate A#   3.71%       6.97%       5.22%       4.37%    
Floating Rate A##        3.76%       4.58%       3.98%    
Floating Rate B#   3.32%       6.15%       4.40%       3.57%*    
Floating Rate B##        1.15%       4.06%       3.57%*    
Floating Rate C#   3.34%       6.18%       4.42%       3.59%    
Floating Rate C##        5.18%       4.42%       3.59%    
Floating Rate I#   3.84%       7.35%       5.48%       4.61%    
Floating Rate R3#   3.56%       6.78%       4.95%       4.23%    
Floating Rate R4#   3.70%       6.95%       5.18%       4.40%    
Floating Rate R5#   3.85%       7.26%       5.37%       4.59%    
Floating Rate Y#   3.89%       7.33%       5.54%       4.68%    
Credit Suisse Leveraged Loan Index   4.31%       8.23%       6.02%       5.04%    

 

Not Annualized
Inception: 04/29/2005
# Without sales charge
## With sales charge
* Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 3.00% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund's Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of April 23, 2012, Wellington Management Company, LLP became the sub-adviser for the Fund. At the end of a transition period of approximately four weeks ending on May 18, 2012, Hartford Investment Management Company ceased serving as a sub-adviser to the Fund.

 

Credit Suisse Leveraged Loan Index is designed to mirror the investable universe of the United States dollar-denominated leveraged loan market.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Floating Rate Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Floating Rate Class A   0.98%   0.98%
Floating Rate Class B   1.75%   1.80%
Floating Rate Class C   1.72%   1.72%
Floating Rate Class I   0.73%   0.73%
Floating Rate Class R3   1.25%   1.37%
Floating Rate Class R4   1.00%   1.06%
Floating Rate Class R5   0.70%   0.76%
Floating Rate Class Y   0.65%   0.65%

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Manager  
Michael Bacevich  
Vice President and Fixed Income Portfolio Manager  

 

How did the Fund perform?

The Class A shares of The Hartford Floating Rate Fund returned 3.71%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmark, the Credit Suisse Leveraged Loan Index, which returned 4.31% for the same period. The Fund also underperformed the 3.98% average return of the Lipper Loan Participation Funds peer group, a group of funds that invest primarily in interests in collateralized senior corporate loans that have floating or variable rates.

 

Why did the Fund perform this way?

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02% to 0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities, outperformed Treasuries on a duration-adjusted basis.

 

The Fund underperformed its benchmark, the Credit Suisse Leveraged Loan Index, for the period. Security selection decisions contributed positively toward relative performance, but were outweighed by the negative impacts of industry allocation decisions. However, an out-of-benchmark allocation to High Yield bonds, for the purpose of improving the Fund’s liquidity, was beneficial to relative returns. Underweights to the Restaurant and Aerospace & Defense sectors benefitted benchmark-relative results, while an underweight to the Utilities sector detracted from relative returns. Security selection was strongest in Technology and Chemicals sectors and weakest in Utilities. Within the Technology sector, overweights to Ceridian and First Data contributed positively to relative performance. We continue to like the payment processing and payroll companies in the Technology sector as we believe that they have shown strong operating metrics recently. An overweight position in Momentive Performance helped relative results in the

 

3

 

The Hartford Floating Rate Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

Chemicals sector. In the Utilities sector, an underweight to TXU represented the primary detractor from relative performance. TXU is a 2007 vintage LBO that has suffered from a large debt burden and has been impacted by the recent weakness in Natural Gas prices. A higher quality bias weighed on returns during the period, as bank loans rated CCC and below generated the strongest performance over the period. A modest cash position, also used for the purpose of improving the Fund’s liquidity, represented a drag on relative performance in an environment of rising bank loan prices. Finally, a high yield index credit default swap position, modestly helped relative performance.

 

What is the outlook?

We believe that the outlook for bank loans remains positive, and that the sector continues to benefit from strong credit fundamentals as evidenced by low interest expense relative to earnings. The bank-loan default rate by principal amount and issuer count ended April at 1.91% and 1.67%, respectively, still below their historical averages of 3.6% and 3.1%. Because issuers have extended maturities via refinancings, less than U.S. $30 billion is scheduled to mature through 2014, which we believe will support continued low defaults. Furthermore, bank loan mutual funds appear to have continued to benefit from a supportive technical picture, as suggested by 45 consecutive weeks of positive net inflows and year-to-date inflows of U.S. $20.8 billion through the end of April. Moreover, the market for CLOs, one of the main sources of demand for bank loans, is forecast to increase to U.S. $70 billion in 2013 from U.S. $45 billion in 2012 according to JP Morgan.

 

We believe valuations of bank loans remain reasonable. The yield premium that investors typically demand for high yield over bank loans (due to higher interest-rate risk and lower positioning on issuers’ capital structure) has diminished, enhancing the relative appeal of bank loans.

 

Distribution by Credit Quality
as of April 30, 2013
Credit Rating *  Percentage of
Net Assets
 
Baa / BBB   0.4%
Ba / BB   26.0 
B   62.8 
Caa / CCC or Lower   4.0 
Unrated   2.6 
Non-Debt Securities and Other Short-Term Instruments   12.7 
Other Assets & Liabilities   (8.5)
Total   100.0%

 

* Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.
 

 

4

 

 

 

Diversification by Industry
as of April 30, 2013
Industry  Percentage of
Net Assets
 
Fixed Income Securities     
Accommodation and Food Services   1.8%
Administrative Waste Management and Remediation   2.6 
Agriculture, Construction, Mining and Machinery   1.3 
Air Transportation   2.2 
Arts, Entertainment and Recreation   8.1 
Chemical Manufacturing   3.7 
Computer and Electronic Product Manufacturing   2.4 
Construction   0.8 
Educational Services   0.3 
Electrical Equipment, Appliance Manufacturing   0.3 
Finance and Insurance   7.5 
Food Manufacturing   5.1 
Furniture and Related Product Manufacturing   1.2 
Health Care and Social Assistance   9.7 
Information   16.5 
Manufacturing   0.1 
Media   1.7 
Mining   2.1 
Miscellaneous Manufacturing   2.7 
Motor Vehicle and Parts Manufacturing   2.6 
Nonmetallic Mineral Product Manufacturing   0.2 
Other Services   0.3 
Petroleum and Coal Products Manufacturing   2.3 
Pipeline Transportation   0.9 
Plastics and Rubber Products Manufacturing   0.8 
Primary Metal Manufacturing   1.0 
Professional, Scientific and Technical Services   3.3 
Real Estate, Rental and Leasing   2.2 
Retail Trade   7.0 
Soap, Cleaning Compound and Toilet Manufacturing   0.5 
Transit and Ground Passenger Transportation   0.6 
Truck Transportation   0.6 
Utilities   2.6 
Wholesale Trade   0.8 
Total   95.8%
Equity Securities     
Consumer Durables and Apparel   0.0 
Energy   0.0 
Materials   0.0 
Media   0.0 
Retailing   0.0 
Total   0.0%
Short-Term Investments   12.7 
Other Assets and Liabilities   (8.5)
Total   100.0%

 

5

 

The Hartford Floating Rate Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 

CORPORATE BONDS - 9.0%

     
     Accommodation and Food Services - 0.2%     
     Caesars Entertainment Operating Co., Inc.     
$1,500   9.00%, 02/15/2020 ■‡  $1,477 
     Caesars Operating Escrow     
 9,500   9.00%, 02/15/2020 ■‡   9,358 
     Elior Finance & Co.     
EUR685   6.50%, 05/01/2020 ■   941 
         11,776 
     Administrative Waste Management and Remediation - 0.1%     
     Corrections Corp. of America     
 8,655   4.13%, 04/01/2020 ■‡   8,936 
           
     Arts, Entertainment and Recreation - 1.3%     
     Bresnan Broadband Holdings LLC     
 6,915   8.00%, 12/15/2018 ■‡   7,572 
     CCO Holdings LLC     
 14,480   5.25%, 09/30/2022 ‡   14,751 
 17,235   5.75%, 01/15/2024 ☼   17,946 
     Chester Downs & Marina LLC     
 10,189   9.25%, 02/01/2020 ■‡   9,820 
     Citycenter Holdings LLC     
 6,000   7.63%, 01/15/2016 ‡   6,443 
     Clear Channel Communications, Inc.     
 7,518   9.00%, 12/15/2019 ■‡   7,518 
     Echostar DBS Corp.     
 6,000   7.13%, 02/01/2016 ‡   6,630 
     Great Canadian Gaming Co.     
CAD6,615   6.63%, 07/25/2022 ■‡   6,894 
     Sinclair Television Group, Inc.     
 11,000   5.38%, 04/01/2021 ■‡   11,137 
         88,711 
     Chemical Manufacturing - 0.5%     
     Eagle Spinco, Inc.     
 455   4.63%, 02/15/2021 ■‡   478 
     Georgia Gulf Corp.     
 260   4.88%, 05/15/2023 ■‡   272 
     Hexion U.S. Finance Corp.     
 2,326   6.63%, 04/15/2020 ‡   2,425 
 12,490   6.63%, 04/15/2020 ■   13,021 
     LyondellBasell Industries N.V.     
 4,892   5.00%, 04/15/2019 ‡   5,575 
     MPM Escrow LLC/MPM Finance Corp.     
 8,050   8.88%, 10/15/2020 ‡   8,774 
         30,545 
     Computer and Electronic Product Manufacturing - 0.2%     
     Freescale Semiconductor, Inc.     
 2,250   9.25%, 04/15/2018 ■‡   2,475 
     NXP B.V./NXP Funding LLC     
 7,430   5.75%, 02/15/2021 - 03/15/2023 ■‡   7,868 
         10,343 
     Finance and Insurance - 1.2%     
     AmeriGas Finance LLC     
 2,750   6.75%, 05/20/2020 ‡   3,045 
     CIT Group, Inc.     
 4,385   5.00%, 05/15/2017 ‡   4,780 
 5,120   5.38%, 05/15/2020 ‡   5,773 
     Ineos Finance plc     
 1,645   7.50%, 05/01/2020 ■‡   1,838 
 6,689   8.38%, 02/15/2019 ■‡   7,542 
     Kion Finance S.A.     
EUR4,000   4.73%, 02/15/2020 §‡Δ  5,353 
EUR11,580   6.75%, 02/15/2020 ■‡   16,623 
     Nuveen Investments, Inc.     
 10,085   9.13%, 10/15/2017 ■‡   10,766 
     Provident Funding Associates L.P.     
 8,126   10.25%, 04/15/2017 ■‡   9,081 
     Rivers Pittsburgh L.P.     
 6,535   9.50%, 06/15/2019 ■‡   7,221 
     SLM Corp.     
 8,129   6.00%, 01/25/2017 ‡   8,800 
         80,822 
     Food Manufacturing - 0.0%     
     Post Holdings, Inc.     
 2,882   7.38%, 02/15/2022 ‡   3,199 
           
     Health Care and Social Assistance - 0.8%     
     Biomet, Inc.     
 5,015   6.50%, 08/01/2020 ■‡   5,466 
     Community Health Systems, Inc.     
 8,330   5.13%, 08/15/2018 ‡   8,913 
 6,665   7.13%, 07/15/2020 ‡   7,448 
     DaVita, Inc.     
 9,435   5.75%, 08/15/2022 ‡   10,048 
     Fresenius Medical Care U.S. Finance II, Inc.     
 3,000   5.63%, 07/31/2019 ■‡   3,353 
     HCA, Inc.     
 5,000   7.25%, 09/15/2020 ‡   5,544 
     Valeant Pharmaceuticals International     
 3,500   6.50%, 07/15/2016 ■‡   3,647 
     Warner Chilcott plc     
 6,071   7.75%, 09/15/2018 ‡   6,587 
         51,006 
     Information - 1.8%     
     Avaya, Inc.     
 6,320   7.00%, 04/01/2019 ■‡   6,083 
     Cegedim S.A.     
EUR1,745   6.75%, 04/01/2020 ■   2,315 
     Ceridian Corp.     
 6,920   8.88%, 07/15/2019 ■‡   8,122 
     Cerved Technologies S.p.A.     
EUR2,500   5.59%, 01/15/2019 ■‡Δ   3,325 
     First Data Corp.     
 10,625   6.75%, 11/01/2020 ■‡   11,395 
     Intelsat Jackson Holdings S.A.     
 6,000   8.50%, 11/01/2019 ‡   6,750 
     Intelsat Luxembourg S.A.     
 8,270   7.75%, 06/01/2021 ■‡   8,725 
     Level 3 Financing, Inc.     
 10,926   4.21%, 02/15/2015 ‡Δ   10,926 
     Nara Cable Funding II Ltd.     
EUR6,550   8.50%, 03/01/2020 §   9,489 
     NII International Telecom Sarl     
 4,135   11.38%, 08/15/2019 ■‡   4,776 
     Unitymedia Hessen GmbH & Co.     
 3,300   5.50%, 01/15/2023 ■‡   3,416 
     UPC Holding B.V.     
EUR6,500   6.75%, 03/15/2023 ‡   8,772 

 

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

 

6

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 

CORPORATE BONDS - 9.0% - (continued)

     
     Information - 1.8% - (continued)     
     Wind Acquisition Finance S.A.     
EUR11,375   5.43%, 04/30/2019 ■Δ  $15,317 
 12,500   7.25%, 02/15/2018 ■‡   13,158 
     Windstream Corp.     
 6,500   7.88%, 11/01/2017 ‡   7,589 
     Zayo Group LLC     
 1,230   8.13%, 01/01/2020 ‡   1,387 
         121,545 
     Mining - 0.2%     
     FMG Resources Pty Ltd.     
 1,500   8.25%, 11/01/2019 ■‡   1,650 
     Peabody Energy Corp.     
 8,000   6.00%, 11/15/2018 ‡   8,640 
         10,290 
     Miscellaneous Manufacturing - 0.1%     
     Reynolds Group Issuer, Inc.     
 3,000   5.75%, 10/15/2020 ‡   3,143 
 6,182   7.13%, 04/15/2019 ‡Δ   6,661 
         9,804 
     Motor Vehicle and Parts Manufacturing - 0.2%     
     American Axle & Manufacturing Holdings, Inc.     
 6,000   6.25%, 03/15/2021 ‡   6,323 
 5,874   9.25%, 01/15/2017 ■‡   6,417 
         12,740 
     Nonmetallic Mineral Product Manufacturing - 0.2%     
     Ardagh Packaging Finance plc     
 9,737   7.38%, 10/15/2017 ■‡   10,734 
         10,734 
     Petroleum and Coal Products Manufacturing - 0.7%     
     Concho Resources, Inc.     
 10,000   5.50%, 04/01/2023 ‡   10,650 
     Denbury Resources, Inc.     
 8,475   4.63%, 07/15/2023 ‡   8,560 
     EP Energy Finance, Inc.     
 6,500   7.75%, 09/01/2022 ‡   7,459 
     Everest Acquisition LLC     
 2,890   6.88%, 05/01/2019 ‡   3,165 
     Range Resources Corp.     
 6,605   5.00%, 03/15/2023 ■‡   7,034 
     Rosetta Resources, Inc.     
 5,870   5.63%, 05/01/2021 ☼   6,119 
     Shelf Drilling Holdings Ltd.     
 2,775   8.63%, 11/01/2018 ■‡   2,969 
         45,956 
     Plastics and Rubber Products Manufacturing - 0.1%     
     Sealed Air Corp.     
 4,146   8.13%, 09/15/2019 ■‡   4,747 
           
     Primary Metal Manufacturing - 0.1%     
     Novelis, Inc.     
 6,973   8.75%, 12/15/2020 ‡   7,914 
           
     Professional, Scientific and Technical Services - 0.1%     
     Affinion Group, Inc.     
 7,000   7.88%, 12/15/2018 ‡   5,495 
           
     Real Estate, Rental and Leasing - 0.3%     
     Avis Budget Car Rental LLC     
3,820   5.50%, 04/01/2023 ■‡   3,939 
     CBRE Services, Inc.     
 1,675   5.00%, 03/15/2023 ‡   1,715 
     International Lease Finance Corp.     
 15,000   5.88%, 08/15/2022 ‡   16,532 
         22,186 
     Retail Trade - 0.1%     
     GRD Holding III Corp.     
 5,050   10.75%, 06/01/2019 ■‡   5,422 
     Libby Glass, Inc.     
 880   6.88%, 05/15/2020 ‡   965 
         6,387 
     Soap, Cleaning Compound and Toilet Manufacturing - 0.2%     
     Revlon Consumer Products Corp.     
 10,860   5.75%, 02/15/2021 ■‡   11,186 
     YCC Holdings LLC     
 4,632   10.25%, 02/15/2016 ‡Þ   4,782 
         15,968 
     Utilities - 0.4%     
     Calpine Corp.     
 9,000   7.25%, 10/15/2017 ■‡   9,529 
     NRG Energy, Inc.     
 4,000   6.63%, 03/15/2023 ■‡   4,360 
 10,750   7.63%, 01/15/2018 ‡   12,456 
         26,345 
     Wholesale Trade - 0.2%     
     Spectrum Brands Holdings, Inc.     
 9,100   9.50%, 06/15/2018 ‡   10,226 
     U.S. Foodservice, Inc.     
 3,000   8.50%, 06/30/2019 ■‡   3,263 
         13,489 
     Total corporate bonds     
     (cost $566,278)  $598,938 
           

SENIOR FLOATING RATE INTERESTS ♦ - 86.8%

     
     Accommodation and Food Services - 1.6%     
     Caesars Entertainment Operating Co., Inc.     
$15,141   4.45%, 01/28/2018  $13,526 
 49,094   5.45%, 01/28/2018   44,515 
 28,934   9.50%, 10/31/2016   29,339 
     Las Vegas Sands LLC, Extended Delayed Draw Term Loan     
 2,703   2.70%, 11/23/2016   2,704 
     Las Vegas Sands LLC, Extended Delayed Draw Term Loan 2     
 1,081   2.70%, 11/23/2015   1,081 
     Las Vegas Sands LLC, Extended Term Loan     
 11,317   2.70%, 11/23/2016   11,323 
     Pilot Travel Centers LLC     
 6,017   4.25%, 08/07/2019   5,952 
         108,440 
     Administrative Waste Management and Remediation - 2.5%     
     Acosta, Inc.     
 34,140   5.00%, 03/02/2018   34,635 
     ADS Waste Holdings, Inc.     
 28,149   4.25%, 10/09/2019   28,487 

 

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

 

7

 

The Hartford Floating Rate Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 

SENIOR FLOATING RATE INTERESTS ♦ - 86.8% - (continued)

     
     Administrative Waste Management and Remediation - 2.5% - (continued)     
     Affinia Group, Inc.     
$7,305   04/11/2016 ◊☼  $7,342 
     Audio Visual Services Group, Inc.     
 12,935   6.75%, 11/09/2018   13,129 
 4,000   10.75%, 05/09/2018   3,967 
     Ipreo Holdings LLC     
 14,583   6.50%, 08/07/2017   14,729 
     NexTag, Inc.     
 5,381   7.00%, 01/28/2016   4,951 
     Ozburn-Hessey Holding Co. LLC     
 4,200   8.25%, 04/08/2016   4,200 
     ServiceMaster (The) Co.     
 16,307   4.46%, 01/31/2017   16,432 
     SI Organization, Inc.     
 10,753   4.50%, 11/22/2016   10,685 
     Synagro Technologies, Inc.     
 14,236   2.28%, 03/28/2014 Ψ   13,880 
     Trans Union LLC     
 14,261   4.25%, 02/08/2019   14,433 
         166,870 
     Agriculture, Construction, Mining and Machinery - 1.3%     
     BOC Edwards, Inc.     
 3,750   03/22/2020 ◊☼   3,767 
     Hupah Finance, Inc.     
 11,880   4.50%, 01/21/2019   12,029 
     Nortek, Inc.     
 4,124   5.25%, 04/26/2017   4,165 
     Veyance Technologies, Inc.     
 67,000   5.25%, 09/08/2017   67,321 
         87,282 
     Air Transportation - 2.2%     
     AWAS Finance Luxembourg S.A.     
 6,623   3.50%, 06/10/2016   6,678 
     AWAS Finance Luxembourg S.aár.l.     
 5,077   4.75%, 07/16/2018   5,106 
     Delta Air Lines, Inc.     
 5,057   4.00%, 10/18/2018   5,113 
     Delta Air Lines, Inc., Term Loan     
 31,566   4.25%, 04/20/2017   31,977 
     Landmark Aviation     
 12,952   5.75%, 10/25/2019   13,276 
     Landmark Aviation FBO Canada, Inc.     
 1,337   2.70%, 10/25/2019   1,371 
     Macquarie Aircraft Leasing Finance S.A., First Lien Term Loan     
 9,678   1.70%, 11/29/2013   9,581 
     United Airlines, Inc.     
 34,630   4.00%, 04/01/2019   34,966 
     US Airways Group, Inc.     
 36,058   2.70%, 03/23/2014 ‡   36,053 
         144,121 
     Arts, Entertainment and Recreation - 6.8%     
     24 Hour Fitness Worldwide, Inc.     
 34,989   5.25%, 04/22/2016   35,155 
     Cenveo Corp.     
 8,665   04/05/2020 ◊☼   8,752 
     Cequel Communications LLC     
 29,097   3.50%, 02/14/2019 ☼   29,294 
     Clear Channel Communications, Inc.     
 35,263   3.85%, 01/29/2016 ‡   32,314 
     ClubCorp Club Operations, Inc.     
 17,390   5.00%, 11/30/2016   17,694 
     CSC Holdings, Inc.     
 16,250   2.70%, 04/15/2020 ☼   16,204 
     Cumulus Media, Inc.     
 33,812   4.50%, 09/17/2018   34,393 
     Cumulus Media, Inc., Second Lien Term Loan     
 4,000   7.50%, 09/16/2019   4,147 
     Dex Media West LLC     
 8,815   7.19%, 10/24/2014   6,949 
     F & W Publications, Inc., New Term Loan     
 3,454   7.75%, 06/09/2014   3,298 
     F & W Publications, Inc., Second Lien Term Loan     
 2,166   15.00%, 12/09/2014 Þ   1,462 
     FoxCo Acquisition LLC     
 6,859   5.50%, 07/14/2017   6,969 
     Golden Nugget, Inc., Delayed Draw Term Loan     
 4,177   3.20%, 06/22/2014 ‡Þ   4,036 
     Golden Nugget, Inc., Term Facility     
 7,407   3.20%, 06/22/2014 Þ   7,157 
     Kabel Deutschland GMBH     
EUR1,980   04/19/2020◊☼   2,614 
     Kabel Deutschland Holding AG     
 33,562   3.25%, 02/01/2019   33,711 
     MGM Resorts International     
 36,908   3.28%, 12/20/2017   36,954 
 42,823   4.25%, 12/20/2019   43,420 
     Penn National Gaming, Inc.     
 8,449   3.75%, 07/16/2018   8,528 
     Penton Media, Inc.     
 8,784   6.00%, 08/01/2014 Þ   8,488 
     R.H. Donnelley, Inc.     
 4,670   9.00%, 10/24/2014   3,351 
     Rock Ohio Caesars LLC     
 2,825   03/28/2019 ◊☼   2,850 
     Salem Communications Corp.     
 8,775   4.50%, 03/13/2020   8,896 
     San Juan Cable LLC     
 16,542   6.00%, 06/09/2017   16,790 
     Seminole (The) Tribe of Florida, Inc.     
 7,540   04/11/2020 ◊☼   7,584 
     Station Casinos LLC     
 39,315   5.00%, 03/02/2020   39,763 
     Tribune Co.     
 27,606   4.00%, 12/31/2019   27,922 
         448,695 
     Chemical Manufacturing - 3.2%     
     Cytec Industries, Inc.     
 1,963   09/20/2019 ◊   1,986 
     DuPont Performance Coatings, Inc.     
 14,350   4.75%, 02/01/2020   14,528 
EUR5,250   5.25%, 02/01/2020   6,981 
     Houghton International, Inc.     
 13,860   5.25%, 12/20/2019   14,068 

 

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

 

8

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 

SENIOR FLOATING RATE INTERESTS ♦ - 86.8% - (continued)

     
     Chemical Manufacturing - 3.2% - (continued)     
     Ineos US Finance LLC     
$36,480   6.50%, 05/04/2018 ☼  $36,877 
     Monarch, Inc.     
 5,052   8.25%, 09/12/2019 - 03/12/2020   5,126 
     Pinnacle Operating Corp.     
 29,805   04/29/2020 ◊☼   29,895 
 15,751   6.75%, 11/15/2018   15,948 
 4,250   11.50%, 05/15/2019   4,179 
     PQ Corp.     
 17,955   4.50%, 08/07/2017   18,145 
     Tronox Pigments Holland     
 13,255   02/08/2018 ◊☼   13,441 
     Univar, Inc.     
 39,650   5.00%, 06/30/2017   39,841 
     Utex Industries, Inc.     
 9,515   04/10/2020 - 04/10/2021 ◊☼   9,637 
         210,652 
     Computer and Electronic Product Manufacturing - 2.2%     
     CDW LLC     
 7,550   04/30/2020 ◊☼   7,564 
 68,428   4.00%, 07/15/2017 ☼   68,462 
     Ceridian Corp.     
 22,764   5.95%, 05/09/2017   23,054 
     Freescale Semiconductor, Inc.     
 39,246   5.00%, 03/01/2020   39,786 
     Spectrum Brands Holdings, Inc.     
 5,372   4.50%, 12/17/2019   5,447 
         144,313 
     Construction - 0.8%     
     Aluma Systems, Inc.     
 3,079   10/23/2018 ◊   3,120 
     Brand Energy & Infrastructure Services, Inc.     
 12,831   6.25%, 10/23/2018   12,999 
     Brock Holdings III, Inc.     
 17,464   6.01%, 03/16/2017   17,639 
 6,898   10.00%, 03/16/2018   6,958 
     Summit Materials LLC     
 10,899   5.00%, 01/30/2019   10,967 
         51,683 
     Educational Services - 0.3%     
     Bright Horizons Family Solutions, Inc.     
 9,656   4.00%, 01/30/2020   9,740 
     Meritas Schools Holdings LLC, Second Lien Term Loan     
 5,000   11.50%, 01/29/2018   4,950 
     Meritas Schools Holdings LLC, Term Loan B     
 7,911   7.50%, 07/29/2017   7,832 
         22,522 
     Electrical Equipment, Appliance Manufacturing - 0.3%     
     WESCO Distribution, Inc.     
 19,950   4.50%, 12/12/2019   20,149 
           
     Finance and Insurance - 6.3%     
     Asurion LLC     
 63,948   4.50%, 05/24/2019   64,660 
 4,688   4.75%, 07/23/2017   4,734 
     Capital Automotvie L.P.     
2,965   04/18/2020 ◊☼  3,054 
 19,081   4.25%, 04/05/2019 ☼   19,220 
     Chrysler Group LLC     
 39,753   6.00%, 05/24/2017   40,260 
     Cooper Gay Swett & Crawford Ltd.     
 11,565   04/05/2020 - 10/05/2020 ◊☼   11,690 
     Evertec LLC     
 14,955   04/11/2020 ◊☼   14,918 
     HUB International Ltd.     
 26,110   3.71%, 06/13/2017 - 12/13/2017   26,339 
     Interactive Data Corp.     
 19,022   3.75%, 02/11/2018   19,212 
     Lonestar Intermediate Super Holdings LLC     
 4,864   11.00%, 09/02/2019   5,220 
     Macquarie Aircraft Leasing Finance S.A., Second Lien Term Loan     
 10,424   4.20%, 11/29/2013   10,215 
     Nuveen Investments, Inc.     
 92,487   4.20%, 05/13/2017 ☼   93,528 
 25,895   6.50%, 02/28/2019 ☼   26,113 
     Ocwen Financial Corp.     
 10,685   5.00%, 02/15/2018   10,853 
     Springleaf Financial Funding Co.     
 16,996   5.50%, 05/10/2017   17,050 
     USI Insurance Services LLC     
 22,803   5.25%, 12/27/2019   23,065 
     Walter Investment Management     
 27,605   5.75%, 11/28/2017   28,059 
         418,190 
     Food Manufacturing - 5.1%     
     Advance Pierre Foods, Inc.     
 17,896   5.75%, 07/10/2017   18,147 
 9,000   9.50%, 10/10/2017   9,214 
     American Seafoods Group LLC     
 15,444   4.25%, 03/18/2018   15,136 
     Del Monte Foods Co.     
 66,582   4.00%, 03/08/2018   67,060 
     Dole Food Co., Inc.     
 17,190   04/25/2020 ◊☼   17,297 
     H. J. Heinz Co.     
 109,390   03/27/2020 ◊☼   110,347 
     Hostess Brands, Inc.     
 7,490   6.75%, 03/21/2020   7,658 
     JBS USA LLC     
 27,246   3.75%, 05/25/2018   27,246 
     Milk Specialties Co.     
 180   07/11/2018 ◊☼Б   183 
 8,953   7.00%, 11/09/2018   9,087 
     Pinnacle Foods Finance LLC     
 30,192   3.70%, 10/02/2016   30,368 
     Roundy's Supermarkets, Inc.     
 19,848   5.75%, 02/13/2019   19,438 
     U.S. Foodservice, Inc.     
 8,846   5.75%, 03/31/2017   8,946 
         340,127 
     Furniture and Related Product Manufacturing - 1.2%     
     AOT Bedding Super Holdings LLC     
 51,955   5.00%, 10/01/2019   52,629 

 

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

 

9

 

The Hartford Floating Rate Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 

SENIOR FLOATING RATE INTERESTS ♦ - 86.8% - (continued)

     
     Furniture and Related Product Manufacturing - 1.2% - (continued)     
     Tempur-Pedic International, Inc.     
$11,401   5.00%, 03/18/2020  $11,582 
     Wilsonart International Holding LLC     
 13,275   4.00%, 10/31/2019 ☼   13,315 
         77,526 
     Health Care and Social Assistance - 8.9%     
     AccentCare, Inc.     
 6,034   6.50%, 12/22/2016   3,620 
     Alere, Inc.     
 30,538   4.25%, 06/30/2017   30,958 
     American Renal Holdings, Inc.     
 20,725   4.50%, 08/20/2019   20,770 
 9,285   8.50%, 02/14/2020   9,362 
     Ardent Medical Services, Inc.     
 9,975   6.75%, 07/02/2018   10,125 
     ATI Holdings, Inc.     
 2,598   5.75%, 12/20/2019   2,636 
     Bausch & Lomb, Inc.     
 12,491   5.25%, 05/17/2019   12,625 
     Catalent Pharma Solutions, Inc.     
 2,385   12/31/2017 ◊☼   2,409 
     DaVita, Inc.     
 29,223   2.70%, 11/01/2017   29,296 
 46,319   4.00%, 11/01/2019   46,804 
     DJO Finance LLC     
 16,728   4.75%, 09/15/2017   16,996 
     Grifols, Inc.     
 18,525   4.25%, 06/01/2017   18,731 
     HCA, Inc.     
 5,000   05/30/2017 ◊☼   5,000 
 6,665   2.95%, 05/01/2018 ☼   6,677 
     HCA, Inc., Tranche B-2 Term Loan     
 35,805   3.53%, 03/31/2017   35,816 
     HCA, Inc., Tranche B-3 Term Loan     
 15,094   2.95%, 05/01/2018   15,091 
     Health Management Associates, Inc.     
 6,907   3.50%, 11/16/2018   6,968 
     Hologic, Inc.     
 33,318   4.50%, 08/01/2019   33,753 
     Iasis Healthcare LLC     
 16,466   4.50%, 05/03/2018   16,700 
     Immucor, Inc.     
 17,528   5.00%, 08/19/2018   17,762 
     IMS Health, Inc.     
 8,125   3.75%, 09/01/2017   8,190 
     Insight Pharmaceuticals LLC     
 9,846   6.25%, 08/25/2016   9,932 
     InVentiv Health, Inc., 1st Lien Consolidated Term Loan     
 7,445   7.50%, 08/04/2016   7,376 
     InVentiv Health, Inc., Term Loan B2     
 7,469   7.75%, 05/15/2018   7,395 
     Jazz Pharmaceuticals, Inc.     
 5,717   5.25%, 06/12/2018   5,796 
     Kindred Healthcare, Inc.     
 9,266   5.25%, 06/01/2018   9,319 
     Kinetic Concepts, Inc.     
 19,255   5.50%, 05/04/2018   19,572 
     MultiPlan, Inc.     
28,097   4.00%, 08/26/2017  28,372 
     NBTY, Inc.     
 22,466   3.50%, 10/01/2017   22,678 
     Par Pharmeceutical Cos., Inc.     
 15,597   4.25%, 09/30/2019   15,740 
     Pharmaceutical Product Development, Inc.     
 14,489   4.25%, 12/05/2018   14,688 
     Physician Oncology Services, Delayed Draw Term Commitment     
 816   8.00%, 01/31/2017   816 
     Physician Oncology Services, Term Loan     
 6,719   8.00%, 01/31/2017   6,719 
     Sheridan Healthcare, Inc.     
 7,446   4.50%, 06/29/2018   7,534 
     Sheridan Holdings, Inc.     
 2,246   9.00%, 07/01/2019   2,284 
     Surgery Center Holdings, Inc.     
 10,000   04/10/2019 ◊☼   10,050 
     Truven Health Analytics, Inc.     
 4,943   4.50%, 06/06/2019   5,001 
     United Surgical Partners International, Inc., Term Loan B     
 2   7.00%, 04/03/2019 ☼   3 
     US Renal Care, Inc.     
 9,429   6.25%, 07/03/2019   9,570 
 2,666   10.25%, 01/03/2020   2,716 
     Valeant Pharmaceuticals International     
 36,716   3.50%, 02/13/2019 - 12/11/2019   37,105 
     Warner Chilcott Corp., Term Loan B-1     
 6,480   4.25%, 03/15/2018   6,572 
     Warner Chilcott Corp., Term Loan B-2     
 2,296   4.25%, 03/15/2018   2,329 
     Warner Chilcott Corp., Term Loan B-3     
 5,107   4.25%, 03/15/2018   5,179 
     Warner Chilcott plc     
 2,821   4.25%, 03/15/2018   2,861 
         589,896 
     Information - 14.7%     
     Alcatel-Lucent     
 41,606   7.25%, 01/30/2019   42,622 
     Arris Group, Inc.     
 20,500   3.50%, 02/10/2020 ☼   20,513 
     Aspect Software, Inc.     
 10,280   7.00%, 05/07/2016   10,382 
     Avaya, Inc., Term B-3 Loan     
 7,119   4.79%, 10/26/2017   6,627 
     Blackboard, Inc.     
 18,993   6.25%, 10/04/2018   19,325 
     Charter Communications Operating LLC     
 49,865   04/10/2020 - 01/19/2021 ◊☼   49,740 
 21,381   4.00%, 05/15/2019   21,439 
     Charter Communications Operating LLC, Term C Loan Extended     
 6,965   3.45%, 09/06/2016 ‡   6,973 
     Crown Castle International Corp.     
 18,790   3.25%, 01/31/2019   18,877 
     Decision Insight Information Group I, Inc.     
 17,263   7.00%, 01/04/2017   17,447 

 

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

 

10

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS ♦ - 86.8% - (continued)     
     Information - 14.7% - (continued)     
     Emdeon, Inc.     
$15,848   3.75%, 11/02/2018 ☼  $15,983 
     Epicor Software Corp.     
 42,520   4.50%, 05/16/2018   43,158 
     First Data Corp.     
 13,804   4.20%, 03/24/2017 - 09/30/2018   13,776 
     First Data Corp., Extended 1st Lien Term Loan     
 88,764   4.20%, 03/23/2018   88,421 
     Hyland Software, Inc.     
 6,648   5.50%, 10/25/2019   6,688 
     Integra Telecom, Inc.     
 2,025   6.00%, 02/22/2019   2,066 
     Intelsat Jackson Holdings S.A.     
 29,802   3.20%, 02/01/2014   29,780 
 34,763   4.50%, 04/02/2018   35,198 
     Kronos, Inc.     
 14,264   4.50%, 10/30/2019   14,435 
 3,000   9.75%, 04/30/2020   3,165 
     Lawson Software, Inc.     
 25,101   5.25%, 04/05/2018   25,490 
     Leap Wireless International, Inc.     
 17,203   4.75%, 10/10/2019 - 03/01/2020   17,278 
     Level 3 Financing, Inc.     
 38,181   4.75%, 02/01/2016 - 08/01/2019   38,609 
 49,045   5.25%, 08/01/2019   49,683 
     Light Tower Fiber LLC     
 17,645   4.50%, 04/01/2020   17,821 
 1,705   8.00%, 03/28/2021   1,737 
     Mediacom Broadband LLC, Term Loan E     
 7,852   4.50%, 10/23/2017   7,883 
     Mediacom Broadband LLC, Tranche F Term Loan     
 15,847   4.50%, 10/23/2017   15,939 
     Metro PCS Wireless, Inc., Tranche B-2 Term Loan     
 6,520   4.73%, 11/03/2016   6,520 
     MetroPCS Wireless, Inc., Term Loan B3     
 4,379   4.88%, 03/17/2018   4,380 
     MISYS plc     
 25,522   7.25%, 12/12/2018   25,937 
     MModal, Inc.     
 4,728   6.75%, 08/16/2019   4,619 
     Nine Entertainment Group Ltd     
 20,105   3.50%, 02/05/2020   20,147 
     Northland Cable Television, Inc.     
 9,563   7.75%, 12/30/2016   9,323 
     Novell, Inc.     
 17,274   7.25%, 11/22/2017   17,473 
     Peak 10, Inc.     
 6,030   7.25%, 10/25/2018   6,105 
     RedPrairie Corp.     
 6,788   6.75%, 12/21/2018   6,932 
     Skillsoft Corp.     
 14,005   5.00%, 05/26/2017   14,224 
     Sorenson Communications, Inc.     
 17,110   9.50%, 10/31/2014   17,379 
     Syniverse Holdings, Inc.     
 5,600   1.35%, 04/23/2019 ☼Б   5,618 
     Telesat Canada     
13,613   3.50%, 03/28/2019 ☼  13,720 
     TransFirst Holding, Inc.     
 12,020   6.25%, 12/27/2017   12,245 
 500   11.00%, 06/27/2018   511 
     TWCC Holding, Corp.     
 18,393   3.50%, 02/13/2017   18,643 
     UPC Financing Partnership     
 15,875   06/10/2021 ◊☼   15,851 
 12,750   4.00%, 01/31/2021   12,886 
     Virgin Media Finance plc     
 71,300   02/15/2020 ◊☼   79,177 
     West Corp.     
 23,264   4.25%, 06/30/2018   23,626 
     WideOpenWest Finance LLC     
 14,902   4.75%, 03/26/2019   15,093 
     Windstream Corp.     
 6,773   3.50%, 01/23/2020   6,794 
         978,258 
     Manufacturing - 0.1%     
     Ameriforge Group, Inc.     
 6,429   5.00%, 12/19/2019   6,509 
 1,335   8.75%, 12/21/2020   1,361 
         7,870 
     Media - 1.7%     
     Gray Television, Inc.     
 14,662   4.75%, 10/12/2019   14,864 
     Primedia, Inc.     
 11,600   7.50%, 01/13/2018   11,542 
     Univision Communications, Inc.     
 88,615   4.75%, 03/01/2020   89,414 
         115,820 
     Mining - 1.9%     
     Arch Coal, Inc.     
 44,867   5.75%, 05/16/2018   45,447 
     Fortescue Metals Group Ltd.     
 80,331   5.25%, 10/18/2017   81,737 
         127,184 
     Miscellaneous Manufacturing - 2.6%     
     Bombardier Recreational Products, Inc.     
 19,455   5.00%, 01/30/2019   19,641 
     DigitalGlobe, Inc.     
 15,330   3.75%, 01/31/2020   15,491 
     Doncasters plc     
 20,415   5.50%, 04/05/2020   20,559 
     Hamilton Sundstrand Corp.     
 38,818   4.00%, 12/13/2019   39,080 
     Provo Craft & Novelty, Inc.     
 9,542   23.50%, 03/22/2016   732 
     Reynolds Group Holdings, Inc.     
 46,690   4.75%, 09/28/2018   47,413 
     Sequa Corp.     
 23,485   5.25%, 06/19/2017   23,834 
     TransDigm Group, Inc.     
 7,966   3.75%, 02/28/2020   8,073 
         174,823 
     Motor Vehicle and Parts Manufacturing - 2.4%     
     Allison Transmission, Inc.     
 27,941   4.25%, 08/23/2019   28,314 

 

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

 

11

 

The Hartford Floating Rate Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 

SENIOR FLOATING RATE INTERESTS ♦ - 86.8% - (continued)

     
     Motor Vehicle and Parts Manufacturing - 2.4% - (continued)     
     Federal Mogul Corp., Tranche B Term Loan     
$42,115   2.95%, 12/29/2014  $39,897 
     Federal Mogul Corp., Tranche C Term Loan     
 13,624   2.14%, 12/28/2015   12,907 
     Navistar, Inc.     
 38,677   5.75%, 08/17/2017 ☼   39,378 
     Tomkins LLC     
 28,758   3.75%, 09/29/2016   29,118 
     Tower International, Inc.     
 7,640   04/16/2020 ◊☼   7,726 
         157,340 
     Other Services - 0.3%     
     Alliance Laundry Systems LLC     
 11,223   4.50%, 12/10/2018   11,321 
     Apex Tool Group LLC     
 7,175   4.50%, 01/31/2020   7,267 
         18,588 
     Petroleum and Coal Products Manufacturing - 1.6%     
     Dynegy Power LLC     
 14,458   04/16/2020 ◊☼   14,451 
     Dynegy, Inc.     
 9,037   04/15/2020 ◊☼   9,032 
     Plains Exploration & Production Co.     
 24,550   4.00%, 11/30/2019   24,565 
     Ruby Western Pipeline Holdings LLC     
 7,625   3.50%, 03/31/2020   7,701 
     Samson Investment Co.     
 22,745   6.00%, 09/25/2018   23,001 
     Shelf Drilling International Holdings Ltd.     
 10,175   6.25%, 05/31/2018   10,225 
     Walter Energy, Inc.     
 9,750   5.75%, 04/02/2018   9,872 
     Willbros United States Holdings, Inc.     
 9,636   9.50%, 06/30/2014   9,578 
         108,425 
     Pipeline Transportation - 0.9%     
     EMG Utica LLC     
 4,800   4.75%, 03/07/2020   4,821 
     EP Energy LLC     
 10,605   4.50%, 04/30/2019   10,724 
 19,622   5.00%, 05/24/2018   19,706 
     NGPL Pipeco LLC     
 9,084   6.75%, 09/15/2017   9,202 
     Philadelphia Energy Solutions LLC     
 12,855   04/03/2018 ◊☼   13,080 
         57,533 
     Plastics and Rubber Products Manufacturing - 0.7%     
     Berry Plastics Group, Inc.     
 35,000   3.50%, 02/10/2020   34,941 
     Consolidated Container Co.     
 6,965   5.00%, 07/03/2019   7,057 
     Tricorbraun, Inc.     
 7,632   5.50%, 05/03/2018   7,655 
         49,653 
     Primary Metal Manufacturing - 0.9%     
     Novelis, Inc.     
 51,501   3.75%, 03/10/2017   52,338 
     WireCo WorldGroup, Inc.     
6,821   6.00%, 02/15/2017  6,898 
         59,236 
     Professional, Scientific and Technical Services - 3.2%     
     Advantage Sales & Marketing, Inc.     
 32,263   4.25%, 12/18/2017 ☼   32,626 
 9,874   8.25%, 06/17/2018   9,898 
     Affinion Group, Inc., Tranche B Term Loan     
 71,965   6.50%, 10/09/2016   70,666 
     AlixPartners LLP     
 14,471   4.50%, 06/30/2019   14,643 
 4,575   10.75%, 12/27/2019   4,689 
     IMG Worldwide, Inc.     
 11,706   5.50%, 06/16/2016   11,824 
     MoneyGram International, Inc.     
 25,230   4.25%, 03/27/2020   25,428 
     Paradigm Ltd., Term Loan B1     
 13,930   4.75%, 07/30/2019   14,056 
     Paradigm Ltd., Term Loan B2     
 2,500   10.50%, 07/30/2020   2,538 
     RBS Holding Co. LLC     
 14,700   9.25%, 03/23/2017   4,704 
     SunGard Data Systems, Inc.     
 9,320   4.00%, 03/08/2020   9,428 
 12,020   4.50%, 01/31/2020   12,163 
         212,663 
     Real Estate, Rental and Leasing - 1.9%     
     Avis Budget Car Rental LLC     
 9,000   3.75%, 03/15/2019   9,116 
     Fly Leasing Ltd.     
 9,263   5.75%, 08/08/2018   9,382 
     Realogy Corp., Credit Linked Deposit     
 1,279   3.20%, 10/05/2013   1,275 
     Realogy Corp., Extended 1st Lien Term Loan B     
 71,932   4.01%, 03/05/2020   72,764 
     Realogy Corp., Extended Credit Linked Deposit     
 8,532   4.49%, 10/10/2016   8,631 
     The Hertz Corp.     
 26,485   3.00%, 03/11/2018 ☼   26,554 
         127,722 
     Retail Trade - 6.9%     
     99 Cents Only Stores     
 13,860   5.25%, 01/11/2019   14,031 
     Albertsons LLC     
 5,675   5.75%, 02/20/2016   5,736 
     American Builders & Contractors Supply Co.     
 16,495   3.50%, 04/05/2020   16,625 
     Aramark Corp.     
 37,350   4.00%, 08/22/2019   37,746 
     Armored AutoGroup, Inc.     
 10,718   6.00%, 11/05/2016   10,712 
     BJ's Wholesale Club, Inc.     
 35,865   4.25%, 09/26/2019   36,151 
     Burlington Coat Factory Warehouse Corp.     
 11,967   5.50%, 02/23/2017   12,113 

 

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

 

12

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 

SENIOR FLOATING RATE INTERESTS ♦ - 86.8% - (continued)

     
     Retail Trade - 6.9% - (continued)     
     EB Sports Corp.     
$12,923   11.50%, 12/31/2015 Þ  $12,794 
     FleetPride, Inc.     
 15,960   5.25%, 11/19/2019   15,874 
     Great Atlantic & Pacific Tea Co., Inc.     
 14,832   11.00%, 03/13/2017   14,962 
     Hillman Group, Inc.     
 16,626   4.25%, 05/28/2017   16,730 
     KAR Auction Services, Inc.     
 6,910   3.75%, 05/19/2017   7,001 
     Michaels Stores, Inc.     
 26,520   3.75%, 01/28/2020   26,765 
     Michaels Stores, Inc., Term B Loan     
 6,076   4.25%, 02/25/2018   6,159 
     Neiman (The) Marcus Group, Inc.     
 69,115   4.00%, 05/16/2018   69,616 
     Party City Holdings, Inc.     
 25,077   4.25%, 07/27/2019   25,254 
     Rite Aid Corp.     
 38,250   4.00%, 02/21/2020   38,704 
 7,755   5.75%, 08/21/2020   8,039 
     Sports (The) Authority, Inc.     
 28,266   7.50%, 11/16/2017   28,390 
     Sprouts Farmers Markets Holdings LLC     
 12,725   04/12/2020 ◊☼    12,757 
     Supervalu, Inc.     
 16,130   6.25%, 03/21/2019   16,370 
     TI Automotive Ltd.     
 4,925   5.50%, 03/14/2019   4,999 
     Weight Watchers International, Inc.     
 21,430   3.75%, 04/02/2020   21,358 
         458,886 
     Soap, Cleaning Compound and Toilet Manufacturing - 0.3%     
     Revlon Consumer Products Corp.     
 16,821   4.00%, 11/20/2017   17,050 
     Yankee (The) Candle Co., Inc.     
 186   5.25%, 04/02/2019   187 
         17,237 
     Transit and Ground Passenger Transportation - 0.6%     
     Emergency Medical Services Corp.     
 41,056   4.00%, 05/25/2018   41,547 
           
     Truck Transportation - 0.6%     
     Nexeo Solutions LLC     
 22,172   5.00%, 09/08/2017 - 09/09/2017   22,283 
     Swift Transportation Co., Inc.     
 16,427   4.00%, 12/21/2017   16,673 
         38,956 
     Utilities - 2.2%     
     AES Corp.     
 15,293   3.75%, 06/01/2018   15,519 
     Calpine Corp.     
 20,204   4.00%, 10/09/2019   20,455 
     Calpine Corp. Term Loan     
 43,185   4.00%, 04/01/2018   43,721 
     Energy Transfer Equity L.P.     
 12,923   3.75%, 03/24/2017   12,973 
     LSP Madison Funding LLC     
 9,048   5.50%, 06/28/2019   9,158 
     Star West Generation LLC     
13,930   5.00%, 03/13/2020  14,191 
     Texas Competitive Electric Holdings Co. LLC     
 34,498   4.73%, 10/10/2017   25,367 
     TPF Generation Holdings LLC, LC Facility Deposits     
 791   2.28%, 12/15/2013   791 
     TPF Generation Holdings LLC, Second Lien Term Loan     
 6,495   4.45%, 12/21/2014   6,491 
         148,666 
     Wholesale Trade - 0.6%     
     Harbor Freight Tools USA, Inc.     
 9,960   5.50%, 11/14/2017   10,087 
     HD Supply, Inc.     
 29,279   4.50%, 10/12/2017   29,638 
         39,725 
     Total senior floating rate interests     
     (cost $5,716,315)  $5,770,598 
           
COMMON STOCKS - 0.0%     
     Consumer Durables and Apparel - 0.0%     
 3   Provo Craft & Novelty, Inc. ⌂●†  $ 
           
     Energy - 0.0%     
 418,220   KCA Deutag ⌂●†   1,975 
           
     Materials - 0.0%     
    LyondellBasell Industries Class A   15 
           
     Media - 0.0%     
 16   F & W Publications, Inc. ●   10 
           
     Retailing - 0.0%     
 168   Neebo, Inc. ●   689 
           
     Total common stocks     
     (cost $6,091)  $2,689 
           
WARRANTS - 0.0%     
     Media - 0.0%     
 19   Cumulus Media, Inc. ⌂  $39 
 6   F & W Publications, Inc.   4 
         43 
     Total warrants     
     (cost $–)  $43 
           
     Total long-term investments     
     (cost $6,288,684)  $6,372,268 

 

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

 

13

 

The Hartford Floating Rate Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount ╬     Market Value ╪ 
SHORT-TERM INVESTMENTS - 12.7%           
Other Investment Pools and Funds - 12.7%           
  843,089  JP Morgan U.S. Government Money Market Fund     $843,089 
     Total short-term investments         
     (cost $843,089)      $843,089 
     Total investments         
     (cost $7,131,773) ▲   108.5%  $7,215,357 
     Other assets and liabilities   (8.5)%   (565,820)
     Total net assets   100.0%  $6,649,537 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $7,132,708 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $115,754 
Unrealized Depreciation   (33,105)
Net Unrealized Appreciation  $82,649 

 

These securities are valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $1,975, which rounds to zero percent of total net assets.

   
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.
   
Δ Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.
   
Þ This security may pay interest in additional principal instead of cash.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $301,186, which represents 4.5% of total net assets.

   
§

These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $14,842, which represents 0.2% 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 Acquired  Shares/ Par   Security  Cost Basis 
07/2009   19   Cumulus Media, Inc. Warrants  $ 
03/2011   418,220   KCA Deutag   5,668 
09/2011   3   Provo Craft & Novelty, Inc.    

 

At April 30, 2013, the aggregate value of these securities was $2,014, which rounds to zero percent of total net assets.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $610,152 at April 30, 2013.

 

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

 

14

 

 

 

All or a portion of this position represents unsettled loan commitment.  The coupon rate will be determined at time of settlement.
   
Ψ The company is in bankruptcy.  The investment held by the fund is current with respect to interest payments.
   
All principal or contract amounts are in U.S. dollars unless otherwise indicated.
   
Senior floating rate interests 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 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.  Unless otherwise noted, the interest rate disclosed for these securities represents the average coupon as of April 30, 2013.
   
Б This security, or a portion of this security, has unfunded loan commitments.  As of April 30, 2013, the aggregate value of the unfunded commitment was $575,335, which represents 8.7% of total net assets.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty   Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
CAD  Sell  05/22/2013  BCLY   $2,084   $2,123   $(39)
CAD  Sell  05/22/2013  UBS    4,512    4,578    (66)
EUR  Sell  05/22/2013  BCLY    6,829    6,922    (93)
EUR  Sell  05/22/2013  CSFB    14,841    14,982    (141)
EUR  Sell  05/22/2013  UBS    46,673    46,606    67 
GBP  Sell  05/22/2013  UBS    21,086    21,326    (240)
                       $(512)

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
BCLY Barclays
CSFB Credit Suisse First Boston Corp.
UBS UBS AG
   
Currency Abbreviations:
CAD Canadian Dollar
EUR EURO
GBP British Pound
   
Other Abbreviations:
LIBOR London Interbank Offered Rate

 

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

 

15

 

The Hartford Floating Rate Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Consumer Durables and Apparel  $   $   $   $ 
Energy   1,975            1,975 
Materials   15    15         
Media   10        10     
Retailing   689    689         
Total   2,689    704    10    1,975 
Corporate Bonds   598,938        598,938     
Senior Floating Rate Interests   5,770,598        5,770,598     
Warrants   43        43     
Short-Term Investments   843,089    843,089         
Total  $7,215,357   $843,793   $6,369,589   $1,975 
Foreign Currency Contracts*   67        67     
Total  $67   $   $67   $ 
Liabilities:                    
Foreign Currency Contracts*   579        579     
Total  $579   $   $579   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  
* Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3 *
   Transfers
Out of
Level 3 *
   Balance
as of
April 30,
2013
 
Assets:                                             
Common Stocks  $3,888   $   $(1,493)†  $   $   $   $   $(420)  $1,975 
Total  $3,888   $   $(1,493)  $   $   $   $   $(420)  $1,975 

 

*Investments are transferred into and out of Level 3 for a variety of reasons including, but not limited to:
1)Investments where trading has been halted (transfer into Level 3) or investments where trading has resumed (transfer out of Level 3).
2)Broker quoted investments (transfer into Level 3) or quoted prices in active markets (transfer out of Level 3).
3)Investments that have certain restrictions on trading (transfer into Level 3) or investments where trading restrictions have expired (transfer out of Level 3).
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $(1,493).

 

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

 

16

 

The Hartford Floating Rate Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $7,131,773)  $7,215,357 
Foreign currency on deposit with custodian (cost $23,577)   23,924 
Unrealized appreciation on foreign currency contracts   67 
Receivables:     
Investment securities sold   74,541 
Fund shares sold   26,624 
Dividends and interest   25,445 
Other assets   190 
Total assets   7,366,148 
Liabilities:     
Unrealized depreciation on foreign currency contracts   579 
Bank overdraft   64,236 
Payables:     
Investment securities purchased   638,054 
Fund shares redeemed   8,801 
Investment management fees   646 
Dividends   3,252 
Administrative fees   1 
Distribution fees   437 
Accrued expenses   605 
Total liabilities   716,611 
Net assets  $6,649,537 
Summary of Net Assets:     
Capital stock and paid-in-capital  $7,010,101 
Undistributed net investment income   1,210 
Accumulated net realized loss   (445,150)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   83,376 
Net assets  $6,649,537 
      
Shares authorized   3,150,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   

$9.07/$9.35

 
Shares outstanding   217,972 
Net assets  $1,977,318 
Class B: Net asset value per share  $9.06 
Shares outstanding   3,693 
Net assets  $33,457 
Class C: Net asset value per share  $9.06 
Shares outstanding   235,254 
Net assets  $2,131,550 
Class I: Net asset value per share  $9.08 
Shares outstanding   265,535 
Net assets  $2,411,320 
Class R3: Net asset value per share  $9.09 
Shares outstanding   1,833 
Net assets  $16,665 
Class R4: Net asset value per share  $9.06 
Shares outstanding   1,392 
Net assets  $12,617 
Class R5: Net asset value per share  $9.07 
Shares outstanding   404 
Net assets  $3,663 
Class Y: Net asset value per share  $9.06 
Shares outstanding   6,948 
Net assets  $62,947 

 

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

 

17

 

The Hartford Floating Rate Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $14 
Interest   157,583 
Less: Foreign tax withheld   (9)
Total investment income   157,588 
      
Expenses:     
Investment management fees   18,162 
Administrative services fees    
Class R3   15 
Class R4   9 
Class R5   2 
Transfer agent fees    
Class A   755 
Class B   28 
Class C   794 
Class I   717 
Class R3   2 
Class R4    
Class R5    
Class Y   1 
Distribution fees     
Class A   2,300 
Class B   168 
Class C   10,231 
Class R3   37 
Class R4   15 
Custodian fees   8 
Accounting services fees   598 
Registration and filing fees   167 
Board of Directors' fees   67 
Audit fees   31 
Other expenses   314 
Total expenses (before waivers)   34,421 
Expense waivers   (20)
Total waivers   (20)
Total expenses, net   34,401 
Net Investment Income   123,187 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities   45,791 
Net realized loss on swap contracts   (3,078)
Net realized gain on foreign currency contracts   198 
Net realized gain on other foreign currency transactions   662 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   43,573 
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   52,396 
Net unrealized appreciation of swap contracts   3,553 
Net unrealized depreciation of foreign currency contracts   (598)
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   304 
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions   55,655 
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   99,228 
Net Increase in Net Assets Resulting from Operations  $222,415 

 

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

 

18

 

The Hartford Floating Rate Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $123,187   $262,200 
Net realized gain on investments, other financial instruments and foreign currency transactions   43,573    8,064 
Net unrealized appreciation of investments, other financial instruments and foreign currency transactions   55,655    174,371 
Net Increase in Net Assets Resulting from Operations   222,415    444,635 
Distributions to Shareholders:          
From net investment income          
Class A   (38,698)   (86,020)
Class B   (584)   (1,545)
Class C   (35,584)   (83,308)
Class I   (46,001)   (84,801)
Class R3   (291)   (559)
Class R4   (243)   (364)
Class R5   (116)   (517)
Class Y   (1,617)   (5,383)
Total distributions   (123,134)   (262,497)
Capital Share Transactions:          
Class A   163,398    (245,385)
Class B   (2,102)   (7,210)
Class C   67,139    (140,552)
Class I   558,958    195,227 
Class R3   2,533    2,232 
Class R4   1,146    4,975 
Class R5   (8,203)   3,601 
Class Y   (14,127)   (43,371)
Net increase (decrease) from capital share transactions   768,742    (230,483)
Net Increase (Decrease) in Net Assets   868,023    (48,345)
Net Assets:          
Beginning of period   5,781,514    5,829,859 
End of period  $6,649,537   $5,781,514 
Undistributed (distribution in excess of) net investment income (loss)  $1,210   $1,157 

 

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

 

19

 

The Hartford Floating Rate Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current

 

20

 

 

 

or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair

 

21

 

The Hartford Floating Rate Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

22

 

 

 

c)Investment Transactions and Investment Income – Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Trade date for senior floating rate interests purchased in the primary loan market is considered the date on which the loan allocations are determined. Trade date for senior floating rate interests purchased in the secondary loan market is the date on which the transaction is entered into.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Normally, dividends from net investment income are declared daily and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

23

 

The Hartford Floating Rate Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

b)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

c)Senior Floating Rate Interests – The Fund, as shown on the Schedule of Investments, invests 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. The Fund may invest in multiple series or tranches of a senior floating rate interest, which may have varying terms and carry different associated risks. The Fund may also enter into unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. In certain circumstances, the Fund may receive various fees upon the restructure of a senior floating rate interest by a borrower. Fees earned/paid may be recorded as a component of income or realized gain/loss in the Statement of Operations.

 

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.

24

  

 

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

25

 

The Hartford Floating Rate Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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 investment or index in the event of a credit event, such as payment default or bankruptcy.

 

Under a credit default swap contract, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying investment 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. Although specified events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. These potential amounts would be partially offset by any recovery values of the respective referenced obligations or upfront payments received upon entering into the contract.

 

Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap contracts on corporate issues, sovereign government issues or U.S. municipal issues as of period-end are disclosed in the notes to the Schedule of Investments, as applicable, and serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the contract. Wider credit spreads represent a deterioration of the referenced entity’s soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. For credit default swap contracts on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced equity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. The Fund had no outstanding credit default swaps as of April 30, 2013.

 

c)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
    

Interest Rate

Contracts

    

Foreign

Exchange

Contracts

    

Credit

Contracts

    

Equity

Contracts

    

Commodity

Contracts

    

Other

Contracts

    

Total

 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $67   $   $   $   $   $67 
Total  $   $67   $   $   $   $   $67 
                                    
Liabilities:                            
Unrealized depreciation on foreign currency contracts  $   $579   $   $   $   $   $579 
Total  $   $579   $   $   $   $   $579 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

26

 

 

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain (Loss) on Derivatives Recognized as a Result of Operations: 
Net realized loss on swap contracts  $   $   $(3,078)  $   $   $   $(3,078)
Net realized gain on foreign currency contracts       198                    198 
Total  $   $198   $(3,078)  $   $   $   $(2,880)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation of swap contracts  $   $   $3,553   $   $   $   $3,553 
Net change in unrealized depreciation of foreign currency contracts       (598)                   (598)
Total  $   $(598)  $3,553   $   $   $   $2,955 

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. Senior floating rate interests and securities subject to prepayment and extension risk generally offer less potential for gains when interest rates decline. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities, senior floating rate interests, and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or

 

27

 

The Hartford Floating Rate Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and

 

competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $263,947   $298,104 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $5,373 
Accumulated Capital Losses *   (487,702)
Unrealized Appreciation †   26,700 
Total Accumulated Deficit  $(455,629)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.

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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated net

 

28

 

 

 

realized gains on investments or from capital depending on the type of book and tax differences that exist. For the year ended October 31, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(17)
Accumulated Net Realized Gain (Loss)   17 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2016  $215,642 
2017   272,060 
Total  $487,702 

 

During the year ended October 31, 2012, the Fund utilized $7,614 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the

 

Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has

 

29

 

The Hartford Floating Rate Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.6500%
On next $2 billion   0.6000%
On next $2.5 billion   0.5900%
On next $5 billion   0.5800%
Over $10 billion   0.5700%

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.020%
On next $5 billion   0.018%
Over $10 billion   0.016%

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 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%     0.70%     0.70%  

 

d)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $1,744 and contingent deferred sales charges of $149 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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

 

30

 

 

 

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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $3,445,818 
Sales Proceeds Excluding U.S. Government Obligations   2,672,524 

 

31

 

The Hartford Floating Rate Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

9.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares Sold   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares Sold   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   48,309    3,903    (34,058)       18,154    54,532    8,576    (91,596)       (28,488)
Amount  $433,957   $35,085   $(305,644)  $   $163,398   $479,039   $75,326   $(799,750)  $   $(245,385)
Class B                                                  
Shares   214    53    (502)       (235)   264    134    (1,221)       (823)
Amount  $1,920   $478   $(4,500)  $   $(2,102)  $2,321   $1,176   $(10,707)  $   $(7,210)
Class C                                                  
Shares   28,339    3,243    (24,124)       7,458    34,678    7,481    (58,404)       (16,245)
Amount  $254,449   $29,110   $(216,420)  $   $67,139   $304,793   $65,639   $(510,984)  $   $(140,552)
Class I                                                  
Shares   95,050    3,800    (36,730)       62,120    100,572    6,502    (85,096)       21,978 
Amount  $855,076   $34,195   $(330,313)  $   $558,958   $883,753   $57,191   $(745,717)  $   $195,227 
Class R3                                                  
Shares   509    30    (259)       280    494    62    (304)       252 
Amount  $4,589   $277   $(2,333)  $   $2,533   $4,354   $546   $(2,668)  $   $2,232 
Class R4                                                  
Shares   282    15    (170)       127    882    32    (350)       564 
Amount  $2,539   $137   $(1,530)  $   $1,146   $7,772   $280   $(3,077)  $   $4,975 
Class R5                                                  
Shares   234    11    (1,164)       (919)   599    56    (244)       411 
Amount  $2,099   $96   $(10,398)  $   $(8,203)  $5,246   $489   $(2,134)  $   $3,601 
Class Y                                                  
Shares   2,150    55    (3,779)       (1,574)   4,323    191    (9,433)       (4,919)
Amount  $19,316   $493   $(33,936)  $   $(14,127)  $37,808   $1,675   $(82,854)  $   $(43,371)
Total                                                  
Shares   175,087    11,110    (100,786)       85,411    196,344    23,034    (246,648)       (27,270)
Amount  $1,573,945   $99,871   $(905,074)  $   $768,742   $1,725,086   $202,322   $(2,157,891)  $   $(230,483)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   21   $186 
For the Year Ended October 31, 2012   60   $530 

 

10.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

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.

 

32

 

 

 

12.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

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 of 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, appealed the decision to the district court. On February 11, 2011, the District Court ruled in favor of the Transeastern Lenders and the Fund and quashed the bankruptcy court opinion. The Committee appealed to the Eleventh Circuit. The Eleventh Circuit reinstated the bankruptcy court opinion, but remanded back to the District Court on the question of remedies. The District Court has not yet issued a decision. If found liable, the Fund would be liable for approximately $3-3.5 million. Management of the Fund believes resolution of this matter will not have a material impact on the Fund’s financial statements.

 

13.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

14.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

33

 

The Hartford Floating Rate Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

34

 

 

 

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35

 

The Hartford Floating Rate Fund
Financial Highlights

 

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited)     
A  $8.93   $0.19   $0.14   $0.33   $(0.19)  $   $   $(0.19)  $9.07 
B   8.92    0.15    0.14    0.29    (0.15)           (0.15)   9.06 
C   8.92    0.15    0.15    0.30    (0.16)           (0.16)   9.06 
I   8.94    0.20    0.14    0.34    (0.20)           (0.20)   9.08 
R3   8.95    0.18    0.14    0.32    (0.18)           (0.18)   9.09 
R4   8.92    0.19    0.14    0.33    (0.19)           (0.19)   9.06 
R5   8.93    0.20    0.14    0.34    (0.20)           (0.20)   9.07 
Y   8.92    0.20    0.14    0.34    (0.20)           (0.20)   9.06 
                                              
For the Year Ended October 31, 2012       
A   8.64    0.43    0.29    0.72    (0.43)           (0.43)   8.93 
B   8.63    0.36    0.29    0.65    (0.36)           (0.36)   8.92 
C   8.63    0.36    0.29    0.65    (0.36)           (0.36)   8.92 
I   8.65    0.45    0.29    0.74    (0.45)           (0.45)   8.94 
R3   8.66    0.40    0.29    0.69    (0.40)           (0.40)   8.95 
R4   8.63    0.42    0.29    0.71    (0.42)           (0.42)   8.92 
R5   8.64    0.45    0.29    0.74    (0.45)           (0.45)   8.93 
Y   8.63    0.45    0.29    0.74    (0.45)           (0.45)   8.92 
                                              
For the Year Ended October 31, 2011       
A   8.81    0.42    (0.16)   0.26    (0.43)           (0.43)   8.64 
B   8.81    0.35    (0.17)   0.18    (0.36)           (0.36)   8.63 
C   8.81    0.36    (0.18)   0.18    (0.36)           (0.36)   8.63 
I   8.82    0.45    (0.17)   0.28    (0.45)           (0.45)   8.65 
R3   8.83    0.40    (0.17)   0.23    (0.40)           (0.40)   8.66 
R4   8.81    0.42    (0.18)   0.24    (0.42)           (0.42)   8.63 
R5   8.82    0.44    (0.17)   0.27    (0.45)           (0.45)   8.64 
Y   8.80    0.45    (0.17)   0.28    (0.45)           (0.45)   8.63 
                                              
For the Year Ended October 31, 2010              
A   8.30    0.46    0.51    0.97    (0.46)           (0.46)   8.81 
B   8.30    0.40    0.50    0.90    (0.39)           (0.39)   8.81 
C   8.29    0.40    0.52    0.92    (0.40)           (0.40)   8.81 
I   8.31    0.48    0.51    0.99    (0.48)           (0.48)   8.82 
R3   8.31    0.44    0.52    0.96    (0.44)           (0.44)   8.83 
R4   8.30    0.46    0.51    0.97    (0.46)           (0.46)   8.81 
R5   8.30    0.48    0.51    0.99    (0.47)           (0.47)   8.82 
Y   8.29    0.49    0.51    1.00    (0.49)           (0.49)   8.80 
                                              
For the Year Ended October 31, 2009          
A   7.13    0.42    1.19    1.61    (0.44)           (0.44)   8.30 
B   7.13    0.37    1.19    1.56    (0.39)           (0.39)   8.30 
C   7.13    0.36    1.19    1.55    (0.39)           (0.39)   8.29 
I   7.13    0.43    1.21    1.64    (0.46)           (0.46)   8.31 
R3   7.14    0.40    1.19    1.59    (0.42)           (0.42)   8.31 
R4   7.13    0.42    1.19    1.61    (0.44)           (0.44)   8.30 
R5   7.15    0.48    1.12    1.60    (0.45)           (0.45)   8.30 
Y   7.13    0.45    1.17    1.62    (0.46)           (0.46)   8.29 
                                              
For the Year Ended October 31, 2008          
A   9.79    0.55    (2.68)   (2.13)   (0.53)           (0.53)   7.13 
B   9.79    0.47    (2.67)   (2.20)   (0.46)           (0.46)   7.13 
C   9.78    0.47    (2.66)   (2.19)   (0.46)           (0.46)   7.13 
I   9.79    0.57    (2.68)   (2.11)   (0.55)           (0.55)   7.13 
R3   9.79    0.52    (2.66)   (2.14)   (0.51)           (0.51)   7.14 
R4   9.78    0.54    (2.66)   (2.12)   (0.53)           (0.53)   7.13 
R5   9.81    0.56    (2.68)   (2.12)   (0.54)           (0.54)   7.15 
Y   9.78    0.57    (2.66)   (2.09)   (0.56)           (0.56)   7.13 

 

36

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(C)
 
                            
                            
 3.71%(D)  $1,977,318    0.97%(E)   0.97%(E)   4.20%(E)   46%
 3.32(D)   33,457    1.80(E)   1.75(E)   3.43(E)    
 3.34(D)   2,131,550    1.71(E)   1.71(E)   3.46(E)    
 3.84(D)   2,411,320    0.70(E)   0.70(E)   4.45(E)    
 3.56(D)   16,665    1.36(E)   1.25(E)   3.92(E)    
 3.70(D)   12,617    1.04(E)   1.00(E)   4.17(E)    
 3.85(D)   3,663    0.76(E)   0.70(E)   4.46(E)    
 3.89(D)   62,947    0.64(E)   0.64(E)   4.55(E)    
                            
                            
 8.48    1,784,029    0.98    0.98    4.85    60 
 7.66    35,026    1.80    1.75    4.08     
 7.69    2,031,516    1.72    1.72    4.10     
 8.74    1,817,957    0.73    0.73    5.10     
 8.17    13,889    1.37    1.25    4.57     
 8.47    11,283    1.06    1.00    4.80     
 8.78    11,820    0.76    0.70    5.12     
 8.85    75,994    0.65    0.65    5.18     
                            
                            
 2.91    1,972,548    0.97    0.97    4.79    96 
 2.00    41,006    1.79    1.75    4.01     
 2.03    2,106,199    1.72    1.72    4.05     
 3.16    1,568,922    0.72    0.72    5.03     
 2.62    11,257    1.37    1.25    4.52     
 2.76    6,048    1.06    1.00    4.78     
 3.07    7,882    0.75    0.70    5.04     
 3.24    115,997    0.65    0.65    5.11     
                            
                            
 11.97    1,840,478    0.97    0.97    5.40    63 
 11.11    47,006    1.78    1.75    4.64     
 11.27    1,945,470    1.72    1.72    4.65     
 12.22    1,202,589    0.74    0.74    5.62     
 11.75    7,598    1.38    1.25    5.11     
 11.93    2,339    1.07    1.00    5.37     
 12.25    10,956    0.79    0.74    5.46     
 12.35    101,560    0.65    0.65    5.73     
                            
                            
 23.65    1,277,011    1.00    1.00    5.69    55 
 22.60    47,635    1.84    1.75    5.00     
 22.60    1,204,826    1.76    1.75    4.99     
 23.93    594,705    0.74    0.74    5.94     
 23.17    2,863    1.41    1.25    5.36     
 23.50    1,367    1.10    1.00    5.70     
 23.32    26    0.97    0.85    5.99     
 23.87    87,907    0.68    0.68    6.12     
                            
                            
 (22.71)   728,882    0.99    0.99    6.02    18 
 (23.30)   40,440    1.81    1.75    5.23     
 (23.24)   876,501    1.75    1.75    5.25     
 (22.51)   171,007    0.74    0.74    6.28     
 (22.80)   544    1.45    1.25    5.63     
 (22.63)   515    1.15    1.00    5.71     
 (22.55)   90    0.86    0.85    6.24     
 (22.39)   98,315    0.69    0.69    6.23     

 

37

 

The Hartford Floating Rate Fund
Financial Highlights – (continued)

 

(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)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

(D)Not annualized.
(E)Annualized.

 

38

  

The Hartford Floating Rate Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

39

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.
40

 

 

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

41

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)              
   Beginning
Account Value
October 31, 2012
  

Ending Account

Value
April 30, 2013

   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,037.10   $4.88   $1,000.00   $1,020.00   $4.84    0.97 %   181     365  
Class B  $1,000.00   $1,033.20   $8.83   $1,000.00   $1,016.11   $8.76    1.75     181     365  
Class C  $1,000.00   $1,033.40   $8.63   $1,000.00   $1,016.30   $8.56    1.71     181     365  
Class I  $1,000.00   $1,038.40   $3.56   $1,000.00   $1,021.30   $3.53    0.70     181     365  
Class R3  $1,000.00   $1,035.60   $6.32   $1,000.00   $1,018.59   $6.26    1.25     181     365  
Class R4  $1,000.00   $1,037.00   $5.06   $1,000.00   $1,019.83   $5.01    1.00     181     365  
Class R5  $1,000.00   $1,038.50   $3.54   $1,000.00   $1,021.32   $3.51    0.70     181     365  
Class Y  $1,000.00   $1,038.90   $3.22   $1,000.00   $1,021.63   $3.19    0.64     181     365  

 

42

 

The Hartford Floating Rate Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Floating Rate Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the

 

43

 

The Hartford Floating Rate Fund
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

44

 

The Hartford Floating Rate Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early).

 

Loan Risk: The Fund’s investments in loans may at times become difficult to value and highly illiquid; they are subject to credit risk such as nonpayment of principal or interest, and risks of bankruptcy and insolvency.

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

The Hartford Floating Rate Fund should not be considered an alternative to CDs or money market funds. This Fund is for clients who are looking to complement their traditional fixed-income investments.

 

45
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-FR13 4/13 113974 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

14

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD FLOATING RATE HIGH INCOME FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Floating Rate High Income Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 12
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 13
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 14
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 15
Notes to Financial Statements (Unaudited) 16
Financial Highlights (Unaudited) 28
Directors and Officers (Unaudited) 30
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 32
Quarterly Portfolio Holdings Information (Unaudited) 32
Expense Example (Unaudited) 33
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 34
Principal Risks (Unaudited) 36

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Floating Rate High Income Fund inception 09/30/2011
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks to provide high current income, and long-term total return.

 

Performance Overview 9/30/11 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   Since
Inception▲
 
Floating Rate High Income A#   5.08%       9.40%       11.47%    
Floating Rate High Income A##        6.12%       9.35%    
Floating Rate High Income C#   4.79%       8.68%       10.70%    
Floating Rate High Income C##        7.68%       10.70%    
Floating Rate High Income I#   5.34%       9.74%       11.73%    
Floating Rate High Income R3#   5.03%       9.08%       11.07%    
Floating Rate High Income R4#   5.19%       9.41%       11.40%    
Floating Rate High Income R5#   5.34%       9.74%       11.73%    
Floating Rate High Income Y#   5.31%       9.77%       11.81%    
Credit Suisse Leveraged Loan Index   4.31%       8.23%       9.79%    

 

Not Annualized
Inception: 09/30/2011
#Without sales charge
##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 3.00% and returns for Class C reflect a contingent deferred sales charge of 1.00%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of April 23, 2012, Wellington Management Company, LLP became the sub-adviser for the Fund. At the end of a transition period of approximately four weeks ending on May 18, 2012, Hartford Investment Management Company ceased serving as a sub-adviser to the Fund.

 

Credit Suisse Leveraged Loan Index is designed to mirror the investable universe of the United States dollar-denominated leveraged loan market.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Floating Rate High Income Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Floating Rate High Income Class A   1.05%   1.31%
Floating Rate High Income Class C   1.80%   2.05%
Floating Rate High Income Class I   0.80%   1.05%
Floating Rate High Income Class R3   1.35%   1.72%
Floating Rate High Income Class R4   1.05%   1.42%
Floating Rate High Income Class R5   0.75%   1.12%
Floating Rate High Income Class Y   0.75%   1.02%

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Michael Bacevich  
Vice President and Fixed Income Portfolio Manager  

 

How did the Fund perform?

The Class A shares of The Hartford Floating Rate High Income Fund returned 5.08%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the Credit Suisse Leveraged Loan Index, which returned 4.31% for the same period. The Fund also outperformed the 3.98% average return of the Lipper Loan Participation Funds peer group, a group of funds that that invests primarily in interests in collateralized senior corporate loans that have floating or variable rates.

 

Why did the Fund perform this way?

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02% to 0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage Backed Securities, outperformed Treasuries on a duration-adjusted basis.

 

The Fund outperformed its benchmark, the Credit Suisse Leveraged Loan Index, for the period. Positive effects from security selection decisions far outweighed the modestly negative impact from sector allocation decisions during the period. Additionally, an out-of-benchmark allocation to High Yield bonds, for the purpose of improving the Fund’s liquidity, was beneficial to relative returns. Underweight allocations (i.e. the Fund’s sector position was less than the benchmark position) to the Healthcare and Pharmaceuticals sectors contributed positively to relative performance, while underweights to Utilities and Media NonCable detracted from relative results. Within the Technology sector, overweights to Ceridian and First Data contributed positively to relative performance. We continue to like the payment processing and payroll companies in the Technology sector as we believe that they have shown strong operating metrics recently. In the Chemicals sector, our position in Momentive Performance drove relative outperformance during the period. Lack of exposure to Tribune, a 2007 vintage Leveraged Buyout (LBO) with a massive debt burden, hurt relative returns in the Media

 

3

 

The Hartford Floating Rate High Income Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

NonCable sector. Within the Utilities sector, our underweight to TXU represented the primary detractor from relative performance. TXU is another 2007 vintage LBO that has suffered from a large debt burden and has been impacted by the recent weakness in Natural Gas prices. An overweight allocation to bonds rated CCC and below contributed positively to relative returns during the period, as risk assets rallied. A modest cash position, also used for the purpose of improving the Fund’s liquidity, represented a drag on relative performance in an environment of rising bank loan prices.

 

What is the outlook?

We believe that the outlook for bank loans remains positive, and that the sector continues to benefit from strong credit fundamentals as evidenced by low interest expense relative to earnings. The bank-loan default rate by principal amount and issuer count ended April at 1.91% and 1.67%, respectively, still below their historical averages of 3.6% and 3.1%. Because issuers have extended maturities via refinancings, less than U.S. $30 billion is scheduled to mature through 2014 which we believe will support continued low defaults. Furthermore, bank loan mutual funds appear to have continued to benefit from a supportive technical picture, suggested by 45 consecutive weeks of positive net inflows and year-to-date inflows of U.S. $20.8 billion through the end of April. Moreover, the market for Collateralized Loan Obligations, one of the main sources of demand for bank loans, is forecast to increase to U.S. $70 billion in 2013 from U.S. $45 billion in 2012 according to JPMorgan.

 

We believe valuations of bank loans remain reasonable. The yield premium that investors typically demand for high yield over bank loans (due to higher interest-rate risk and lower positioning on issuers’ capital structure) has diminished, enhancing the relative appeal of bank loans.

 

Distribution by Credit Quality

as of April 30, 2013

 

Credit Rating *  Percentage of
Net Assets
 
Ba / BB   14.3%
B   71.4 
Caa / CCC or Lower   12.1 
Unrated   2.1 
Non-Debt Securities and Other Short-Term Instruments   12.4 
Other Assets & Liabilities   (12.3)
Total   100.0%

 

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

Diversification by Industry

as of April 30, 2013

Industry  Percentage of
Net Assets
 
Fixed Income Securities     
Accommodation and Food Services   2.9%
Administrative Waste Management and Remediation   2.4 
Agriculture, Construction, Mining and Machinery   1.9 
Air Transportation   2.6 
Arts, Entertainment and Recreation   6.9 
Chemical Manufacturing   7.2 
Computer and Electronic Product Manufacturing   2.1 
Construction   0.4 
Educational Services   0.3 
Finance and Insurance   9.3 
Food Manufacturing   3.6 
Furniture and Related Product Manufacturing   0.7 
Health Care and Social Assistance   4.4 
Information   20.7 
Manufacturing   0.2 
Media   3.1 
Mining   1.8 
Miscellaneous Manufacturing   2.8 
Motor Vehicle and Parts Manufacturing   2.4 
Nonmetallic Mineral Product Manufacturing   0.1 
Other Services   0.5 
Petroleum and Coal Products Manufacturing   3.4 
Pipeline Transportation   1.3 
Plastics and Rubber Products Manufacturing   0.1 
Primary Metal Manufacturing   0.3 
Professional, Scientific and Technical Services   4.6 
Real Estate, Rental and Leasing   1.2 
Retail Trade   6.9 
Soap, Cleaning Compound and Toilet Manufacturing   0.7 
Transit and Ground Passenger Transportation   0.3 
Truck Transportation   0.7 
Utilities   2.2 
Wholesale Trade   1.9 
Total   99.9%
Short-Term Investments   12.4 
Other Assets and Liabilities   (12.3)
Total   100.0%

 

4

 

The Hartford Floating Rate High Income Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 19.5% 
     Accommodation and Food Services - 0.5%     
     Caesars Entertainment Operating Co., Inc.     
$500   9.00%, 02/15/2020 ■‡  $492 
     Caesars Operating Escrow     
 500   9.00%, 02/15/2020 ■‡   493 
     Elior Finance & Co.     
EUR 187     6.50%, 05/01/2020 ■   257 
         1,242 
     Arts, Entertainment and Recreation - 2.1%     
     Cenveo, Inc.     
 215   8.88%, 02/01/2018 ‡   218 
     Chester Downs & Marina LLC     
 2,340   9.25%, 02/01/2020 ■‡   2,255 
     Downstream Development Authority of Quapaw Tribe of Oklahoma     
 118   10.50%, 07/01/2019 ■‡   133 
     Great Canadian Gaming Co.     
CAD 1,295   6.63%, 07/25/2022 ■‡   1,350 
     Sinclair Television Group, Inc.     
 1,000   5.38%, 04/01/2021 ■‡   1,012 
         4,968 
     Chemical Manufacturing - 1.5%     
     Hexion Specialty Chemicals     
 300   8.88%, 02/01/2018 ‡   318 
     Hexion U.S. Finance Corp.     
 58   6.63%, 04/15/2020 ‡   60 
 1,655   6.63%, 04/15/2020 ■   1,725 
     MPM Escrow LLC/MPM Finance Corp.     
 1,240   8.88%, 10/15/2020 ‡   1,352 
         3,455 
     Computer and Electronic Product Manufacturing - 0.9%     
     Freescale Semiconductor, Inc.     
 500   9.25%, 04/15/2018 ■‡   550 
     NXP B.V./NXP Funding LLC     
 1,570   5.75%, 02/15/2021 - 03/15/2023 ■‡   1,663 
         2,213 
     Finance and Insurance - 2.7%     
     AmeriGas Finance LLC     
 250   6.75%, 05/20/2020   277 
     Ineos Finance plc     
 400   8.38%, 02/15/2019 ■‡   451 
     Kion Finance S.A.     
EUR 1,000   4.73%, 02/15/2020 §‡Δ   1,338 
EUR 450   6.75%, 02/15/2020 ■‡   646 
     Nuveen Investments, Inc.     
 2,765   9.13%, 10/15/2017 ■‡   2,952 
     Rivers Pittsburgh L.P.     
 465   9.50%, 06/15/2019 ■‡   514 
         6,178 
     Food Manufacturing - 0.1%     
     Post Holdings, Inc.     
 228   7.38%, 02/15/2022 ‡   253 
           
     Health Care and Social Assistance - 0.3%     
     Biomet, Inc.     
 360   6.50%, 08/01/2020 ■   392 
     Community Health Systems, Inc.     
 220   7.13%, 07/15/2020 ‡   246 
         638 
     Information - 6.7%     
     Cegedim S.A.     
EUR 580   6.75%, 04/01/2020 ■‡   770 
     Ceridian Corp.     
 500   8.88%, 07/15/2019 ■‡   587 
     Cerved Technologies S.p.A.     
EUR 500   5.59%, 01/15/2019 ■‡Δ   665 
     First Data Corp.     
 1,080   6.75%, 11/01/2020 ■‡   1,158 
 1,000   8.25%, 01/15/2021 ■‡   1,063 
     Intelsat Jackson Holdings S.A.     
 500   6.63%, 12/15/2022 ■‡   541 
     Intelsat Luxembourg S.A.     
 1,180   7.75%, 06/01/2021 ■‡   1,245 
     Level 3 Financing, Inc.     
 350   4.21%, 02/15/2015 ‡Δ   350 
 300   10.00%, 02/01/2018 ‡   330 
     Nara Cable Funding II Ltd.     
EUR 725   8.50%, 03/01/2020 §‡   1,050 
     Nara Cable Funding Ltd.     
 500   8.88%, 12/01/2018 ■‡   528 
     NII International Telecom Sarl     
 945   11.38%, 08/15/2019 ■‡   1,091 
     Softbrands, Inc.     
 200   11.50%, 07/15/2018 ‡   236 
     Unitymedia Hessen GmbH & Co.     
 510   5.50%, 01/15/2023 ■‡   528 
     UPC Holding B.V.     
EUR 1,000   6.75%, 03/15/2023 ‡   1,350 
     UPCB Finance VI Ltd.     
 248   6.88%, 01/15/2022 ■‡   272 
     Wind Acquisition Finance S.A.     
EUR 1,625   5.43%, 04/30/2019 ■Δ   2,188 
 1,500   7.25%, 02/15/2018 ■‡   1,577 
         15,529 
     Nonmetallic Mineral Product Manufacturing - 0.1%     
     Ardagh Packaging Finance plc     
 200   7.38%, 10/15/2017 ■   221 
           
     Petroleum and Coal Products Manufacturing - 1.2%     
     Denbury Resources, Inc.     
 610   4.63%, 07/15/2023 ‡   616 
     MEG Energy Corp.     
 121   6.38%, 01/30/2023 ■‡   128 
     Rosetta Resources, Inc.     
 1,175   5.63%, 05/01/2021 ☼   1,225 
     Shelf Drilling Holdings Ltd.     
 695   8.63%, 11/01/2018 ■‡   743 
         2,712 
     Plastics and Rubber Products Manufacturing - 0.1%     
     Sealed Air Corp.     
 200   8.13%, 09/15/2019 ■‡   229 
           
     Retail Trade - 0.3%     
     GRD Holding III Corp.     
 585   10.75%, 06/01/2019 ■‡   628 
     Libby Glass, Inc.     
 45   6.88%, 05/15/2020 ‡   50 
         678 

 

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

 

5

 

The Hartford Floating Rate High Income Fund
Schedule of Investments – (Continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 19.5% - (continued) 
     Soap, Cleaning Compound and Toilet Manufacturing - 0.7%     
     Revlon Consumer Products Corp.     
$1,205   5.75%, 02/15/2021 ■‡  $1,241 
     YCC Holdings LLC     
 400   10.25%, 02/15/2016 Þ   413 
         1,654 
     Utilities - 0.8%     
     Calpine Corp.     
 360   7.25%, 10/15/2017 ■‡   381 
     NRG Energy, Inc.     
 1,000   6.63%, 03/15/2023 ■‡   1,090 
 250   7.63%, 01/15/2018 ‡   290 
         1,761 
     Wholesale Trade - 1.5%     
     Ontex IV     
EUR 1,000   7.50%, 04/15/2018 §‡   1,409 
     U.S. Foodservice, Inc.     
 2,000   8.50%, 06/30/2019 ■‡   2,175 
         3,584 
     Total corporate bonds     
     (cost $43,309)  $45,315 
           
SENIOR FLOATING RATE INTERESTS ♦ - 80.4%     
     Accommodation and Food Services - 2.4%     
     Caesars Entertainment Operating Co., Inc.     
$1,816   4.45%, 01/28/2018  $1,622 
 3,192   5.45%, 01/28/2018   2,895 
 1,035   9.50%, 10/31/2016   1,050 
         5,567 
     Administrative Waste Management and Remediation - 2.4%     
     Acosta, Inc.     
 1,108   5.00%, 03/02/2018   1,124 
     ADS Waste Holdings, Inc.     
 1,262   4.25%, 10/09/2019   1,277 
     Affinia Group, Inc.     
 810   04/11/2016 ◊☼   814 
     Audio Visual Services Group, Inc.     
 925   6.75%, 11/09/2018   939 
 1,000   10.75%, 05/09/2018   992 
     Synagro Technologies, Inc.     
 517   2.28%, 03/28/2014 Ψ   505 
         5,651 
     Agriculture, Construction, Mining and Machinery - 1.9%     
     BOC Edwards, Inc.     
 935   03/22/2020 ◊☼   939 
     Hupah Finance, Inc.     
 426   4.50%, 01/21/2019   431 
     Nortek, Inc.     
 87   5.25%, 04/26/2017   88 
     Veyance Technologies, Inc.     
 3,000   5.25%, 09/08/2017   3,014 
         4,472 
     Air Transportation - 2.6%     
     Delta Air Lines, Inc.     
 648   4.00%, 10/18/2018   656 
     Delta Air Lines, Inc., Term Loan     
 344   4.25%, 04/20/2017   349 
     Landmark Aviation     
 886   5.75%, 10/25/2019   908 
     Landmark Aviation FBO Canada, Inc.     
 96   5.75%, 10/25/2019   98 
     United Airlines, Inc.     
 2,475   4.00%, 04/01/2019   2,499 
     US Airways Group, Inc.     
 1,609   2.70%, 03/23/2014   1,609 
         6,119 
     Arts, Entertainment and Recreation - 4.8%     
     24 Hour Fitness Worldwide, Inc.     
 847   5.25%, 04/22/2016   851 
     Cenveo Corp.     
 2,170   04/05/2020 ◊☼   2,192 
     Clear Channel Communications, Inc.     
 456   3.85%, 01/29/2016   418 
     ClubCorp Club Operations, Inc.     
 473   5.00%, 11/30/2016   481 
     Cumulus Media, Inc.     
 123   4.50%, 09/17/2018   125 
     FoxCo Acquisition LLC     
 209   5.50%, 07/14/2017   213 
     Golden Nugget, Inc.     
 359   3.20%, 06/22/2014 Þ   347 
     Golden Nugget, Inc., Delayed Draw     
 200   3.20%, 06/22/2014 Þ   193 
     Kabel Deutschland GMBH     
EUR 270   04/19/2020 ◊☼   356 
     Kabel Deutschland Holding AG     
 1,369   3.25%, 02/01/2019   1,375 
     Rock Ohio Caesars LLC     
 470   03/28/2019 ◊☼   474 
     Salem Communications Corp.     
 975   4.50%, 03/13/2020   988 
     San Juan Cable LLC     
 123   6.00%, 06/09/2017   125 
     Station Casinos LLC     
 2,850   5.00%, 03/02/2020   2,883 
         11,021 
     Chemical Manufacturing - 5.7%     
     Cytec Industries, Inc.     
 104   09/20/2019 ◊   106 
     DuPont Performance Coatings, Inc.     
 305   4.75%, 02/01/2020   309 
EUR 1,750   5.25%, 02/01/2020   2,327 
     Houghton International, Inc.     
 100   5.25%, 12/20/2019   101 
     Ineos US Finance LLC     
 3,369   6.50%, 05/04/2018 ☼   3,406 
     Monarch, Inc.     
 516   8.25%, 09/12/2019 - 03/12/2020   525 
     Pinnacle Operating Corp.     
 865   04/29/2020 ◊☼   868 
 831   6.75%, 11/15/2018   841 
 750   11.50%, 05/15/2019   738 
     PQ Corp.     
 748   4.50%, 08/07/2017   756 
     Tronox Pigments Holland     
 695   02/08/2018 ◊☼   705 

 

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

 

6

 

 

Shares or Principal Amount ╬  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS ♦ - 80.4% - (continued) 
     Chemical Manufacturing - 5.7% - (continued)     
     Univar, Inc.     
$1,990   5.00%, 06/30/2017 ☼  $1,999 
     Utex Industries, Inc.     
 610   04/10/2020 ◊☼   617 
         13,298 
     Computer and Electronic Product Manufacturing - 1.2%     
     Ceridian Corp.     
 1,167   5.95%, 05/09/2017   1,187 
     Freescale Semiconductor, Inc.     
 1,647   5.00%, 03/01/2020   1,670 
         2,857 
     Construction - 0.4%     
     Brock Holdings III, Inc.     
 469   6.01%, 03/16/2017   473 
 402   10.00%, 03/16/2018   406 
         879 
     Educational Services - 0.3%     
     Bright Horizons Family Solutions, Inc.     
 643   4.00%, 01/30/2020   649 
           
     Finance and Insurance - 6.6%     
     Asurion LLC     
 1,434   4.50%, 05/24/2019   1,450 
     Capital Automotvie L.P.     
 260   04/18/2020 ◊☼   268 
 1,590   4.25%, 04/05/2019 ☼   1,601 
     Chrysler Group LLC     
 592   6.00%, 05/24/2017   600 
     Cooper Gay Swett & Crawford Ltd.     
 2,715   04/05/2020 - 10/05/2020 ◊☼   2,755 
     Evertec LLC     
 1,220   04/11/2020 ◊☼   1,217 
     HUB International Ltd.     
 246   3.71%, 12/13/2017   248 
     Lonestar Intermediate Super Holdings LLC     
 136   11.00%, 09/02/2019   146 
     Macquarie Aircraft Leasing Finance S.A., Second Lien Term Loan     
 246   4.20%, 11/29/2013   241 
     Nuveen Investments, Inc.     
 886   4.20%, 05/13/2017   896 
 3,105   6.50%, 02/28/2019 ☼   3,128 
     Ocwen Financial Corp.     
 630   5.00%, 02/15/2018   640 
     USI Insurance Services LLC     
 1,202   5.25%, 12/27/2019   1,216 
     Walter Investment Management     
 997   5.75%, 11/28/2017   1,014 
         15,420 
     Food Manufacturing - 3.5%     
     Advance Pierre Foods, Inc.     
 614   5.75%, 07/10/2017   623 
 1,000   9.50%, 10/10/2017   1,024 
     Del Monte Foods Co.     
 3,310   4.00%, 03/08/2018   3,333 
     H. J. Heinz Co.     
 950   03/27/2020 ◊☼   958 
     Hostess Brands, Inc.     
 750   6.75%, 03/21/2020   767 
     Milk Specialties Co.     
 20   07/11/2018 ◊☼Б   20 
 499   7.00%, 11/09/2018   506 
     Roundy's Supermarkets, Inc.     
 368   5.75%, 02/13/2019   361 
     U.S. Foodservice, Inc.     
 472   5.75%, 03/31/2017   478 
         8,070 
     Furniture and Related Product Manufacturing - 0.7%     
     AOT Bedding Super Holdings LLC     
 1,082   5.00%, 10/01/2019   1,096 
     Wilsonart International Holding LLC     
 424   4.00%, 10/31/2019   425 
         1,521 
     Health Care and Social Assistance - 4.1%     
     Alere, Inc.     
 283   4.25%, 06/30/2017   287 
     American Renal Holdings, Inc.     
 1,090   4.50%, 08/20/2019   1,092 
 1,430   8.50%, 02/14/2020   1,442 
     Ardent Medical Services, Inc.     
 499   6.75%, 07/02/2018   506 
     ATI Holdings, Inc.     
 289   5.75%, 12/20/2019   293 
     Bausch & Lomb, Inc.     
 328   5.25%, 05/17/2019   331 
     Catalent Pharma Solutions, Inc.     
 480   12/31/2017 ◊☼   485 
     DJO Finance LLC     
 813   4.75%, 09/15/2017   826 
     Iasis Healthcare LLC     
 200   4.50%, 05/03/2018   202 
     Immucor, Inc.     
 495   5.00%, 08/19/2018   502 
     InVentiv Health, Inc., Term Loan B2     
 187   7.75%, 05/15/2018   186 
     MultiPlan, Inc.     
 419   4.00%, 08/26/2017   423 
     Par Pharmeceutical Cos., Inc.     
 348   4.25%, 09/30/2019   351 
     Pharmaceutical Product Development, Inc.     
 424   4.25%, 12/05/2018   429 
     Sheridan Healthcare, Inc.     
 139   4.50%, 06/29/2018   141 
     Truven Health Analytics, Inc.     
 328   4.50%, 06/06/2019   331 
     US Renal Care, Inc.     
 496   6.25%, 07/03/2019   504 
 666   10.25%, 01/03/2020   679 
     Valeant Pharmaceuticals International     
 419   3.50%, 12/11/2019   424 
         9,434 
     Information - 14.0%     
     Alcatel-Lucent     
 4,399   7.25%, 01/30/2019   4,506 
     Arris Group, Inc.     
 2,000   3.50%, 02/10/2020   2,001 

 

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

 

7

 

The Hartford Floating Rate High Income Fund
Schedule of Investments – (Continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS ♦ - 80.4% - (continued) 
     Information - 14.0% - (continued)     
     Aspect Software, Inc.     
$207   7.00%, 05/07/2016  $209 
     Avaya, Inc., Term B-3 Loan     
 245   4.79%, 10/26/2017   228 
     Blackboard, Inc.     
 247   6.25%, 10/04/2018   251 
     Charter Communications Operating LLC     
 1,850   04/10/2020 ◊☼   1,845 
     Decision Insight Information Group I, Inc.     
 473   7.00%, 01/04/2017   478 
     Emdeon, Inc.     
 1,521   3.75%, 11/02/2018 ☼   1,534 
     First Data Corp.     
 1,733   4.20%, 03/24/2017 - 09/30/2018   1,729 
     First Data Corp., Extended 1st Lien Term Loan     
 1,650   4.20%, 03/23/2018   1,644 
     Integra Telecom, Inc.     
 365   6.00%, 02/22/2019   372 
     Intelsat Jackson Holdings S.A.     
 394   3.20%, 02/01/2014   394 
     Kronos, Inc.     
 698   4.50%, 10/30/2019   707 
 750   9.75%, 04/30/2020   791 
     Lawson Software, Inc.     
 695   5.25%, 04/05/2018   706 
     Leap Wireless International, Inc.     
 1,004   4.75%, 10/10/2019 - 03/01/2020   1,009 
     Level 3 Financing, Inc.     
 1,920   5.25%, 08/01/2019   1,945 
     Light Tower Fiber LLC     
 645   4.50%, 04/01/2020   651 
 505   8.00%, 03/28/2021   514 
     MISYS plc     
 1,343   7.25%, 12/12/2018   1,365 
     MModal, Inc.     
 198   6.75%, 08/16/2019   193 
     Novell, Inc.     
 334   7.25%, 11/22/2017   338 
     Peak 10, Inc.     
 319   7.25%, 10/25/2018   323 
     RedPrairie Corp.     
 544   6.75%, 12/21/2018   555 
     Skillsoft Corp.     
 268   5.00%, 05/26/2017   272 
     Sorenson Communications, Inc.     
 2,335   9.50%, 10/31/2014   2,372 
     Syniverse Holdings, Inc.     
 400   1.35%, 04/23/2019 ☼Б   401 
     TransFirst Holding, Inc.     
 499   6.25%, 12/27/2017   508 
 250   11.00%, 06/27/2018   255 
     Virgin Media Finance plc     
 3,200   02/15/2020 ◊☼   3,884 
     WideOpenWest Finance LLC     
 337   4.75%, 03/26/2019   342 
     Windstream Corp.     
 234   3.50%, 01/23/2020   235 
         32,557 
     Manufacturing - 0.2%     
     Ameriforge Group, Inc.     
 219   5.00%, 12/19/2019   222 
 330   8.75%, 12/21/2020   336 
         558 
     Media - 3.1%     
     Gray Television, Inc.     
 434   4.75%, 10/12/2019   440 
     Primedia, Inc.     
 153   7.50%, 01/13/2018   152 
     Univision Communications, Inc.     
 6,635   4.75%, 03/01/2020 ☼   6,695 
         7,287 
     Mining - 1.8%     
     Arch Coal, Inc.     
 2,488   5.75%, 05/16/2018   2,521 
     Fortescue Metals Group Ltd.     
 1,692   5.25%, 10/18/2017   1,721 
         4,242 
     Miscellaneous Manufacturing - 2.8%     
     Bombardier Recreational Products, Inc.     
 2,115   5.00%, 01/30/2019   2,135 
     DigitalGlobe, Inc.     
 485   3.75%, 01/31/2020   490 
     Doncasters plc     
 2,915   5.50%, 04/05/2020   2,936 
     Hamilton Sundstrand Corp.     
 808   4.00%, 12/13/2019   813 
     Sequa Corp.     
 156   5.25%, 06/19/2017   158 
         6,532 
     Motor Vehicle and Parts Manufacturing - 2.4%     
     Federal Mogul Corp., Tranche B Term Loan     
 1,871   2.14%, 12/29/2014   1,772 
     Federal Mogul Corp., Tranche C Term Loan     
 954   2.14%, 12/28/2015   904 
     Navistar, Inc.     
 1,915   5.75%, 08/17/2017   1,949 
     Tower International, Inc.     
 850   04/16/2020 ◊☼   860 
         5,485 
     Other Services - 0.5%     
     Alliance Laundry Systems LLC     
 831   4.50%, 12/10/2018   838 
     Apex Tool Group LLC     
 285   4.50%, 01/31/2020   289 
         1,127 
     Petroleum and Coal Products Manufacturing - 2.2%     
     Dynegy Power LLC     
 923   04/16/2020 ◊☼   923 
     Dynegy, Inc.     
 577   04/15/2020 ◊☼   577 
     Plains Exploration & Production Co.     
 721   4.00%, 11/30/2019   721 
     Samson Investment Co.     
 615   6.00%, 09/25/2018   622 
     Shelf Drilling International Holdings Ltd.     
 1,796   6.25%, 05/31/2018   1,804 

 

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

 

8

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS ♦ - 80.4% - (continued) 
     Petroleum and Coal Products Manufacturing - 2.2% - (continued)     
     Willbros United States Holdings, Inc.     
$469   9.50%, 06/30/2014  $466 
         5,113 
     Pipeline Transportation - 1.3%     
     EMG Utica LLC     
 535   4.75%, 03/07/2020   537 
     EP Energy LLC     
 760   4.50%, 04/30/2019   769 
 117   5.00%, 05/24/2018   118 
     NGPL Pipeco LLC     
 232   6.75%, 09/15/2017   235 
     Philadelphia Energy Solutions LLC     
 1,430   04/03/2018 ◊☼   1,455 
         3,114 
     Primary Metal Manufacturing - 0.3%     
     WireCo WorldGroup, Inc.     
 781   6.00%, 02/15/2017   790 
           
     Professional, Scientific and Technical Services - 4.6%     
     Advantage Sales & Marketing, Inc.     
 380   4.25%, 12/18/2017 ☼   384 
 801   8.25%, 06/17/2018   803 
     Affinion Group, Inc., Tranche B Term Loan     
 4,702   6.50%, 10/09/2016   4,617 
     AlixPartners LLP     
 298   4.50%, 06/30/2019   301 
 141   10.75%, 12/27/2019   145 
     MoneyGram International, Inc.     
 2,460   4.25%, 03/27/2020   2,479 
     Paradigm Ltd., Term Loan B1     
 995   4.75%, 07/30/2019   1,004 
     Paradigm Ltd., Term Loan B2     
 356   10.50%, 07/30/2020   361 
     SunGard Data Systems, Inc.     
 490   4.00%, 03/08/2020   496 
         10,590 
     Real Estate, Rental and Leasing - 1.2%     
     Fly Leasing Ltd.     
 488   5.75%, 08/08/2018   494 
     Realogy Corp.     
 104   3.20%, 10/05/2013   104 
     Realogy Corp., Extended 1st Lien Term Loan B     
 1,275   4.01%, 03/05/2020   1,289 
     Realogy Corp., Extended Credit Linked Deposit     
 83   4.49%, 10/10/2016   84 
     The Hertz Corp.     
 720   3.00%, 03/11/2018   722 
         2,693 
     Retail Trade - 6.6%     
     Albertsons LLC     
 630   5.75%, 02/20/2016   637 
     American Builders & Contractors Supply Co.     
 1,100   3.50%, 04/05/2020   1,109 
     BJ's Wholesale Club, Inc.     
 3,574   4.25%, 09/26/2019   3,603 
     EB Sports Corp.     
 18   11.50%, 12/31/2015 Þ   18 
     Great Atlantic & Pacific Tea Co., Inc.     
 1,324   11.00%, 03/13/2017   1,335 
     Michaels Stores, Inc.     
 1,230   3.75%, 01/28/2020   1,241 
     Party City Holdings, Inc.     
 1,820   4.25%, 07/27/2019   1,832 
     Rite Aid Corp.     
 1,075   4.00%, 02/21/2020   1,088 
 725   5.75%, 08/21/2020   752 
     Sports (The) Authority, Inc.     
 692   7.50%, 11/16/2017   695 
     Sprouts Farmers Markets Holdings LLC     
 910   04/12/2020 ◊☼   912 
     Supervalu, Inc.     
 1,610   6.25%, 03/21/2019   1,634 
     TI Automotive Ltd.     
 460   5.50%, 03/14/2019   467 
         15,323 
     Transit and Ground Passenger Transportation - 0.3%     
     Emergency Medical Services Corp.     
 769   4.00%, 05/25/2018   778 
           
     Truck Transportation - 0.7%     
     Nexeo Solutions LLC     
 1,280   5.00%, 09/09/2017 - 10/01/2017   1,286 
     Swift Transportation Co., Inc.     
 257   4.00%, 12/21/2017   261 
         1,547 
     Utilities - 1.4%     
     Energy Transfer Equity L.P.     
 127   3.75%, 03/24/2017   128 
     Star West Generation LLC     
 1,290   5.00%, 03/13/2020   1,314 
     Texas Competitive Electric Holdings Co. LLC     
 2,500   4.73%, 10/10/2017   1,838 
         3,280 
     Wholesale Trade - 0.4%     
     Harbor Freight Tools USA, Inc.     
 362   5.50%, 11/14/2017   367 
     HD Supply, Inc.     
 496   4.50%, 10/12/2017   502 
         869 
     Total senior floating rate interests     
     (cost $183,844)  $186,843 
           
     Total long-term investments     
     (cost $227,153)  $232,158 

 

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

 

9

 

The Hartford Floating Rate High Income Fund
Schedule of Investments – (Continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬      Market Value ╪ 
SHORT-TERM INVESTMENTS - 12.4%                  
 Other Investment Pools and Funds - 12.4%          
 28,886   JP Morgan U.S. Government Money Market Fund           $28,886 
                
     Total short-term investments          
     (cost $28,886)           $28,886 
                
     Total investments          
     (cost $256,039) ▲   112.3%  $261,044 
     Other assets and liabilities   (12.3)%   (28,623)
     Total net assets   100.0%  $232,421 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $256,059 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $5,129 
Unrealized Depreciation   (144)
Net Unrealized Appreciation  $4,985 

 

This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

 

ΔVariable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $33,934, which represents 14.6% of total net assets.

 

§These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $3,797, which represents 1.6% of total net assets.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $36,089 at April 30, 2013.

 

All or a portion of this position represents unsettled loan commitment.  The coupon rate will be determined at time of settlement.

 

ΨThe company is in bankruptcy.  The investment held by the fund is current with respect to interest payments.

 

All principal or contract amounts are in U.S. dollars unless otherwise indicated.

 

ÞThis security may pay interest in additional principal instead of cash.

 

Senior floating rate interests 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 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.  Unless otherwise noted, the interest rate disclosed for these securities represents the average coupon as of April 30, 2013.

 

БThis security, or a portion of this security, has unfunded loan commitments.  As of April 30, 2013, the aggregate value of the unfunded commitment was $41,815, which represents 18.0% of total net assets.

 

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

 

10

 

 

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
CAD  Sell  05/22/2013  BCLY  $1,042   $1,062   $(20)
CAD  Sell  05/22/2013  UBS   289    293    (4)
EUR  Sell  05/22/2013  BCLY   1,113    1,128    (15)
EUR  Sell  05/22/2013  CSFB   2,120    2,140    (20)
EUR  Sell  05/22/2013  UBS   8,765    8,752    13 
GBP  Sell  05/22/2013  UBS   1,833    1,854    (21)
                      $(67)

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)  
   
Counterparty Abbreviations:  
BCLY Barclays  
CSFB Credit Suisse First Boston Corp.  
UBS UBS AG  
     
Currency Abbreviations:  
CAD Canadian Dollar  
EUR EURO  
GBP British Pound  
     
Other Abbreviations:  
LIBOR London Interbank Offered Rate  

 

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

 

11

 

The Hartford Floating Rate High Income Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Corporate Bonds   45,315        45,315     
Senior Floating Rate Interests   186,843        186,843     
Short-Term Investments   28,886    28,886         
Total  $261,044   $28,886   $232,158   $ 
Foreign Currency Contracts *   13        13     
Total  $13   $   $13   $ 
Liabilities:                    
Foreign Currency Contracts *   80        80     
Total  $80   $   $80   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.

*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

12

 

The Hartford Floating Rate High Income Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $256,039)  $261,044 
Cash   226 
Foreign currency on deposit with custodian (cost $2,178)   2,208 
Unrealized appreciation on foreign currency contracts   13 
Receivables:     
Investment securities sold   4,669 
Fund shares sold   2,774 
Dividends and interest   1,165 
Other assets   62 
Total assets   272,161 
Liabilities:     
Unrealized depreciation on foreign currency contracts   80 
Payables:     
Investment securities purchased   39,406 
Fund shares redeemed   176 
Investment management fees   26 
Dividends   19 
Administrative fees    
Distribution fees   13 
Accrued expenses   20 
Total liabilities   39,740 
Net assets  $232,421 
Summary of Net Assets:     
Capital stock and paid-in-capital  $226,067 
Undistributed net investment income   30 
Accumulated net realized gain   1,360 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   4,964 
Net assets  $232,421 
      
Shares authorized   450,000 
Par value  $ 0.001 
Class A: Net asset value per share/Maximum offering price per share  $10.77/$11.10 
Shares outstanding   9,558 
Net assets  $102,968 
Class C: Net asset value per share  $10.78 
Shares outstanding   5,164 
Net assets  $55,640 
Class I: Net asset value per share  $10.78 
Shares outstanding   5,171 
Net assets  $55,735 
Class R3: Net asset value per share  $10.76 
Shares outstanding   224 
Net assets  $2,411 
Class R4: Net asset value per share  $10.76 
Shares outstanding   224 
Net assets  $2,413 
Class R5: Net asset value per share  $10.76 
Shares outstanding   236 
Net assets  $2,537 
Class Y: Net asset value per share  $10.76 
Shares outstanding   996 
Net assets  $10,717 

 

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

 

13

 

The Hartford Floating Rate High Income Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Interest  $4,332 
Less: Foreign tax withheld   (2)
Total investment income   4,330 
      
Expenses:     
Investment management fees   533 
Administrative services fees     
Class R3   2 
Class R4   2 
Class R5   1 
Transfer agent fees     
Class A   35 
Class C   17 
Class I   10 
Class R3    
Class R4    
Class R5    
Class Y    
Distribution fees     
Class A   86 
Class C   182 
Class R3   6 
Class R4   3 
Custodian fees   3 
Accounting services fees   15 
Registration and filing fees   51 
Board of Directors' fees   1 
Audit fees   6 
Other expenses   7 
Total expenses (before waivers)   960 
Expense waivers   (72)
Total waivers   (72)
Total expenses, net   888 
Net Investment Income   3,442 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   1,310 
Net realized loss on foreign currency contracts   (30)
Net realized gain on other foreign currency transactions   106 
Net Realized Gain on Investments and Foreign Currency Transactions   1,386 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   3,231 
Net unrealized depreciation of foreign currency contracts   (73)
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   27 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   3,185 
Net Gain on Investments and Foreign Currency Transactions   4,571 
Net Increase in Net Assets Resulting from Operations  $8,013 

 

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

 

14

 

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

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $3,442   $3,451 
Net realized gain on investments and foreign currency transactions   1,386    881 
Net unrealized appreciation of investments and foreign currency transactions   3,185    1,305 
Net Increase in Net Assets Resulting from Operations   8,013    5,637 
Distributions to Shareholders:          
From net investment income          
Class A   (1,594)   (1,388)
Class C   (707)   (564)
Class I   (695)   (407)
Class R3   (53)   (125)
Class R4   (57)   (132)
Class R5   (63)   (139)
Class Y   (267)   (623)
Total from net investment income   (3,436)   (3,378)
From net realized gain on investments          
Class A   (470)    
Class C   (242)    
Class I   (138)    
Class R3   (21)    
Class R4   (22)    
Class R5   (23)    
Class Y   (96)    
Total from net realized gain on investments   (1,012)    
Total distributions   (4,448)   (3,378)
Capital Share Transactions:          
Class A   55,008    38,602 
Class C   30,533    20,714 
Class I   39,807    12,183 
Class R3   120    128 
Class R4   82    168 
Class R5   232    138 
Class Y   363    623 
Net increase from capital share transactions   126,145    72,556 
Net Increase in Net Assets   129,710    74,816 
Net Assets:          
Beginning of period   102,711    27,895 
End of period  $232,421   $102,711 
Undistributed (distribution in excess of) net investment income (loss)  $30   $24 

 

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

 

15

 

The Hartford Floating Rate High Income Fund
Notes to the Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Floating Rate High 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 non-diversified open-end management investment company.

 

Class A shares are sold with a front-end sales charge of up to 3.00%. 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 primarily through advisory fee-based wrap programs. Class 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.

 

2.Significant Accounting Policies:

 

The following is a summary of significant accounting policies of the Fund in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance

 

16

 

 

 

that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

 

17

 

The Hartford Floating Rate High Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Trade date for senior floating rate interests purchased in the primary loan market is considered the date on which the loan allocations are determined. Trade date for senior floating rate interests purchased in the secondary loan market is the date on which the transaction is entered into.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available

 

18

 

 

 

in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Normally, dividends from net investment income are declared daily and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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 note).

 

19

 

The Hartford Floating Rate High Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

3.Securities and Other Investments:

 

a)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

b)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

c)Senior Floating Rate Interests – The Fund, as shown on the Schedule of Investments, invests 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. The Fund may invest in multiple series or tranches of a senior floating rate interest, which may have varying terms and carry different associated risks. The Fund may also enter into unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. In certain circumstances, the Fund may receive various fees upon the restructure of a senior floating rate interest by a borrower. Fees earned/paid may be recorded as a component of income or realized gain/loss in the Statement of Operations.

 

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.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and

 

20

 

 

 

changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $13   $   $   $   $   $13 
Total  $   $13   $   $   $   $   $13 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $80   $   $   $   $   $80 
Total  $   $80   $   $   $   $   $80 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Loss on Derivatives Recognized as a Result of Operations: 
Net realized loss on foreign currency contracts  $   $(30)  $   $   $   $   $(30)
Total  $   $(30)  $   $   $   $   $(30)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations: 
Net change in unrealized depreciation of foreign currency contracts  $   $(73)  $   $   $   $   $(73)
Total  $   $(73)  $   $   $   $   $(73)

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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

 

21

 

The Hartford Floating Rate High Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. Senior floating rate interests and securities subject to prepayment and extension risk generally offer less potential for gains when interest rates decline. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities, senior floating rate interests, and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

22

 

 

 

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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011 *
 
Ordinary Income  $3,354   $66 

 

*The Fund commenced operations on September 30, 2011

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $976 
Undistributed Long-Term Capital Gain   83 
Unrealized Appreciation *   1,754 
Total Accumulated Earnings  $2,813 

 

*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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(80)
Accumulated Net Realized Gain (Loss)   87 
Capital Stock and Paid-in-Capital   (7)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. Additionally, capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized

 

23

 

The Hartford Floating Rate High Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.7000%  
On next $2.0 billion   0.6500%  
On next $2.5 billion   0.6400%  
On next $5 billion   0.6300%  
Over $10 billion   0.6200%  

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.020%  
On next $5 billion   0.018%  
Over $10 billion   0.016%  

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.05%      1.80%      0.80%      1.35%      1.05%      0.75%      0.75%   

 

24

 

 

 

d)Distribution and Service Plan for Class A, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $381 and contingent deferred sales charges of $10 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class A, 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 0.25% of average daily net assets. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class A   7%
Class C   4 
Class I   4 
Class R3   98 
Class R4   99 
Class R5   94 
Class Y   100 

 

25

 

The Hartford Floating Rate High Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $180,739 
Sales Proceeds Excluding U.S. Government Obligations   56,437 

 

10.Capital Share Transactions:

 

The following information is for the year ended October 31, 2012, and for the period September 30, 2011, (commencement of operations) through October 31, 2011:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   6,055    187    (1,062)       5,180    4,379    128    (801)       3,706 
Amount  $64,272   $1,984   $(11,248)  $   $55,008   $45,707   $1,334   $(8,439)  $   $38,602 
Class C                                                  
Shares   3,030    87    (242)       2,875    2,050    52    (117)       1,985 
Amount  $32,190   $913   $(2,570)  $   $30,533   $21,398   $542   $(1,226)  $   $20,714 
Class I                                                  
Shares   4,240    71    (562)       3,749    1,504    36    (374)       1,166 
Amount  $45,022   $743   $(5,958)  $   $39,807   $15,729   $381   $(3,927)  $   $12,183 
Class R3                                                  
Shares   4    7            11    1    12            13 
Amount  $47   $73   $   $   $120   $3   $125   $   $   $128 
Class R4                                                  
Shares       7            7    4    13            17 
Amount  $5   $77   $   $   $82   $36   $132   $   $   $168 
Class R5                                                  
Shares   14    8            22    2    13    (2)       13 
Amount  $146   $86   $   $   $232   $25   $139   $(25)  $   $139 
Class Y                                                  
Shares       34            34        60            60 
Amount  $   $363   $   $   $363   $   $623   $   $   $623 
Total                                                  
Shares   13,343    401    (1,866)       11,878    7,940    314    (1,294)       6,960 
Amount  $141,682   $4,239   $(19,776)  $   $126,145   $82,898   $3,276   $(13,617)  $   $72,557 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the

 

26

 

 

 

1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

13.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

14.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

27

 

The Hartford Floating Rate High Income Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (D)           
A  $10.60   $0.24   $0.29   $0.53   $(0.26)  $(0.10)  $   $(0.36)  $10.77 
C   10.60    0.20    0.30    0.50    (0.22)   (0.10)       (0.32)   10.78 
I   10.60    0.25    0.30    0.55    (0.27)   (0.10)       (0.37)   10.78 
R3   10.58    0.23    0.29    0.52    (0.24)   (0.10)       (0.34)   10.76 
R4   10.58    0.25    0.29    0.54    (0.26)   (0.10)       (0.36)   10.76 
R5   10.58    0.26    0.29    0.55    (0.27)   (0.10)       (0.37)   10.76 
Y   10.58    0.26    0.29    0.55    (0.27)   (0.10)       (0.37)   10.76 
                                              
For the Year Ended October 31, 2012 (D)                   
A   10.20    0.62    0.42    1.04    (0.64)           (0.64)   10.60 
C   10.20    0.54    0.42    0.96    (0.56)           (0.56)   10.60 
I   10.20    0.65    0.42    1.07    (0.67)           (0.67)   10.60 
R3   10.20    0.61    0.38    0.99    (0.61)           (0.61)   10.58 
R4   10.20    0.64    0.38    1.02    (0.64)           (0.64)   10.58 
R5   10.20    0.67    0.38    1.05    (0.67)           (0.67)   10.58 
Y   10.20    0.67    0.38    1.05    (0.67)           (0.67)   10.58 
                                              
From September 30, 2011 (commencement of operations), through October 31, 2011  (D)                   
A(G)   10.00    0.03    0.20    0.23    (0.03)           (0.03)   10.20 
C(G)   10.00    0.03    0.19    0.22    (0.02)           (0.02)   10.20 
I(G)   10.00    0.04    0.19    0.23    (0.03)           (0.03)   10.20 
R3(G)   10.00    0.03    0.19    0.22    (0.02)           (0.02)   10.20 
R4(G)   10.00    0.03    0.20    0.23    (0.03)           (0.03)   10.20 
R5(G)   10.00    0.04    0.19    0.23    (0.03)           (0.03)   10.20 
Y(G)   10.00    0.04    0.19    0.23    (0.03)           (0.03)   10.20 

 

(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)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(D)Per share amounts have been calculated using average shares outstanding method.
(E)Not annualized.
(F)Annualized.
(G)Commenced operations on September 30, 2011.

 

28

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(C)
 
                      
                      
 5.08%(E)  $102,968    1.16%(F)   1.05%(F)   4.61%(F)   38%
 4.79(E)   55,640    1.90(F)   1.80(F)   3.87(F)    
 5.34(E)   55,735    0.86(F)   0.79(F)   4.75(F)    
 5.03(E)   2,411    1.52(F)   1.35(F)   4.43(F)    
 5.19(E)   2,413    1.22(F)   1.05(F)   4.73(F)    
 5.34(E)   2,537    0.91(F)   0.75(F)   5.04(F)    
 5.31(E)   10,717    0.82(F)   0.75(F)   5.03(F)    
                            
                            
 10.54    46,387    1.31    1.04    5.93    67 
 9.70    24,263    2.05    1.78    5.18     
 10.80    15,072    1.05    0.78    6.23     
 9.98    2,252    1.72    1.35    5.85     
 10.31    2,292    1.42    1.05    6.15     
 10.64    2,264    1.12    0.75    6.45     
 10.64    10,181    1.02    0.75    6.45     
                            
                            
 2.25(E)   6,855    1.29(F)   1.00(F)   4.72(F)   0 
 2.19(E)   3,101    2.07(F)   1.78(F)   4.21(F)    
 2.28(E)   2,611    1.05(F)   0.76(F)   5.10(F)    
 2.22(E)   2,044    1.74(F)   1.35(F)   4.25(F)    
 2.25(E)   2,044    1.44(F)   1.05(F)   4.55(F)    
 2.28(E)   2,045    1.14(F)   0.75(F)   4.85(F)    
 2.27(E)   9,195    1.04(F)   0.75(F)   4.85(F)    

 

29

 

The Hartford Floating Rate High Income Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

30

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

31

 

The Hartford Floating Rate High Income Fund
Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

32

 

The Hartford Floating Rate High 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,050.80   $5.34   $1,000.00   $1,019.58   $5.26    1.05%   181    365 
Class C  $1,000.00   $1,047.90   $9.15   $1,000.00   $1,015.86   $9.01    1.80    181    365 
Class I  $1,000.00   $1,053.10   $4.02   $1,000.00   $1,020.88   $3.96    0.79    181    365 
Class R3  $1,000.00   $1,050.30   $6.87   $1,000.00   $1,018.09   $6.76    1.35    181    365 
Class R4  $1,000.00   $1,051.90   $5.35   $1,000.00   $1,019.58   $5.26    1.05    181    365 
Class R5  $1,000.00   $1,053.40   $3.82   $1,000.00   $1,021.07   $3.76    0.75    181    365 
Class Y  $1,000.00   $1,053.40   $3.82   $1,000.00   $1,021.07   $3.76    0.75    181    365 

 

33

 

The Hartford Floating Rate High Income Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Floating Rate High Income Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its June 2011 meeting and its March 2012 meeting, when it initially considered the Fund’s existing investment management agreement and existing investment sub-advisory agreement, respectively. In this regard, the Board noted that there have been no material changes with respect to the information

 

34

 

 

 

provided to the Board in connection with the initial approval processes. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the initial approval processes and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services to be provided by HIFSCO and the Sub-adviser; (ii) performance of the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the extent to which economies of scale would be realized as the Fund grows and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the initial approval processes, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

35

 

The Hartford Floating Rate High Income Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early).

 

Loan Risk: The Fund’s investments in loans may at times become difficult to value and highly illiquid; they are subject to credit risk such as nonpayment of principal or interest, and risks of bankruptcy and insolvency.

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

Non-Diversified Risk: The Fund is non-diversified, so it may be more exposed to the risks associated with individual issuers than a diversified fund.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

The Hartford Floating Rate High Income Fund should not be considered an alternative to CDs or money market funds. This Fund is for clients who are looking to complement their traditional fixed income investments.

 

36
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-FRHI13 4/13 113975 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

15

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD GLOBAL ALL-ASSET FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

  

The Hartford Global All-Asset Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Consolidated Schedule of Investments at April 30, 2013 (Unaudited) 6
Consolidated Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 23
Consolidated Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 25
Consolidated Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 27
Consolidated Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 28
Notes to Consolidated Financial Statements (Unaudited) 29
Consolidated Financial Highlights (Unaudited) 46
Directors and Officers (Unaudited) 48
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 50
Quarterly Portfolio Holdings Information (Unaudited) 50
Expense Example (Unaudited) 51
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 52
Principal Risks (Unaudited) 54

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Global All-Asset Fund inception 05/28/2010

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks to provide long-term total return.

 

Performance Overview 5/28/04 - 4/30/13

 

Z:\Vineyard\Live jobs\2013\06 June\19 June\Shift III\v348149-Hartford Mutual Fund N-CSRS\Draft\03-Production

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

  

   6 Month†   1 Year   Since
Inception▲
 
Global All-Asset A#   7.66%       10.00%       7.55%    
Global All-Asset A##        3.95%       5.49%    
Global All-Asset C#   7.26%       9.11%       6.75%    
Global All-Asset C##        8.11%       6.75%    
Global All-Asset I#   7.83%       10.27%       7.84%    
Global All-Asset R3#   7.52%       9.66%       7.26%    
Global All-Asset R4#   7.66%       9.98%       7.56%    
Global All-Asset R5#   7.77%       10.30%       7.86%    
Global All-Asset Y#   7.82%       10.35%       7.91%    
Barclays U.S. Aggregate Bond Index   0.90%       3.68%       5.35%    
MSCI All Country World Index   13.78%       15.69%       13.36%    

 

Not Annualized
Inception: 05/28/2010
#Without sales charge
##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Class C reflect a contingent deferred sales charge of 1.00%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Global All-Asset Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Global All-Asset Class A   1.26%     1.39%  
Global All-Asset Class C   2.01%     2.13%  
Global All-Asset Class I   1.01%     1.10%  
Global All-Asset Class R3   1.51%     1.75%  
Global All-Asset Class R4   1.21%     1.46%  
Global All-Asset Class R5   0.96%     1.12%  
Global All-Asset Class Y   0.91%     1.02%  

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Consolidated Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers        
Scott M. Elliot   Stephen A. Gorman, CFA   Brian M. Garvey

Senior Vice President and Asset Allocation Portfolio Manager

 

Vice President, Director of Tactical Asset Allocation, Asset Allocation Strategies Group, and Portfolio Manager

 

Vice President and Asset Allocation Portfolio Manager

         

 

How did the Fund perform?

The Class A shares of The Hartford Global All-Asset Fund returned 7.66%, before sales charge, for the six-month period ended April 30, 2013, compared to the returns of 13.78% and 0.90%, respectively, for the MSCI All Country World Index and Barclays Capital U.S. Aggregate Index for the same period. The Fund outperformed the 7.13% average return of the Lipper Global Flexible Portfolio Funds peer group, a group of funds that allocate investments across various asset classes with at least 25% in securities traded outside of the U.S.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. The formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB also supported European assets.

 

Fixed income risk assets held up relatively well during the period as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to avert the fiscal cliff. Lawmakers also passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration. Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02% to 0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

The Fund uses multiple levers to generate investment performance. It can invest in equities and fixed income, as well as undertake opportunistic investments in additional asset classes, such as currencies and commodities. The Fund’s underperformance during the period was due in part to relatively weak performance in the Fund’s equity allocation. Equity underperformance versus its benchmark was due primarily to security selection within Materials and Financials. From a regional perspective, security selection within North America (U.S. and Canada) and Europe (United

 

3

 

The Hartford Global All-Asset Fund
Manager Discussion  – (continued)
April 30, 2013 (Unaudited)

 

Kingdom and Switzerland) hurt relative returns. Aggregate top detractors from the equity allocation included the Market Vectors Gold Miners exchange traded fund, a Korean equity index futures position (KOSPI 200), and the Fund’s holding in gold production company Banro. An out-of-benchmark allocation to commodities, achieved through futures contracts in commodities such as gold, platinum, silver, and natural gas, also detracted as commodities underperformed the Fund’s benchmark.

 

The fixed income portion of the Fund outperformed its benchmark during the period. Security selection, as well as out-of-benchmark allocations to emerging market debt and bank loans, contributed positively to relative returns. Within emerging market debt, exposure to corporate cash bonds, nominal cash bonds, and interest rate swaps were the primary contributors to relative performance. The Fund’s bank loan exposure, via credit default swaps, and the Fund’s exposure to high yield, achieved via credit default swaps, boosted relative results.

 

What is the outlook?

We expect improvement in the global economy in the latter half of 2013 and into 2014. We believe that central banks are playing a key role in anchoring bond yields and shifting economic activity, with policies focused on currency debasement and socially acceptable outcomes. Cyclical inflation pressures in developed markets are likely to emerge as growth improves. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms should support an economic improvement in the region.

 

In general we believe equities represent good value over the medium term, and we ended the period overweight equities versus the Fund’s benchmark. We are focused on areas that are out of favor but benefit from structural change in the economy, such as European equities, value oriented small/mid cap securities with high active risk, and equities of countries poised to benefit from improving terms of trade. Terms of trade beneficiaries include Asian companies largely based in Korea and Taiwan.

 

Recent economic data out of Europe indicate ongoing weakness, which we expect will continue until at least late-2013. However, fundamental structural change continues. These changes require time to implement, but we believe their impact will be durable. Some of these changes are already producing results. Euro area deficits have shrunk to low levels relative to those of other developed nations, productivity is improving, and Southern European economies are stabilizing. We, therefore, continue to believe that despite the current economic challenges, Europe is an attractive opportunity.

 

Sentiment on U.S. Treasury bonds is at extreme bearish levels. In the past such a negative outlook often foreshadowed a bond rally. Given historically low rates and the persistent nature of inflation any bond rally could be muted this time, but we are wary of being aggressively short duration in the near term. We trimmed our exposure to U.S. Treasuries during the period. At the end of the period we were overweight bank loans and emerging markets debt within the Fund’s fixed income allocation.

 

Distribution by Credit Quality

as of April 30, 2013

 

Credit Rating *  Percentage of
Net Assets
 
Aaa / AAA   2.7%
Aa / AA   0.4 
A   1.0 
Baa / BBB   2.8 
Ba / BB   2.2 
B   0.8 
Caa / CCC or Lower   0.1 
Unrated   0.1 
U.S. Government Agencies and Securities   7.9 
Non-Debt Securities and Other Short-Term Instruments   85.5 
Other Assets & Liabilities   (3.5)
Total   100.0%

 

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

4

 

 

 

Diversification by Country

as of April 30, 2013

 

   Percentage of 
Country  Net Assets 
Australia   1.8%
Austria   0.2 
Belgium   0.2 
Bermuda   0.1 
Brazil   1.6 
British Virgin Islands   0.2 
Canada   2.9 
Cayman Islands   0.2 
Chile   0.2 
China   1.3 
Colombia   0.2 
Denmark   0.1 
Dominican Republic   0.0 
Egypt   0.0 
Finland   0.1 
France   1.9 
Germany   2.4 
Greece   0.4 
Hong Kong   2.6 
India   0.5 
Indonesia   0.1 
Ireland   1.2 
Israel   0.2 
Italy   1.2 
Japan   6.2 
Jersey   0.0 
Kazakhstan   0.1 
Kuwait   0.1 
Luxembourg   0.2 
Malaysia   0.2 
Mauritius   0.0 
Mexico   0.9 
Netherlands   0.6 
New Zealand   0.3 
Norway   1.7 
Peru   0.2 
Poland   0.0 
Portugal   0.9 
Qatar (State of)   0.2 
Russia   0.3 
Singapore   1.0 
South Africa   0.3 
South Korea   2.6 
Spain   1.3 
Sweden   1.2 
Switzerland   2.0 
Taiwan   2.7 
Thailand   0.2 
Turkey   0.4 
United Arab Emirates   0.2 
United Kingdom   3.1 
United States   34.2 
Short-Term Investments   22.8 
Other Assets and Liabilities   (3.5)
Total   100.0%

 

5

 

The Hartford Global All-Asset Fund
Consolidated Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 60.7%     
     Automobiles and Components – 1.7%     
 228   Astra International Tbk PT  $172 
 3   Bayerische Motoren Werke (BMW) AG   273 
 2   BorgWarner, Inc. ●   188 
 9   Bridgestone Corp.   327 
 242   Cheng Shin Rubber Industries Co,. Ltd   820 
 84   China Motor Corp.   82 
 2   Continental AG ●   187 
 7   Daimler AG   415 
 6   Denso Corp.   281 
 342   Dongfeng Motor Group Co., Ltd.   511 
 18   Exedy Corp.   452 
 21   Ford Motor Co.   283 
 7   General Motors Co. ●   219 
 30   Honda Motor Co., Ltd.   1,186 
 4   Hyundai Motor Co., Ltd.   805 
 86   Isuzu Motors Ltd.   573 
 3   Kia Motors Corp.   162 
 2   Michelin (C.G.D.E.) Class B   169 
 113   Nan Kang Rubber Tire Co., Ltd.   134 
 127   Nissan Motor Co., Ltd.   1,329 
 40   Pirelli & Co. S.p.A.   411 
 9   Stanley Electric Co., Ltd.   181 
 10   Tachi-S Co., Ltd.   190 
 27   Tata Motors Ltd.   147 
 23   Toyota Motor Corp.   1,349 
 860   Xingda International Holdings   330 
 200   Yulon Motor Co., Ltd.   436 
         11,612 
     Banks - 5.1%     
 10   Alior Bank S.A. ●   234 
 24   Australia & New Zealand Banking Group Ltd.   798 
 45   Banco ABC Brasil S.A.   355 
 38   Banco Bilbao Vizcaya Argentaria S.A.   366 
 22   Banco Bradesco S.A.   360 
 538   Banco Espirito Santo S.A. ●   617 
 57   Banco Santander Brasil S.A.   420 
 63   Banco Santander Central Hispano S.A.   454 
 15   Bancolombia S.A.   242 
 10   Bancorpsouth, Inc.   153 
 26   Bangkok Bank plc   201 
 143   Bank Central Asia PT   158 
 558   Bank of China Ltd.   262 
 30   Bank of East Asia Ltd.   124 
 3   Bank of Montreal   201 
 5   Bank of Nova Scotia   290 
 1   Banque Cantonale Vaudoise   300 
 95   Barclays Bank plc ADR   422 
 6   BB&T Corp.   192 
 48   BNP Paribas   2,681 
 60   BOC Hong Kong Holdings Ltd.   206 
 5   BOK Financial Corp.   281 
 13   BS Financial Group, Inc.   172 
 9   Canadian Imperial Bank of Commerce   703 
 495   China Construction Bank   416 
 13   Commonwealth Bank of Australia   970 
    ConnectOne Bancorp Inc. ●   10 
 26   DBS Group Holdings Ltd.   359 
 18   DGB Financial Group, Inc.   251 
 48   DNB ASA ●   793 
 6   Federal Agricultural Mortgage Corp.   180 
 14   Fifth Third Bancorp   232 
 29   Fukuoka Financial Group, Inc.   150 
 24   Hana Financial Holdings   762 
 13   Hang Seng Bank Ltd.   211 
 15   HDFC Bank Ltd.   192 
 6   Home Capital Group, Inc.   331 
 9   Housing Development Finance Corp. Ltd.   143 
 138   HSBC Holdings plc   1,507 
 525   Industrial & Commercial Bank of China Ltd.   370 
 82   Intesa Sanpaolo   149 
 22   Itau Unibanco Banco Multiplo S.A. ADR   363 
 32   Itausa - Investimentos Itau S.A.   159 
 5   KB Financial Group, Inc.   152 
 431   Lloyds Banking Group plc ●   366 
 204   Mega Financial Holding Co.   158 
 220   Mitsubishi UFJ Financial Group, Inc.   1,494 
 178   Mizuho Financial Group, Inc.   392 
 21   National Australia Bank Ltd.   740 
 5   National Bank of Canada   411 
 27   Nordea Bank Ab   322 
 33   Oversea-Chinese Banking Corp., Ltd.   290 
 4   PNC Financial Services Group, Inc.   281 
 164   PT Bank Rakyat Indonesia   159 
 6   Royal Bank of Canada   355 
 9   Shinhan Financial Group Co., Ltd.   316 
 7   Societe Generale Class A   251 
 35   Spar Nord Bank A/S ●   223 
 14   Standard Bank Group Ltd.   181 
 46   Standard Chartered plc   1,151 
 32   Sumitomo Mitsui Financial Group, Inc.   1,503 
 8   SunTrust Banks, Inc.   240 
 6   Svenska Handelsbanken Ab Class A   259 
 9   Swedbank Ab   215 
 3   Toronto-Dominion Bank   285 
 34   Turkiye Garanti Bankasi A.S.   188 
 233   Turkiye Sinai Kalkinma Bankasi A.S.   335 
 31   Unicredit S.p.A.   160 
 18   United Overseas Bank Ltd.   320 
 14   US Bancorp   462 
 106   Wells Fargo & Co.   4,028 
 25   Westpac Banking Corp.   867 
         33,844 
     Capital Goods - 5.0%     
 8   3M Co.   786 
 19   ABB Ltd. ADR   440 
 5   AGCO Corp.   279 
 36   AirTac International Group   191 
 25   Amada Co., Ltd.   198 
 17   Asahi Glass Co., Ltd.   133 
 6   Atlas Copco Ab B Shares   151 
 37   BAE Systems plc   218 
 72   Beijing Enterprises Holdings Ltd.   542 
 63   Belden, Inc. ‡   3,097 
 7   Boeing Co.   619 
 48   Carlisle Cos., Inc. ‡   3,129 
 9   Caterpillar, Inc.   720 

 

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

 

6

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 60.7% - (continued)     
     Capital Goods - 5.0% - (continued)     
 127   China International Marine Containers Co., Ltd.  $204 
 546   China Liansu Group Holdings Ltd.   312 
 31   Compagnie De Saint-Gobain   1,245 
 2   Cummins, Inc.   166 
 5   Danaher Corp.   326 
 5   Danieli & Co.   133 
 7   Deere & Co.   624 
 1   Doosan Corp.   163 
 6   Eaton Corp. plc   355 
 9   Emerson Electric Co.   478 
 4   European Aeronautic Defence & Space Co. N.V.   224 
 1   Fanuc Corp.   208 
 368   Far Eastern New Century Corp.   396 
 5   Fastenal Co.   258 
 12   Ferrovial S.A.   202 
 27   Fiat Industrial S.p.A.   301 
 3   Fluor Corp.   181 
 48   GATX Corp. ╦   2,435 
 2   Geberit AG   560 
 86   General Electric Co. ‡   1,908 
 8   Honeywell International, Inc.   573 
 26   Hutchison Whampoa Ltd.   284 
 14   Hyundai Development Co.   285 
 1   Hyundai Heavy Industries Co., Ltd.   115 
 3   Illinois Tool Works, Inc.   218 
 5   Ingersoll-Rand plc   266 
 18   Itochu Corp.   229 
 2   Joy Global, Inc.   109 
 20   Keppel Corp., Ltd.   173 
 4   Keppel REIT   5 
 22   King Slide Works Co., Ltd.   175 
 26   Kingspan Group plc   312 
 65   Kinik Co.   120 
 8   Komatsu Ltd.   212 
 11   Koninklijke Philips Electronics N.V.   303 
 13   Kubota Corp.   188 
 5   Larsen & Toubro Ltd.   135 
 4   Legrand S.A.   170 
 2   LG Corp.   118 
 2   LS Corp.   125 
 3   Metso Oyj   121 
 12   Mitsubishi Corp.   225 
 42   Mitsubishi Electric Corp.   400 
 38   Mitsubishi Heavy Industries Ltd.   263 
 15   Mitsui & Co., Ltd.   205 
 5   Monotaro Co.   138 
 2   Nidec Corp.   121 
 6   Obrascon Huarte Lain S.A.   217 
 2   Parker-Hannifin Corp.   186 
 8   Pentair Ltd.   414 
 1   Precision Castparts Corp.   218 
 2   Rockwell Automation, Inc.   195 
 20   Rolls-Royce Holdings plc   349 
 2   Samsung C&T Corp.   124 
 11   Sandvik AB   158 
 7   Scania AB Class B   144 
 5   Schneider Electric S.A.   350 
 198   Shanghai Industrial Holdings Ltd.   629 
 28   Shin Zu Shing Co., Ltd.   71 
 7   Siemens AG   721 
 1   SMC Corp. of America   207 
 12   Sumitomo Electric Industries Ltd.   157 
 62   Taiwan Glass Industries Corp.   63 
 480   TECO Electric & Machinery Co., Ltd.   452 
 14   Textron, Inc.   363 
 5   United Technologies Corp.   432 
 28   Vinci S.A.   1,328 
 404   Walsin Lihwa Corp.   125 
         33,673 
     Commercial and Professional Services - 0.6%     
 224   ACCO Brands Corp. ●   1,513 
 2   ADT (The) Corp.   95 
 5   Bilfinger Berger AG   497 
 17   Brambles Ltd.   157 
 5   Cintas Corp.   219 
 15   Experian plc   257 
 44   Performant Financial Corp. ●   425 
 3   Secom Co., Ltd.   148 
 16   Seek Ltd.   189 
 4   Tyco International Ltd.   136 
 5   Waste Management, Inc.   219 
         3,855 
     Consumer Durables and Apparel - 1.4%     
 3   Adidas AG   266 
 3   Cie Financiere Richemont S.A.   281 
 3   Coach, Inc.   155 
 40   Formosa Taffeta Co.   38 
 26   Giant Manufacturing   156 
 5   Hugo Boss AG   536 
 2   LVMH Moet Hennessy Louis Vuitton S.A.   359 
 87   Mattel, Inc. ‡   3,988 
 60   Merida Industry Co., Ltd.   364 
 4   NIKE, Inc. Class B   286 
 5   Nikon Corp.   102 
 25   Panasonic Corp.   181 
 269   Pou Chen   318 
 2   PVH Corp.   261 
 205   Ruentex Industries Ltd.   490 
 8   Sankyo Co., Ltd.   351 
 7   Sega Sammy Holdings, Inc.   184 
 134   Skyworth Digital Holdings Ltd.   111 
 11   Sony Corp.   186 
 163   Sunny Optical Technology Group   216 
    Swatch Group AG   229 
 8   Toll Brothers, Inc. ●   269 
         9,327 
     Consumer Services - 0.9%     
 6   Carnival Corp.   196 
 1   Chipotle Mexican Grill, Inc. ●   222 
 21   Compass Group plc   277 
 14   Ctrip.com International Ltd. ADR ●   300 
 4   Darden Restaurants, Inc.   188 
 40   Genting Berhad   138 
 13   Home Inns & Hotels Management, Inc. ●   333 
 3   Las Vegas Sands Corp.   192 
 7   McDonald's Corp.   738 
 163   MGM China Holdings Ltd.   384 

 

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

 

7

 

The Hartford Global All-Asset Fund
Consolidated Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 60.7% - (continued)     
     Consumer Services - 0.9% - (continued)     
 16   New Oriental Education & Technology Group, Inc. ADR  $307 
 51   Opap S.A.   506 
 4   Paddy Power plc   368 
 5   Starbucks Corp.   334 
 3   Starwood Hotels & Resorts, Inc.   206 
 43   TUI AG ●   456 
 127   Wynn Macau Ltd. ●   386 
 2   Wynn Resorts Ltd.   206 
 4   Yum! Brands, Inc.   265 
         6,002 
     Diversified Financials - 2.1%     
 8   American Express Co.   537 
 3   Ameriprise Financial, Inc.   244 
 7   Banca Generali S.p.A.   136 
 70   Bank of America Corp. ‡   863 
 9   Bank of New York Mellon Corp.   251 
 28   BM & F Bovespa S.A.   195 
 4   Capital One Financial Corp.   236 
 49   Citigroup, Inc.   2,284 
 3   CME Group, Inc.   196 
 9   Credit Suisse Group AG   245 
 8   Deutsche Bank AG   351 
 2   Deutsche Boerse AG   156 
 6   Discover Financial Services, Inc.   281 
 7   Eaton Vance Corp.   280 
 159   Fubon Financial Holding Co., Ltd   228 
 4   Goldman Sachs Group, Inc. ‡   511 
 7   Groupe Bruxelles Lambert S.A.   557 
 13   Hong Kong Exchanges & Clearing Ltd.   227 
 3   IBJ Leasing Co., Ltd.   103 
 26   ING Groep N.V. ●   214 
 3   IntercontinentalExchange, Inc. ●   423 
 8   Invesco Ltd.   242 
 35   JP Morgan Chase & Co.   1,739 
 10   Julius Baer Group Ltd.   390 
 7   Legg Mason, Inc.   221 
 11   Morgan Stanley   246 
 42   Nomura Holdings, Inc.   342 
 17   ORIX Corp.   267 
 7   SEI Investments Co.   205 
 4   State Street Corp.   260 
 3   T. Rowe Price Group, Inc.   231 
 74   UBS AG   1,323 
         13,984 
     Energy - 4.5%     
 3   Anadarko Petroleum Corp.   294 
 3   Apache Corp.   229 
 4   Baker Hughes, Inc.   176 
 27   BG Group plc   457 
 143   BP plc   1,038 
 3   Cameron International Corp. ●   198 
 7   Canadian Natural Resources Ltd.   208 
 8   Chesapeake Energy Corp.   162 
 13   Chevron Corp. ‡   1,571 
 179   China Petroleum & Chemical Corp. Class H   198 
 46   China Shenhua Energy Co., Ltd.   164 
 131   CNOOC Ltd.   244 
 8   Cobalt International Energy, Inc. ●   210 
 8   ConocoPhillips Holding Co.   503 
 3   Devon Energy Corp.   180 
 10   Enbridge Energy Management ●   282 
 17   Enbridge, Inc.   818 
 39   Eni S.p.A.   942 
 2   EOG Resources, Inc. ‡   268 
 42   ERA Group, Inc. ●   957 
 31   Exxon Mobil Corp. ‡   2,800 
 8   GS Holdings Corp.   376 
 8   Halliburton Co.   322 
 3   Hess Corp.   228 
    Inpex Corp.   436 
 122   JX Holdings, Inc.   662 
 9   Kinder Morgan Management LLC ●   761 
 13   Kinder Morgan, Inc.   501 
 316   Kunlun Energy Co., Ltd.   619 
 5   Lukoil ADR   302 
 5   Marathon Oil Corp.   179 
 4   Marathon Petroleum Corp.   324 
 3   National Oilwell Varco, Inc.   211 
 42   OAO Gazprom Class S ADR   333 
 5   Occidental Petroleum Corp.   488 
 14   OGX Petroleo e Gas Participacoes S.A. ●   14 
 12   Origin Energy Ltd.   149 
 5   Peabody Energy Corp.   98 
 213   PetroChina Co., Ltd.   271 
 56   Petroleo Brasileiro S.A.   555 
 4   Phillips 66   253 
 14   PTT Public Co., Ltd.   153 
 14   Reliance Industries Ltd.   206 
 32   Repsol S.A. ●   752 
 16   Royal Dutch Shell plc   538 
 25   Royal Dutch Shell plc Class B   888 
 12   Saipem S.p.A.   331 
 5   Sasol Ltd.   227 
 9   Schlumberger Ltd.   682 
 231   Scorpio Tankers, Inc. ●   2,002 
 18   Seacor Holdings, Inc.   1,302 
 12   Statoil ASA   295 
 8   Suncor Energy, Inc.   245 
 20   Tecnicas Reunidas S.A.   972 
 18   Total S.A.   892 
 10   Transcanada Corp.   505 
 3   Transocean Ltd. ●   179 
 10   Tullow Oil plc   149 
 8   Valero Energy Corp.   304 
 7   Williams Cos., Inc.   253 
 7   Woodside Petroleum Ltd.   257 
         30,113 
     Food and Staples Retailing - 1.0%     
 7   Carrefour S.A.   205 
 3   Costco Wholesale Corp.   356 
 10   CVS Caremark Corp.   554 
 82   Distribuidora Internacional De Alimentacion S.A.   637 
 26   Jeronimo Martins   620 
 14   Koninklijke Ahold N.V.   214 
 16   Metro AG   499 
 9   Seven & I Holdings Co., Ltd.   333 
 81   Tesco plc   458 
 7   Walgreen Co.   346 

 

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

 

8

 


  

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 60.7% - (continued)     
     Food and Staples Retailing - 1.0% - (continued)     
 73   Wal-Mart de Mexico S.A.B. de C.V.  $232 
 12   Wal-Mart Stores, Inc.   928 
 12   Wesfarmers Ltd.   545 
 12   Woolworths Ltd.   457 
         6,384 
     Food, Beverage and Tobacco - 3.7%     
 14   Adecoagro S.A. ●   107 
 15   Altria Group, Inc.   545 
 8   Anheuser-Busch InBev N.V.   809 
 17   Archer-Daniels-Midland Co.   588 
 6   Asahi Group Holdings Ltd.   156 
 304   Asian Citrus Holdings Ltd.   129 
 6   Associated British Foods plc   190 
 15   British American Tobacco plc   828 
 44   Bumitama Agri Ltd. ●   36 
 10   Bunge Ltd. Finance Corp.   740 
 45   C&C Group plc   278 
 112   Charoen Pokphand Foods Ltd.   121 
 105   China Agri-Industries Holdings   51 
 135   China Modern Dairy Holdings Ltd. ●   47 
 10   Coca-Cola Amatil Ltd.   159 
 29   Coca-Cola Co.   1,246 
 10   Coca-Cola Hellenic Bottling Co. S.A.   237 
 64   Davide Campari   517 
 19   Diageo Capital plc   590 
 20   Ebro Foods S.A.   409 
 67   First Resources Ltd.   95 
 34   Fomento Economico Mexicano S.A. de C.V.   382 
 7   General Mills, Inc.   362 
 36   Glanbia plc   481 
 377   Golden Agri Resources Ltd.   162 
 5   Groupe Danone   354 
 28   Grupo Modelo S.A.B. de C.V.   251 
 11   Heineken N.V.   744 
 10   Imperial Tobacco Group plc   345 
 85   IOI Corp. Bhd   140 
 31   ITC Ltd.   190 
 29   Japan Tobacco, Inc. ☼   1,097 
 23   JBS S.A.   72 
 7   Kernel Holding S.A. ●   120 
 9   Kerry Group plc Class A   550 
 21   Kirin Brewery Co., Ltd.   362 
 7   Kraft Foods Group, Inc.   362 
 2   KT&G Corp.   134 
 5   Lorillard, Inc.   199 
 3   Maple Leaf Foods, Inc. w/ Rights   46 
 362   Marine Harvest ●   377 
 3   Mead Johnson Nutrition Co.   204 
 7   Minerva S.A. ●   40 
 15   Mondelez International, Inc.   466 
 25   Nestle S.A.   1,796 
 11   PepsiCo, Inc.   890 
 8   Perdigao S.A.   203 
 2   Pernod-Ricard S.A.   255 
 12   Philip Morris International, Inc.   1,131 
 31   Post Holdings, Inc. ●   1,365 
 11   PureCircle Ltd. ●   45 
 7   SABMiller plc   396 
 11   SLC Agricola S.A.   93 
 84   Standard Foods Corp.   289 
 12   Suedzucker AG   501 
 12   Tyson Foods, Inc. Class A   296 
 16   Unilever N.V.   679 
 525   Uni-President Enterprises Corp.   1,035 
 5   Viscofan S.A.   275 
 198   Wilmar International Ltd.   536 
         25,103 
     Health Care Equipment and Services - 1.1%     
 10   Abbott Laboratories   379 
 4   Aetna, Inc.   238 
 4   Baxter International, Inc.   281 
 546   Biosensors International Group Ltd. ●   533 
 5   Carl Zeiss Meditec AG   163 
 3   Cie Generale d'Optique Essilor International S.A.   288 
 4   CIGNA Corp.   297 
 3   Covidien plc   217 
 13   DiaSorin S.p.A.   487 
 7   Express Scripts Holding Co. ●   406 
 2   Fresenius Medical Care AG & Co.   167 
 1   Fresenius SE & Co. KGaA   169 
 2   Humana, Inc.   160 
    Intuitive Surgical, Inc. ●   228 
    M3, Inc.   285 
 3   McKesson Corp.   298 
 7   Medtronic, Inc.   341 
 25   Rhoen-Klinikum AG   532 
 122   Sorin S.p.A. ●   341 
 4   St. Jude Medical, Inc.   175 
 3   Terumo Corp.   127 
 8   UnitedHealth Group, Inc.   487 
 4   Wellpoint, Inc.   267 
 3   Zimmer Holdings, Inc.   240 
         7,106 
     Household and Personal Products - 0.6%     
 4   Colgate-Palmolive Co.   419 
 3   Estee Lauder Co., Inc.   225 
 4   Henkel AG & Co. KGaA   282 
 3   Herbalife Ltd.   128 
 8   Kao Corp.   263 
 3   Kimberly-Clark Corp.   335 
 2   L'Oreal S.A. ●   419 
 11   Pola Orbis Holdings, Inc.   375 
 17   Procter & Gamble Co.   1,306 
 4   Reckitt Benckiser Group plc   307 
 8   Shiseido Co., Ltd.   110 
 131   Vinda International Holdings Ltd.   171 
         4,340 
     Insurance - 2.6%     
 3   ACE Ltd.   273 
 4   Aflac, Inc.   209 
 4   Ageas   151 
 208   AIA Group Ltd.   925 
 7   Alleghany Corp. ●‡   2,610 
 4   Allianz SE   554 
 6   Allstate Corp.   290 
 6   American International Group, Inc. ●   244 
 39   Amp Ltd.   221 
 11   Assicurazioni Generali S.p.A.   209 
 30   Aviva plc   142 

 

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

 

9

 

The Hartford Global All-Asset Fund
Consolidated Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 60.7% - (continued)     
     Insurance - 2.6% - (continued)     
 27   AXA S.A.  $503 
 11   Berkshire Hathaway, Inc. Class B ●   1,193 
 89   China Life Insurance Co., Ltd.   245 
 173   China Pacific Insurance Co., Ltd.   624 
 3   Chubb Corp.   286 
 10   Cincinnati Financial Corp.   482 
 11   Delta Lloyd N.V.   220 
 42   Discovery Ltd.   383 
 6   Hanover Insurance Group, Inc.   285 
 8   Lincoln National Corp.   262 
 1   Markel Corp. ●   283 
 8   MetLife, Inc.   306 
 2   Muenchener Rueckversicherungs   391 
 24   Ping An Insurance (Group) Co.   188 
 7   Principal Financial Group, Inc.   250 
 4   Prudential Financial, Inc.   249 
 24   Prudential plc   407 
 20   RMI Holdings ☼   53 
 7   Sampo Oyj Class A   271 
 1   Samsung Fire & Marine Insurance Co., Ltd.   139 
 44   Storebrand ASA   202 
 20   Suncorp-Metway Ltd.   263 
 3   Swiss Re Ltd.   234 
 38   T&D Holdings, Inc.   447 
 54   Tokio Marine Holdings, Inc.   1,721 
 5   Torchmark Corp.   336 
 4   Travelers Cos., Inc.   362 
 6   Unum Group   165 
 12   XL Group plc   383 
 1   Zurich Financial Services AG   307 
         17,268 
     Materials - 5.3%     
 33   Acerinox S.A. ●   361 
 115   African Barrick Gold Ltd.   314 
 1   Agrium, Inc.   132 
 3   Air Liquide   381 
 3   Akzo Nobel N.V.   157 
 65   Alacer Gold Corp.   195 
 44   Alamos Gold, Inc.   620 
 21   Allied Nevada Gold Corp. ●   227 
 12   Anglo American plc   298 
 5   AngloGold Ashanti   92 
 9   ArcelorMittal   110 
 378   Asia Cement Corp.   481 
 8   Ball Corp.   352 
 326   Banro Corp. ●   417 
 4   Barrick Gold Corp.   77 
 8   BASF SE   762 
 27   BHP Billiton Ltd.   903 
 14   BHP Billiton plc   388 
 12   Boliden Ab   196 
 3   Celanese Corp.   169 
 475   Centamin plc ●   308 
 1   CF Industries Holdings, Inc.   208 
 68   China Bluechemical Ltd.   41 
 1,575   China Petrochemical Dev Corp.   853 
 23   China Steel Chemical Corp.   114 
 780   China Steel Corp.   688 
 78   Colossus Minerals, Inc. ●   179 
 13   Companhia Sider·rgica Nacional   53 
 24   Compania De Minas Buenaventur ADR   483 
 59   Continental Gold Ltd. ●   290 
 31   Continental Gold Ltd. Private Placement ●   154 
 54   CRH plc ☼   1,169 
 11   Deltic Timber Corp.   689 
 10   Detour Gold Corp. ●   126 
 9   Dow Chemical Co.   295 
 7   E.I. DuPont de Nemours & Co.   382 
 3   Ecolab, Inc.   261 
 77   Evolution Mining Ltd. ●   78 
 26   Feng Hsin Iron & Steel Co.   46 
 56   Formosa Chemicals & Fibre Corp.   131 
 63   Formosa Plastic Corp.   152 
 7   Freeport-McMoRan Copper & Gold, Inc.   217 
 15   Gerdau S.A.   115 
 5   Goldcorp, Inc.   149 
 234   Golden Star Resources Ltd. ●   253 
 55   Graphic Packaging Holding Co. ●   411 
 52   Grupo Mexico S.A.B. de C.V.   187 
 39   Hitachi Metals Ltd.   398 
 3   Holcim Ltd.   218 
 1,868   Huabao International Holdings Ltd.   858 
 7   Impala Platinum Holdings Ltd.   103 
 39   Incitec Pivot Ltd.   117 
 3   Industrias Penoles S.A.B. de C.V.   110 
 1   InkTec Co., Ltd.   38 
 10   International Paper Co.   473 
 7   Israel Chemicals Ltd.   80 
 3   Johnson Matthey plc   125 
 150   Kingsgate Consolidated Ltd.   338 
 21   Koza Altin Isletmeleri A.S.   422 
 76   Lcy Chemical Corp.   90 
 2   LG Chem Ltd.   193 
 2   Linde AG   323 
 146   Medusa Mining Ltd.   498 
 7   Mining & Metallurgical Co. Norilsk Nickel OJSC ADR   104 
 79   Mitsubishi Gas Chemical Co.   606 
 13   Monsanto Co.   1,361 
 14   Mosaic Co.   891 
 12   Mytilineos Holding ●   73 
 81   Nan Ya Plastics Corp.   161 
 193   Nevsun Resources Ltd.   728 
 7   Newcrest Mining Ltd.   126 
 9   Newmont Mining Corp.   282 
 40   Nippon Shokubai Co., Ltd.   394 
 61   Nippon Steel & Sumitomo Metal Corp.   163 
 3   Nitto Denko Corp.   204 
 116   Northern Star Resources Ltd.   82 
 5   Orica Ltd.   112 
 141   Oriental Union Chemical Corp.   156 
 30   Osisko Mining Corp. ●   127 
 127   Petropavlovsk plc   288 
 1   Posco Ltd.   222 
 22   Potash Corp. of Saskatchewan, Inc.   932 
 4   Randgold Resources Ltd. ADR   293 
 26   Regis Resources Ltd. ●   103 
 5   Rio Tinto Ltd.   299 
 10   Rio Tinto plc   468 
 3   Rock Tenn Co. Class A   340 

 

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

 

10

 


  

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 60.7% - (continued)     
     Materials - 5.3% - (continued)     
 7   Royal Gold, Inc.  $378 
 82   Rubicon Minerals Corp. ●   143 
 203   Semafo, Inc.   385 
 4   Shin-Etsu Chemical Co., Ltd.   271 
 234   Showa Denko K.K.   378 
 9   Sibanye Gold Ltd. ●   9 
 12   Silgan Holdings, Inc.   591 
 38   Silver Lake Resources Ltd. ●   41 
 38   Smurfit Kappa Group plc   568 
 3   Sociedad Quimica y Minera de Chile S.A.   125 
 68   St. Barbara Ltd. ●   42 
 17   Stora Enso Oyj Class R   116 
 1   Syngenta AG   371 
 411   Taiwan Cement   546 
 178   Taiwan Fertilizer Co., Ltd   426 
 14   Tokyo Ohka Kogyo Co., Ltd.   295 
 21   Toray Industries, Inc.   145 
 70   TSRC Corp.   138 
 94   Tung Ho Steel Enterprise Corp.   92 
 6   Uralkali GDR §   211 
 29   Vale S.A.   482 
 18   Xstrata plc   264 
 48   Yamana Gold, Inc.   596 
 19   Yamato Kogyo Co.   627 
 2   Yara International ASA   113 
 4   Zeon Corp. ☼   38 
 253   Zhaojin Mining Industry Co., Ltd.   283 
 1,113   Zijin Mining Group Co., Ltd.   330 
         35,567 
     Media - 2.1%     
 49   Arbitron, Inc. ‡   2,293 
 4   Avex, Inc.   111 
 9   Axel Springer AG   369 
 14   British Sky Broadcasting Group plc   178 
 6   CBS Corp. Class B   283 
 19   Comcast Corp. Class A   803 
 5   Cookpad, Inc.   183 
 18   DirecTV ●   1,003 
    Fuji Media Holdings, Inc.   441 
 7   Kabel Deutschland Holding AG   637 
 4   Liberty Global, Inc. ●   271 
 54   Liberty Global, Inc. Class C ●   3,651 
 4   McGraw-Hill Cos., Inc.   215 
 4   Naspers Ltd.   260 
 17   News Corp. Class A   514 
 10   Pearson plc   177 
 4   REA Group, Ltd.   133 
 16   Reed Elsevier Capital, Inc.   187 
 97   Sky Deutschland AG ●   554 
 3   Time Warner Cable, Inc.   275 
 8   Time Warner, Inc.   483 
 5   Viacom, Inc. Class B   290 
 12   Walt Disney Co.   756 
 12   WPP plc   205 
         14,272 
     Pharmaceuticals, Biotechnology and Life Sciences - 2.7%     
 1   3-D Matrix, Ltd. ●   46 
 11   Abbvie Inc.   495 
 4   Agilent Technologies, Inc.   167 
 3   Allergan, Inc.   303 
 5   Amgen, Inc.   562 
 6   Astellas Pharma, Inc.   362 
 10   AstraZeneca plc   544 
 6   Bayer AG   656 
 1   Biogen Idec, Inc. ●   321 
 12   Bristol-Myers Squibb Co.   475 
 3   Celgene Corp. ●   369 
 10   Daiichi Sankyo Co., Ltd.   205 
 23   Eisai Co., Ltd.   1,050 
 9   Elan Corp. plc ●   109 
 8   Eli Lilly & Co.   439 
 6   Gerresheimer AG   323 
 10   Gilead Sciences, Inc. ●   515 
 34   GlaxoSmithKline plc   884 
 19   Johnson & Johnson   1,646 
 2   Linical Co., Ltd.   42 
 20   Merck & Co., Inc.   957 
 8   Mylan, Inc. ●   237 
 17   Novartis AG   1,285 
 4   Novo Nordisk A/S   649 
 2   Perrigo Co.   218 
 51   Pfizer, Inc.   1,493 
    Prothena Corp. plc ●   2 
 5   Roche Holding AG   1,155 
 9   Sanofi-Aventis S.A.   977 
 57   Scinopharm Taiwan, Ltd.   133 
 18   Shionogi & Co., Ltd.   435 
 6   Shire plc   203 
 11   Taiwan Liposome Co., Ltd. ●   86 
 7   Takeda Pharmaceutical Co., Ltd.   379 
 8   Teva Pharmaceutical Industries Ltd.   323 
         18,045 
     Real Estate - 3.1%     
 5   AEON Mall Co., Ltd.   161 
 4   Allied Properties REIT   153 
 5   Allreal Holding AG REIT   670 
 3   American Tower Corp. REIT   277 
 17   Artis REIT   285 
 252   Ascendas REIT   565 
 7   Boardwalk REIT   428 
 64   BWP Trust REIT   161 
 17   Canadian Apartment Properties REIT   440 
 7   Canadian REIT   309 
 388   Capitacommercial Trust REIT   540 
 52   Castellum AB   781 
 134   CFS Retail Property Trust Group REIT   304 
 19   Cheung Kong Holdings Ltd.   290 
 12   Cominar REIT   276 
 9   Crombie REIT   141 
 27   Deutsche Wohnen A.G.   467 
 7   Dundee REIT   274 
 8   Equity Lifestyle Properties, Inc. REIT   622 
 3   Equity Residential Properties Trust REIT   203 
 508   Evergrande Real Estate Group Ltd.   208 
 3   Federal Realty Investment Trust REIT   361 
 62   Federation Centres   168 
 96   FKP Property Group   163 
 31   Goodman Group REIT   166 
 75   GPT Group REIT   317 

  

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

 

11

  

The Hartford Global All-Asset Fund
Consolidated Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

  

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 60.7% - (continued)     
     Real Estate - 3.1% - (continued)     
 9   GSW Immobilien AG  $364 
 6   H&R Real Estate Investment Trust   149 
 4   HCP, Inc. REIT   233 
 20   Henderson Land Development Co., Ltd.   148 
 11   Host Hotels & Resorts, Inc. REIT   198 
 33   Hufvudstaden AB   430 
 616   IGB REIT   275 
 177   ING Office Fund REIT   604 
 7   Liberty Property Trust REIT   300 
 39   Link (The) REIT   220 
 77   Macquarie CountryWide Trust REIT   341 
 302   Mapletree Commercial Trust REIT   359 
 300   Mapletree Industries REIT   382 
 191   Mapletree Logistics Trust REIT   203 
 13   Mitsubishi Estate Co., Ltd.   428 
 11   Mitsui Fudosan Co., Ltd.   373 
 3   Mobimo Holding AG   702 
 5   Northern Property REIT   146 
 291   Norwegian Property ASA   408 
 5   ProLogis L.P. REIT   229 
 9   PSP Swiss Property AG   845 
 6   Regency Centers Corp. REIT   341 
 5   RioCan REIT   147 
 2   Shopping Centres Australasia Property Group ●   4 
 3   Simon Property Group, Inc. REIT   500 
 76   Stockland REIT   307 
 44   Sun Hung Kai Properties Ltd.   631 
 265   Suntec REIT   419 
 10   Swiss Prime Site AG   817 
 1   Unibail Rodamco REIT   259 
 23   Westfield Group REIT   280 
 175   Westfield Retail Trust REIT   597 
 22   Wharf Holdings Ltd.   196 
 12   Wihlborgs Fastigheter A.B.   193 
         20,758 
     Retailing - 2.1%     
 37   Advance Automotive Parts, Inc.   3,123 
 3   Amazon.com, Inc. ●   672 
 13   Askul Corp.   238 
 218   Baoxin Automotive Group Ltd. ●   190 
 3   Bed Bath & Beyond, Inc. ●   213 
 80   Belle International Holdings Ltd.   130 
 161   Dah Chong Hong Holdings Ltd.   149 
 4   Dollar Tree, Inc. ●   204 
 12   Don Quijote Co.   627 
 2   Fielmann AG   149 
 7   Hennes & Mauritz Ab   262 
 2   Hikari Tsushin, Inc.   104 
 11   Home Depot, Inc.   795 
 1   Hyundai Department Store Co., Ltd.   169 
 8   Hyundai Home Shopping Network Corp.   1,149 
 2   Industria de Diseno Textil S.A.   254 
 711   Intime Department Store Group Co., Ltd.   844 
 28   Kingfisher plc   135 
 4   Kohl's Corp.   168 
 15   K's Holdings Corp.   539 
 4   L Brands Inc.   205 
 65   Li & Fung Ltd.   84 
 78   Lifestyle International   171 
 17   Lojas Americanas S.A.   151 
 10   Lowe's Co., Inc.   371 
 5   Macy's, Inc.   234 
 2,098   Maoye International Holdings   450 
 1   Netflix, Inc. ●   257 
 1   Pinault-Printemps-Redoute S.A.   218 
 1   Priceline.com, Inc. ●   374 
 16   Rakuten, Inc.   174 
 7   Start Today Co., Ltd.   112 
 5   Target Corp.   324 
 3   Tiffany & Co.   221 
 6   TJX Cos., Inc.   283 
 35   Woolworths Holdings Ltd.   271 
         14,014 
     Semiconductors and Semiconductor Equipment - 2.4%     
 39   Ali Corp   42 
 5   Altera Corp.   148 
 15   Arm Holdings plc   227 
 25   ASM Pacific Technology Ltd.   254 
 3   ASML Holding N.V.   214 
 5   Broadcom Corp. Class A   177 
 78   Chipbond Technology Corp.   198 
 3   Eo Technics Co, Ltd.   101 
 8   Eugene Technology Co, Ltd.   169 
 7   Hermes Microvision, Inc.   223 
 30   Hynix Semiconductor, Inc.   818 
 5   Iljin Display   99 
 15   Infineon Technologies AG   122 
 33   Intel Corp.   787 
 3   KLA-Tencor Corp.   187 
 3   Koh Young Technology, Inc.   81 
 4   Lam Research Corp. ●   196 
 75   Maxim Integrated Products, Inc. ‡   2,331 
 15   MediaTek, Inc.   183 
 4   Samsung Electronics Co., Ltd.   5,996 
 873   Taiwan Semiconductor Manufacturing Co., Ltd.   3,242 
 7   Texas Instruments, Inc.   263 
 3   Tokyo Electron Ltd.   130 
 278   United Microelectronics Corp.   107 
 80   Vanguard International Semiconductor Corp.   87 
         16,382 
     Software and Services - 3.8%     
 5   Accenture plc   388 
 6   Adobe Systems, Inc. ●   259 
 20   Amadeus IT Holding S.A. Class A   588 
 8   Bit-Isle, Inc.   111 
 9   Cardtronics, Inc. ●   238 
 13   Carsales.Com Ltd.   128 
 3   Citrix Systems, Inc. ●   168 
 5   Cognizant Technology Solutions Corp. ●   300 
 1   Com2Us Corp. ●   48 
 26   Computershare Ltd.   269 
 14   Daum Communications Corp.   1,165 
    Digital Garage, Inc.   184 
 14   Diligent Board Member Services Inc. ●   90 
 8   eBay, Inc. ●   437 
 1   Enigmo, Inc. ●   114 
 11   Facebook, Inc. ●   317 
 41   Fiserv, Inc. ●‡   3,776 

 

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

 

12

 


 

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 60.7% - (continued)     
     Software and Services - 3.8% - (continued)     
 1   Gamevil, Inc. ●  $49 
 23   Giant Interactive Group, Inc. ADR ●   172 
 6   GMO Payment Gateway, Inc.   138 
 2   Google, Inc. ●‡   1,350 
 11   HCL Technologies Ltd.   141 
 107   Higher One Holdings, Inc. ●   1,051 
 8   IBM Corp. ╦   1,583 
 3   Infomart Corp.   88 
 4   Infosys Technologies Ltd.   146 
 5   Internet Initiative Japan, Inc.   202 
 3   Intuit, Inc.   194 
 11   Iress Market Technology Ltd.   98 
 4   Itochu Techno-Science Corp.   176 
 12   Kakaku.com, Inc.   299 
 2   Livesense, Inc. ●   148 
 1   Mastercard, Inc.   515 
 12   Micros Systems, Inc. ●   492 
 49   Microsoft Corp.   1,627 
 24   Net One Systems Co., Ltd.   211 
 3   NetEase, Inc. ADR   186 
 1   Nintendo Co., Ltd.   122 
 27   Oracle Corp.   890 
 14   Pchome Online, Inc.   63 
 4   Red Hat, Inc. ●   179 
 6   Salesforce.com, Inc. ●   238 
 8   SAP AG   640 
 6   SMS Co, Ltd.   109 
 9   Sohu.com, Inc. ●   472 
 19   SouFun Holdings Ltd.   481 
 17   Sumisho Computer Systems Corp. ☼   368 
 21   Tata Consultancy Services Ltd.   550 
 9   Tencent Holdings Ltd.   312 
 14   United Internet AG   390 
 47   VeriFone Systems, Inc. ●   1,012 
 4   Visa, Inc.   590 
 2   VMware, Inc. ●   131 
 18   Websense, Inc. ●   315 
 14   Wirecard A.G.   387 
    Yahoo Japan Corp.   186 
 12   Yahoo!, Inc. ●   292 
         25,173 
     Technology Hardware and Equipment - 2.6%     
 57   AAC Technologies Holdings, Inc.   277 
 42   Advantech Co., Ltd.   199 
 24   Anritsu Corp.   359 
 6   Apple, Inc. ‡   2,706 
 36   Asustek Computer, Inc.   419 
 10   Canon, Inc.   350 
 48   Chicony Electronics Co., Ltd.   141 
 69   Chroma Ate, Inc.   148 
 36   Cisco Systems, Inc.   751 
 14   Corning, Inc.   196 
 12   Dell, Inc.   165 
 96   Delta Electronics, Inc.   462 
 31   Diebold, Inc.   907 
 37   Digital China Holdings Ltd.   47 
 16   EMC Corp. ●   361 
 28   Fuji Photo Film Co., Ltd.   570 
 14   Hewlett-Packard Co.   291 
 11   High Technology Computer Corp.   112 
 20   Hitachi High-Technologies Co.   490 
 208   Hitachi Ltd.   1,331 
 109   Hon Hai Precision Industry Co., Ltd.   283 
 7   Hoya Pentax HD Corp.   134 
 2   Iriso Electronics Co., Ltd. ☼   38 
 56   Ju Teng International Holdings   37 
 8   Juniper Networks, Inc. ●   135 
 4   Kyocera Corp.   399 
 5   L.G. Philips LCD Co., Ltd.   133 
 274   Lenovo Group Ltd.   251 
 166   Lite-On Technology Corp.   299 
 37   Lumax Internatioinal   88 
 2   Murata Manufacturing Co., Ltd.   175 
 5   NetApp, Inc. ●   165 
 32   Nokia Oyj   107 
 6   Partron Co, Ltd.   134 
 11   Qualcomm, Inc.   648 
 60   Redington India   88 
 4   SanDisk Corp. ●   204 
 33   Scientech Corp. ●   63 
 2   SFA Engineering Corp.   88 
 8   Suprema, Inc.   155 
 687   SVI Public Co., Ltd.   98 
 52   Synnex Technology International Corp.   88 
 8   TDK Corp. ☼   297 
 5   TE Connectivity Ltd.   234 
 30   Telefonaktiebolaget LM Ericsson Class B   367 
 50   Test Research, Inc.   83 
 560   Tongda Group Holdings Ltd.   34 
 116   Toshiba Corp.   641 
 9   TPK Holding Co., Ltd.   183 
 3   Trimble Navigation Ltd. ●   94 
 8   Vtech Holdings Ltd.   101 
    Wacom Co., Ltd.   399 
 804   WPG Holdings Co., Ltd.   969 
         17,494 
     Telecommunication Services - 2.3%     
 26   Advanced Info Service Public Co., Ltd.   242 
 380   America Movil S.A.B. de C.V.   407 
 38   AT&T, Inc. ╦   1,426 
 129   Axiata Group Berhad   287 
 17   Bharti Televentures   104 
 67   BT Group plc   288 
 5   CenturyLink, Inc.   203 
 60   China Mobile Ltd.   664 
 81   China Unicom Ltd.   116 
 27   Deutsche Telekom AG   315 
 15   Drillisch AG   311 
 24   France Telecom S.A.   260 
 26   Freenet AG   653 
 43   Hellenic Telecommunications Organization S.A.   375 
 7   KDDI Corp.   332 
 13   MTN Group Ltd.   231 
 8   Nippon Telegraph & Telephone Corp.   382 
    NTT DoCoMo, Inc.   243 
 105   Portugal Telecom SGPS S.A.   547 
 164   PT Telekomunikasi Indonesia Tbk   198 
 5   SBA Communications Corp. ●   424 

 

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

 

13

 

The Hartford Global All-Asset Fund
Consolidated Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 60.7% - (continued)     
     Telecommunication Services - 2.3% - (continued)     
 101   Singapore Telecommunications Ltd.  $321 
 24   SoftBank Corp.   1,202 
 37   Sprint Nextel Corp. ●   258 
 1   Swisscom AG   544 
 73   Telefonica S.A. ●   1,074 
 36   Telenor ASA   808 
 33   Telia Ab   226 
 65   Telstra Corp., Ltd.   333 
 19   Verizon Communications, Inc.   1,022 
 10   Vivendi S.A.   231 
 530   Vodafone Group plc   1,617 
         15,644 
     Transportation - 1.1%     
 12   Abertis Infraestructuras S.A.   219 
 367   AirAsia Berhad   354 
 14   All America Latina Logistica S.A.   73 
 6   Canadian National Railway Co.   587 
 3   Central Japan Railway Co.   309 
 20   CSX Corp.   499 
 15   Delta Air Lines, Inc. ●   256 
 3   East Japan Railway Co.   224 
 372   Evergreen Marine Corp., Ltd.   217 
 2   FedEx Corp.   224 
    Hutchinson Port Holdings Trust    
 32   Kintetsu Corp.   162 
 7   Latam Airlines Group S.A.   145 
 10   Norfolk Southern Corp.   755 
 4   Osterreichische Post AG   160 
 1   Pescanova S.A.   318 
 14   Ryanair Holdings plc ADR   616 
 23   Tobu Railway Co., Ltd.   133 
 24   Transurban Group   171 
 52   Turk Hava Yollari Anonim Ortakligi ●   215 
 4   Union Pacific Corp.   563 
 8   United Continental Holdings, Inc. ●   252 
 8   United Parcel Service, Inc. Class B   728 
 3   West Japan Railway Co.   151 
         7,331 
     Utilities - 2.9%     
 10   AGL Energy Ltd.   161 
 6   Ameren Corp.   226 
 52   Centrica plc   300 
 109   Cheung Kong Infrastructure Holdings Ltd.   792 
 75   China Longyuan Power Group Corp.   69 
 9   Chubu Electric Power Co., Inc.   111 
 49   Cia de Saneamento Basico do Estado de Sao Paulo   693 
 25   CLP Holdings Ltd.   223 
 11   Companhia Energetica de Minas Gerais   143 
 63   E.On SE   1,146 
 125   Empresa Nacional del Petroleo   222 
 190   Enel S.p.A.   735 
 141   ENN Energy Holdings Ltd.   816 
 6   Exelon Corp.   242 
 6   Fortum Corp.   117 
 13   GDF Suez   281 
 1,236   Guangdong Investment Ltd.   1,197 
 66   Hong Kong & China Gas Co., Ltd.   199 
 218   Huaneng Power International, Inc.   252 
 145   Iberdrola S.A.   780 
 7   Integrys Energy Group, Inc.   453 
 10   Kansai Electric Power Co., Inc.   128 
 6   Korea Electric Power Corp. ●   179 
 99   National Grid plc   1,262 
 9   NextEra Energy, Inc.   771 
 11   NiSource, Inc.   352 
 36   NTPC Ltd.   106 
 5   Oneok, Inc.   246 
 96   Osaka Gas Co., Ltd.   416 
 11   PG&E Corp.   533 
 10   Pinnacle West Capital Corp.   595 
 16   Power Assets Holdings Ltd.   158 
 61   Power Grid Corp. of India Ltd.   128 
 6   Red Electrica Corporacion S.A.   311 
 37   Scottish & Southern Energy   901 
 23   Severn Trent plc   662 
 121   Snam S.p.A.   597 
 45   Suez Environment S.A.   644 
 85   Tenaga Nasional Bhd   220 
 32   Tokyo Gas Co., Ltd.   183 
 21   Tractebel Energia S.A.   368 
 21   UGI Corp.   845 
 12   United Utilities Group plc   144 
 14   Wisconsin Energy Corp.   607 
         19,514 
     Total common stocks     
     (cost $371,377)  $406,805 
           
PREFERRED STOCKS - 0.2%     
     Automobiles and Components - 0.0%     
 1   Volkswagen AG N.V.  $293 
           
     Banks - 0.1%     
 23   Banco Itau Holding   385 
           
     Food, Beverage and Tobacco - 0.0%     
 9   Cia de Bebidas das Americas   358 
           
     Utilities - 0.1%     
 40   Cia Paranaense de Energie   704 
           
     Total preferred stocks     
     (cost $1,783)  $1,740 
           
WARRANTS - 0.0%     
     Energy - 0.0%     
 6   Kinder Morgan, Inc. ●  $34 
           
     Total warrants     
     (cost $9)  $34 

 

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

 

14

 


 

Shares or Principal Amount ╬  Market Value ╪ 
EXCHANGE TRADED FUNDS - 1.8%     
     Other Investment Pools and Funds - 1.8%     
 224   iShares MSCI Canada Index Fund  $6,273 
 108   Market Vectors Gold Miners   3,266 
 57   SPDR Barclays Convertible Securities ETF   2,434 
           
     Total exchange traded funds     
     (cost $14,041)  $11,973 
           
CORPORATE BONDS - 4.9%     
     Agriculture, Forestry, Fishing and Hunting - 0.1%     
     Celulosa Arauco y Constitucion S.A.     
$296   7.25%, 07/29/2019  $354 
           
     Air Transportation - 0.1%     
     Aeropuertos Dominicanos     
 325   9.25%, 11/13/2019 §   353 
           
     Beverage and Tobacco Product Manufacturing - 0.1%     
     Anadolu Efes     
 850   3.38%, 11/01/2022 §   839 
           
     Chemical Manufacturing - 0.1%     
     PTT plc     
 600   3.38%, 10/25/2022 ■   605 
           
     Construction - 0.4%     
     Country Garden Holdings Co.     
 542   11.25%, 04/22/2017 ■   606 
     Empresas ICA, S.A.B. de C.V.     
 382   8.90%, 02/04/2021 §   370 
     Hongkong (The) Land Finance Co., Ltd.     
 340   4.50%, 10/07/2025   360 
     Hutchison Whampoa Ltd.     
 482   6.00%, 10/28/2015 ■♠   524 
     Odebrecht Finance Ltd.     
 492   7.50%, 09/14/2015 §♠   534 
     Shimao Property Holding Ltd.     
 320   9.65%, 08/03/2017 §   352 
         2,746 
     Finance and Insurance - 1.6%     
     Axis Bank     
 450   4.75%, 05/02/2016 §   474 
     Banco de Credito del Peru/Panama     
 791   5.38%, 09/16/2020 §   870 
     Banco Panamericano S.A.     
 425   8.50%, 04/23/2020 §   487 
     Banco Santander S.A.     
 825   4.13%, 11/09/2022 §   831 
     Bancolombia S.A.     
 662   6.13%, 07/26/2020   725 
     Bank of China Hong Kong     
 542   5.55%, 02/11/2020 ■   614 
     Bank of East Asia Ltd.     
 352   6.13%, 07/16/2020   411 
     CBQ Finance Ltd.     
 364   7.50%, 11/18/2019 ■   448 
     DBS Bank Ltd.     
 800   3.63%, 09/21/2022 §   838 
     Fibria Overseas Finance Ltd.     
 632   7.50%, 05/04/2020 §   719 
     Gazprombank OJSC Via GPB Eurobond     
 500   7.88%, 04/25/2018 §♠Δ   522 
     Home Credit & Finance Bank     
 325   9.38%, 04/24/2020 §   353 
     HSBK Europe B.V.     
 752   7.25%, 05/03/2017 §   812 
     ICICI Bank Ltd.     
 525   5.75%, 11/16/2020 §   585 
     Kuwait Projects Co.     
 437   8.88%, 10/17/2016 §   514 
     Standard Bank plc     
 255   8.13%, 12/02/2019   301 
     Turkiye Garanti Bankasi A.S.     
 350   5.25%, 09/13/2022 §   381 
     VTB Capital S.A.     
 569   6.88%, 05/29/2018 §   638 
         10,523 
     Food Manufacturing - 0.2%     
     Grupo Bimbo S.A.B.     
 733   4.88%, 06/30/2020 §   836 
     JBS Finance II Ltd.     
 225   8.25%, 01/29/2018 ■   243 
         1,079 
     Health Care and Social Assistance - 0.1%     
     Teva Pharmaceuticals Finance LLC     
 600   6.15%, 02/01/2036   788 
           
     Information - 0.4%     
     Colombia Telecomunicaciones S.A. ESP     
 400   5.38%, 09/27/2022 §   401 
     Digicel Ltd.     
 400   8.25%, 09/01/2017 §   421 
     Indosat Palapa Co. B.V.     
 455   7.38%, 07/29/2020 §   511 
     MTS International Funding Ltd.     
 325   8.63%, 06/22/2020 §   409 
     NII Capital Corp.     
 417   10.00%, 08/15/2016   429 
     Qtel International Finance Ltd.     
 550   4.75%, 02/16/2021 §   619 
         2,790 
     Mining - 0.2%     
     Bumi Investment Pte Ltd.     
 608   10.75%, 10/06/2017 §   491 
     Mongolian Mining Corp.     
 275   8.88%, 03/29/2017 §   281 
     Vedanta Resources plc     
 343   9.50%, 07/18/2018 §   393 
         1,165 
     Nonmetallic Mineral Product Manufacturing - 0.1%     
     Cemex Finance LLC     
 820   9.50%, 12/14/2016 §   882 
           
     Petroleum and Coal Products Manufacturing - 0.5%     
     CNOOC Finance 2012 Ltd.     
 725   3.88%, 05/02/2022 §   769 
     Dolphin Energy Ltd.     
 650   5.50%, 12/15/2021 §   770 
     Gaz Capital S.A.     
 425   9.25%, 04/23/2019 §   554 

  

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

 

15

 

The Hartford Global All-Asset Fund
Consolidated Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 4.9% - (continued)     
     Petroleum and Coal Products Manufacturing - 0.5% - (continued)     
     OGX Austria GmbH     
$350   8.50%, 06/01/2018 §  $220 
     Pacific Rubiales Energy Corp.     
 725   7.25%, 12/12/2021 §   826 
     Reliance Holdings USA, Inc.     
 325   5.40%, 02/14/2022 §   366 
         3,505 
     Pipeline Transportation - 0.1%     
     Korea Gas Corp.     
 685   4.25%, 11/02/2020 ■   753 
           
     Primary Metal Manufacturing - 0.3%     
     CITIC Pacific Ltd.     
 700   6.63%, 04/15/2021 §   720 
     CSN Islands XII     
 614   7.00%, 09/23/2015 §♠   616 
     Posco     
 802   4.25%, 10/28/2020 ■   870 
         2,206 
     Real Estate, Rental and Leasing - 0.1%     
     Agile Property Holdings Ltd.     
 775   8.88%, 04/28/2017 §   835 
           
     Retail Trade - 0.1%     
     Cencosud S.A.     
 475   5.50%, 01/20/2021 §   516 
           
     Utilities - 0.3%     
     Colbun S.A.     
 239   6.00%, 01/21/2020 ■   270 
     Hong Kong Electric Finance Ltd.     
 755   4.25%, 12/14/2020 §   834 
     Korea Hydro & Nuclear Power Co., Ltd.     
 475   4.75%, 07/13/2021 §   536 
     Taqa Abu Dhabi National Energy Co.     
 263   5.88%, 10/27/2016 ■   299 
         1,939 
     Water Transportation - 0.1%     
     DP World Ltd.     
 400   6.85%, 07/02/2037 ■   481 
           
     Wholesale Trade - 0.0%     
     Li & Fung Ltd.     
 318   5.25%, 05/13/2020 §   351 
           
     Total corporate bonds     
     (cost $31,443)  $32,710 
           
FOREIGN GOVERNMENT OBLIGATIONS - 5.2%     
     Brazil - 0.3%     
     Brazil (Republic of)     
$1,200   7.13%, 01/20/2037   $1,761 
           
     Canada - 0.9%     
     Canada (Government of)     
CAD  6,000   1.50%, 09/01/2017    6,042 
           
     Greece - 0.3%     
     Hellenic Republic     
EUR  3,245   2.00%, 02/24/2032 - 02/24/2037 ☼   1,811 
        $1,811 
     Ireland - 0.3%     
     Ireland (Republic of)     
EUR1,545   4.50%, 10/18/2018    2,235 
           
     Italy - 0.3%     
     Italy Buoni Poliennali del Tesoro     
EUR 1,700   4.75%, 05/01/2017    2,427 
           
     Mexico - 0.4%     
     Mexican Udibonos     
MXN 5,598   4.50%, 11/22/2035 ◄   686 
     United Mexican States     
 1,326   6.05%, 01/11/2040    1,744 
         2,430 
     New Zealand - 0.3%     
     New Zealand (Government of)     
NZD 1,290   4.50%, 02/15/2016    1,792 
           
     Norway - 1.2%     
     Norway (Kingdom of)     
NOK46,850   2.00%, 05/24/2023    8,101 
           
     Portugal - 0.6%     
     Obrigacoes do Tesouro     
EUR1,975   3.85%, 04/15/2021    2,338 
EUR925   4.35%, 10/16/2017    1,212 
EUR350   4.75%, 06/14/2019    452 
         4,002 
     Sweden - 0.6%     
     Sweden (Kingdom of)     
SEK 16,700   3.50%, 06/01/2022    3,009 
SEK  4,953   3.50%, 12/01/2028 ◄   1,145 
         4,154 
     Total foreign government obligations     
     (cost $31,991)  $34,755 
           
U.S. GOVERNMENT AGENCIES - 7.6%     
     FHLMC - 0.6%     
$2,148   5.50%, 01/01/2038 - 05/01/2040   $2,320 
 1,250   6.00%, 09/01/2034 - 12/01/2037    1,373 
         3,693 
     FNMA - 4.3%     
 760   3.00%, 05/15/2043 ☼   795 
 5,100   3.50%, 05/15/2041 ☼   5,434 
 4,900   4.00%, 05/15/2043 ☼   5,245 
 6,200   4.50%, 05/15/2041 ☼   6,684 
 1,906   5.50%, 04/01/2034 - 06/01/2038    2,089 
 8,104   6.00%, 06/01/2040 - 05/15/2043 ☼   8,865 
         29,112 
     GNMA - 2.7%     
 790   3.00%, 05/15/2043 ☼   841 
 6,400   5.50%, 05/15/2039 ☼   6,993 

 

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

 

16

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
U.S. GOVERNMENT AGENCIES - 7.6% - (continued)    
     GNMA - 2.7% - (continued)     
$8,900   6.00%, 03/15/2033 - 04/15/2043  $10,055 
         17,889 
     Total U.S. government agencies     
     (cost $50,722)  $50,694 
           
U.S. GOVERNMENT SECURITIES - 0.3%     
U.S. Treasury Securities - 0.3%     
     U.S. Treasury Bonds - 0.3%     
$1,125   3.38%, 04/15/2032 ◄  $2,411 
           
     Total U.S. government securities     
     (cost $2,347)  $2,411 

 

Contracts      Market Value ╪ 
CALL OPTIONS PURCHASED - 0.0%     
Commodity Contracts - 0.0%     
     Brent Oil Option     
 1,355   Expiration: 08/12/2013, Exercise Price: $140.00 β  $2 
 1,355   Expiration: 02/10/2014, Exercise Price: $150.00β   11 
 1,355   Expiration: 08/11/2014, Exercise Price: $160.00β   10 
         23 
     Total call options purchased     
     (cost $206)  $23 
           
PUT OPTIONS PURCHASED - 0.0%     
Equity Contracts - 0.0%     
     S&P 500 10yr Contingent Option     
 29   Expiration: 02/21/2014, Exercise Price:     
     $1,422.43  $33 
           
     Total put options purchased     
     (cost $290)  $33 
           
     Total long-term investments     
     (cost $504,209)  $541,178 

 

Shares or Principal Amount ╬      Market Value ╪ 
SHORT-TERM INVESTMENTS - 22.8%          
Repurchase Agreements - 22.8%          
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $6,054,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $6,175)
          
$6,054   0.17%, 4/30/2013        $6,054 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $16,495, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $16,825)
          
 16,495   0.15%, 4/30/2013        16,495 

     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $31,770, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 -
2021, value of $32,405)
          
31,770   0.15%, 4/30/2013       31,770 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $44,124,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $45,007)
          
 44,124   0.14%, 4/30/2013        44,124 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $7,934,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value of
$8,093)
          
 7,934   0.17%, 4/30/2013        7,934 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $26,887, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 -
2022, value of $27,425)
          
 26,887   0.14%, 4/30/2013        26,887 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $18,903, collateralized by U.S.
Treasury Note 0.25% - 1.88%, 2014 -
2019, value of $19,281)
          
 18,903   0.17%, 4/30/2013        18,903 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$337, collateralized by U.S. Treasury Note
3.88%, 2018, value of $345)
          
 337   0.13%, 4/30/2013        337 
              152,504 
     Total short-term investments          
     (cost $152,504)       $152,504 
                
     Total investments          
     (cost $656,713) ▲   103.5%  $693,682 
     Other assets and liabilities   (3.5)%   (23,460)
     Total net assets   100.0%  $670,222 

 

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

 

17

 

The Hartford Global All-Asset Fund
Consolidated Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.
   
  Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

  The consolidated schedule of investments includes investments held by The Hartford Cayman Global All-Asset Fund, Ltd. (the “Subsidiary”), a wholly owned subsidiary of the Fund, which primarily invests in commodity-related instruments. The Fund may invest up to 25% of its total assets in the Subsidiary. As of April 30, 2013, the Fund invested 1.3% of its total assets in the Subsidiary.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $660,754 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

  

Unrealized Appreciation  $57,690 
Unrealized Depreciation   (24,762)
Net Unrealized Appreciation  $32,928 

 

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. Unless otherwise indicated, these issues are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $5,713, which represents 0.9% of total net assets.  
   
This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.  In addition, cash of $1,095 was received from broker(s) as collateral in connection with swap contracts.  Securities valued at $5,651, held on behalf of the Fund at the custody bank, were designated by broker(s) as collateral in connection with swap contracts.
This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $32,501 at April 30, 2013.
The principal amount for this security is adjusted for inflation and the interest payments equal a fixed percentage of the inflation-adjusted principal amount.
§ These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $23,840, which represents 3.6% of total net assets.  
   
All principal amounts are in U.S. dollars unless otherwise indicated.
Perpetual maturity security.  Maturity date shown is the first call date.
β This security has limitations.  If at time of expiration the price of a barrel of ICE Brent Crude is equal to or greater than the strike price, the counterparty will be required to pay the Fund the equivalent of par on the number of contracts traded.
Δ Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

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

 

18

 

 

 

Futures Contracts Outstanding at April 30, 2013
                    
Description  Number of
Contracts*
   Expiration
Date
  Notional Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
Long position contracts:                       
Australian 10-Year Bond Future   163   06/17/2013  $20,303   $21,109   $806 
Canadian Government 10-Year Bond Future   86   06/19/2013   11,383    11,673    290 
German Stock Exchange Future   56   06/21/2013   14,724    14,604    (120)
Gold 100oz Future   35   06/26/2013   5,652    5,152    (500)
KOSPI 200 Index Future   99   06/13/2013   11,889    11,558    (331)
S&P 500 (E-Mini) Future   130   06/21/2013   10,065    10,349    284 
U.S. Treasury 10-Year Note Future   422   06/19/2013   55,503    56,278    775 
U.S. Treasury 2-Year Note Future   7   06/28/2013   1,543    1,544    1 
U.S. Treasury 30-Year Bond Future   3   06/19/2013   431    445    14 
U.S. Treasury 5-Year Note Future   32   06/28/2013   3,966    3,989    23 
U.S. Treasury CME Ultra Long Term Bond Future   56   06/19/2013   8,857    9,203    346 
                    $1,588 
Short position contracts:                       
Australian SPI 200 Index Future   85   06/20/2013  $11,114   $11,385   $(271)
Euro-BUND Future   54   06/06/2013   10,141    10,424    (283)
Japan 10-Year Bond Future   10   06/11/2013   14,864    14,826    38 
Long Gilt Future   145   06/26/2013   26,063    27,030    (967)
                     $(1,483)
                     $105 

 

* The number of contracts does not omit 000's.
 
Cash of $10,920 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

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

 

19

 

The Hartford Global All-Asset Fund
Consolidated Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency   Buy / Sell  Delivery Date  Counterparty   Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
AUD   Buy  05/01/2013  CSFB   $1   $1   $ 
AUD   Buy  05/01/2013  JPM    61    61     
AUD   Buy  05/31/2013  WEST    19,671    19,892    221 
AUD   Sell  06/20/2013  CSFB    11,055    11,062    (7)
CAD   Buy  05/31/2013  BCLY    7,419    7,558    139 
CAD   Buy  06/19/2013  UBS    4,505    4,601    96 
CAD   Sell  05/01/2013  JPM    5    5     
CAD   Sell  06/19/2013  UBS    5,862    5,987    (125)
CHF   Buy  06/19/2013  UBS    5,010    5,113    103 
CHF   Sell  05/31/2013  CSFB    7,599    7,650    (51)
CHF   Sell  05/06/2013  DEUT    29    29     
CHF   Sell  05/02/2013  JPM    43    43     
CNY   Buy  09/06/2013  JPM    3,005    3,003    (2)
CNY   Sell  09/06/2013  JPM    2,950    3,003    (53)
EUR   Buy  05/02/2013  BCLY    415    420    5 
EUR   Buy  05/31/2013  BCLY    7,101    7,199    98 
EUR   Buy  05/08/2013  CSFB    250    251    1 
EUR   Buy  05/03/2013  JPM    49    49     
EUR   Buy  06/19/2013  JPM    6,382    6,485    103 
EUR   Sell  06/19/2013  BCLY    1,660    1,692    (32)
EUR   Sell  06/19/2013  CBK    267    270    (3)
EUR   Sell  06/19/2013  CSFB    249    250    (1)
EUR   Sell  05/01/2013  JPM    94    94     
EUR   Sell  06/19/2013  JPM    7,625    7,748    (123)
EUR   Sell  05/31/2013  MSC    2,319    2,350    (31)
EUR   Sell  06/19/2013  SSG    6,369    6,486    (117)
GBP   Buy  06/19/2013  WEST    12,189    12,667    478 
GBP   Sell  05/03/2013  BCLY    115    115     
GBP   Sell  05/01/2013  JPM    29    29     
GBP   Sell  05/31/2013  UBS    6,064    6,175    (111)
JPY   Buy  05/07/2013  CSFB    38    38     
JPY   Buy  05/01/2013  HSBC    70    71    1 
JPY   Buy  05/02/2013  SSG    276    279    3 
JPY   Sell  06/19/2013  BCLY    2,223    2,177    46 
JPY   Sell  05/07/2013  CSFB    103    103     
JPY   Sell  05/01/2013  HSBC    26    26     
JPY   Sell  05/01/2013  JPM    12    12     
JPY   Sell  05/31/2013  NAB    22,381    22,825    (444)
KRW   Buy  06/13/2013  JPM    12,004    11,972    (32)
KRW   Sell  05/01/2013  JPM    162    162     
MXN   Buy  06/19/2013  JPM    1,229    1,265    36 
MXN   Sell  06/19/2013  JPM    352    362    (10)
NOK   Buy  05/31/2013  MSC    2,318    2,378    60 
NOK   Buy  06/19/2013  MSC    2,114    2,169    55 
NOK   Sell  06/19/2013  CBK    8,096    8,010    86 
NZD   Sell  06/19/2013  WEST    1,816    1,898    (82)
SEK   Buy  06/19/2013  BCLY    3,164    3,102    (62)
SEK   Buy  06/19/2013  JPM    1,614    1,599    (15)
SEK   Sell  06/19/2013  BCLY    5,932    5,816    116 
ZAR   Buy  05/08/2013  DEUT    53    53     
                          $346 

 

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

 

20

 

 

 

Credit Default Swap Contracts Outstanding at April 30, 2013

 

Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices:               
Sell protection:                               
CDX.EM.19  GSC  $28,525    5.00%  06/20/18  $3,509   $3,654   $145 
CDX.NA.HY.20  JPM   4,825    5.00%  06/20/18   139    297    158 
LCDX.NA.15  GSC   3,159    2.50%  12/20/15   31    126    95 
LCDX.NA.17  BCLY   12,288    2.50%  12/20/16   (909)   661    1,570 
Total                  $2,770   $4,738   $1,968 

 

(a)The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.  Notional shown in U.S. dollars unless otherwise noted.

 

Interest Rate Swap Contracts Outstanding at April 30, 2013

 

Counterparty  Payments made by Fund  Payments received by Fund  Notional
Amount *
  Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
BCLY  0.93% Fixed  6M CHF LIBOR  CHF 2,260  11/08/22  $   $8   $8 
BCLY  5.47% Fixed  3M JIBAR  ZAR 11,050  01/29/16       (10)   (10)
BCLY  CLPUF  2.41% Fixed  CLP 307,125  04/04/22       23    23 
GSC  0.87% Fixed  6M CHF LIBOR  CHF 1,135  11/16/22       12    12 
GSC  0.94% Fixed  6M CHF LIBOR  CHF 6,235  09/03/22       7    7 
GSC  1.21% Fixed  6M CHF LIBOR  CHF 80  06/19/23       (2)   (2)
GSC  CLICP Camara  2.25% Fixed  CLP 708,475  06/26/22       27    27 
GSC  CLICP Camara  2.35% Fixed  CLP 761,625  04/16/22       47    47 
                 $   $112   $112 

 

* Notional shown in U.S. dollars unless otherwise noted.

 

Total Return Swap Contracts Outstanding at April 30, 2013

 

Reference Entity  Counterparty  Notional
Amount *
   Payments received
(paid) by Fund
  Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
MSCI Daily TR Net EM Chile  DEUT  $3,258   1M LIBOR + 0.30%  02/28/14  $5   $98   $93 
MSCI Daily TR Net EM Chile  GSC   2,906   1M LIBOR + 0.30%  02/28/14   4    88    84 
MSCI Daily TR Net EM Peru  DEUT   650   1M LIBOR + 0.10%  02/28/14       77    77 
MSCI Daily TR Net EM Peru  GSC   2,675   1M LIBOR + 0.10%  02/28/14       317    317 
                 $9   $580   $571 

 

* Notional shown in U.S. dollars unless otherwise noted.

 

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.

 

21

 

The Hartford Global All-Asset Fund

Consolidated Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

GLOSSARY: (abbreviations used in preceding Consolidated Schedule of
Investments)
 
Counterparty Abbreviations:
BCLY Barclays
CBK Citibank NA
CSFB Credit Suisse First Boston Corp.
DEUT Deutsche Bank Securities, Inc.
GSC Goldman Sachs & Co.
HSBC HSBC Bank USA
JPM JP Morgan Chase & Co.
MSC Morgan Stanley
NAB National Australia Bank
SSG State Street Global Markets LLC
UBS UBS AG
WEST Westpac International
 
Currency Abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
CHF Swiss Franc
CLP Chilean Peso
CNY Chinese Yuan Renminbi
EUR EURO
GBP British Pound
JPY Japanese Yen
KRW South Korean Won
MXN Mexican New Peso
NOK Norwegian Krone
NZD New Zealand Dollar
SEK Swedish Krona
ZAR South African Rand
 
Index Abbreviations:
CDX.EM Credit Derivatives Emerging Markets
CDX.NA.HY Credit Derivatives North American High Yield
KOSPI Korea Composite Stock Price
LCDX.NA Credit Derivatives North American Loan
S&P Standard & Poors
SPI Share Price Index
 
Other Abbreviations:
ADR American Depositary Receipt
CLICP Sinacofi Chile Interbank Offered Rate
CLPUF Chilean Unidada de Fomentos Rate
ETF Exchange Traded Fund
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GDR Global Depositary Receipt
GNMA Government National Mortgage Association
JIBAR Johannesburg Interbank Agreed Rate
LIBOR London Interbank Offered Rate
MSCI Morgan Stanley Capital International
REIT Real Estate Investment Trust
SPDR Standard & Poor's Depositary Receipt

 

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

 

22

 

The Hartford Global All-Asset Fund

Consolidated Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Automobiles and Components  $11,612   $690   $10,922   $ 
Banks   33,844    10,534    23,310     
Capital Goods   33,673    18,335    15,338     
Commercial and Professional Services   3,855    2,607    1,248     
Consumer Durables and Apparel   9,327    4,959    4,368     
Consumer Services   6,002    3,855    2,147     
Diversified Financials   13,984    9,445    4,539     
Energy   30,113    18,718    11,395     
Food and Staples Retailing   6,384    3,036    3,348     
Food, Beverage and Tobacco   25,103    11,592    13,511     
Health Care Equipment and Services   7,106    4,014    3,092     
Household and Personal Products   4,340    2,413    1,927     
Insurance   17,268    8,521    8,747     
Materials   35,567    15,554    20,013     
Media   14,272    10,837    3,435     
Pharmaceuticals, Biotechnology and Life Sciences   18,045    8,285    9,760     
Real Estate   20,758    9,096    11,662     
Retailing   14,014    7,595    6,419     
Semiconductors and Semiconductor Equipment   16,382    4,089    12,293     
Software and Services   25,173    17,743    7,430     
Technology Hardware and Equipment   17,494    6,920    10,574     
Telecommunication Services   15,644    3,740    11,904     
Transportation   7,331    5,176    2,155     
Utilities   19,514    6,296    13,218     
Total   406,805    194,050    212,755     
Corporate Bonds   32,710        32,710     
Exchange Traded Funds   11,973    11,973         
Foreign Government Obligations   34,755        34,755     
Preferred Stocks   1,740        1,740     
U.S. Government Agencies   50,694        50,694     
U.S. Government Securities   2,411        2,411     
Warrants   34    34         
Short-Term Investments   152,504        152,504     
Call Options Purchased   23        23     
Put Options Purchased   33        33     
Total  $693,682   $206,057   $487,625   $ 
Credit Default Swaps*   1,968        1,968     
Foreign Currency Contracts*   1,647        1,647     
Futures*   2,577    2,577         
Interest Rate Swaps*   124        124     
Total Return Swaps*   571        571     
Total  $6,887   $2,577   $4,310   $ 
Liabilities:                    
Foreign Currency Contracts*   1,301        1,301     
Futures*   2,472    2,472         
Interest Rate Swaps*   12        12     
Total  $3,785   $2,472   $1,313   $ 

 

For the six-month period ended April 30, 2013, investments valued at $1,440 were transferred from Level 1 to Level 2, and investments valued at $2,359 were transferred from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).
*Derivative instruments not reflected in the Consolidated Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

23

 

The Hartford Global All-Asset Fund

Consolidated Investment Valuation Hierarchy Level Summary – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3 *
   Transfers
Out of
Level 3 *
   Balance
as of
April 30,
2013
 
Assets:                                             
Common Stocks  $498   $   $   $   $   $   $   $(498)  $ 
Foreign Government Obligations   1,729    242    (169)   1        (1,803)            
Total  $2,227   $242   $(169)  $1   $   $(1,803)  $   $(498)  $ 

 

*Investments are transferred into and out of Level 3 for a variety of reasons including, but not limited to:
1)Investments where trading has been halted (transfer into Level 3) or investments where trading has resumed (transfer out of Level 3).
2)Broker quoted investments (transfer into Level 3) or quoted prices in active markets (transfer out of Level 3).
3)Investments that have certain restrictions on trading (transfer into Level 3) or investments where trading restrictions have expired (transfer out of Level 3).

 

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

 

24

 

The Hartford Global All-Asset Fund

Consolidated Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $504,209)  $541,178 
Investments in repurchase agreements, at market value (cost $152,504)   152,504 
Cash   10,920*
Foreign currency on deposit with custodian (cost $103)   104 
Unrealized appreciation on foreign currency contracts   1,647 
Unrealized appreciation on swap contracts   2,663 
Receivables:     
Investment securities sold   2,867 
Fund shares sold   609 
Dividends and interest   2,254 
Variation margin   370 
Swap premiums paid   3,688 
Other assets   78 
Total assets   718,882 
Liabilities:     
Unrealized depreciation on foreign currency contracts   1,301 
Unrealized depreciation on swap contracts   12 
Bank overdraft   6,468 
Payables:     
Investment securities purchased   35,525 
Fund shares redeemed   2,875 
Investment management fees   99 
Administrative fees    
Distribution fees   39 
Collateral received from broker   1,095 
Variation margin   147 
Accrued expenses   154 
Swap premiums received   909 
Other liabilities   36 
Total liabilities   48,660 
Net assets  $670,222 
Summary of Net Assets:     
Capital stock and paid-in-capital  $630,734 
Distributions in excess of net investment loss   (1,573)
Accumulated net realized gain   1,015 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   40,046 
Net assets  $670,222 

 

* Cash of $10,920 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

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

 

25

 

The Hartford Global All-Asset Fund

Consolidated Statement of Assets and Liabilities – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares authorized   700,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $11.86/$12.55 
Shares outstanding   23,925 
Net assets  $283,669 
Class C: Net asset value per share  $11.79 
Shares outstanding   14,025 
Net assets  $165,371 
Class I: Net asset value per share  $11.88 
Shares outstanding   13,913 
Net assets  $165,232 
Class R3: Net asset value per share  $11.87 
Shares outstanding   288 
Net assets  $3,424 
Class R4: Net asset value per share  $11.97 
Shares outstanding   65 
Net assets  $777 
Class R5: Net asset value per share  $11.88 
Shares outstanding   213 
Net assets  $2,533 
Class Y: Net asset value per share  $11.88 
Shares outstanding   4,144 
Net assets  $49,216 

 

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

 

26

 

The Hartford Global All-Asset Fund

Consolidated Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $5,089 
Interest   1,578 
Less: Foreign tax withheld   (342)
Total investment income   6,325 
      
Expenses:     
Investment management fees   3,078 
Administrative services fees     
Class R3   4 
Class R4   1 
Class R5   1 
Transfer agent fees     
Class A   201 
Class C   102 
Class I   79 
Class R3    
Class R4    
Class R5    
Class Y   1 
Distribution fees     
Class A   356 
Class C   825 
Class R3   9 
Class R4   1 
Custodian fees   45 
Accounting services fees   86 
Registration and filing fees   55 
Board of Directors' fees   8 
Audit fees   15 
Other expenses   72 
Total expenses (before waivers and fees paid indirectly)   4,939 
Expense waivers   (574)
Commission recapture    
Custodian fee offset    
Total waivers and fees paid indirectly   (574)
Total expenses, net   4,365 
Net Investment Income   1,960 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities   9,198 
Net realized gain on futures   2,063 
Net realized gain on swap contracts   450 
Net realized gain on foreign currency contracts   3,844 
Net realized loss on other foreign currency transactions   (94)
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   15,461 
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   29,965 
Net unrealized depreciation of purchased options   (440)
Net unrealized appreciation of futures   1,087 
Net unrealized appreciation of swap contracts   1,822 
Net unrealized appreciation of foreign currency contracts   487 
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies   (26)
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions   32,895 
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   48,356 
Net Increase in Net Assets Resulting from Operations  $50,316 

 

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

 

27

 

The Hartford Global All-Asset Fund

Consolidated Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $1,960   $4,413 
Net realized gain on investments, other financial instruments and foreign currency transactions   15,461    18,026 
Net unrealized appreciation of investments, other financial instruments and foreign currency transactions   32,895    33,357 
Net Increase in Net Assets Resulting from Operations   50,316    55,796 
Distributions to Shareholders:          
From net investment income          
Class A   (7,352)   (2,063)
Class C   (2,817)    
Class I   (4,795)   (2,277)
Class R3   (75)   (10)
Class R4   (18)    
Class R5   (71)   (23)
Class Y   (2,021)   (1,047)
Total distributions   (17,149)   (5,420)
Capital Share Transactions:          
Class A   (23,911)   (98,321)
Class C   (13,075)   (58,203)
Class I   (23,119)   (95,984)
Class R3   (715)   592 
Class R4   (644)   93 
Class R5   (71)   (4)
Class Y   (37,923)   65,705 
Net decrease from capital share transactions   (99,458)   (186,122)
Net Decrease in Net Assets   (66,291)   (135,746)
Net Assets:          
Beginning of period   736,513    872,259 
End of period  $670,222   $736,513 
Undistributed (distribution in excess of) net investment income (loss)  $(1,573)  $13,616 

 

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

 

28

 

The Hartford Global All-Asset Fund

Notes to Consolidated Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Global All-Asset 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 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 primarily through advisory fee-based wrap programs. Class 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.

 

2.Significant Accounting Policies:

 

The following is a summary of significant accounting policies of the Fund in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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

 

29

 

The Hartford Global All-Asset Fund

Notes to Consolidated Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

market prices at the close of the exchange on which a portfolio investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

 

30

 

 

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Consolidated Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Consolidated Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

31

 

The Hartford Global All-Asset Fund

Notes to Consolidated Financial Statements (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

g)Basis for Consolidation – The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund. The subsidiary is organized under the laws of the Cayman Islands and is consolidated in the Fund’s financial statements. All intercompany balances, revenues, and expenses have been eliminated in consolidation. The subsidiary acts as an investment vehicle in order to enter into certain investments for the Fund consistent with the investment objectives and policies specified in the Prospectus and Statement of Additional Information.

 

32

 

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Consolidated Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the Consolidated Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a value at least equal to the amount of the commitment. The Fund, as shown on the Consolidated Schedule of Investments, had when-issued or delayed-delivery investments as of April 30, 2013.

 

d)Inflation Indexed Bonds – The Fund may invest in inflation indexed bonds. Inflation indexed bonds are fixed income investments whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation indexed bond will be included as interest income on the Consolidated Statement of Operations, even though investors do not receive the principal amount until maturity. The Fund, as shown on the Consolidated Schedule of Investments, had inflation indexed bonds as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Consolidated Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Consolidated Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Consolidated Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Consolidated Statement of Operations.

 

33

 

The Hartford Global All-Asset Fund

Notes to Consolidated Financial Statements (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts reflected in the Consolidated 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 foreign currency contracts as shown on the Consolidated Schedule of Investments as of April 30, 2013.

 

b)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Consolidated Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. The Fund, as shown on the Consolidated Schedule of Investments, had outstanding futures contracts as of April 30, 2013.

 

c)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Consolidated Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Consolidated Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Consolidated Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Consolidated Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Consolidated Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received

 

34

 

 

(although such amounts are presented on a gross basis within the Consolidated Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

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 investment or index in the event of a credit event, such as payment default or bankruptcy.

 

Under a credit default swap contract, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying investment 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 Consolidated 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. Although specified events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. These potential amounts would be partially offset by any recovery values of the respective referenced obligations or upfront payments received upon entering into the contract.

 

Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap contracts on corporate issues, sovereign government issues or U.S. municipal issues as of period-end are disclosed in the notes to the Consolidated Schedule of Investments, as applicable, and serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the contract. Wider credit spreads represent a deterioration of the referenced entity’s soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. For credit default swap contracts on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced equity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. The Fund, as shown on the Consolidated Schedule of Investments, had outstanding credit default swaps as of April 30, 2013.

 

Interest Rate Swap Contracts 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 or inflation benchmark (e.g. London Interbank Offered Rate (“LIBOR”)), 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 contracts is recorded as a realized gain or loss. Interest rate swaps are marked to market daily and the change, if any, is recorded as an unrealized gain or loss in the Consolidated 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 contract 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 contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash

 

35

 

The Hartford Global All-Asset Fund

Notes to Consolidated Financial Statements (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The Fund, as shown on the Schedule of Investments, had outstanding interest rate swaps as of April 30, 2013.

 

Total Return Swap ContractsThe Fund may invest in total return swap contracts. An investment in a total return swap allows the Fund to gain or mitigate exposure to underlying referenced securities. Total return swap contracts on commodities involve commitments where cash flows are exchanged based on the price of a commodity and based on a fixed or variable rate. One party would receive payments based on the price appreciation or depreciation of a commodity index, a portion of the index, or a single commodity in exchange for paying to or receiving from the counterparty seller an agreed-upon rate. A variable rate may be correlated to a base rate, such as the LIBOR, and is adjusted each period. Therefore, if interest rates increase over the term of the swap contract, the party paying the rate may be required to pay a higher rate at each swap reset date.

 

Total return swap contracts on indices involve commitments to pay interest in exchange for a market-linked return. One party pays out the total return of a specific reference asset, which may be an equity, index, or bond, and in return receives a regular stream of payments. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty. The Fund, as shown on the Consolidated Schedule of Investments, had outstanding total return swaps as of April 30, 2013.

 

d)Options 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) an investment or other financial asset at an agreed-upon price during a specific period of time or on a specific date. The Fund may write (sell) covered call and put options on futures, swaps (“swaptions”), securities, commodities or currencies. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying investments or currency or an option to purchase the same underlying investments 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 investments having a value equal to or greater than the fluctuating market value of the option investment or currency. Writing put options increases the Fund’s exposure to the underlying instrument. Writing call options decreases the Fund’s exposure to the underlying instrument. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options that are exercised or closed are added to the proceeds or offset amounts paid on the underlying futures, swap, investment or currency transaction to determine the realized gain or loss. The Fund as a writer of an option has no control over whether the underlying instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the instrument underlying the written option. There is the risk the Fund may not be able to enter into a closing transaction because of an illiquid market. The Fund may also purchase put and call options. Purchasing call options increases the Fund’s exposure to the underlying instrument. Purchasing put options decreases the Fund’s exposure to the underlying instrument. The Fund pays a premium, which is included on the Fund’s Consolidated Statement of Assets and Liabilities as an investment and is subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options that expire are treated as realized losses. Certain options may be purchased with premiums to be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. The risk associated with purchasing put and call options is generally limited to the premium paid. Premiums paid for purchasing options that are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss. Entering into over-the-counter options also exposes the Fund to counterparty risk. Counterparty risk is the possibility that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements. The Fund, as shown on the Consolidated  Schedule of Investments, had outstanding purchased options contracts as of April 30, 2013. The Fund had no outstanding written options contracts as of April 30, 2013 or transactions involving written options contracts for the six-month period ended April 30, 2013.

 

36

 

 

e)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Consolidated Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Investments in securities, at value (purchased options), market value  $   $   $   $33   $23   $   $56 
Unrealized appreciation on foreign currency contracts       1,647                    1,647 
Unrealized appreciation on swap contracts   124        1,968    571            2,663 
Variation margin receivable *   77            276    17        370 
Total  $201   $1,647   $1,968   $880   $40   $   $4,736 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $1,301   $   $   $   $   $1,301 
Unrealized depreciation on swap contracts   12                        12 
Variation margin payable *   61            86            147 
Total  $73   $1,301   $   $86   $   $   $1,460 

 

* Only current day's variation margin is reported within the Consolidated Statement of Assets and Liabilities. The variation margin is included in the open futures cumulative appreciation of $105 as reported in the Consolidated Schedule of Investments.

 

The volume of derivatives that is presented in the Consolidated Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Consolidated Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain on Derivatives Recognized as a Result of Operations:      
Net realized gain (loss) on futures  $255   $   $   $2,020   $(212)  $   $2,063 
Net realized gain (loss) on swap contracts   (171)       694    (73)           450 
Net realized gain on foreign currency contracts       3,844                    3,844 
Total  $84   $3,844   $694   $1,947   $(212)  $   $6,357 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations: 
Net change in unrealized depreciation of purchased options  $   $   $   $(257)  $(183)  $   $(440)
Net change in unrealized appreciation (depreciation) of futures   936            662    (511)       1,087 
Net change in unrealized appreciation of swap contracts   104        1,147    571            1,822 
Net change in unrealized appreciation of foreign currency contracts       487                    487 
Total  $1,040   $487   $1,147   $976   $(694)  $   $2,956 

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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

 

37

 

The Hartford Global All-Asset Fund

Notes to Consolidated Financial Statements (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

of a fund that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Consolidated Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

38

 

 

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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $5,420   $2,677 
Long-Term Capital Gains ‡       615 

 

The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $15,517 
Accumulated Capital Losses *   (11,522)
Unrealized Appreciation †   2,326 
Total Accumulated Earnings  $6,321 

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 Consolidated Statement of Changes in Net Assets as from undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $9,671 
Accumulated Net Realized Gain (Loss)   (4,960)
Capital Stock and Paid-in-Capital   (4,711)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

39

 

The Hartford Global All-Asset Fund

Notes to Consolidated Financial Statements (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2019  $11,522 
Total  $11,522 

 

During the year ended October 31, 2012, the Fund utilized $7,215 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $250 million   0.9500%  
On next $250 million   0.9000%  
On next $500 million   0.8000%  
On next $1.5 billion   0.7300%  
On next $2.5 billion   0.7000%  
On next $5 billion   0.6600%  
Over $10 billion   0.6550%  

 

HFMC has contractually agreed to waive the investment management fee in an amount equal to the investment management fee paid to it by the Fund’s wholly owned Cayman Islands subsidiary fund. This waiver will remain in effect for as long as the Fund remains invested in that subsidiary fund.

 

40

 

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.025%  
On next $5 billion   0.020%  
Over $10 billion   0.015%  

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.25%      2.00%      1.00%      1.50%      1.20%      0.95%      0.90%   

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses as follows:

 

Class A   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.15%      1.90%      0.90%      1.40%      1.10%      0.90%       0.85%   

 

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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, are included in the Consolidated 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.18%
Class C   1.94 
Class I   0.93 
Class R3   1.43 
Class R4   1.13 
Class R5   0.92 
Class Y   0.87 

 

41

 

The Hartford Global All-Asset Fund

Notes to Consolidated Financial Statements (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

e)Distribution and Service Plan for Class A, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $478 and contingent deferred sales charges of $4 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class A, 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 0.25% of average daily net assets. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Consolidated Statement of Operations. 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 Consolidated Statement of Operations. These fees are accrued daily and paid monthly.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R5   99%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $461,555 
Sales Proceeds Excluding U.S. Government Obligations   501,384 

 

42

 

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   1,698    616    (4,391)       (2,077)   4,480    185    (13,786)       (9,121)
Amount  $19,535   $6,983   $(50,429)  $   $(23,911)  $48,154   $1,899   $(148,374)  $   $(98,321)
Class C                                                  
Shares   1,034    194    (2,377)       (1,149)   2,812        (8,210)       (5,398)
Amount  $11,818   $2,190   $(27,083)  $   $(13,075)  $30,011   $   $(88,214)  $   $(58,203)
Class I                                                  
Shares   2,087    293    (4,393)       (2,013)   7,117    153    (16,071)       (8,801)
Amount  $23,979   $3,329   $(50,427)  $   $(23,119)  $76,355   $1,564   $(173,903)  $   $(95,984)
Class R3                                                  
Shares   30    6    (99)       (63)   117    1    (63)       55 
Amount  $357   $70   $(1,142)  $   $(715)  $1,256   $9   $(673)  $   $592 
Class R4                                                  
Shares   12    1    (69)       (56)   45        (37)       8 
Amount  $138   $12   $(794)  $   $(644)  $479   $   $(386)  $   $93 
Class R5                                                  
Shares   3    6    (15)       (6)   31    2    (33)        
Amount  $17   $71   $(159)  $   $(71)  $327   $23   $(354)  $   $(4)
Class Y                                                  
Shares   94    128    (3,556)       (3,334)   9,020    91    (2,778)       6,333 
Amount  $1,078   $1,446   $(40,447)  $   $(37,923)  $95,396   $934   $(30,625)  $   $65,705 
Total                                                  
Shares   4,958    1,244    (14,900)       (8,698)   23,622    432    (40,978)       (16,924)
Amount  $56,922   $14,101   $(170,481)  $   $(99,458)  $251,978   $4,429   $(442,529)  $   $(186,122)

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced

 

43

 

The Hartford Global All-Asset Fund

Notes to Consolidated Financial Statements (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

44

 

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45

 

The Hartford Global All-Asset Fund

Consolidated Financial Highlights

- Selected Per-Share Data (A) -

 

Class 

Net Asset Value at

Beginning of

Period

  

Net Investment

Income (Loss)

  

Net Realized and

Unrealized Gain

(Loss) on

Investments

  

Total from

Investment

Operations

  

Dividends from Net

Investment Income

  

Distributions from

Realized Capital

Gains

  

Distributions from

Capital

   Total Distributions  

Net Asset Value at

End of Period

 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $11.30   $0.04   $0.81   $0.85   $(0.29)  $   $   $(0.29)  $11.86 
C   11.18        0.80    0.80    (0.19)           (0.19)   11.79 
I   11.33    0.05    0.82    0.87    (0.32)           (0.32)   11.88 
R3   11.29    0.02    0.82    0.84    (0.26)           (0.26)   11.87 
R4   11.39    0.04    0.82    0.86    (0.28)           (0.28)   11.97 
R5   11.34    0.05    0.82    0.87    (0.33)           (0.33)   11.88 
Y   11.34    0.06    0.81    0.87    (0.33)           (0.33)   11.88 
                                              
For the Year Ended October 31, 2012 (E)
A   10.63    0.06    0.67    0.73    (0.06)           (0.06)   11.30 
C   10.53    (0.02)   0.67    0.65                    11.18 
I   10.66    0.09    0.68    0.77    (0.10)           (0.10)   11.33 
R3   10.61    0.04    0.67    0.71    (0.03)           (0.03)   11.29 
R4   10.64    0.07    0.68    0.75                    11.39 
R5   10.67    0.09    0.68    0.77    (0.10)           (0.10)   11.34 
Y   10.67    0.10    0.68    0.78    (0.11)           (0.11)   11.34 
                                              
For the Year Ended October 31, 2011 (E)
A   11.04    0.03    (0.32)   (0.29)   (0.03)   (0.09)       (0.12)   10.63 
C   11.00    (0.05)   (0.32)   (0.37)   (0.01)   (0.09)       (0.10)   10.53 
I   11.05    0.06    (0.32)   (0.26)   (0.04)   (0.09)       (0.13)   10.66 
R3   11.02    0.01    (0.33)   (0.32)       (0.09)       (0.09)   10.61 
R4   11.04    0.06    (0.36)   (0.30)   (0.01)   (0.09)       (0.10)   10.64 
R5   11.05    0.08    (0.34)   (0.26)   (0.03)   (0.09)       (0.12)   10.67 
Y   11.05    0.08    (0.33)   (0.25)   (0.04)   (0.09)       (0.13)   10.67 
                                              
From May 28, 2010 (commencement of operations), through October 31, 2010  (E)
A(H)   10.00    (0.01)   1.05    1.04                    11.04 
C(H)   10.00    (0.04)   1.04    1.00                    11.00 
I(H)   10.00        1.05    1.05                    11.05 
R3(H)   10.00    (0.01)   1.03    1.02                    11.02 
R4(H)   10.00    0.01    1.03    1.04                    11.04 
R5(H)   10.00    0.02    1.03    1.05                    11.05 
Y(H)   10.00    0.01    1.04    1.05                    11.05 

 

(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)Not annualized.
(G)Annualized.
(H)Commenced operations on May 28, 2010.

 

46

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
                            
 7.66%(F)  $283,669    1.37%(G)   1.18%(G)   0.66%(G)   26%
 7.26(F)   165,371    2.11(G)   1.94(G)   (0.09)(G)    
 7.83(F)   165,232    1.08(G)   0.93(G)   0.91(G)    
 7.52(F)   3,424    1.70(G)   1.43(G)   0.41(G)    
 7.66(F)   777    1.42(G)   1.13(G)   0.73(G)    
 7.77(F)   2,533    1.09(G)   0.92(G)   0.93(G)    
 7.82(F)   49,216    0.99(G)   0.87(G)   1.00(G)    
                            
                            
 6.97    293,773    1.38    1.09    0.58    94 
 6.17    169,673    2.12    1.84    (0.16)    
 7.28    180,463    1.09    0.83    0.84     
 6.75    3,961    1.74    1.36    0.33     
 7.05    1,378    1.45    1.06    0.62     
 7.31    2,485    1.11    0.83    0.85     
 7.38    84,780    1.01    0.77    0.91     
                            
                            
 (2.67)   373,186    1.45    1.02    0.31    206 
 (3.36)   216,578    2.19    1.75    (0.43)    
 (2.44)   263,596    1.17    0.73    0.57     
 (2.93)   3,140    1.79    1.30    0.09     
 (2.71)   1,205    1.49    1.00    0.50     
 (2.36)   2,335    1.19    0.70    0.74     
 (2.34)   12,219    1.08    0.65    0.76     
                            
                            
 10.40(F)   92,704    1.51(G)   0.95(G)   (0.16)(G)   37 
 10.00(F)   46,828    2.26(G)   1.70(G)   (0.92)(G)    
 10.50(F)   66,511    1.24(G)   0.68(G)   (0.01)(G)    
 10.20(F)   2,216    1.91(G)   1.31(G)   (0.18)(G)    
 10.40(F)   2,208    1.61(G)   1.01(G)   0.12(G)    
 10.50(F)   2,210    1.31(G)   0.71(G)   0.42(G)    
 10.50(F)   9,948    1.22(G)   0.66(G)   0.47(G)    

 

47

 

The Hartford Global All-Asset Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company can be found in the Consolidated 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

48

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

49

 

The Hartford Global All-Asset Fund

Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

50

 

The Hartford Global All-Asset 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
     Days in
the
current
1/2
year
     Days
in the
full
year
 
Class A  $1,000.00   $1,076.60   $6.10   $1,000.00   $1,018.92   $5.93    1.18%   181    365 
Class C  $1,000.00   $1,072.60   $9.95   $1,000.00   $1,015.20   $9.67    1.94    181    365 
Class I  $1,000.00   $1,078.30   $4.81   $1,000.00   $1,020.16   $4.68    0.93    181    365 
Class R3  $1,000.00   $1,075.20   $7.38   $1,000.00   $1,017.68   $7.17    1.43    181    365 
Class R4  $1,000.00   $1,076.60   $5.83   $1,000.00   $1,019.18   $5.67    1.13    181    365 
Class R5  $1,000.00   $1,077.70   $4.73   $1,000.00   $1,020.24   $4.60    0.92    181    365 
Class Y  $1,000.00   $1,078.20   $4.46   $1,000.00   $1,020.50   $4.33    0.87    181    365 

 

51

 

The Hartford Global All-Asset Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Global All-Asset Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing

 

52

 

 

investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

53

 

The Hartford Global All-Asset Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early).

 

Cayman Subsidiary Risk: Investing in a Cayman Islands subsidiary exposes the Fund to the risks associated with the subsidiary and its investments.

 

Commodities Risk: Investments in commodities may be more volatile than investments in traditional securities.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

54
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-GAA13 4/13 113976 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

16

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD GLOBAL ALPHA FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford Global Alpha Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 13
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 14
Statement of Operations for the Period December 14, 2012, (commencement of operations) through April 30, 2013 (Unaudited) 15
Statement of Changes in Net Assets for the Period December 14, 2012, (commencement of operations) through April 30, 2013 (Unaudited) 16
Notes to Financial Statements (Unaudited) 17
Financial Highlights (Unaudited) 32
Directors and Officers (Unaudited) 34
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 36
Quarterly Portfolio Holdings Information (Unaudited) 36
Expense Example (Unaudited) 37
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) 38
Principal Risks (Unaudited) 43

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Global Alpha Fund inception 12/14/2012

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks a positive total return that exceeds the return on 3-Month U.S. Treasury bills over the long term (generally at least three years) regardless of market conditions. 

 

 

Performance Overview 12/14/12 - 4/30/13

 

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Cumulative Returns (as of 4/30/13)

 

   Since
Inception▲
 
Global Alpha A#   -0.80%    
Global Alpha A##   -6.26%    
Global Alpha C#   -1.00%    
Global Alpha C##   -1.99%    
Global Alpha I#   -0.70%    
Global Alpha R3#   -0.90%    
Global Alpha R4#   -0.80%    
Global Alpha R5#   -0.70%    
Global Alpha Y#   -0.70%    
Bank of America Merrill Lynch 3-Month U.S. Treasury Bill Index   0.03%    

 

Inception: 12/14/2012
# Without sales charge
## With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Class C reflect a contingent deferred sales charge of 1.00%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Bank of America Merrill Lynch 3-Month U.S. Treasury Bill Index is an unmanaged index of Treasury securities maturing in 90 days that assumes reinvestment of all income.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Global Alpha Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

 

Operating Expenses*
   Net   Gross 
Global Alpha Class A   1.55%      1.60%   
Global Alpha Class C   2.30%      2.35%   
Global Alpha Class I   1.30%      1.35%   
Global Alpha Class R3   1.85%      1.90%   
Global Alpha Class R4   1.55%      1.60%   
Global Alpha Class R5   1.25%      1.30%   
Global Alpha Class Y   1.20%      1.20%   

 

*As of the Fund's current prospectus dated December 14, 2012. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the period December 14, 2012, (commencement of operations) through April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers    
Robert L. Evans Mark H. Sullivan, CFA, CMT John Soukas

Director and Fixed Income

Portfolio Manager

Vice President and Fixed Income

Portfolio Manager

Senior Vice President and Fixed Income
Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Global Alpha Fund returned -0.80%, before sales charge, for the period from December 14, 2012, (commencement of operations) to April 30, 2013, underperforming the Fund’s benchmark, the Bank of America Merrill Lynch 3-Month U.S. Treasury Bill Index, which returned 0.03% for the same period. The Fund also underperformed the 2.40% average return of the Lipper Absolute Return Funds peer group, a group of funds which aim for positive returns in all market conditions. The funds are not benchmarked against a traditional long only market index but rather have the aim of outperforming a cash or risk-free benchmark.

 

Why did the Fund perform this way?

During the period ended April 30, 2013, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02% to 0.08%. Global government bond performance was positive as major government bond yields continued to grind lower over the period. Peripheral sovereign yields tightened further amid growing expectations that central banks from China to Europe and the U.S. will all maintain monetary stimulus plans to bolster growth. The U.S. dollar performance was mixed over the period. The currency declined vs. the Mexican Peso, the Euro, the Swedish Krona, and the New Zealand Dollar, but appreciated versus the Norwegian Krone, the British Pound, and especially the Japanese Yen. The yen was a major decliner as the markets priced in aggressive monetary easing by the Japanese policy authorities.

 

The Fund’s performance lagged during the period due to weak results in our systematic country strategies and our credit strategy. Our quantitatively-oriented country strategies detracted from results, primarily as a result of contrarian long U.S. relative value positions. Specifically, being long the U.S. 10-year versus being short the Germany 10-year detracted as U.S./Germany spreads widened throughout the first quarter.

 

3

 

The Hartford Global Alpha Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

 

In addition, being long the U.S. 10-year versus being short the U.K. 10-year also detracted from performance as we built up this position throughout the month of March as U.K. yields continued to grind lower. Credit strategies also detracted from results during the period. Our long positioning in select Commercial Mortgage Backed Securities issues detracted as spreads widened over the period. Our quantitatively-oriented country and credit positioning is primarily implemented through the use of exchange-traded government bond futures and cash bonds.

 

Macro-driven currency strategies contributed positively to results during the period, particularly our long positions in the Mexican Peso and Canadian Dollar, our long position in the U.S. Dollar vs. the Euro, and our short positions in Norwegian Krone and Korean Won. This more than offset the negative impact of our short position in the Swedish Krona and our tactical long Japanese Yen positions. Macro-driven duration strategies detracted from performance, in particular our short U.K. 10-year position and our short Japan positions. However our tactical long Germany 10-year and long Australia 10-year positions contributed positively to results. Our currency and duration positioning is primarily implemented through the use of currency forward contracts and through the use of exchange-traded government bond futures.

 

What is the outlook?

We believe the U.S. continues to cyclically outperform most advanced economies based on a broadening recovery in housing and the likelihood of continued declines in unemployment. Market focus appears ready to shift to the tapering off and unwinding of extremely loose monetary conditions in the U.S. In Europe, we are witnessing what we believe to be increasing signs of ‘austerity fatigue’ as evidenced by the rise of anti-establishment parties in the recent Italian elections. Similarly, ‘bailout fatigue’ among creditor nations like Germany and Netherlands has likely led to a reversal of the earlier banking union proposals. Germany and Japan are examples of countries where official policy is encouraging domestic growth stimulus and wage inflation so we will watch if these trends result in increased consumer spending and retail sales. Currently, our cyclical indicators are pointing to signs of a slower momentum in global growth. As countries try to gain share from their competitors, we believe that unconventional monetary and fiscal easing measures could lead to an unstable fiscal and competitive environment. Given this outlook, we ended the period with a negative duration bias with the aggregate effective duration of the Fund at -2.8 years. We will tactically manage duration around a low range as global economic conditions evolve.

 

At the end of the period, the Fund remained long duration within the U.S., both on an outright and relative basis to both Germany and the U.K. In addition, the Fund continued to hold short duration exposure within Japan given the negative longer term dynamics within that country which we believe ultimately need to be re-priced by the market. Within currencies, the portfolio continued to favor North American currencies including the Mexican Peso and initiated long positions in the Euro versus both the commodity bloc (Australian and Canadian Dollars) and Swedish Krona.

 

Distribution by Credit Quality

as of April 30, 2013

Credit Rating *   

Percentage of
Net Assets

 
Aaa / AAA   5.1%
Aa / AA   0.3 
A   1.2 
Baa / BBB   1.8 
Ba / BB   1.2 
B   0.5 
Caa / CCC or Lower   0.2 
U.S. Government Agencies and Securities   80.4 
Non-Debt Securities and Other Short-Term Instruments   3.6 
Other Assets & Liabilities   5.7 
Total   100.0%

 

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

Diversification by Industry

as of April 30, 2013

Industry  Percentage of
Net Assets
 
Fixed Income Securities     
Administrative Waste Management and Remediation   0.1%
Arts, Entertainment and Recreation   0.1 
Computer and Electronic Product Manufacturing   0.2 
Finance and Insurance   2.2 
Food Manufacturing   0.1 
Food Services   0.0 
Health Care and Social Assistance   1.3 
Information   0.1 
Rail Transportation   0.2 
Utilities   0.3 
Water Transportation   0.1 
Wholesale Trade   0.2 
Total   4.9%
Call Options Purchased   0.0 
Foreign Government Obligations   5.4 
Put Options Purchased   0.0 
U.S. Government Agencies   6.0 
U.S. Government Securities   74.4 
Short-Term Investments   3.6 
Other Assets and Liabilities   5.7 
Total   100.0%

 

4

 

The Hartford Global Alpha Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

Shares or Principal Amount ╬  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 0.5% 
     Finance and Insurance - 0.5%     
     Luminent Mortgage Trust     
$70    0.46%, 11/25/2035 Δ  $63 
     WF-RBS Commercial Mortgage Trust     
 100    4.19%, 03/15/2045 ■Δ   79 
         142 
           
     Total asset & commercial mortgage backed securities     
    (cost $132)  $142 
           

CORPORATE BONDS - 4.4%

     
     Administrative Waste Management and Remediation - 0.1%     
     Clean Harbors, Inc.     
$25   5.13%, 06/01/2021 ■  $26 
           
     Arts, Entertainment and Recreation - 0.1%     
     Cinemark USA, Inc.     
 25   5.13%, 12/15/2022 ■   26 
           
     Computer and Electronic Product Manufacturing - 0.2%     
     Micron Technology, Inc.     
 18   1.63%, 02/15/2033 ۞■   20 
 18   2.13%, 02/15/2033 ۞■   20 
         40 
     Finance and Insurance - 1.7%     
     Bank of America Corp.     
 40   3.30%, 01/11/2023    41 
     CNH Capital LLC     
 75   3.63%, 04/15/2018 ■   76 
     Goldman Sachs Group, Inc.     
 250   2.38%, 01/22/2018    255 
     HSBC Holdings plc     
EUR   50   0.51%, 09/30/2020 Δ   63 
     Royal Bank of Scotland Group plc     
 50   9.50%, 03/16/2022 §   60 
         495 
     Food Manufacturing - 0.1%     
     ConAgra Foods, Inc.     
 35   1.90%, 01/25/2018    36 
           
     Food Services - 0.0%     
     ARAMARK Corp.     
 5   5.75%, 03/15/2020 ■   5 
           
     Health Care and Social Assistance - 1.3%     
     AbbVie, Inc.     
 75   1.75%, 11/06/2017 ■   76 
 75   2.00%, 11/06/2018 ■   76 
     DaVita, Inc.     
 45   5.75%, 08/15/2022    48 
     Fresenius Medical Care U.S. Finance II, Inc.     
 70   5.63%, 07/31/2019 ■   78 
     Zoetis, Inc.     
 45   1.88%, 02/01/2018 ■   46 
         324 
     Information - 0.1%     
     CC Holdings GS V LLC     
35   2.38%, 12/15/2017 ■  35 
           
     Rail Transportation - 0.2%     
     CSX Corp.     
 50   4.10%, 03/15/2044   49 
           
     Utilities - 0.3%     
     American Electric Power Co., Inc.     
 25   1.65%, 12/15/2017   25 
 50   2.95%, 12/15/2022   51 
         76 
     Water Transportation - 0.1%     
     Royal Caribbean Cruises Ltd.     
 35   5.25%, 11/15/2022   36 
           
     Wholesale Trade - 0.2%     
     Spectrum Brands Holdings, Inc.     
 60   6.38%, 11/15/2020 ■   66 
           
     Total corporate bonds     
     (cost $1,199)  $1,214 
           

FOREIGN GOVERNMENT OBLIGATIONS - 5.4%

     
     France - 0.3%     
     France (Government of)     
EUR   50    4.50%, 04/25/2041  $87 
           
     Sweden - 5.1%     
     Sweden (Kingdom of)     
SEK   5,260   1.50%, 11/13/2023   804 
SEK3,180   4.25%, 03/12/2019   574 
         1,378 
     Total foreign government obligations     
     (cost $1,453)  $1,465 
           

U.S. GOVERNMENT AGENCIES - 6.0%

     
     FNMA - 6.0%     
$1,625   1.13%, 09/30/2013  $1,632 
           
     Total U.S. government agencies     
     (cost $1,632)  $1,632 
           

U.S. GOVERNMENT SECURITIES - 74.4%

     

U.S. Treasury Securities - 74.4%

     
     U.S. Treasury Bonds - 1.0%     
$250   3.13%, 02/15/2043  $262 
           
     U.S. Treasury Notes - 73.4%     
 16,000   0.38%, 06/30/2013 - 07/31/2013 ╦   16,010 
 4,000   0.50%, 10/15/2013   4,007 
         20,017 
         20,279 
     Total U.S. government securities     
     (cost $20,265)  $20,279 

 

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

  

5

 

The Hartford Global Alpha Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
U.S. GOVERNMENT SECURITIES - 74.4% - (continued) 
U.S. Treasury Securities - 74.4% - (continued) 
    U.S. Treasury Notes - 73.4% - (continued)
Contracts   
CALL OPTIONS PURCHASED - 0.0% 

Interest Rate Contracts - 0.0%

     
     U.S. Treasury 30-Year Bond Future Option     
    Expiration: 05/28/2013, Exercise Price: $150.00  $12 
           
     Total call options purchased     
     (cost $10)  $12 
           

PUT OPTIONS PURCHASED - 0.0%

     

Foreign Exchange Contracts - 0.0%

     
     AUD Put/USD Call     
AUD   658     Expiration: 05/09/2013  $ 
     GBP Put/USD Call     
GBP   17     Expiration: 09/17/2013æ   1 
GBP   16     Expiration: 09/24/2013Р  2 
         3 
     Total put options purchased     
     (cost $15)  $3 
           
     Total long-term investments
(cost $24,706)
  $24,747 
           
Shares or Principal Amount ╬Market Value ╪ 
SHORT-TERM INVESTMENTS - 3.6%     
Repurchase Agreements - 3.6%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $39,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $39)
     
$38   0.17%, 4/30/2013  $38 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $105, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015
- 2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$107)
     
 105   0.15%, 4/30/2013   105 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $203, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $207)
     
 203   0.15%, 4/30/2013   203 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $282,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $287)
     
 282   0.14%, 4/30/2013   282 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $51,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value of
$52)
     
 51   0.17%, 4/30/2013   51 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $172, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $175)
     
 172   0.14%, 4/30/2013   172 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $121, collateralized by U.S.
Treasury Note 0.25% - 1.88%, 2014 - 2019,
value of $123)
     
 121   0.17%, 4/30/2013   121 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$2, collateralized by U.S. Treasury Note
3.88%, 2018, value of $2)
     
 2   0.13%, 4/30/2013   2 
         974 
     Total short-term investments     
     (cost $974)  $974 
           
     Total investments         
     (cost $25,680) ▲ 94.3 %  $25,721  
     Other assets and liabilities 5.7 %   1,541  
     Total net assets 100.0 %  $ 27,262  

  

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

 

6

  

 

 

Note:

 Percentage of investments as shown is the ratio of the total market value to total net assets.

   
  Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

Also represents cost for tax purposes.

 

ΔVariable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $629, which represents 2.3% of total net assets.

 

§These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $60, which represents 0.2% of total net assets.

  

۞Convertible security.

 

æThis security has limitations.  If the U.S. Dollar per British Pound exchange rate is less than or equal to the barrier level of 1.39 at any point during the contract period, the counterparty will be required to pay the Fund the equivalent of par on the number of contracts traded.

 

ÐThis security has limitations.  If the U.S. Dollar per British Pound exchange rate is less than or equal to the barrier level of 1.41 at any point during the contract period, the counterparty will be required to pay the Fund the equivalent of par on the number of contracts traded.

 

All principal or contract amounts are in U.S. dollars unless otherwise indicated.

 

This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.

 

Futures Contracts Outstanding at April 30, 2013

 

Description  Number of
Contracts*
   Expiration
Date
  Notional Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
Long position contracts:                       
Australian 10-Year Bond Future   27   06/17/2013  $3,400   $3,497   $97 
Australian 3-Year Bond Future   8   06/17/2013   912    912     
U.S. Treasury 10-Year Note Future   43   06/19/2013   5,711    5,734    23 
U.S. Treasury 2-Year Note Future   32   06/28/2013   7,054    7,060    6 
U.S. Treasury 30-Year Bond Future   45   06/19/2013   6,604    6,677    73 
U.S. Treasury CME Ultra Long Term Bond Future   6   06/19/2013   939    986    47 
                     $246 
Short position contracts:                       
Euro BUXL 30-Year Bond Future   13   06/06/2013  $2,335   $2,373   $(38)
Euro-BOBL Future   52   06/06/2013   8,680    8,679    1 
Euro-BTP Future   4   06/06/2013   587    611    (24)
Euro-BUND Future   32   06/06/2013   6,172    6,177    (5)
Euro-OAT Future   15   06/06/2013   2,716    2,761    (45)
Japan 10-Year Bond Future   1   06/11/2013   1,487    1,483    4 
Japan 10-Year Mini Bond Future   15   06/10/2013   2,230    2,225    5 
Long Gilt Future   41   06/26/2013   7,567    7,643    (76)
U.S. Treasury 5-Year Note Future   4   06/28/2013   499    499     
                    $(178)
                    $68 

 

* The number of contracts does not omit 000's.

 

Cash of $780 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

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

 

7

 

The Hartford Global Alpha Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
AUD  Buy  05/31/2013  CBA  $21   $21   $ 
AUD  Buy  05/31/2013  NAB   5    5     
AUD  Buy  05/31/2013  SCB   5    5     
AUD  Buy  05/31/2013  WEST   35    36    1 
AUD  Sell  05/31/2013  CBA   52    53    (1)
AUD  Sell  05/31/2013  CBK   212    212     
AUD  Sell  05/01/2013  JPM   4    4     
AUD  Sell  05/31/2013  NAB   52    53    (1)
AUD  Sell  05/31/2013  SCB   10    10     
AUD  Sell  05/31/2013  UBS   5    5     
AUD  Sell  05/31/2013  WEST   423    428    (5)
BRL  Buy  05/03/2013  JPM   27    27     
BRL  Buy  05/03/2013  SCB   74    74     
BRL  Buy  05/03/2013  UBS   31    31     
BRL  Buy  05/03/2013  UBS   106    106     
BRL  Sell  05/03/2013  JPM   27    27     
BRL  Sell  05/03/2013  SCB   74    74     
BRL  Sell  05/03/2013  UBS   136    136     
BRL  Sell  06/04/2013  UBS   22    22     
CAD  Buy  05/31/2013  BCLY   20    20     
CAD  Buy  05/31/2013  GSC   5    5     
CAD  Buy  05/31/2013  UBS   268    268     
CAD  Sell  05/31/2013  BCLY   518    528    (10)
CHF  Sell  05/31/2013  CSFB   103    104    (1)
CHF  Sell  05/31/2013  JPM   108    108     
CLP  Buy  05/31/2013  CBK   16    16     
CLP  Sell  05/31/2013  UBS   41    42    (1)
COP  Buy  05/31/2013  UBS   23    23     
COP  Sell  05/31/2013  BNP   46    47    (1)
CZK  Buy  05/31/2013  JPM   8    8     
CZK  Buy  05/31/2013  RBS   99    100    1 
CZK  Sell  05/31/2013  JPM   27    28    (1)
EUR  Buy  05/31/2013  BCLY   73    74    1 
EUR  Buy  05/31/2013  BNP   270    270     
EUR  Buy  05/31/2013  CBK   291    292    1 
EUR  Buy  05/31/2013  DEUT   188    188     
EUR  Buy  05/31/2013  DEUT   263    263     
EUR  Buy  05/31/2013  GSC   263    263     
EUR  Buy  05/01/2013  JPM   2    2     
EUR  Buy  05/31/2013  JPM   194    195    1 
EUR  Buy  05/31/2013  NAB   7    7     
EUR  Buy  05/31/2013  RBC   45    46    1 
EUR  Buy  05/31/2013  UBS   30    30     
EUR  Sell  05/31/2013  BCLY   340    345    (5)
EUR  Sell  05/31/2013  CBK   52    53    (1)
EUR  Sell  05/31/2013  DEUT   117    118    (1)
EUR  Sell  05/31/2013  JPM   66    67    (1)
EUR  Sell  05/31/2013  RBS   96    97    (1)
EUR  Sell  05/31/2013  UBS   33    33     
EUR  Sell  05/31/2013  UBS   19    19     
GBP  Buy  05/31/2013  CBK   264    266    2 
GBP  Buy  05/31/2013  GSC   8    8     
GBP  Buy  05/31/2013  JPM   8    8     
GBP  Buy  05/31/2013  UBS   42    43    1 
GBP  Buy  05/31/2013  UBS   23    23     
GBP  Sell  05/01/2013  JPM   7    7     
GBP  Sell  05/31/2013  JPM   54    54     
GBP  Sell  05/31/2013  RBS   46    47    (1)

 

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

 

8

 

 

  

Foreign Currency Contracts Outstanding at April 30, 2013 - (continued)

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪  

Unrealized

Appreciation/

(Depreciation)

 
GBP  Sell  05/31/2013  UBS  $425   $433   $(8)
HUF  Buy  05/31/2013  CBK   54    55    1 
HUF  Sell  05/31/2013  BNP   113    114    (1)
ILS  Buy  05/31/2013  UBS   11    11     
INR  Buy  05/31/2013  JPM   142    143    1 
JPY  Buy  05/31/2013  CBK   213    214    1 
JPY  Buy  05/31/2013  NAB   431    440    9 
JPY  Buy  05/31/2013  SCB   15    15     
JPY  Buy  05/31/2013  SCB   8    8     
JPY  Buy  05/31/2013  WEST   25    25     
JPY  Sell  05/31/2013  CBA   16    16     
JPY  Sell  05/31/2013  CBK   105    105     
JPY  Sell  05/01/2013  JPM   5    5     
JPY  Sell  05/31/2013  JPM   53    53     
JPY  Sell  05/31/2013  NAB   23    24    (1)
KRW  Buy  05/31/2013  JPM   270    270     
KRW  Sell  05/31/2013  BCLY   485    493    (8)
MXN  Buy  05/31/2013  RBC   372    377    5 
MYR  Buy  05/31/2013  JPM   16    16     
NOK  Buy  05/31/2013  BCLY   7    7     
NOK  Buy  05/31/2013  MSC   20    21    1 
NOK  Buy  05/31/2013  UBS   23    23     
NOK  Sell  05/31/2013  UBS   16    16     
NZD  Buy  05/31/2013  CBA   33    34    1 
NZD  Buy  05/31/2013  NAB   30    30     
NZD  Sell  05/31/2013  SCB   13    13     
NZD  Sell  05/31/2013  UBS   4    4     
RUB  Buy  05/31/2013  CSFB   22    22     
RUB  Buy  05/31/2013  JPM   21    21     
RUB  Buy  05/31/2013  UBS   10    10     
RUB  Buy  05/31/2013  UBS   11    11     
RUB  Sell  05/31/2013  JPM   82    84    (2)
SEK  Buy  05/31/2013  CSFB   119    121    2 
SEK  Buy  05/31/2013  DEUT   101    103    2 
SEK  Buy  05/31/2013  GSC   6    6     
SEK  Buy  05/31/2013  UBS   8    8     
SEK  Sell  05/02/2013  CSFB   119    121    (2)
SEK  Sell  05/31/2013  DEUT   28    28     
SEK  Sell  05/31/2013  UBS   2,019    2,059    (40)
SGD  Sell  05/31/2013  JPM   137    138    (1)
TRY  Buy  05/31/2013  BCLY   11    11     
TRY  Buy  05/31/2013  GSC   11    11     
TRY  Buy  05/31/2013  JPM   30    30     
TRY  Sell  05/31/2013  SCB   22    22     
TRY  Sell  05/31/2013  UBS   8    8     
TWD  Buy  05/31/2013  GSC   24    24     
TWD  Buy  05/31/2013  UBS   24    24     
TWD  Sell  05/31/2013  JPM   35    35     
ZAR  Buy  05/31/2013  CSFB   205    213    8 
ZAR  Sell  05/31/2013  CBK   109    109     
ZAR  Sell  05/31/2013  CSFB   15    16    (1)
                     $(55)

 

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

 

9

 

The Hartford Global Alpha Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Credit Default Swap Contracts Outstanding at April 30, 2013

 

Reference Entity   Counterparty   Notional
Amount (a)
    (Pay)/Receive
Fixed Rate /
Implied Credit
Spread (b)
    Expiration
Date
    Upfront
Premiums
Paid/
(Received)
    Market
Value ╪
    Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices:                                              
Buy protection:                                                  
ABX.HE.AAA.06-1   BOA   $ 146       (0.18)%     07/25/45     $ 4     $ 2     $ (2 )
ABX.HE.PENAAA.07-1   JPM     31       (0.09)%     08/25/37       11       10       (1 )
CDX.NA.HY.20   JPM     275       (5.00)%     06/20/18       (8 )     (17 )     (9 )
CMBX.NA.AA.1   CSI     590       (0.25)%     10/12/52       137       105       (32 )
CMBX.NA.AM.2   CSI     375       (0.50)%     03/15/49       24       15       (9 )
CMBX.NA.AM.3   CSI     100       (0.50)%     12/13/49       10       7       (3 )
Total                             $ 178     $ 122     $ (56 )
Sell protection:                                                  
ABX.HE.AAA.06-2   MSC   $ 93       0.11%     05/25/46     $ (32 )   $ (25 )   $ 7  
CMBX.NA.AAA.6   CSI     645       0.50%     05/11/63       (20 )     (16 )     4  
CMBX.NA.BB.6   CSI     625       5.00%     05/11/63       (37 )     (14 )     23  
CMBX.NA.BB.6   MSC     10       5.00%     05/11/63                    
PrimeX.ARM.2   MSC     164       4.58%     12/25/37       3       6       3  
Total                             $ (86 )   $ (49 )   $ 37  
Total traded indices                             $ 92     $ 73     $ (19 )
Credit default swaps on single-name issues:                                            
Buy protection:                                                  
UBS AG   MSC   EUR   65       (1.00)% / 0.90%     06/20/18     $ 1     $     $ (1 )
Sell protection:                                                  
Zurich Insurance Co., Ltd.   MSC   EUR   80       1.00% / 1.03%      06/20/18     $ (1 )   $     $ 1  
Total single name issues                         $     $     $  
                              $ 92     $ 73     $ (19 )

 

(a)The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.  Notional shown in U.S. dollars unless otherwise noted.

 

(b)Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues, U.S. municipal issues or sovereign government issues as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood of risk of default for the credit derivative.  The implied credit spread of a particular entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement.  Wider credit spreads represent a deterioration of the reference entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.  The percentage shown is the implied credit spread on April 30, 2013.  For credit default swap agreements on indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk.

 

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

 

10

  

 

 

Interest Rate Swap Contracts Outstanding at April 30, 2013

 

Counterparty  Payments made by Fund  Payments received by Fund  Notional
Amount *
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
BOA  2.65% Fixed  6M JPY LIBOR  JPY 20,745   03/08/43  $   $(4)  $(4)
CSI  0.82% Fixed  6M JPY LIBOR  JPY 25,600   02/18/23       (2)   (2)
CSI  3.00% Fixed  3M USD LIBOR   260   06/19/43  3   (10)  (13)
DEUT  0.40% Fixed  3M USD LIBOR   2,435   03/20/15       (3)   (3)
DEUT  0.50% Fixed  3M LIBOR   2,525   06/19/15   (1)   (7)   (6)
DEUT  0.51% Fixed  3M USD LIBOR   4,950   02/05/15       (7)   (7)
DEUT  0.54% Fixed  3M USD LIBOR   4,950   02/05/15       (9)   (9)
DEUT  0.82% Fixed  6M JPY LIBOR  JPY  25,600   02/18/23       (2)   (2)
JPM  0.40% Fixed  3M USD LIBOR   2,525   03/20/15       (3)   (3)
JPM  2.73% Fixed  6M WIBOR PLN  PLN  865   06/19/15       (1)   (1)
JPM  3.15% Fixed  6M WIBOR PLN  PLN  850   06/19/15       (3)   (3)
JPM  3.16% Fixed  6M WIBOR PLN  PLN  1,700   06/19/15       (5)   (5)
JPM  6M EURIBOR  0.40% Fixed  EUR  205   06/19/15            
JPM  6M EURIBOR  0.48% Fixed  EUR  390   06/19/15       1    1 
JPM  6M EURIBOR  0.51% Fixed  EUR  200   06/19/15       1    1 
MSC  2.59% Fixed  6M JPY LIBOR  JPY  26,090   03/22/43       (3)   (3)
                 $2   $(57)  $(59)

 

*Notional shown in U.S. dollars unless otherwise noted.

 

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 Alpha Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)

 

Counterparty Abbreviations:
BCLY Barclays
BNP BNP Paribas Securities
BOA Banc of America Securities LLC
CBA Commonwealth Bank of Australia
CBK Citibank NA
CSFB Credit Suisse First Boston Corp.
CSI Credit Suisse International
DEUT Deutsche Bank Securities, Inc.
GSC Goldman Sachs & Co.
JPM JP Morgan Chase & Co.
MSC Morgan Stanley
NAB National Australia Bank
RBC RBC Dominion Securities
RBS RBS Greenwich Capital
SCB Standard Chartered Bank
UBS UBS AG
WEST Westpac International

 

Currency Abbreviations:
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
CHF Swiss Franc
CLP Chilean Peso
COP Colombian Peso
CZK Czech Koruna
EUR EURO
GBP British Pound
HUF Hungarian Forint
ILS Israeli New Shekel
INR Indian Rupee
JPY Japanese Yen
KRW South Korean Won
MXN Mexican New Peso
MYR Malaysian Ringgit
NOK Norwegian Krone
NZD New Zealand Dollar
PLN Polish New Zloty
RUB New Ruble
SEK Swedish Krona
SGD Singapore Dollar
TRY Turkish New Lira
TWD Taiwan Dollar
USD U.S. Dollar
ZAR South African Rand

 

Index Abbreviations:
ABX.HE Markit Asset Backed Security Home Equity
ABX.HE.PEN Markit Asset Backed Security Home Equity Penultimate
CDX.NA.HY Credit Derivatives North American High Yield
CMBX.NA Markit Commercial Mortgage Backed North American
PrimeX.ARM Markit PrimeX Mortgage Backed Security

 

Other Abbreviations:
EURIBOR Euro Interbank Offered Rate
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
LIBOR London Interbank Offered Rate
WIBOR Warsaw Interbank Offered Rate

 

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

 

12

 

The Hartford Global Alpha Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Asset & Commercial Mortgage Backed Securities  $142   $   $142   $ 
Call Options Purchased   12    12         
Corporate Bonds   1,214        1,214     
Foreign Government Obligations   1,465        1,465     
Put Options Purchased   3        3     
U.S. Government Agencies   1,632        1,632     
U.S. Government Securities   20,279    262    20,017     
Short-Term Investments   974        974     
Total  $25,721   $274   $25,447   $ 
Credit Default Swaps *   38        38     
Foreign Currency Contracts *   40        40     
Futures *   256    256         
Interest Rate Swaps *   2        2     
Total  $336   $256   $80   $ 
Liabilities:                    
Credit Default Swaps *   57        57     
Foreign Currency Contracts *   95        95     
Futures *   188    188         
Interest Rate Swaps *   61        61     
Total  $401   $188   $213   $ 

 

For the period ended April 30, 2013, there were no transfers between Level 1 and Level 2.

*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

13

 

The Hartford Global Alpha Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

Assets:     
Investments in securities, at market value (cost $25,680)  $25,721 
Cash   781*
Foreign currency on deposit with custodian (cost $–)    
Unrealized appreciation on foreign currency contracts   40 
Unrealized appreciation on swap contracts   40 
Receivables:     
Investment securities sold   120 
Fund shares sold   559 
Dividends and interest   41 
Variation margin   37 
Swap premiums paid   193 
Other assets   92 
Total assets   27,624 
Liabilities:     
Unrealized depreciation on foreign currency contracts   95 
Unrealized depreciation on swap contracts   118 
Payables:     
Investment management fees   5 
Administrative fees    
Distribution fees   1 
Variation margin   38 
Accrued expenses   6 
Swap premiums received   99 
Other liabilities    
Total liabilities   362 
Net assets  $27,262 
Summary of Net Assets:     
Capital stock and paid-in-capital  $27,442 
Distributions in excess of net investment loss   (100)
Accumulated net realized loss   (60)
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency   (20)
Net assets  $27,262 
      
Shares authorized   450,000 
Class A: Net asset value per share/Maximum offering price per share   

$9.92/$10.50

 
Shares outstanding   680 
Net assets  $6,751 
Class C: Net asset value per share  $9.90 
Shares outstanding   201 
Net assets  $1,985 
Class I: Net asset value per share  $9.93 
Shares outstanding   276 
Net assets  $2,741 
Class R3: Net asset value per share  $9.91 
Shares outstanding   200 
Net assets  $1,982 
Class R4: Net asset value per share  $9.92 
Shares outstanding   200 
Net assets  $1,985 
Class R5: Net asset value per share  $9.93 
Shares outstanding   200 
Net assets  $1,987 
Class Y: Net asset value per share  $9.94 
Shares outstanding   990 
Net assets  $9,831 

 

*Cash of $780 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

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

 

14

 

The Hartford Global Alpha Fund

Statement of Operations

For the Period December 14, 2012, (commencement of operations) through April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

Investment Income:     
Interest  $33 
Total investment income   33 
      
Expenses:     
Investment management fees   103 
Administrative services fees     
Class R3   1 
Class R4   1 
Class R5   1 
Transfer agent fees     
Class A    
Class C    
Class I    
Class Y    
Distribution fees     
Class A   6 
Class C   7 
Class R3   4 
Class R4   2 
Custodian fees   1 
Accounting services fees   2 
Registration and filing fees   38 
Board of Directors' fees   1 
Audit fees   4 
Other expenses   4 
Total expenses (before waivers)   175 
Expense waivers   (42)
Total waivers   (42)
Total expenses, net   133 
Net Investment Loss   (100)
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized loss on investments in securities   (12)
Net realized loss on purchased options   (7)
Net realized loss on futures   (139)
Net realized gain on written options   3 
Net realized gain on swap contracts   9 
Net realized gain on foreign currency contracts   121 
Net realized loss on other foreign currency transactions   (35)
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions   (60)
Net Changes in Unrealized Depreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   51 
Net unrealized depreciation of purchased options   (10)
Net unrealized appreciation of futures   68 
Net unrealized depreciation of swap contracts   (78)
Net unrealized depreciation of foreign currency contracts   (55)
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   4 
Net Changes in Unrealized Depreciation of Investments, Other Financial Instruments and Foreign Currency Transactions   (20)
Net Loss on Investments, Other Financial Instruments and Foreign Currency Transactions   (80)
Net Decrease in Net Assets Resulting from Operations  $(180)

 

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

 

15

 

The Hartford Global Alpha Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

 

  

For the Period
December 14,
2012* 
through
April 30, 2013

(Unaudited)

 
Operations:     
Net investment loss  $(100)
Net realized loss on investments, other financial instruments and foreign currency transactions   (60)
Net unrealized depreciation of investments, other financial instruments and foreign currency transactions   (20)
Net Decrease in Net Assets Resulting from Operations   (180)
Capital Share Transactions:     
Class A   6,796 
Class C   2,005 
Class I   2,756 
Class R3   2,000 
Class R4   2,000 
Class R5   2,000 
Class Y   9,885 
Net increase from capital share transactions   27,442 
Net Increase in Net Assets   27,262 
Net Assets:     
Beginning of period    
End of period  $27,262 
Undistributed (distribution in excess of) net investment income (loss)  $(100)

 

*Commencement of operations.

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

 

16

 

The Hartford Global Alpha Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Global Alpha 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 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 primarily through advisory fee-based wrap programs. Class 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.

 

2.Significant Accounting Policies:

 

The following is a summary of significant accounting policies of the Fund in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance

 

17

The Hartford Global Alpha Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted) 

 

 

that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to

 

18

 

 

  

  reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Trade date for senior floating rate interests purchased in the primary loan market is considered the date on which the loan allocations are determined. Trade date for senior floating rate interests purchased in the secondary loan market is the date on which the transaction is entered into.

 

19

 

The Hartford Global Alpha Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. Paydown gains and losses on mortgage-related and other asset-backed securities are included in interest income in the Statement of Operations, as applicable.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note). 

  

20

 

 

  

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a value at least equal to the amount of the commitment. As of April 30, 2013, the Fund had no outstanding when-issued or delayed-delivery investments.

 

d)Mortgage Related and Other Asset Backed Securities The Fund may invest in mortgage related and other asset backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations, commercial mortgage backed securities, stripped mortgage backed securities, asset backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. Mortgage related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. These securities provide a monthly payment that consists of both interest and principal payments. Interest payments may be determined by fixed or adjustable rates. The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. The timely payment of principal and interest of certain mortgage related securities is guaranteed by the full faith and credit of the United States Government. Mortgage related and other asset backed securities created and guaranteed by non-governmental issuers, including government-sponsored corporations, may be supported by various forms of insurance or guarantees, but there can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund, as shown on the  Schedule of Investments, had mortgage related and other asset backed securities as of April 30, 2013.

 

21

 

 

The Hartford Global Alpha Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. The Fund, as shown on the  Schedule of Investments, had outstanding futures contracts as of April 30, 2013.

 

c)Options 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) an investment or other financial asset at an agreed-upon price during a specific period of time or on a specific date. The Fund may write (sell) covered call and put options on futures, swaps (“swaptions”), securities, commodities or currencies. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying investments or currency or an option to purchase the same underlying investments 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 investments having a value equal to or greater than the fluctuating market value of the option investment or currency. Writing put options increases the Fund’s exposure to the underlying instrument. Writing call options decreases the Fund’s exposure to the underlying instrument. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options that are exercised or closed are added to the proceeds or offset amounts paid on the underlying futures, swap, investment or currency transaction to determine the realized gain or loss. The Fund as a writer of an option has no control over whether the underlying instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the instrument underlying the written option. There is the risk the Fund may not

 

22

 

 

 

be able to enter into a closing transaction because of an illiquid market. The Fund may also purchase put and call options. Purchasing call options increases the Fund’s exposure to the underlying instrument. Purchasing put options decreases the Fund’s exposure to the underlying instrument. The Fund pays a premium, which is included on the Fund’s Statement of Assets and Liabilities as an investment and is subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options that expire are treated as realized losses. Certain options may be purchased with premiums to be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. The risk associated with purchasing put and call options is generally limited to the premium paid. Premiums paid for purchasing options that are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss. Entering into over-the-counter options also exposes the Fund to counterparty risk. Counterparty risk is the possibility that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements. The Fund, as shown on the Schedule of Investments, had outstanding purchased options contracts as of April 30, 2013. The Fund had no outstanding written options contracts as of April 30, 2013. Transactions involving written options contracts during the period December 14, 2012, (commencement of operations) through April 30, 2013, are summarized below:

  

Put Options Written During the Period  Number of Contracts*   Premium Amounts 
Beginning of the period      $ 
Written   780,000    3 
Expired   (780,000)   (3)
Closed        
Exercised        
End of Period      $ 

 

  * The number of contracts does not omit 000's.

 

d)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

23

 

The Hartford Global Alpha Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

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 investment or index in the event of a credit event, such as payment default or bankruptcy.

 

Under a credit default swap contract, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying investment 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. Although specified events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. These potential amounts would be partially offset by any recovery values of the respective referenced obligations or upfront payments received upon entering into the contract.

 

Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap contracts on corporate issues, sovereign government issues or U.S. municipal issues as of period-end are disclosed in the notes to the Schedule of Investments, as applicable, and serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the contract. Wider credit spreads represent a deterioration of the referenced entity’s soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. For credit default swap contracts on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced equity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. The Fund, as shown on the Schedule of Investments, had outstanding credit default swaps as of April 30, 2013.

 

Interest Rate Swap Contracts 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 or inflation benchmark (e.g. London Interbank Offered Rate (“LIBOR”)), 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 contracts is recorded as a realized gain or loss. 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 contract 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 contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The Fund, as shown on the Schedule of Investments, had outstanding interest rate swaps as of April 30, 2013.

 

24

 

 

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Investments in securities, at value (purchased options), market value  $12   $3   $   $   $   $   $15 
Unrealized appreciation on foreign currency contracts       40                    40 
Unrealized appreciation on swap contracts   2        38                40 
Variation margin receivable *   37                        37 
Total  $51   $43   $38   $   $   $   $132 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $95   $   $   $   $   $95 
Unrealized depreciation on swap contracts   61        57                118 
Variation margin payable *   38                        38 
Total  $99   $95   $57   $   $   $   $251 

 

* Only current day's variation margin is reported within the Statement of Assets and Liabilities. The variation margin is included in the open futures cumulative appreciation of $68 as reported in the Schedule of Investments.

  

The ratio of futures contracts to net assets at April 30, 2013 was 68.11%, compared to the December 14, 2012, (commencement of operations) to April 30, 2013 period, average to net assets of 57.53%. The volume of other derivatives that are presented in the Schedule of Investments is consistent with the derivative activity during the period December 14, 2012, (commencement of operations), through April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the period December 14, 2012, (commencement of operations) through April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain (Loss) on Derivatives Recognized as a Result of Operations:
Net realized loss on purchased options  $(3)  $   $(4)  $   $   $   $(7)
Net realized loss on futures   (139)                       (139)
Net realized gain on written options           3                3 
Net realized gain (loss) on swap contracts   15        (6)               9 
Net realized gain on foreign currency contracts       121                    121 
Total  $(127)  $121   $(7)  $   $   $   $(13)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation (depreciation) of purchased options  $2   $(12)  $   $   $   $   $(10)
Net change in unrealized appreciation of futures   68                        68 
Net change in unrealized depreciation of swap contracts   (59)       (19)               (78)
Net change in unrealized depreciation of foreign currency contracts       (55)                   (55)
Total  $11   $(67)  $(19)  $   $   $   $(75)

 

25

 

The Hartford Global Alpha Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend

 

26

 

 

 

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)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   1.100%  
On next $500 million   1.090%  
On next $1.5 billion   1.080%  
On next $2.5 billion   1.070%  
Over $5 billion   1.060%  

 

Beginning January 2014, the Fund’s management fee rate may adjust up or down based on the Fund’s performance relative to the cumulative investment record of its benchmark index over the performance measurement period. Until such time, only the base fee rate shown in the table above applies. For more information on management fees, including the performance adjustment, please see the prospectus.

 

27

 

The Hartford Global Alpha Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.025%  
On next $5 billion   0.020%  
Over $10 billion   0.015%  

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.55%      2.30%      1.30%      1.85%      1.55%      1.25%      1.20%   

 

e)Distribution and Service Plan for Class A, 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 period December 14, 2012, (commencement of operations) through April 30, 2013, HIFSCO received front-end load sales charges of $2 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class A, 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 0.25% of average daily net assets. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the period December 14, 2012, (commencement of operations) through April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of the investment companies in the Hartford fund complex. No amount was allocated to the Fund during the period December 14, 2012 (commencement of operations) through April 30, 2013. 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. These fees are accrued daily and paid monthly.

 

28

 

 

 

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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class A   88%
Class C   100 
Class I   72 
Class R3   100 
Class R4   100 
Class R5   100 
Class Y   91 

 

9.Investment Transactions:

 

For the period December 14, 2012, (commencement of operations) through April 30, 2013, the Fund's aggregate purchases and sales of investment securities (excluding short-term investments) were as follows:

 

   Amount 
Cost of Purchases Excluding U.S. Government Obligations  $9,391 
Sales Proceeds Excluding U.S. Government Obligations   4,952 
Cost of Purchases for U.S. Government Obligations   25,286 
Sales Proceeds for U.S. Government Obligations   5,000 

 

29

 

The Hartford Global Alpha Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the period December 14, 2012, (commencement of operations) through April 30, 2013:

 

   For the Period Ended April 30, 2013 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                         
Shares   681        (1)       680 
Amount  $6,801   $   $(5)  $   $6,796 
Class C                         
Shares   201                201 
Amount  $2,005   $   $   $   $2,005 
Class I                         
Shares   278        (2)       276 
Amount  $2,775   $   $(19)  $   $2,756 
Class R3                         
Shares   200                200 
Amount  $2,000   $   $   $   $2,000 
Class R4                         
Shares   200                200 
Amount  $2,000   $   $   $   $2,000 
Class R5                         
Shares   200                200 
Amount  $2,000   $   $   $   $2,000 
Class Y                         
Shares   990                990 
Amount  $9,885   $   $   $   $9,885 
Total                        
Shares   2,750        (3)       2,747 
Amount  $27,466   $   $(24)  $   $27,442 

  

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the period December 14, 2012 (commencement of operations) through April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health

 

30

  

 

 

Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

31

 

The Hartford Global Alpha Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
From December 14, 2012 (commencement of operations), through April 30, 2013 (Unaudited)
A(D)  $10.00   $(0.04)  $(0.04)  $(0.08)  $   $   $   $   $9.92 
C(D)   10.00    (0.07)   (0.03)   (0.10)                   9.90 
I(D)   10.00    (0.03)   (0.04)   (0.07)                   9.93 
R3(D)   10.00    (0.05)   (0.04)   (0.09)                   9.91 
R4(D)   10.00    (0.04)   (0.04)   (0.08)                   9.92 
R5(D)   10.00    (0.03)   (0.04)   (0.07)                   9.93 
Y(D)   10.00    (0.03)   (0.03)   (0.06)                   9.94 

 

(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) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(D) Commenced operations on December 14, 2012.
(E) Not annualized.
(F) Annualized.

 

32

  

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(C)
 
  
  
 (0.80)%(E)  $6,751    1.89%(F)   1.45%(F)   (1.07)%(F)   292%
 (1.00) (E)   1,985    2.64(F)   2.20(F)   (1.79) (F)    
 (0.70) (E)   2,741    1.64(F)   1.19(F)   (0.83) (F)    
 (0.90) (E)   1,982    2.34(F)   1.85(F)   (1.45) (F)    
 (0.80) (E)   1,985    2.04(F)   1.55(F)   (1.16) (F)    
 (0.70) (E)   1,987    1.74(F)   1.25(F)   (0.87) (F)    
 (0.70) (E)   9,831    1.64(F)   1.20(F)   (0.82) (F)    

 

33

 

The Hartford Global Alpha Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

34

 

 

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

35

 

The Hartford Global Alpha Fund

Directors and Officers (Unaudited) – (continued)

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 will be available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

36

 

The Hartford Global Alpha 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs including investment management fees, distribution fees, if any, 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 December 14, 2012, (commencement of operations) through April 30, 2013.

 

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 137/365 (to reflect the period of operations).

 

 

   Actual return   Hypothetical (5% return before expenses)            
   Beginning 
Account Value
December 14, 
2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
December 14, 2012
through
April 30, 2013
   Beginning
Account Value
December 14,
2012
   Ending Account
Value
April 30, 2013
   Expenses paid 
during the 
period
December 14,
2012
through
April 30, 2013
   Annualized
expense
ratio
  Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A*  $1,000.00   $992.00   $5.40   $1,000.00   $1,013.34   $5.46    1.45  137     365  
Class C*  $1,000.00   $990.00   $8.22   $1,000.00   $1,010.51   $8.31    2.20   137     365  
Class I*  $1,000.00   $993.00   $4.47   $1,000.00   $1,014.28   $4.52    1.19   137     365  
Class R3*  $1,000.00   $991.00   $6.91   $1,000.00   $1,011.82   $6.99    1.85   137     365  
Class R4*  $1,000.00   $992.00   $5.80   $1,000.00   $1,012.95   $5.86    1.55   137     365  
Class R5*  $1,000.00   $993.00   $4.68   $1,000.00   $1,014.07   $4.73    1.25   137     365  
Class Y*  $1,000.00   $993.00   $4.49   $1,000.00   $1,014.26   $4.54    1.20   137     365  

 

* Commenced operations on December 14, 2012.
   

 

37

 

The Hartford Global Alpha 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”), initially approve, and annually review and consider the continuation of, the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on September 6-7, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to approve an investment management agreement for The Hartford Global Alpha Fund (the “Fund”) with Hartford Investment Financial Services, LLC (“HIFSCO”) and an investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HIFSCO, the “Advisers”) (collectively, the “Agreements”).

 

Prior to approving the Agreements, 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 “Adviser Materials”). In addition, the Board’s Investment Committee received in-person presentations from representatives of the Advisers regarding the Fund and the proposed investment strategy.

 

In determining whether to approve 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the Agreements was based on a comprehensive consideration of all information provided to the Board with respect to the approval 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 to be Provided by the Advisers

 

The Board requested and considered information concerning the nature, extent, and quality of the services to be provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements, the range of services to be provided, and HIFSCO’s and the Sub-adviser’s organizational structure, systems and personnel. The Board also considered HIFSCO’s and the Sub-adviser’s reputation and overall financial strength, and the Board’s past experience with the Sub-adviser as sub-adviser for other Hartford-sponsored funds.

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO would be responsible for the management of the Fund, including overseeing fund operations and service providers. The Board also noted that HIFSCO would provide administrative services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Fund’s sub-adviser, and that HIFSCO had recommended to the Board that the Sub-adviser be appointed as the sub-adviser to the Fund. The Board considered HIFSCO’s ongoing monitoring of people, process and performance, including its quarterly reviews of each of the Hartford Mutual Funds, semi-annual meetings with the leaders of each Fund’s portfolio management team, and oversight of the Funds’ approximately 61 portfolio managers. The Board recognized that HIFSCO has demonstrated a record of making changes to the management and/or strategies of the Funds when warranted. The Board considered that HIFSCO would oversee the Sub-adviser’s investment approach and results and considered HIFSCO’s process for monitoring best execution of portfolio trades by the Sub-adviser and approach to risk management with respect to the Fund and the service providers to the Fund. The Board also considered that HIFSCO would oversee compliance with the Fund’s objective and policies as well as with applicable laws and regulations. In addition, the Board considered that HIFSCO or its affiliates would be responsible for providing the Fund’s officers.

 

With respect to the day-to-day portfolio management services to be provided by the Sub-adviser, the Investment Committee met with members of the proposed portfolio management team. The Board considered the Sub-adviser’s investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience.

 

The Board also considered information previously provided by the Advisers regarding their compliance policies and procedures and compliance history, and received a representation from HIFSCO that the written compliance policies and procedures of HIFSCO and the Sub-adviser are reasonably designed to prevent violations of the federal securities laws. In addition, the Board considered HIFSCO’s representation that it did not anticipate making any material changes to HIFSCO’s and the Hartford-sponsored funds’ compliance program as a result of the addition of the Fund.

 

38

 

 

 

In considering this information, the Board evaluated not only the information presented to the Board and the Investment Committee in connection with its consideration of the Agreements, but also the Board’s experience through past interactions with HIFSCO and the Sub-adviser. Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services to be provided to the Fund by HIFSCO and the Sub-adviser.

 

Performance of the Sub-adviser

 

The Board considered the investment performance of the Sub-adviser and its portfolio management team, including, for purposes of considering the investment skill and experience of the Fund’s portfolio managers, the composite performance of one of the Sub-adviser’s strategies similar to the strategy to be used by the Fund. HIFSCO and the Sub-adviser also provided additional information about the broad range of the portfolio management team’s investment experience and their investment philosophy and process.

 

Based on these considerations, the Board concluded that it was satisfied that HIFSCO and the Sub-adviser have the capability of providing satisfactory investment performance for the Fund.

 

Costs of the Services and Profitability of the Advisers

 

In considering the proposed advisory and sub-advisory fee schedules for the Fund, the Board reviewed information regarding HIFSCO’s estimated costs to provide investment management and related services to the Fund and the estimated profitability to HIFSCO and its affiliates from all services to be provided to the Fund and all aspects of their relationships with the Fund. In evaluating HIFSCO’s estimated profitability, the Board considered HIFSCO’s representation that the level of estimated profitability was fair and appropriate based on the nature and quality of the services to be provided to shareholders. The Board also noted that the actual profitability of the Fund to HIFSCO would depend on the growth of assets under management. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.

 

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 to be Provided by the Advisers

 

The Board considered comparative information with respect to the management fees to be paid by the Fund to HIFSCO and the expected total expense ratios of the Fund. The Board also considered comparative information with respect to the sub-advisory fees to be paid by HIFSCO to the Sub-adviser, to the extent applicable. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the proposed management and sub-advisory fees and total operating expenses for the Fund. With respect to the sub-advisory fee schedule, the Board considered representations from HIFSCO and the Sub-adviser that the Sub-adviser’s fees were negotiated at arm’s length. The Board also reviewed information comparing the Fund’s proposed management fees and total expenses to those of a peer universe of funds derived from information provided by Lipper Inc., an independent provider of investment company data (“Lipper”), in conjunction with input from an independent financial services consulting firm engaged by the Board. The Board considered that HIFSCO had contractually agreed to limit the expenses for the Fund’s Class A, Class C, Class I, Class R3, Class R4, Class R5 and Class Y shares to 1.55%, 2.30%, 1.30%, 1.85%, 1.55%, 1.25% and 1.20%, respectively, through February 28, 2014. The Board noted that the expense limits do not include the performance fee adjustments. The Board noted that HIFSCO’s contractual obligation to limit the expenses for the Fund will automatically renew on an annual basis after February 28, 2014 unless HIFSCO provides written notice of termination prior to the start of the next term or upon approval of the Board.

 

The Board reviewed information regarding the proposed performance fee adjustment for the Fund, including the structure and level of the adjustment. The Board considered that the Sub-adviser only offers the Fund’s investment strategy with a performance fee adjustment, and that a number of peer funds also use performance fees. The Board also noted that the Sub-adviser had agreed to a reduced minimum performance fee adjustment as well as breakpoints specific to the adjustment amount. The Board also considered other operational considerations regarding the performance fee, including the appropriateness of the index to be used as a measurement benchmark and the “hurdle” rate to be used to determine whether a performance fee would be paid. The Board noted that, while the performance adjustment would increase the sub-advisory fee rate when the Fund outperforms the measurement benchmark, it would also reduce the sub-advisory fee rate when the Fund underperforms that measurement

 

39

 

The Hartford Global Alpha Fund

Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

benchmark. The Board further noted that the performance adjustment will not be used until the Fund has been in operation for twelve months.

 

In considering the reasonableness of the Fund’s management and sub-advisory fees and total expense ratios, the Board considered that, according to the information provided by Lipper, the Fund’s proposed base management fees were below the Lipper peer group average and median for all asset levels, and the Fund’s estimated total expenses, less Rule 12b-1 fees, were also below the Lipper peer group average and median. The Board noted that certain of the funds within the Lipper peer group also use performance fee adjustments. With respect to the proposed performance fee adjustment for the Fund, the Board considered that the management fees and total net expenses would rank in the fourth quintile at the maximum adjustment and in the first quintile at the minimum adjustment.

 

Based on these considerations, the Board concluded that the Fund’s proposed 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 to be provided.

 

Economies of Scale

 

The Board considered the extent to which economies of scale would be realized as the Fund grows and whether the fee levels reflect these economies of scale for the benefit of the Fund’s future shareholders. The Board reviewed the breakpoints in the proposed management fee schedule for the Fund, which would reduce fee rates as Fund assets grow over time. The Board considered HIFSCO’s representation that the Fund could be expected to achieve some economies of scale as assets in the Fund grow. The Board recognized that a fund with assets beyond the last breakpoint level would 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 provide protection from an increase in expenses if Fund assets decline. The Board recognized that a fee schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale. The Board also considered that HIFSCO has been active in managing expenses for the Hartford Mutual Funds.

 

The Board also considered how any benefits from economies of scale would be realized by the various parties. The Board reviewed relevant information included in the Adviser Materials regarding comparative breakpoint information for other funds in the Fund’s Lipper peer group. Based on these considerations, 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 future shareholders. The Board noted, however, that it would review future growth in Fund assets and the appropriateness of the breakpoints as part of its future annual review of the Agreements.

 

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., an affiliate of HIFSCO, would receive fees for fund accounting and related services from the Fund. The Board also considered that Hartford Administrative Services Company, the Fund’s transfer agent and an affiliate of HIFSCO, would receive transfer agency compensation from the Fund.

 

The Board also considered that, as principal underwriter of the Fund, HIFSCO would receive 12b-1 fees from the Fund and would receive 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 would distribute shares of the Fund and would receive compensation in that connection.

 

The Board considered the benefits to the Fund’s future 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.

 

40

 

 

 

* * * *

 

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. 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 with independent legal counsel to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Global Alpha Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. Information provided to the Board at its meetings throughout the year with respect to the Hartford Mutual Funds, included, among other things, reports on performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided by HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect

 

41

 

The Hartford Global Alpha Fund

Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangements for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangements approved by the Board at its September 2012 meeting, when it initially considered the Fund’s existing investment management agreement and existing investment sub-advisory agreement. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the initial approval process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the initial approval process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services to be provided by HIFSCO and the Sub-adviser; (ii) performance of the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the extent to which economies of scale would be realized as the Fund grows and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the initial approval process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

42

 

The Hartford Global Alpha Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early). These risks also apply to the Fund’s investments in U.S. government securities, which may not be guaranteed by the U.S. government.

 

Mortgage-Backed Securities Risk: Mortgage-backed securities are subject to interest rate risk, credit risk, prepayment risk, extension risk, and the risk that an investment’s value may be reduced or become worthless if it receives interest or income payments only after other investments in the same pool.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Foreign Investment, Emerging Markets and Sovereign Debt Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks. Sovereign debt investments are subject to credit risk and the risk of default.

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

Structured Securities Risk: Structured securities are subject to credit risk; these securities may be difficult to sell because they are typically sold in private placement transactions.

 

Quantitative Analysis Risk: The Fund uses quantitative analysis in its securities selection; securities selected by this method may perform differently from the broader stock market.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

Performance Fee Risk: The use of a Treasury bill index to calculate the Fund’s performance fee could result in the Fund paying higher management fees than if the Fund limited its investments to U.S. Treasury bills and other short-term instruments.

 

43
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-GLA13 4/13 113978 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

17

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD GLOBAL GROWTH FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Global Growth Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 9
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 10
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 11
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 12
Notes to Financial Statements (Unaudited) 13
Financial Highlights (Unaudited) 26
Directors and Officers (Unaudited) 28
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 30
Quarterly Portfolio Holdings Information (Unaudited) 30
Expense Example (Unaudited) 31
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 32
Principal Risks (Unaudited) 34

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Global Growth Fund inception 09/30/1998
(sub-advised byWellington Management Company, LLP)
 
Investment objective – Seeks growth of captial.

 

Performance Overview 4/30/03 - 4/30/13

 

Z:\Vineyard\Live jobs\2013\06 June\19 June\Shift III\v348149-Hartford Mutual Fund N-CSRS\Draft\03-Production

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

 

Average Annual Total Returns (as of 4/30/13)

  

   6 Month†   1 Year   5 year   10 year 
Global Growth A#   16.78%       15.04%       -1.49%       6.31%    
Global Growth A##        8.71%       -2.60%       5.71%    
Global Growth B#   16.37%       14.20%       -2.14%       5.80%*    
Global Growth B##        9.20%       -2.53%       5.80%*    
Global Growth C#   16.39%       14.21%       -2.26%       5.53%    
Global Growth C##        13.21%       -2.26%       5.53%    
Global Growth R3#   16.75%       14.86%       -1.71%       6.38%    
Global Growth R4#   16.97%       15.24%       -1.48%       6.54%    
Global Growth R5#   17.13%       15.64%       -1.13%       6.79%    
Global Growth Y#   17.16%       15.55%       -1.05%       6.85%    
MSCI World Growth Index   14.00%       14.23%       2.87%       8.42%    

 

Not Annualized
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

  

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

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 United States, Canada, Europe, Australia, New Zealand and the Far East.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Global Growth Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Global Growth Class A   1.48%      1.67%   
Global Growth Class B   2.23%      2.76%   
Global Growth Class C   2.23%      2.36%   
Global Growth Class R3   1.60%      1.97%   
Global Growth Class R4   1.30%      1.40%   
Global Growth Class R5   1.00%      1.10%   
Global Growth Class Y   0.95%      0.96%   

 

* As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

  

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Matthew D. Hudson, CFA John A. Boselli, CFA
Vice President and Equity Portfolio Manager Director and Equity Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Global Growth Fund returned 16.78%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the MSCI World Growth Index, which returned 14.00% for the same period. The Fund also outperformed the 13.94% average return 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?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Investors’ enthusiasm for stocks was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, the market responded favorably to the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

Value stocks (+16.1%) outperformed growth stocks (+14.0%) during the six-month period, as measured by the MSCI World Value Index and the MSCI World Growth Index, respectively. Within the MSCI World Growth Index, nine out of ten sectors posted positive returns. Telecommunication Services (+26%), Financials (+23%), and Health Care (+22%) performed the best, while the Materials (-1%), Information Technology (+4%), and Energy (+4%) sectors lagged on a relative basis.

 

The Fund’s benchmark-relative outperformance was driven by broad-based, positive stock selection across businesses with different fundamental drivers. Notably, the Fund outperformed despite facing headwinds from investor’s preference for stocks with perceived safety and lower volatility. Positive security selection in the Information Technology, Consumer Staples, and Health Care sectors contributed the most to relative performance, more than offsetting unfavorable security selection within Financials and Telecommunication Services. Sector allocation, a result of the bottom up investment process, contributed to relative outperformance due primarily to an underweight (i.e. the Fund’s sector position was less than the benchmark position) in Materials and an overweight in Financials.

 

Top contributors to benchmark-relative performance were Green Mountain Coffee (Consumer Staples), Apple (Information Technology), and Gilead Sciences (Health Care). Shares of Green Mountain Coffee, a leading provider of single-cup brewers and k-cups for coffee and other beverages, rose as the company reported first quarter financial results that beat consensus expectations and raised its earnings guidance for the 2013 fiscal year. In addition, data released in March showed that new lower-priced entrants are having a minimal impact on Green Mountain's core business. Shares of Apple, a U.S.-based designer and retailer of a range of personal electronic products, fell during the period as the company missed revenue expectations and issued disappointing earnings guidance. Our benchmark-relative underweight position in Apple contributed to relative returns. Shares of Gilead Sciences, a U.S.-based bio-pharmaceutical company, moved steadily higher during the period alongside positive news flow, including passing the first hurdle for the firm’s

 

3

 

The Hartford Global Growth Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

hepatitis C single tablet regimen. Top absolute contributors also included Roche Holding (Health Care).

 

The top detractors from the Fund’s relative performance were Toyota Motor (Consumer Discretionary), Edwards Lifesciences (Health Care), and Oracle (Information Technology). Shares of Toyota Motor, a Japanese auto company, detracted during the period as the stock rose sharply due to yen depreciation. Not owning this strong performing benchmark-constituent hurt relative results. Shares of Edwards Lifesciences, a medical device company specializing in heart valve technology and treatments for cardiovascular diseases, reported disappointing first quarter results due to poor transcatheter heart valve (THV) sales. Management lowered 2013 guidance primarily due to lower U.S. THV sales, which is the growth driver of the business. Due to concerns regarding the company’s core business, we eliminated the position to pursue more attractive opportunities. Oracle, a U.S.-based enterprise software and hardware manufacturer, reported quarterly results that missed expectations, sending the stock lower. A return to growth in their hardware division following the acquisition of Sun Microsystems has taken longer than originally expected. This delay, combined with weakness in public sector spending on Information Technology, led to poor stock performance during the period. Top absolute detractors also included Apple (Information Technology) and InterActive (Information Technology).

 

What is the outlook?

Driven by quantitative easing and government stimulus programs, economic data continues to improve slowly across the world. To start the year, the U.S. economy appeared on solid footing as budget and sequester fears have been proven unfounded thus far. Japan is generating more interest with the market’s continued enthusiasm for Prime Minister Shinzo Abe’s pro-business economics and for the weakening yen. Europe, however, regressed towards the end of the quarter due to the banking crisis in Cyprus, political paralysis in Italy, and a host of tepid economic data points. However, while excessive leverage in European banks and government balance sheets in the Western Hemisphere continue, the economic improvement has had positive effects on earnings and stock prices. Within emerging markets, which remained weak, China has yet to rebound from the transition in leadership. In this global market environment, we continue to look for attractive investment opportunities.

 

At the end of the period, our stock-by-stock investment process resulted in greater-than-benchmark weights in the Information Technology, Financials and Health Care sectors. The Fund held below-benchmark weights in the Consumer Staples, Materials and Industrials sectors.

 

Diversification by Country

as of April 30, 2013

 

   Percentage of 
Country  Net Assets 
Austria   0.6%
Belgium   2.2 
Brazil   0.6 
China   1.0 
France   4.1 
Germany   3.7 
Hong Kong   2.7 
Ireland   2.1 
Italy   0.4 
Japan   3.2 
Jersey   0.5 
Mexico   1.1 
Netherlands   1.8 
Norway   0.6 
Portugal   0.3 
South Korea   1.7 
Sweden   1.0 
Switzerland   6.1 
Taiwan   1.1 
Thailand   1.0 
Turkey   0.7 
United Kingdom   4.9 
United States   57.6 
Short-Term Investments   0.9 
Other Assets and Liabilities   0.1 
Total   100.0%

 

4

 

The Hartford Global Growth Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.4% 
     Automobiles and Components - 0.7%     
 131   Nissan Motor Co., Ltd.   $1,362 
           
     Banks - 5.3%     
 568   Banco Espirito Santo S.A. ●   651 
 905   Bank of Ayudhya plc   1,012 
 221   Barclays Bank plc ADR   985 
 24   BNP Paribas   1,354 
 1,058   China Construction Bank   888 
 37   Erste Group Bank AG   1,151 
 144   Kasikornbank PCL   1,038 
 157   Mitsubishi UFJ Financial Group, Inc.   1,063 
 41   Standard Chartered plc   1,032 
 226   Turkiye Garanti Bankasi   1,270 
         10,444 
     Capital Goods - 5.1%     
 11   Boeing Co.   1,043 
 17   Honeywell International, Inc.   1,220 
 11   MTU Aero Engines Holdings AG   1,031 
 11   Parker-Hannifin Corp.   974 
 73   Rolls-Royce Holdings plc   1,287 
 37   Safran S.A.   1,840 
 12   Schneider Electric S.A.   941 
 39   SKF AB Class B   912 
 5   SMC Corp. of America   965 
         10,213 
     Commercial and Professional Services - 1.9%     
 19   Equifax, Inc. ●   1,169 
 71   Experian plc   1,241 
 1   SGS S.A.   1,364 
         3,774 
     Consumer Durables and Apparel - 1.4%     
 13   Cie Financiere Richemont S.A.   1,055 
 1   NVR, Inc. ●   978 
 93   Prada S.p.A.   837 
         2,870 
     Consumer Services - 3.6%     
 165   Galaxy Entertainment Group Ltd. ●   739 
 80   MGM Resorts International ●   1,125 
 13   Paddy Power plc ☼   1,122 
 608   Sands China Ltd.   3,199 
 17   Starbucks Corp.   1,009 
         7,194 
     Diversified Financials - 10.1%     
 259   Aberdeen Asset Management plc   1,811 
 7   Affiliated Managers Group, Inc. ●   1,144 
 39   American Express Co.   2,664 
 18   Ameriprise Financial, Inc.   1,312 
 9   BlackRock, Inc.   2,498 
 27   Discover Financial Services, Inc.   1,187 
 11   Franklin Resources, Inc.   1,717 
 7   IntercontinentalExchange, Inc. ●   1,173 
 42   JP Morgan Chase & Co.   2,071 
 26   Moody's Corp.   1,570 
 7   Partners Group   1,725 
 44   SEI Investments Co.   1,272 
         20,144 
     Energy - 2.2%     
 13   Anadarko Petroleum Corp.   1,063 
 40   Cobalt International Energy, Inc. ●   1,121 
 8   EOG Resources, Inc.  931 
 17   Schlumberger Ltd.   1,251 
         4,366 
     Food and Staples Retailing - 1.8%     
 49   CVS Caremark Corp.   2,864 
 20   Seven & I Holdings Co., Ltd.   758 
         3,622 
     Food, Beverage and Tobacco - 7.6%     
 42   Altria Group, Inc.   1,515 
 35   Anheuser-Busch InBev N.V. ☼   3,386 
 32   British American Tobacco plc   1,775 
 59   Diageo Capital plc   1,809 
 9   Fomento Economico Mexicano S.A.B. de C.V. ADR   1,074 
 26   Green Mountain Coffee Roasters, Inc. ●   1,491 
 15   Heineken N.V.   1,035 
 10   Pernod-Ricard S.A.   1,257 
 42   Unilever N.V.   1,805 
         15,147 
     Health Care Equipment and Services - 2.4%     
 18   Aetna, Inc.   1,035 
 19   Covidien plc   1,220 
 23   Medtronic, Inc.   1,055 
 19   Zimmer Holdings, Inc.   1,430 
         4,740 
     Insurance - 1.5%     
 29   American International Group, Inc. ●   1,196 
 109   Ping An Insurance (Group) Co.   867 
 27   Tokio Marine Holdings, Inc. ☼   852 
         2,915 
     Materials - 2.6%     
 105   Cemex S.A.B. de C.V. ADR ●   1,178 
 199   Glencore Xstrata plc   985 
 15   HeidelbergCement AG   1,065 
 99   James Hardie Industries plc   1,040 
 2   Syngenta AG   978 
         5,246 
     Media - 5.2%     
 26   CBS Corp. Class B   1,192 
 28   Comcast Corp. Class A   1,173 
 101   News Corp. Class A   3,114 
 339   Sirius XM Radio, Inc. w/ Rights   1,100 
 24   Viacom, Inc. Class B   1,548 
 19   Walt Disney Co.   1,170 
 59   WPP plc   972 
         10,269 
     Pharmaceuticals, Biotechnology and Life Sciences - 13.9%     
 21   Actelion Ltd.   1,291 
 22   Amgen, Inc. ‡   2,272 
 7   Biogen Idec, Inc. ●   1,632 
 26   Celgene Corp. ●   3,117 
 92   Gilead Sciences, Inc. ●   4,649 
 28   Merck & Co., Inc.   1,302 
 52   Mylan, Inc. ●   1,502 
 17   Novartis AG ☼   1,281 
 6   Regeneron Pharmaceuticals, Inc. ●   1,370 
 18   Roche Holding AG   4,445 
 14   Sanofi-Aventis S.A.   1,528 
 18   Thermo Fisher Scientific, Inc.   1,472 

 

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

 

5

 

The Hartford Global Growth Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.4% - (continued) 
     Pharmaceuticals, Biotechnology and Life Sciences - 13.9% - (continued)     
 17   UCB S.A. ●  $1,020 
 10   Vertex Pharmaceuticals, Inc. ●   753 
         27,634 
     Real Estate - 0.4%     
 9   American Tower Corp. REIT   790 
           
     Retailing - 4.5%     
 4   Amazon.com, Inc. ●   1,023 
 3   AutoZone, Inc. ●   1,340 
 18   Expedia, Inc.   1,028 
 47   Lowe's Co., Inc.   1,808 
 17   Next plc   1,152 
 4   Priceline.com, Inc. ●   2,700 
         9,051 
     Semiconductors and Semiconductor Equipment - 4.3%     
 11   ASML Holding N.V.   843 
 128   Infineon Technologies AG   1,014 
 33   Maxim Integrated Products, Inc.   1,033 
 67   MediaTek, Inc.   818 
 101   Micron Technology, Inc. ●   949 
 2   Samsung Electronics Co., Ltd.   2,542 
 341   Taiwan Semiconductor Manufacturing Co., Ltd.   1,266 
         8,465 
     Software and Services - 15.4%     
 22   Accenture plc   1,819 
 8   Alliance Data Systems Corp. ●   1,288 
 35   Amdocs Ltd.   1,235 
 15   Citrix Systems, Inc. ●   944 
 15   Cognizant Technology Solutions Corp. ●   998 
 9   Dassault Systemes S.A.   1,097 
 54   eBay, Inc. ●   2,853 
 44   Facebook, Inc. ●   1,220 
 6   Google, Inc. ●   4,732 
 8   LinkedIn Corp. Class A ●   1,594 
 3   Mastercard, Inc.   1,880 
 38   Oracle Corp.   1,230 
 28   Salesforce.com, Inc. ●   1,146 
 23   SAP AG   1,815 
 23   Splunk, Inc. ●   950 
 20   Teradata Corp. ●   996 
 48   United Internet AG   1,331 
 13   Visa, Inc.   2,156 
 55   Yahoo!, Inc. ●   1,368 
         30,652 
     Technology Hardware and Equipment - 4.7%     
 4   Apple, Inc.   1,559 
 49   Cisco Systems, Inc.   1,017 
 61   EMC Corp. ●   1,375 
 224   Hitachi Ltd.   1,432 
 67   Juniper Networks, Inc. ●   1,110 
 53   LG.Philips LCD Co., Ltd.   731 
 21   Motorola Solutions, Inc.   1,224 
 79   Telefonaktiebolaget LM Ericsson Class B   985 
         9,433 
     Telecommunication Services - 1.5%     
 246   Sprint Nextel Corp. ●   1,736 
 53   Telenor ASA  1,202 
         2,938 
     Transportation - 1.0%     
 64   Delta Air Lines, Inc. ●   1,105 
 9   FedEx Corp.   878 
         1,983 
     Utilities - 1.3%     
 85   Cia de Saneamento Basico do Estado de Sao Paulo ☼   1,193 
 1,354   Guangdong Investment Ltd.   1,311 
         2,504 
     Total common stocks     
     (cost $155,181)  $195,756 
           

PREFERRED STOCKS - 0.6%

     
     Media - 0.6%     
 31   ProSieben Sat.1 Media AG  $1,172 
           
     Total preferred stocks     
     (cost $1,062)  $1,172 
           
     Total long-term investments     
     (cost $156,243)  $196,928 
           
SHORT-TERM INVESTMENTS - 0.9% 
 Repurchase Agreements - 0.9%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $69,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $70)
     
$69    0.17%, 4/30/2013  $69 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $188, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -
2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$192)
     
 188    0.15%, 4/30/2013   188 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $362, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $369)
     
 362    0.15%, 4/30/2013   362 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $502,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $512)
     
 502    0.14%, 4/30/2013   502 

 

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

 

6

  

 

  

Shares or Principal Amount          Market Value ╪ 
SHORT-TERM INVESTMENTS - 0.9% - (continued)            
Repurchase Agreements - 0.9% - (continued)             
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $90, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $92)
            
$90    0.17%, 4/30/2013          $90 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $306, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $312)
            
 306    0.14%, 4/30/2013           306 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$215, collateralized by U.S. Treasury Note
0.25% - 1.88%, 2014 - 2019, value of $219)
            
 215    0.17%, 4/30/2013           215 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$4, collateralized by U.S. Treasury Note
3.88%, 2018, value of $4)
            
 4    0.13%, 4/30/2013           4 
                 1,736 
     Total short-term investments             
     (cost $1,736)          $1,736 
                   
        Total investments          
        (cost $157,979) ▲   99.9%  $198,664 
        Other assets and liabilities   0.1%   298 
        Total net assets   100.0%  $198,962 

  

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.
   
  Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $159,331 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $43,275 
Unrealized Depreciation   (3,942)
Net Unrealized Appreciation   $39,333 

 

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.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $2,040 at April 30, 2013.

 

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

 

7

 

The Hartford Global Growth Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty   Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
CHF  Buy  05/06/2013 

DEUT

   $1,283   $1,283   $ 
EUR  Buy  05/06/2013 

JPM

    204    204     
EUR  Buy  05/07/2013 

JPM

    204    204     
GBP  Buy  05/02/2013 

DEUT

    251    252    1 
JPY  Buy  05/07/2013 

CSFB

    105    105     
                        $1 

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

  

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
CSFB Credit Suisse First Boston Corp.
DEUT Deutsche Bank Securities, Inc.
JPM JP Morgan Chase & Co.
   
Currency Abbreviations:
CHF Swiss Franc
EUR EURO
GBP British Pound
JPY Japanese Yen
 
Other Abbreviations:
ADR American Depositary Receipt
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
REIT Real Estate Investment Trust

  

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

 

8

 

The Hartford Global Growth Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Automobiles and Components  $1,362   $   $1,362   $ 
Banks   10,444    1,270    9,174     
Capital Goods   10,213    3,237    6,976     
Commercial and Professional Services   3,774    1,169    2,605     
Consumer Durables and Apparel   2,870    978    1,892     
Consumer Services   7,194    3,256    3,938     
Diversified Financials   20,144    16,608    3,536     
Energy   4,366    4,366         
Food and Staples Retailing   3,622    2,864    758     
Food, Beverage and Tobacco   15,147    4,080    11,067     
Health Care Equipment and Services   4,740    4,740         
Insurance   2,915    1,196    1,719     
Materials   5,246    1,178    4,068     
Media   10,269    9,297    972     
Pharmaceuticals, Biotechnology and Life Sciences   27,634    18,069    9,565     
Real Estate   790    790         
Retailing   9,051    7,899    1,152     
Semiconductors and Semiconductor Equipment   8,465    1,982    6,483     
Software and Services   30,652    26,409    4,243     
Technology Hardware and Equipment   9,433    7,016    2,417     
Telecommunication Services   2,938    1,736    1,202     
Transportation   1,983    1,983         
Utilities   2,504    1,193    1,311     
Total   195,756    121,316    74,440     
Preferred Stocks   1,172        1,172     
Short–Term Investments   1,736        1,736     
Total  $198,664   $121,316   $77,348   $ 
Foreign Currency Contracts*   1        1     
Total  $1   $   $1   $ 
Liabilities:                    
Foreign Currency Contracts*                
Total  $   $   $   $ 

  

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.

*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

9

 

The Hartford Global Growth Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $157,979)  $198,664 
Cash   15 
Foreign currency on deposit with custodian (cost $34)   34 
Unrealized appreciation on foreign currency contracts   1 
Receivables:     
Investment securities sold   2,444 
Fund shares sold   224 
Dividends and interest   387 
Other assets   91 
Total assets   201,860 
Liabilities:     
Unrealized depreciation on foreign currency contracts    
Payables:     
Investment securities purchased   2,515 
Fund shares redeemed   234 
Investment management fees   28 
Administrative fees    
Distribution fees   11 
Accrued expenses   110 
Total liabilities   2,898 
Net assets  $198,962 
Summary of Net Assets:     
Capital stock and paid-in-capital  $209,370 
Distributions in excess of net investment loss   (18)
Accumulated net realized loss   (51,076)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   40,686 
Net assets  $198,962 
      
Shares authorized   450,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   

$17.82/$18.86

 
Shares outstanding   9,740 
Net assets  $173,542 
Class B: Net asset value per share  $15.92 
Shares outstanding   350 
Net assets  $5,572 
Class C: Net asset value per share  $15.91 
Shares outstanding   1,203 
Net assets  $19,134 
Class R3: Net asset value per share  $18.47 
Shares outstanding   7 
Net assets  $128 
Class R4: Net asset value per share  $18.75 
Shares outstanding   10 
Net assets  $190 
Class R5: Net asset value per share  $19.15 
Shares outstanding   7 
Net assets  $139 
Class Y: Net asset value per share  $19.25 
Shares outstanding   13 
Net assets  $257 

 

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

  

10

 

The Hartford Global Growth Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $1,581 
Interest   3 
Less: Foreign tax withheld   (87)
Total investment income   1,497 
      
Expenses:     
Investment management fees   802 
Administrative services fees     
Class R3    
Class R4    
Class R5    
Transfer agent fees     
Class A   352 
Class B   24 
Class C   34 
Class R3    
Class R4    
Class R5    
Distribution fees     
Class A   205 
Class B   29 
Class C   91 
Class R3    
Class R4    
Custodian fees   11 
Accounting services fees   15 
Registration and filing fees   36 
Board of Directors' fees   3 
Audit fees   7 
Other expenses   33 
Total expenses (before waivers and fees paid indirectly)   1,642 
Expense waivers   (20)
Transfer agent fee waivers   (134)
Commission recapture   (2)
Total waivers and fees paid indirectly   (156)
Total expenses, net   1,486 
Net Investment Income   11 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   13,615 
Net realized loss on foreign currency contracts   (32)
Net realized loss on other foreign currency transactions   (1)
Net Realized Gain on Investments and Foreign Currency Transactions   13,582 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   15,749 
Net unrealized appreciation of 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 and Foreign Currency Transactions   15,751 
Net Gain on Investments and Foreign Currency Transactions   29,333 
Net Increase in Net Assets Resulting from Operations  $29,344 

 

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

 

11

 

The Hartford Global Growth Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income (loss)  $11   $(342)
Net realized gain on investments and foreign currency transactions   13,582    17,198 
Net unrealized appreciation (depreciation) of investments and foreign currency transactions   15,751    (68)
Net Increase in Net Assets Resulting from Operations   29,344    16,788 
Capital Share Transactions:          
Class A   (9,374)   (33,686)
Class B   (1,421)   (4,094)
Class C   (1,097)   (3,615)
Class R3   9    (8)
Class R5   1    4 
Class Y   1    (34,261)
Net decrease from capital share transactions   (11,881)   (75,660)
Net Increase (Decrease) in Net Assets   17,463    (58,872)
Net Assets:          
Beginning of period   181,499    240,371 
End of period  $198,962   $181,499 
Undistributed (distribution in excess of) net investment income (loss)  $(18)  $(29)

 

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

 

12

 

The Hartford Global Growth Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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’s portfolio managers are Matthew D. Hudson (50.67%) and John A. Boselli (49.33%). 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 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the

 

13

 

The Hartford Global Growth Fund
Notes to Financial Statements
April 30, 2013 (Unaudited) – (continued)
(000’s Omitted)

 

Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant

 

14

 

 

  

management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

15

 

The Hartford Global Growth Fund
Notes to Financial Statements
April 30, 2013 (Unaudited) – (continued)
(000’s Omitted)

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that

 

16

 

 

  

is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund had no illiquid or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

17

 

The Hartford Global Growth Fund
Notes to Financial Statements
April 30, 2013 (Unaudited) – (continued)
(000’s Omitted)

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $1   $   $   $   $   $1 
Total  $   $1   $   $   $   $   $1 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $   $   $   $   $   $ 
Total  $   $   $   $   $   $   $ 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Loss on Derivatives Recognized as a Result of Operations:
Net realized loss on foreign currency contracts  $   $(32)  $   $   $   $   $(32)
Total  $   $(32)  $   $   $   $   $(32)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation of foreign currency contracts  $   $1   $   $   $   $   $1 
Total  $   $1   $   $   $   $   $1 

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of

 

18

 

 

  

equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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)Components of Distributable Earnings – The Fund’s components of distributable earnings (deficit) on a tax basis at October 31, 2012, are as follows:

 

   Amount 
Accumulated Capital Losses *  $(63,335)
Unrealized Appreciation †   23,583 
Total Accumulated Deficit  $(39,752)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $313 
Accumulated Net Realized Gain (Loss)   115 
Capital Stock and Paid-in-Capital   (428)

 

19

 

The Hartford Global Growth Fund
Notes to Financial Statements
April 30, 2013 (Unaudited) – (continued)
(000’s Omitted)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2017  $63,306 
Total  $63,306 

 

During the year ended October 31, 2012, the Fund utilized $17,508 of prior year capital loss carryforwards.

 

As of October 31, 2012, the Fund elected to defer the following Late-Year Ordinary Losses:

 

   Amount 
Ordinary Income  $29 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

20

 

 

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class R3   Class R4   Class R5   Class Y 
 1.48%      2.23%      2.23%      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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

21

 

The Hartford Global Growth Fund
Notes to Financial Statements
April 30, 2013 (Unaudited) – (continued)
(000’s Omitted)

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.48%
Class B   2.23 
Class C   2.23 
Class R3   1.60 
Class R4   1.30 
Class R5   1.00 
Class Y   0.95 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $94 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

22

 

 

  

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R4   80%
Class R5   100 
Class Y   100 

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $81,826 
Sales Proceeds Excluding U.S. Government Obligations   94,224 

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   454        (1,028)       (574)   1,685        (4,052)       (2,367)
Amount  $7,601   $   $(16,975)  $   $(9,374)  $24,840   $   $(58,526)  $   $(33,686)
Class B                                                  
Shares   6        (102)       (96)   13        (330)       (317)
Amount  $84   $   $(1,505)  $   $(1,421)  $192   $   $(4,286)  $   $(4,094)
Class C                                                  
Shares   44        (118)       (74)   157        (436)       (279)
Amount  $660   $   $(1,757)  $   $(1,097)  $2,103   $   $(5,718)  $   $(3,615)
Class R3                                                  
Shares   1                1    2        (3)       (1)
Amount  $14   $   $(5)  $   $9   $30   $   $(38)  $   $(8)
Class R4                                                  
Shares                                        
Amount  $   $   $   $   $   $1   $   $(1)  $   $ 
Class R5                                                  
Shares                                        
Amount  $1   $   $   $   $1   $4   $   $   $   $4 
Class Y                                                  
Shares                       412        (2,699)       (2,287)
Amount  $1   $   $   $   $1   $6,323   $   $(40,584)  $   $(34,261)
Total                                                  
Shares   505        (1,248)       (743)   2,269        (7,520)       (5,251)
Amount  $8,361   $   $(20,242)  $   $(11,881)  $33,493   $   $(109,153)  $   $(75,660)

 

23

 

The Hartford Global Growth Fund
Notes to Financial Statements
April 30, 2013 (Unaudited) – (continued)
(000’s Omitted)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   40   $672 
For the Year Ended October 31, 2012   117   $1,700 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

24

 

 

  

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

25

 

The Hartford Global Growth Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
 
For the Six-Month Period Ended April 30, 2013 (Unaudited)
A  $15.26   $0.01   $2.55   $2.56   $   $   $   $   $17.82 
B   13.68    (0.06)   2.30    2.24                    15.92 
C   13.67    (0.05)   2.29    2.24                    15.91 
R3   15.82        2.65    2.65                    18.47 
R4   16.03    0.02    2.70    2.72                    18.75 
R5   16.35    0.05    2.75    2.80                    19.15 
Y   16.43    0.05    2.77    2.82                    19.25 
                                              
For the Year Ended October 31, 2012 (G)
A   13.92    (0.02)   1.36    1.34                    15.26 
B   12.58    (0.12)   1.22    1.10                    13.68 
C   12.57    (0.12)   1.22    1.10                    13.67 
R3   14.46    (0.04)   1.40    1.36                    15.82 
R4   14.61        1.42    1.42                    16.03 
R5   14.85    0.05    1.45    1.50                    16.35 
Y   14.93    0.10    1.40    1.50                    16.43 
                                              
For the Year Ended October 31, 2011
A   14.31    (0.04)   (0.35)   (0.39)                   13.92 
B   13.03    (0.16)   (0.29)   (0.45)                   12.58 
C   13.02    (0.15)   (0.30)   (0.45)                   12.57 
R3   14.88    (0.09)   (0.33)   (0.42)                   14.46 
R4   14.99    (0.01)   (0.37)   (0.38)                   14.61 
R5   15.19    0.04    (0.38)   (0.34)                   14.85 
Y   15.27    0.10    (0.44)   (0.34)                   14.93 
                                              
For the Year Ended October 31, 2010 (G)
A   12.53    (0.05)   1.87    1.82    (0.04)           (0.04)   14.31 
B   11.46    (0.14)   1.71    1.57                    13.03 
C   11.45    (0.14)   1.71    1.57                    13.02 
R3   13.04    (0.08)   1.94    1.86    (0.02)           (0.02)   14.88 
R4   13.11    (0.04)   1.94    1.90    (0.02)           (0.02)   14.99 
R5   13.26    0.01    1.98    1.99    (0.06)           (0.06)   15.19 
Y   13.32    0.02    2.00    2.02    (0.07)           (0.07)   15.27 
                                              
For the Year Ended October 31, 2009
A   10.50    0.04    1.99    2.03                    12.53 
B   9.64        1.82    1.82                    11.46 
C   9.68    (0.05)   1.82    1.77                    11.45 
R3   10.97    (0.02)   2.09    2.07                    13.04 
R4   11.01    0.01    2.09    2.10                    13.11 
R5   11.10    0.05    2.11    2.16                    13.26 
Y   11.14    0.07    2.11    2.18                    13.32 
                                              
For the Year Ended October 31, 2008 (G)
A   24.97    (0.03)   (11.78)   (11.81)       (2.66)       (2.66)   10.50 
B   23.27    (0.14)   (10.83)   (10.97)       (2.66)       (2.66)   9.64 
C   23.40    (0.16)   (10.90)   (11.06)       (2.66)       (2.66)   9.68 
R3   26.02    (0.08)   (12.31)   (12.39)       (2.66)       (2.66)   10.97 
R4   26.09    (0.05)   (12.37)   (12.42)       (2.66)       (2.66)   11.01 
R5   26.15    0.05    (12.44)   (12.39)       (2.66)       (2.66)   11.10 
Y   26.19    0.07    (12.46)   (12.39)       (2.66)       (2.66)   11.14 

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Not annualized.
(F)Annualized.
(G)Per share amounts have been calculated using average shares outstanding method.

 

26

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
  
                            
 16.78%(E)  $173,542    1.64%(F)   1.48%(F)   0.11%(F)   44%
  16.37(E)   5,572     2.78(F)     2.23(F)    (0.65)(F)     
  16.39(E)   19,134     2.33(F)    2.23(F)   (0.64)(F)    
  16.75(E)   128     1.89(F)    1.60(F)   (0.01)(F)    
  16.97(E)   190     1.40(F)    1.30(F)    0.29(F)    
  17.13(E)   139     1.10(F)    1.00(F)    0.59(F)    
  17.16(E)    257     0.96(F)    0.95(F)    0.64(F)    
                            
                            
 9.63    157,341    1.67    1.48    (0.16)   99 
 8.74    6,104    2.76    2.23    (0.91)    
 8.75    17,454    2.36    2.23    (0.90)    
 9.41    101    1.97    1.60    (0.30)    
 9.72    162    1.40    1.30    0.02     
 10.10    118    1.10    1.00    0.33     
 10.05    219    0.96    0.95    0.67     
                            
                            
 (2.73)   176,523    1.57    1.48    (0.22)   60 
 (3.45)   9,591    2.60    2.23    (0.98)    
 (3.46)   19,556    2.29    2.23    (0.97)    
 (2.82)   103    1.73    1.60    (0.29)    
 (2.54)   148    1.35    1.30    (0.04)    
 (2.24)   104    1.04    1.00    0.24     
 (2.23)   34,346    0.94    0.94    0.31     
                            
                            
 14.53    243,667    1.61    1.48    (0.40)   61 
 13.70    14,367    2.63    2.23    (1.16)    
 13.71    25,611    2.31    2.23    (1.15)    
 14.24    193    1.73    1.68    (0.57)    
 14.47    118    1.33    1.33    (0.28)    
 15.00    119    1.05    1.03    0.06     
 15.17    91,540    0.93    0.93    0.12     
                            
                            
 19.33    234,971    1.83    1.13    0.38    82 
 18.88    18,333    2.90    1.57    (0.05)    
 18.29    27,064    2.45    2.01    (0.49)    
 18.87    113    1.82    1.73    (0.41)    
 19.07    59    1.37    1.37    0.16     
 19.46    7    1.05    1.05    0.46     
 19.57    177,096    0.94    0.94    0.59     
                            
                            
 (52.57)   212,910    1.49    1.43    (0.18)   82 
 (52.83)   23,614    2.42    2.01    (0.79)    
 (52.94)   30,334    2.16    2.16    (0.92)    
 (52.69)   10    1.88    1.73    (0.42)    
 (52.66)   7    1.58    1.43    (0.57)    
 (52.40)   12    1.06    1.06    0.26     
 (52.31)   135,673    0.90    0.90    0.36     

 

27

 

The Hartford Global Growth Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

28

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

29

 

The Hartford Global Growth Fund
Directors and Officers (Unaudited) – (continued)

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

30

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,167.80   $7.97   $1,000.00   $1,017.44   $7.42    1.48%   181      365   
Class B  $1,000.00   $1,163.70   $11.98   $1,000.00   $1,013.72   $11.15    2.23    181      365   
Class C  $1,000.00   $1,163.90   $11.99   $1,000.00   $1,013.72   $11.15    2.23    181      365   
Class R3  $1,000.00   $1,167.50   $8.61   $1,000.00   $1,016.85   $8.02    1.60    181      365   
Class R4  $1,000.00   $1,169.70   $7.01   $1,000.00   $1,018.34   $6.52    1.30    181      365   
Class R5  $1,000.00   $1,171.30   $5.39   $1,000.00   $1,019.83   $5.02    1.00    181      365   
Class Y  $1,000.00   $1,171.60   $5.12   $1,000.00   $1,020.08   $4.77    0.95    181      365   

 

31

 

The Hartford Global Growth Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Global Growth Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing

 

32

 

 

 

investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

33

 

The Hartford Global Growth Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Growth Investing Risk: Growth investments can be volatile, and may fail to increase earnings or grow as quickly as anticipated. Growth-style investing falls in and out of favor, which may result in periods of underperformance.

 

Mid-cap Stock Risk: Mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

34
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-GG13 4/13 113979 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

18

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD GLOBAL REAL ASSET FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford Global Real Asset Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Consolidated Schedule of Investments at April 30, 2013 (Unaudited) 6
Consolidated Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 15
Consolidated Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 17
Consolidated Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 19
Consolidated Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 20
Notes to Consolidated Financial Statements (Unaudited) 21
Consolidated Financial Highlights (Unaudited) 38
Directors and Officers (Unaudited) 40
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 42
Quarterly Portfolio Holdings Information (Unaudited) 42
Expense Example (Unaudited) 43
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 44
Principal Risks (Unaudited) 46

 

The views expressed in the Fund’s Manager Discussion under “Why did the Fund perform this way?” and “What is the outlook?” are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Global Real Asset Fund inception 05/28/2010

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks to provide long-term total returns that outpace inflation over a macroeconomic cycle.

 

Performance Overview 5/28/10 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

           Since 
   6 Month†   1 Year   Inception▲ 
Global Real Asset A#   -1.37%       -1.83%       2.50%    
Global Real Asset A##       -7.23%       0.54%    
Global Real Asset C#   -1.89%       -2.63%       1.73%    
Global Real Asset C##       -3.60%       1.73%    
Global Real Asset I#   -1.37%       -1.64%       2.74%    
Global Real Asset R3#   -1.50%       -2.05%       2.25%    
Global Real Asset R4#   -1.41%       -1.77%       2.54%    
Global Real Asset R5#   -1.36%       -1.63%       2.79%    
Global Real Asset Y#   -1.33%       -1.60%       2.83%    
Barclays U.S. TIPS 1-10 Year Index   0.47%       2.66%       5.98%    
Global Real Asset Fund Blended Index   -1.51%       -1.62%       5.95%    
MSCI All Country World Energy Index   4.43%       3.53%       9.85%    
MSCI All Country World Metals and Mining Index   -15.57%       -19.92%       -6.82%    
S&P Goldman Sachs Commodity Index   -3.42%       -8.99%       5.46%    

 

Not Annualized
Inception: 05/28/2010
#Without sales charge
##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Class C reflect a contingent deferred sales charge of 1.00%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Barclays U.S. TIPS 1-10 Year 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 maturities of 1 to 10 years.

 

Global Real Asset Fund Blended Index is a blended index comprised of the following indices: MSCI All Country World Energy Index (33%), MSCI All Country World Metals and Mining Industry Index (16.5%), MSCI All Country World Agriculture/Chemicals, and Forest, Paper and Products Index (5.5%), Barclays U.S. TIPS 1-10 Year Index (35%), and S&P Goldman Sachs Commodity Index (2.5% Precious Metals, 2.5% Industrial Metals, 2.5% Energy, 2.5% Agriculture and Livestock).

 

MSCI All Country World Energy Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets in the energy sector.

 

MSCI All Country World Metals and Mining Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets in the metals and mining industry.

 

S&P Goldman Sachs Commodity Index is a measure of general commodity price movements and inflation in the world economy.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Global Real Asset Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Global Real Asset Class A   1.37%   1.54%
Global Real Asset Class C   2.12%   2.25%
Global Real Asset Class I   1.12%   1.24%
Global Real Asset Class R3   1.62%   1.86%
Global Real Asset Class R4   1.32%   1.58%
Global Real Asset Class R5   1.07%   1.25%
Global Real Asset Class Y   1.02%   1.21%

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Consolidated Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers      
Scott M. Elliot Jay Bhutani Brian M. Garvey Lindsay T. Politi
Senior Vice President and Asset Allocation Portfolio Manager Director and Natural Resources Portfolio Manager Vice President and Asset Allocation Portfolio Manager Vice President and Fixed Income Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Global Real Asset Fund returned -1.37%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s blended benchmark (33% MSCI All Country World Energy Index, 16.5% MSCI All Country World Metals and Mining Index, 5.5% MSCI All Country World Agriculture/Chemicals and Forest, Paper, and Products Index, 35% Barclays U.S. TIPS 1 – 10 Year Index, and 10% S&P Goldman Sachs Commodity Index), which returned -1.51% for the same period.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. The formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB also supported European assets.

 

Equities ended the period up 13.8% as measured by the MSCI All Country World Index. Natural resource equities, which returned -1.6% as defined by the equity components of the Fund’s benchmark, underperformed broader equity markets. Diversified Metals and Mining-related stocks led the decline among resource equities.

 

Intermediate U.S. TIPS returned +0.5% over the period, as measured by the Barclays U.S. TIPS 1-10 Year Index. The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02% - 0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

Commodities returned -8.5% during the period as represented by S&P Goldman Sachs Commodity Index. All four commodity sectors recorded negative returns. Industrial metals commodities were led lower by copper and nickel. Energy commodities also declined as oil prices fell late in the period. Falling silver and gold prices pushed precious metals commodities lower. Agriculture-related commodities, in particular coffee, wheat, and sugar, lagged relative to the Commodity Index.

 

The Fund has four primary levers to generate investment performance: inflation-related equity investments, inflation-related fixed income investments, commodity investments, and asset allocation among stocks, bonds, commodities, and cash. The Fund outperformed its benchmark during the period primarily due to strong security selection within the natural resources equity portfolio. Asset allocation decisions detracted due to an overweight allocation (i.e. the Fund’s sector position was greater than the benchmark position) to precious metals equities and an underweight allocation to TIPS. This was partially offset by an out-of-benchmark exposure to inflation-related infrastructure equities.

 

Stocks that contributed most to relative performance in the natural resources equities portion of the Fund were Marathon

 

3

 

The Hartford Global Real Asset Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

Petroleum, Phillips 66, and Tesoro. U.S. refiners Marathon Petroleum, Phillips 66, and Tesoro benefited from a historically wide spread between West Texas Intermediate (WTI), a U.S. oil price, and Brent, traditionally representative of global oil prices. This gap lowered input costs for these U.S. refiners, generating strong profitability.

 

Significant detractors from relative performance in the natural resources equities portion of the Fund during the period included Occidental Petroleum, Chevron, and Saipem. Our underweight positions in exploration and production company Occidental Petroleum and integrated oil and gas company Chevron detracted from relative performance as both benchmark-component stocks outperformed during the period. Shares of Saipem, an Italian-based oilfield services company, fell as corporate governance issues came to light during the period. The Fund also held two exchange traded funds (ETF), Market Vectors Gold Miners ETF and SPDR S&P Metals & Mining ETF, which detracted from relative returns.

 

The commodities sub-portfolio underperformed its benchmark due to overweights to gold, platinum, and silver. Commodities exposure is gained through derivatives, particularly total return swaps and futures.

 

The TIPS portion of the Fund modestly underperformed its benchmark during the period, primarily due to yield curve positioning.

 

What is the outlook?

We view our asset class positioning in the Hartford Global Real Asset Fund as having two components: intermediate-term views (1-3 year horizon) and tactical changes around those positions (less than one year horizon). Our intermediate positions target areas with attractive valuations, tight supply conditions, improving demand, and supportive business cycle conditions. Short-term shifts typically reflect positioning changes to take advantage of price volatility.

 

In our opinion, the market environment in the coming decade is unlikely to mirror that of the prior ten years. The key differences from an inflationary perspective are China’s slowing growth and transition to a more consumption-focused economy, continued – but evolving – demand for resources, the end of global manufacturing disinflation, and, perhaps most critically, the unprecedented monetary stimulus that continues in the wake of the global financial crisis. These changes will take time to play out, but should ultimately result in a fundamental shift in the nature of global inflation.

 

The most probable outcome, in our view, is an environment characterized by improving growth, increasing inflationary pressure, and a high degree of monetary stimulus. We expect meaningful improvement in the global economy in the latter half of 2013 and into 2014. We believe this growth will be enough to generate cyclical inflation pressure in developed markets, in part because the U.S. Federal Reserve Board (Fed) will have a difficult time exiting its highly stimulative policies. Any meaningful change in the Fed’s bond purchase program would risk an interest rate increase, which could slow a nascent recovery – particularly in the context of ongoing fiscal contraction.

 

History suggests that these issues will keep the Fed, and central banks more broadly, biased toward accepting higher inflation pressure as lending eventually begins to accelerate and the housing market more fully recovers. In our view, the longer inflation stays low and the greater the resulting complacency, the greater the ultimate inflation shock.

 

Structural growth in China is likely to be slower going forward as the economy transitions from a period of unprecedented urbanization and a rapid infrastructure buildout to an increasing focus on the consumption proclivities of an expanding middle class. We expect demand for everything from cars to appliances to clothing to expand further. We believe that infrastructure spending will continue to grow, but at a slower rate than in the past. One likely outcome is a shift in the nature of commodities demand, from infrastructure-intensive (industrial metals) to consumption-oriented (oil, cotton, platinum, protein).

 

Within this backdrop, supply challenges continue to persist in most resource areas. Cost inflation is rising due to higher labor, transport, and regulatory costs as well as declining resource quality. The result is that for every dollar spent, there is less resource being found. This situation is compounded by the ongoing risk of supply shocks, particularly in energy and agriculture markets. Unfortunately, most of the world’s oil is in geopolitically unstable regions, and global spare capacity is near multi-decade lows. Inventories of key global crops are very low, while the risk of droughts is likely amplified by climate change and widespread water scarcity — creating the potential for substantial price spikes. There are a few exceptions to this, notably U.S. oil and natural gas, where the shale gas boom is creating ample supplies, and most industrial metals.

 

With rising cost structures in many of the formerly low-cost manufacturing countries like China, prices for manufactured goods may begin to rise, reversing the disinflationary trend that has existed since the middle of the 1990s. We expect that this theme will become more apparent in the coming years as

 

4

 

 

 

rising cost structures and growing demand from the emerging middle class exert upward pressure on prices.

 

We ended the period underweight TIPS, underweight commodities, and overweight natural resource equities favoring precious metals and inflation-linked infrastructure equities.

 

Distribution by Credit Quality

as of April 30, 2013 

Credit Rating *  Percentage of
Net Assets
 
Aa / AA   0.4%
A   0.4 
Baa / BBB   4.9 
Unrated   2.3 
U.S. Government Agencies and Securities   15.1 
Non-Debt Securities and Other Short-Term Instruments   70.0 
Other Assets & Liabilities   6.9 
Total   100.0%

 

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

Diversification by Country

as of April 30, 2013 

   Percentage of 

Country

 

Net Assets

 
Australia   2.3%
Austria   0.1 
Belgium   0.4 
Brazil   4.0 
Canada   8.9 
Cayman Islands   0.0 
Chile   0.0 
China   0.2 
Denmark   0.0 
Egypt   0.0 
France   0.4 
Germany   0.3 
Hong Kong   2.8 
India   0.8 
Indonesia   0.0 
Israel   1.2 
Italy   0.5 
Japan   1.3 
Jersey   0.5 
Luxembourg   0.4 
Mauritius   0.1 
Mexico   1.8 
Netherlands   0.3 
Norway   1.4 
Papua New Guinea   0.4 
Peru   0.2 
Philippines   0.0 
Poland   0.5 
Portugal   0.4 
Russia   0.1 
Singapore   0.4 
South Africa   1.8 
South Korea   0.5 
Spain   0.9 
Sweden   0.0 
Switzerland   0.4 
Taiwan   0.0 
Thailand   0.5 
Turkey   1.2 
United Kingdom   8.1 
Zambia   0.0 
United States   39.0 
Short-Term Investments   11.0 
Other Assets and Liabilities   6.9 
Total   100.0%

 

5

 

The Hartford Global Real Asset Fund
Consolidated Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 54.7%     
     Agricultural Products - 1.8%     
 63   Archer-Daniels-Midland Co.  $2,155 
 17   Asian Bamboo AG   57 
 1,064   Asian Citrus Holdings Ltd.   452 
 184   Bumitama Agri Ltd. ●   151 
 51   Bunge Ltd. Finance Corp.   3,661 
 619   China Modern Dairy Holdings Ltd. ●   214 
 80   First Resources Ltd.   113 
 1,149   Golden Agri Resources Ltd.   495 
 42   Kernel Holding S.A. ●☼   768 
 5   Limoneira Co.   99 
 9   New Britain Palm Oil Ltd.   51 
 15   Ros Agro plc ●§   74 
 33   SLC Agricola S.A.   293 
 95   Thai Vegetable Oil Public Co., Ltd. ●   74 
 179   Trigon Agri A/S   126 
 770   Wilmar International Ltd.   2,091 
         10,874 
     Aluminum - 0.1%     
 63   Alcoa, Inc.   532 
 56   Alumina Ltd.   56 
 106   Aluminum Corp. of China Ltd. ●   40 
 20   Hindalco Industries Ltd.   37 
 21   Norsk Hydro ASA   100 
         765 
     Biotechnology - 0.0%     
 8   Genus plc   176 
           
     Brewers - 0.0%     
 3   Anheuser-Busch InBev N.V.   296 
           
     Coal and Consumable Fuels - 0.7%     
 1   Cameco Corp.   18 
 16   Ceres, Inc. ●   37 
 78   Consol Energy, Inc.   2,610 
 8   Kior, Inc. ●   40 
 76   Peabody Energy Corp.   1,521 
         4,226 
     Commodity Chemicals - 0.3%     
 26   LyondellBasell Industries Class A   1,596 
           
     Construction and Engineering - 0.3%     
 56   KBR, Inc.   1,689 
           
     Construction, Farm Machinery and Heavy Trucks - 0.8%     
 17   AGCO Corp.   927 
 2   Caterpillar, Inc.   169 
 3   CNH Global N.V.   123 
 94   Cosco Corp. Singapore Ltd.   67 
 —     Cummins, Inc.   16 
 14   Deere & Co.   1,276 
 99   Fiat Industrial S.p.A.   1,114 
 88   First Tractor Co.   66 
 13   Hino Motors Ltd.   206 
 1   Hitachi Construction Machine Co., Ltd.   12 
 2   Komatsu Ltd.   45 
 10   Kubota Corp.   146 
 1   Man AG ●   124 
 3   PACCAR, Inc.   136 
 38   Sembcorp Marine Ltd.   134 
 4   Titan International, Inc.   98 
 23   Yangzigiang Shipbuilding Holdings Ltd.   18 
         4,677 
     Diversified Metals and Mining - 3.8%     
 2   African Rainbow Minerals Ltd.   49 
 29   Anglo American plc   703 
 8   Antofagasta plc   114 
 1   Assore Ltd.   26 
 67   BHP Billiton Ltd.   2,236 
 46   BHP Billiton Ltd. ADR   3,066 
 98   BHP Billiton plc   2,765 
 39   BHP Billiton plc ADR   2,177 
 6   Boliden Ab   91 
 6   Eurasian Natural Resources Corp.   25 
 26   First Quantum Minerals Ltd.   456 
 46   Freeport-McMoRan Copper & Gold, Inc.   1,397 
 78   Glencore Xstrata plc   387 
 81   Grupo Mexico S.A.B. de C.V.   292 
 9   Iluka Resources Ltd.   86 
 1   Jastrzebska Spolka Weglowa S.A.   24 
 27   Jiangxi Copper Co., Ltd.   54 
 5   Kazakmys plc   26 
 3   KGHM Polska Miedz S.A.   140 
    Korea Zinc Co., Ltd.   50 
 13   Minera Frisco S.A.B. de C.V. ●   57 
 9   Mining & Metallurgical Co. Norilsk Nickel OJSC ADR   144 
 22   Mitsubishi Materials Corp.   63 
 21   MMT Ltd. ●   6 
 5,038   Mongolian Mining Corp. ●   1,499 
 8   OZ Minerals Ltd.   34 
 9   Rio Tinto Ltd.   551 
 27   Rio Tinto plc   1,239 
 76   Rio Tinto plc ADR   3,478 
 46   Shougang Fushan Resources Group Ltd.   18 
 3   Southern Copper Corp.   102 
 27   Sterlite Industries India Ltd.   48 
 11   Sumitomo Metal Mining Co., Ltd.   154 
 26   Teck Cominco Ltd. Class B   702 
 9   Turquoise Hill Resources Ltd. ●   62 
 30   Vale Indonesia Tbk PT   9 
 2   Vedanta Resources plc   44 
    Walter Energy, Inc.   5 
 43   Xstrata plc   650 
         23,029 
     Diversified Support Services - 0.0%     
 11   Ceres Global AG Corp. ●   69 
           
     Electric Utilities - 1.6%     
 371   Cheung Kong Infrastructure Holdings Ltd.   2,694 
 83   Cia Paranaense de Energia-Copel   1,486 
 32   NextEra Energy, Inc.   2,633 
 20   Red Electrica Corporacion S.A.   1,065 
 83   Scottish & Southern Energy   2,007 
         9,885 

 

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

 

6

 

     
Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 54.7% - (continued)     
     Electronic Manufacturing Services - 0.0%     
 10   Trimble Navigation Ltd. ●   $287 
           
     Fertilizers and Agricultural Chemicals - 3.1%     
 7   Agrium, Inc.    667 
 5   American Vanguard Corp.    150 
 2   CF Industries Holdings, Inc.    390 
 236   China Bluechemical Ltd.    144 
 61   Incitec Pivot Ltd.    182 
 44   Israel Chemicals Ltd.    522 
    Israel Corp., Ltd. ●    205 
 9   K+S AG    386 
 57   Monsanto Co.    6,039 
 48   Mosaic Co.    2,933 
 25   Nihon Nohyaku Co., Ltd.    238 
 96   Potash Corp. of Saskatchewan, Inc.    4,061 
 5   Syngenta AG    2,332 
 4   Uralkali GDR §    133 
 12   Yara International ASA    556 
         18,938 
     Gas Utilities - 1.4%     
 482   ENN Energy Holdings Ltd.    2,791 
 326   Osaka Gas Co., Ltd.    1,413 
 322   Snam S.p.A.    1,586 
 70   UGI Corp.    2,873 
         8,663 
     Gold - 6.0%     
 9   African Barrick Gold Ltd.    25 
 38   Agnico-Eagle Mines Ltd.    1,216 
 102   Alacer Gold Corp.    305 
 23   Alamos Gold, Inc.    320 
 25   Alkane Resources Ltd. ●    15 
 24   Allied Nevada Gold Corp. ●    260 
 79   AngloGold Ltd. ADR    1,535 
 9   Argonaut Gold, Inc. ●    56 
 7   Asanko Gold, Inc. ●    19 
 37   AuRico Gold, Inc.    192 
 52   Aurizon Mines Ltd. ●    222 
 18   Avocet Mining plc    4 
 43   B2Gold Corp. ●    108 
 13   Banro Corp. ●    17 
 231   Barrick Gold Corp.    4,556 
 48   Beadell Resources Ltd. ●    35 
 14   Belo Sun Mining Corp. ●    15 
 72   Centamin plc ●    46 
 15   Centerra Gold, Inc.    62 
 9   China Gold International Resources Corp. ●    26 
 158   China Precious Metal Resources Holdings Co., Ltd. ●    27 
 8   Colossus Minerals, Inc. ●    18 
 52   Compania De Minas Buenaventur ADR    1,038 
 17   Continental Gold Ltd. ●    80 
 36   Detour Gold Corp. ●    433 
 42   DRDGOLD Ltd.    28 
 232   Eldorado Gold Corp.    1,839 
 89   Endeavour Mining Corp. ●    95 
 37   Franco-Nevada Corp.    1,608 
 18   Gabriel Resources Ltd. ●    32 
 66   Gold Fields Ltd.    496 
 54   Gold Fields Ltd. ADR    405 
 2   Gold Resource Corp.    23 
 203   Goldcorp, Inc.    6,002 
 19   Golden Star Resources Ltd. ●    20 
 1,188   G-Resources Group Ltd. ●    56 
 27   Gryphon Minerals Ltd. ●    6 
 7   Guyana Goldfields, Inc. ●    13 
 37   Harmony Gold Mining Co., Ltd.    185 
 120   Harmony Gold Mining Co., Ltd. ADR    617 
 15   Highland Gold Mining Ltd.    20 
 34   IAMGOLD Corp.    182 
 9   Kingsgate Consolidated Ltd.    20 
 21   Kingsrose Mining Ltd.    12 
 237   Kinross Gold Corp.    1,292 
 4   Kirkland Lake Gold, Inc. ●    15 
 3   Koza Altin Isletmeleri A.S.    68 
 27   Lake Shore Gold Corp. ●    11 
 851   Lepanto Consolidated Mining Co. ●    20 
 40   LionGold Corp. Ltd. ●    37 
 11   Medusa Mining Ltd.    38 
 8   Midas Gold Corp. ●    6 
 13   Nevsun Resources Ltd.    47 
 150   New Gold, Inc. ●    1,205 
 70   Newcrest Mining Ltd.    1,220 
 113   Newmont Mining Corp.    3,667 
 10   NGEx Resources, Inc. ●    26 
 22   Northern Star Resources Ltd.    16 
 15   NovaGold Resources, Inc. ●    37 
 65   OceanaGold Corp. ●    141 
 151   Osisko Mining Corp. ●    639 
 88   Pan African Resources plc    21 
 13   Papillon Resources Ltd. ●    14 
 32   Perseus Mining Ltd. ●    45 
 12   Petropavlovsk plc    26 
 9   Premier Gold Mines Ltd. ●    19 
 25   Pretium Resources, Inc. ●    184 
 5   Primero Mining Corp. ●    32 
 6   Rainy River Resources Ltd. ●    14 
 8   Randgold Resources Ltd.    638 
 26   Randgold Resources Ltd. ADR    2,164 
 21   Regis Resources Ltd. ●    83 
 44   Resolute Mining Ltd.    44 
 7   Royal Gold, Inc.    410 
 18   Rubicon Minerals Corp. ●    30 
 25   San Gold Corp. ●    5 
 58   Saracen Mineral Holdings Ltd. ●    9 
 2   Seabridge Gold, Inc. ●    26 
 19   Semafo, Inc.    35 
 50   Sibanye Gold Ltd. ●    48 
 14   Sibanye Gold, Ltd. ADR ●    52 
 23   Silver Lake Resources Ltd. ●    25 
 32   St. Barbara Ltd. ●    20 
 6   Tanzanian Royalty Exploration Corp. ●    17 
 8   Timmins Gold Corp. ●    18 
 187   Torex Gold Resources, Inc. ●    260 
 7   Troy Resources Ltd.    14 
 113   Yamana Gold, Inc.    1,393 
 77   Zhaojin Mining Industry Co., Ltd.    86 
 528   Zijin Mining Group Co., Ltd.    157 
         36,663 

 

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

 

7

 

The Hartford Global Real Asset Fund
Consolidated Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 54.7% - (continued)     
     Independent Power Producers and Energy Traders - 0.3%     
 308   China Longyuan Power Group Corp.   $283 
 70   Tractebel Energia S.A.    1,249 
         1,532 
     Industrial Conglomerates - 0.3%     
 248   Beijing Enterprises Holdings Ltd.    1,856 
           
     Integrated Oil and Gas - 10.0%     
 580   BG Group plc    9,797 
 298   BP plc ADR    12,981 
 1   Cenovus Energy, Inc.    29 
 111   Chevron Corp.    13,544 
 1   Eni S.p.A. ADR    64 
 22   Exxon Mobil Corp.    1,952 
 144   Galp Energia SGPS S.A.    2,307 
    Hess Corp.    25 
 1   Husky Energy, Inc.    25 
 108   Imperial Oil Ltd.    4,301 
    Murphy Oil Corp.    29 
 1   Occidental Petroleum Corp.    94 
 147   Petroleo Brasileiro S.A. ADR    2,809 
 177   Repsol S.A. ●    4,159 
 4   Royal Dutch Shell plc ADR    286 
 39   Sasol Ltd. ADR    1,702 
 187   Statoilhydro ASA ADR    4,584 
 61   Suncor Energy, Inc.    1,917 
 2   Total S.A. ADR    121 
         60,726 
     Integrated Telecommunication Services - 0.4%     
 95   Telenor ASA    2,146 
           
     Multi-Sector Holdings - 0.3%     
 25   Groupe Bruxelles Lambert S.A.    1,904 
           
     Multi-Utilities-1.7%     
 75   E.On SE    1,357 
 240   National Grid plc    3,059 
 38   PG&E Corp.    1,821 
 153   Suez Environment S.A.    2,193 
 46   Wisconsin Energy Corp.    2,063 
         10,493 
     Oil and Gas Drilling - 0.2%     
    Diamond Offshore Drilling, Inc.    15 
    Ensco plc    21 
 1   Nabors Industries Ltd.    13 
    Noble Corp.    15 
 62   Patterson-UTI Energy, Inc.    1,310 
 1   Seadrill Ltd.    34 
    Transocean, Inc. ●    26 
         1,434 
     Oil and Gas Equipment and Services - 2.1%     
 49   Baker Hughes, Inc.    2,234 
 27   Dril-Quip, Inc. ●    2,252 
 88   Halliburton Co.    3,759 
 24   National Oilwell Varco, Inc.    1,544 
 37   Schlumberger Ltd.    2,765 
 1   Tenaris S.A. ADR    26 
 1   Weatherford International Ltd. ●    14 
         12,594 
     Oil and Gas Exploration and Production - 9.3%     
 77   Anadarko Petroleum Corp.    6,545 
    Apache Corp.    30 
    Baytex Energy Corp.    11 
 1,114   Beach Energy Ltd.    1,574 
 238   Buru Energy Ltd. ●    460 
 521   Cairn Energy plc ●    2,342 
 89   Canadian Natural Resources Ltd.    2,613 
 1   Canadian Natural Resources Ltd. ADR    39 
 1   Chesapeake Energy Corp.    24 
 1,643   CNOOC Ltd.    3,077 
 107   Cobalt International Energy, Inc. ●    3,002 
    Concho Resources, Inc. ●    11 
 67   ConocoPhillips Holding Co.    4,076 
 1   Crescent Point Energy    23 
 102   Denbury Resources, Inc. ●    1,823 
 1   Devon Energy Corp.    29 
 137   EnCana Corp.    2,527 
 33   EOG Resources, Inc.    3,983 
 262   Karoon Gas Australia Ltd. ●    1,136 
 1,082   Kunlun Energy Co., Ltd.    2,121 
 1   Marathon Oil Corp.    40 
 71   MEG Energy Corp. ●    2,037 
 2,321   New Standard Energy Ltd. ●    349 
    Noble Energy, Inc.    27 
 271   Oil & Natural Gas Corp., Ltd.    1,647 
 305   Oil Search Ltd.    2,351 
 331   Ophilr Energy plc ●    2,092 
 1   Pacific Rubiales Energy Corp.    12 
 31   Pioneer Natural Resources Co.    3,830 
    QEP Resources, Inc.    14 
    Range Resources Corp.    18 
 210   Santos Ltd.    2,697 
 65   Southwestern Energy Co. ●    2,432 
 2   Talisman Energy, Inc.    20 
 39   Tourmaline Oil Corp. ●    1,531 
 1   Vermilion Energy, Inc.    26 
 40   Whiting Petroleum Corp. ●    1,758 
         56,327 
     Oil and Gas Refining and Marketing - 2.9%     
 52   Gevo, Inc. ●    95 
 23   Green Plains Renewable Energy, Inc. ●    292 
    HollyFrontier Corp.    14 
 575   JX Holdings, Inc.    3,124 
 30   Marathon Petroleum Corp.    2,342 
 83   Phillips 66    5,085 
 102   Reliance Industries Ltd. GDR ■    2,987 
 36   Tesoro Corp.    1,917 
 159   Tonengeneral Sekiyu KK    1,607 
 1   Valero Energy Corp.    24 
         17,487 
     Oil and Gas Storage and Transportation - 1.6%     
 33   Enbridge Energy Management ●    972 
 59   Enbridge, Inc.    2,827 
 29   Kinder Morgan Management LLC ●    2,600 
 34   Kinder Morgan, Inc.    1,326 
 1   Pembina Pipelin Corp.    28 
 1   Spectra Energy Corp.    23 
 36   Transcanada Corp.    1,766 
         9,542 

 

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

 

8

 

     
Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 54.7% - (continued)     
     Packaged Foods and Meats - 0.8%     
 42   Adecoagro S.A. ●   $313 
 286   Australian Agricultural Co., Ltd. ●    347 
 326   Charoen Pokphand Foods Ltd.    353 
 132   China Minzhong Food Corp., Ltd. ●    108 
 8   Ebro Foods S.A.    163 
 93   JBS S.A.    293 
 7   Kraft Foods Group, Inc.    335 
 1,245   Marine Harvest ●    1,296 
 17   McLeod Russel India Ltd.    100 
 10   MHP S.A. ●§    184 
 72   Minerva S.A. ●    405 
 54   PureCircle Ltd. ●    222 
 385   REI Agro Ltd.    85 
 31   Tyson Foods, Inc. Class A    763 
 132   Zambeef Products plc ●    99 
         5,066 
     Paper Products - 0.2%     
 8   Holmen AB Class B    217 
 15   International Paper Co.    687 
 14   MeadWestvaco Corp.    467 
 26   Oji Holdings Corp.    94 
         1,465 
     Precious Metals and Minerals - 1.4%     
 5   Alexco Resource ●    11 
 6   Anglo American Platinum Ltd.    247 
 38   Aquarius Platinum Ltd.    23 
 1   Asahi Holdings, Inc.    28 
 4   CNK International Co., Ltd. ●    16 
 27   Coeur d'Alene Mines Corp. ●    404 
 14   Dominion Diamond Corp. ●    226 
 35   Dundee Precious Metals, Inc. ●    225 
 104   Eastern Platinum Ltd. ●    9 
 8   Endeavor Silver Corp. ●    40 
 38   First Majestic Silver Corp. ●    471 
 8   Fortuna Silver Mines, Inc. ●    25 
 16   Fresnillo plc    295 
 9   Gem Diamonds Ltd. ●    19 
 69   Hecla Mining Co.    234 
 12   Hochschild Mining plc    47 
 49   Impala Platinum Holdings Ltd.    669 
 13   Industrias Penoles S.A.B. de C.V.    532 
 36   Lonmin plc    150 
 3   MAG Silver Corp. ●    23 
 12   McEwen Mining, Inc. ●    27 
 14   North American Palladium Ltd. ●    19 
 22   Northern Platinum Ltd.    83 
 15   Pan American Silver Corp.    193 
 10   Paramount Gold & Silver Corp. ●    15 
 55   Patagonia Gold plc ●    10 
 25   Petra Diamonds Ltd. ●    43 
 7   Royal Bafokeng Platinum Ltd. ●    40 
 19   Silver Standard Resources, Inc. ●    139 
 97   Silver Wheaton Corp.    2,377 
 11   Silvercorp Metals, Inc.    33 
 93   Stillwater Mining Co. ●    1,156 
 20   Tahoe Resources, Inc. ●    355 
 1   Umicore S.A.    56 
         8,240 
     Railroads - 0.4%     
 56   All America Latina Logistica S.A.    284 
 20   Canadian National Railway Co.    1,988 
         2,272 
     Residential REITs - 0.4%     
 26   Equity Lifestyle Properties, Inc. REIT    2,125 
           
     Specialty Chemicals - 0.0%     
 13   EcoSynthetix, Inc. ●    48 
           
     Steel - 1.1%     
 6   Allegheny Technologies, Inc.    171 
 18   Angang Steel Co., Ltd.    10 
 118   ArcelorMittal ADR    1,473 
 3   ArcelorMittal South Africa Ltd.    8 
 5   Bradespar S.A.    58 
 1   Capital S.A.    44 
 188   China Steel Corp.    166 
 8   Cliff's Natural Resources, Inc.    166 
 16   Companhia Sider·rgica Nacional    63 
 6   Daido Steel Co., Ltd.    32 
 1   Dongkuk Steel Mill Co., Ltd.    7 
 26   Eregli Demir ve Celik Fabrikalari T.A.S.    30 
 8   Evraz plc    19 
 31   Fortescue Metals Group Ltd.    113 
 17   Fosun International    12 
 18   Gerdau S.A.    141 
 4   Hitachi Metals Ltd.    41 
 1   Hyundai Hysco    21 
 1   Hyundai Steel Co.    81 
 2   Industrias CH, S.A. ●    16 
 10   JFE Holdings, Inc.    223 
 7   Jindal Steel & Power Ltd.    42 
 1   JSW Steel Ltd.    15 
 56   Kobe Steel Ltd.    73 
 2   Kumba Iron Ore Ltd.    92 
    Maruichi Steel Tube Ltd.    10 
 5   Mechel ADR    19 
 6   Metalurgica Gerdau S.A.    58 
 3   MMX Mineracao E Metalicos S.A. ●    4 
 152   Nippon Steel & Sumitomo Metal Corp.    406 
 2   Novolipetsk Steel §    31 
 17   Nucor Corp.    723 
 1   Posco Ltd.    379 
 1   Salzgitter AG    36 
 5   Sesa Goa Ltd.    14 
 1   Severstal GDR §    9 
 4   Sims Metal Management Ltd.    42 
 2   SSAB AB    14 
 7   Tata Steel Ltd.    41 
 8   ThyssenKrupp AG    143 
 8   United States Steel Corp.    151 
 8   Usinas Siderurgicas De Minas Gerais S.A. ●    38 
 68   Vale S.A.    1,132 
 2   Voestalpine AG    73 
    Yamato Kogyo Co.    15 
         6,455 
     Water Utilities - 1.1%     
 168   Cia de Saneamento Basico do Estado de Sao Paulo ADR    2,404 

 

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

 

9

 

The Hartford Global Real Asset Fund
Consolidated Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
COMMON STOCKS - 54.7% - (continued)     
     Water Utilities - 1.1% - (continued)     
 2,210   Guangdong Investment Ltd.   $2,140 
 80   Severn Trent plc    2,257 
         6,801 
     Wireless Telecommunication Services - 0.3%     
 676   Vodafone Group plc    2,062 
           
     Total common stocks     
     (cost $330,907)   $332,408 
           
PREFERRED STOCKS - 0.1%     
     Electric Utilities - 0.1%     
 51   Cia Paranaense de Energie   $908 
           
     Total preferred stocks     
     (cost $817)   $908 
           
WARRANTS - 0.0%     
     Diversified Metals and Mining - 0.0%     
 26   Shandong Denghai Warrant ⌂■   $98 
           
     Total warrants     
     (cost $77)   $98 
           
EXCHANGE TRADED FUNDS - 4.2%     
     Other Investment Pools and Funds - 4.2%     
 832   Market Vectors Gold Miners    25,259 
     Total exchange traded funds     
     (cost $29,405)   $25,259 
           
FOREIGN GOVERNMENT OBLIGATIONS - 8.0%     
     Brazil - 2.1%     
     Brazil (Republic of)     
BRL  21,174   6.00%, 08/15/2016 - 08/15/2050 ◄    12,536 
         12,536 
     Israel - 1.1%     
     Israel (Government of)     
ILS   8,514   1.00%, 05/30/2017 ◄    2,479 
ILS   12,884   2.75%, 09/30/2022 ◄    4,115 
         6,594 
     Mexico - 1.7%     
     Mexican Udibonos     
MXN  24,643   2.00%, 06/09/2022 ◄    2,194 
MXN  31,136   3.50%, 12/14/2017 ◄    2,872 
     United Mexican States     
MXN  41,957   4.00%, 11/15/2040 ◄    4,931 
         9,997 
     Poland - 0.4%     
     Poland Government Bond     
PLN  7,678   3.00%, 08/24/2016 ◄    2,588 
           
     South Africa - 0.7%     
     South Africa (Republic of)     
ZAR  27,296   5.50%, 12/07/2023 ◄    4,562 
           
     South Korea - 0.4%     
     Korea (Republic of)     
KRW2,569,343 1.50%, 06/10/2021 ◄ 2,497
           
     Thailand - 0.4%     
     Thailand Government Bond     
THB70,989   1.20%, 07/14/2021 §◄    2,479 
           
     Turkey - 1.2%     
     Turkey (Republic of)     
TRY  5,782   2.50%, 05/04/2016 ◄    3,429 
TRY   6,014   3.00%, 07/21/2021 ◄    3,911 
         7,340 
     Total foreign government obligations     
     (cost $47,621)   $48,593 
           
U.S. GOVERNMENT SECURITIES - 15.1%     
     U.S. Treasury Securities - 15.1%     
     U.S. Treasury Notes - 15.1%     
$35,689   0.13%, 04/15/2016 - 01/15/2023 ◄   $39,191 
 1,250   0.13%, 04/15/2018    1,347 
 5,220   0.50%, 04/15/2015 ◄    5,792 
 5,694   0.63%, 07/15/2021 ◄    6,698 
 3,184   1.13%, 01/15/2021 ◄    3,970 
 2,829   1.25%, 07/15/2020 ◄    3,577 
 5,761   1.38%, 07/15/2018 - 01/15/2020 ◄    7,258 
 3,373   1.63%, 01/15/2015 - 01/15/2018 ◄‡    4,307 
 3,575   1.88%, 07/15/2015 - 07/15/2019 ◄    4,683 
 4,411   2.00%, 01/15/2014 - 01/15/2016 ◄    5,663 
 1,680   2.13%, 01/15/2019 ◄    2,195 
 2,137   2.38%, 01/15/2017 ◄╦    2,829 
 1,446   2.50%, 07/15/2016 ◄    1,893 
 1,575   2.63%, 07/15/2017 ◄    2,093 
         91,496 
     Total U.S. government securities     
     (cost $91,589)   $91,496 
           
     Total long-term investments     
     (cost $500,416)   $498,762 
           
SHORT-TERM INVESTMENTS - 11.0%     
     Repurchase Agreements - 11.0%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $2,643,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $2,695)
     
$2,643   0.17%, 4/30/2013  $2,643 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $7,200, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note
0.75%, 2013, value of $7,344)
     
 7,200   0.15%, 4/30/2013   7,200 

 

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

 

10

 

         
Shares or Principal Amount ╬      Market Value ╪ 
SHORT-TERM INVESTMENTS - 11.0% - (continued)          
     Repurchase Agreements - 11.0% - (continued)          
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $13,868, collateralized by
U.S. Treasury Note 0.88% - 3.13%, 2017
- 2021, value of $14,145)
          
$13,868   0.15%, 4/30/2013      $13,868 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $19,260,
collateralized by U.S. Treasury Note
0.75% - 2.13%, 2015 - 2019, value of
$19,645)
          
 19,260   0.14%, 4/30/2013        19,260 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $3,463,
collateralized by FHLMC 3.00% -
5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $3,533)
          
 3,463   0.17%, 4/30/2013╦        3,463 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $11,736, collateralized by
U.S. Treasury Note 1.00% - 2.25%, 2016
- 2022, value of $11,971)
          
 11,736   0.14%, 4/30/2013        11,736 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $8,251, collateralized by
U.S. Treasury Note 0.25% - 1.88%, 2014
- 2019, value of $8,416)
          
 8,251   0.17%, 4/30/2013        8,251 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount
of $147, collateralized by U.S. Treasury
Note 3.88%, 2018, value of $150)
          
 147   0.13%, 4/30/2013        147 
              66,568 
     Total short-term investments          
     (cost $66,568)       $66,568 
                
     Total investments          
     (cost $566,984) ▲   93.1%  $565,330 
     Other assets and liabilities   6.9%   41,958 
     Total net assets   100.0%  $607,288 

 

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

 

11

 

The Hartford Global Real Asset Fund
Consolidated Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

The consolidated schedule of investments includes investments held by The Hartford Cayman Global Real Asset Fund, Ltd. (the “Subsidiary”), a wholly owned subsidiary of the Fund, which primarily invests in commodity-related instruments. The Fund may invest up to 25% of its total assets in the Subsidiary. As of April 30, 2013, the Fund invested 8.0% of its total assets in the Subsidiary.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $578,125 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $24,246 
Unrealized Depreciation   (37,041)
Net Unrealized Depreciation  $(12,795)

 

Non-income producing.

 

This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.   The Fund has also pledged $1,980 of cash as collateral in connection with swap contracts.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $3,085, which represents 0.5% 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 Acquired   Shares/ Par   Security  Cost Basis 
09/2012    26   Shandong Denghai Warrant Warrants - 144A  $77 
                

 At April 30, 2013, the aggregate value of these securities was $98, which rounds to zero percent of total net assets.

 

§These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $2,910, which represents 0.5% of total net assets.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $45 at April 30, 2013.

 

The principal amount for this security is adjusted for inflation and the interest payments equal a fixed percentage of the inflation-adjusted principal amount.

 

All principal amounts are in U.S. dollars unless otherwise indicated.

 

Futures Contracts Outstanding at April 30, 2013

 

Description  Number of
Contracts*
   Expiration
Date
  Notional Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
Long position contracts:                       
Platinum Future   13   07/29/2013  $1,020   $980   $(40)

 

* The number of contracts does not omit 000's.

 

Cash of $1,918 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

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

 

12

 

 

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
AUD  Sell  05/03/2013  CSFB  $21   $21   $ 
AUD  Sell  05/02/2013  JPM   25    25     
CAD  Buy  05/03/2013  BCLY   1,828    1,827    (1)
CAD  Sell  05/03/2013  BCLY   244    244     
CLP  Buy  06/19/2013  RBC   521    519    (2)
CLP  Buy  06/19/2013  UBS   1,938    1,949    11 
EUR  Buy  05/03/2013  JPM   167    167     
GBP  Sell  05/03/2013  BCLY   66    66     
PLN  Buy  05/02/2013  BCLY   25    25     
PLN  Buy  05/06/2013  UBS   20    20     
                      $8 

 

Interest Rate Swap Contracts Outstanding at April 30, 2013

 

Counterparty  Payments made by Fund  Payments received by Fund  Notional
Amount *
  Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
BOA  CLICP Camara  2.09% Fixed  CLP 819,000  09/28/17  $   $(25)  $(25)
BOA  CLICP Camara  2.32% Fixed  CLP 105,200  02/12/18       (3)   (3)
DEUT  CLICP Camara  2.30% Fixed  CLP 251,150  04/11/16       (4)   (4)
               $   $(32)  $(32)

 

* Notional shown in U.S. dollars unless otherwise noted.

 

Total Return Swap Contracts Outstanding at April 30, 2013

 

Reference Entity  Counterparty  Notional
Amount *
   Payments received
(paid) by Fund
  Expiration
Date
  Upfront
Premiums
Paid/ (Received)
   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
S&P GSCI Agriculture  GSC  $400   (0.25)% Fixed  07/31/13  $   $   $ 
S&P GSCI Agriculture  JPM   1,125   (0.20)% Fixed  07/31/13       30    30 
S&P GSCI Agriculture  JPM   5,623   (0.20)% Fixed  03/31/14       151    151 
S&P GSCI Agriculture  MSC   1,699   (0.22)% Fixed  07/31/13       1    1 
S&P GSCI Energy  JPM   3,166   (0.09)% Fixed  07/31/13       (183)   (183)
S&P GSCI Energy  JPM   7,701   (0.09)% Fixed  03/31/14       (444)   (444)
S&P GSCI Energy  MSC   1,142   (0.15)% Fixed  07/31/13       (66)   (66)
S&P GSCI Energy  MSC   168   (0.15)% Fixed  07/31/13            
S&P GSCI Industrial Metals  JPM   1,522   (0.12)% Fixed  07/31/13       (78)   (78)
S&P GSCI Industrial Metals  JPM   2,151   (0.12)% Fixed  07/31/13            
S&P GSCI Industrial Metals  JPM   8,504   (0.12)% Fixed  03/31/14       (435)   (435)
S&P GSCI Livestock  MSC   842   (0.23)% Fixed  07/31/13       (7)   (7)
S&P GSCI Livestock  MSC   2,310   (0.23)% Fixed  03/31/14       (22)   (22)
S&P GSCI Precious Metals  JPM   3,246   (0.12)% Fixed  07/31/13       (282)   (282)
S&P GSCI Precious Metals  JPM   1,459   (0.12)% Fixed  07/31/13            
S&P GSCI Precious Metals  JPM   7,473   (0.12)% Fixed  03/31/14       (650)   (650)
US CPURNSA  BOA   1,970   (1.82)% Fixed  12/18/14       (12)   (12)
                 $   $(1,997)  $(1,997)

 

*Notional shown in U.S. dollars unless otherwise noted.

 

See Significant Accounting Policies of accompanying Consolidated Notes to Financial Statements regarding valuation of securities.

 

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

 

13

 

The Hartford Global Real Asset Fund
Consolidated Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

GLOSSARY: (abbreviations used in preceding Consolidated Schedule of Investments)
 
Counterparty Abbreviations:
BCLY Barclays
BOA Banc of America Securities LLC
CSFB Credit Suisse First Boston Corp.
DEUT Deutsche Bank Securities, Inc.
GSC Goldman Sachs & Co.
JPM JP Morgan Chase & Co.
MSC Morgan Stanley
RBC RBC Dominion Securities
UBS UBS AG
 
Currency Abbreviations:
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
CLP Chilean Peso
EUR EURO
GBP British Pound
ILS Israeli New Shekel
KRW South Korean Won
MXN Mexican New Peso
PLN Polish New Zloty
THB Thai Baht
TRY Turkish New Lira
ZAR South African Rand
 
Index Abbreviations:
CPURNSA Consumer Price All Urban Non-Seasonally Adjusted
GSCI Goldman Sachs Commodity
S&P Standard & Poors
 
Other Abbreviations:
ADR American Depositary Receipt
CLICP Sinacofi Chile Interbank Offered Rate
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GDR Global Depositary Receipt
REIT Real Estate Investment Trust

 

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

 

14

 

The Hartford Global Real Asset Fund
Consolidated Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Agricultural Products  $10,874   $6,390   $4,484   $ 
Aluminum   765    532    233     
Biotechnology   176        176     
Brewers   296    296         
Coal and Consumable Fuels   4,226    4,226         
Commodity Chemicals   1,596    1,596         
Construction and Engineering   1,689    1,689         
Construction, Farm Machinery and Heavy Trucks   4,677    2,745    1,932     
Diversified Metals and Mining   23,029    11,964    11,065     
Diversified Support Services   69    69         
Electric Utilities   9,885    4,119    5,766     
Electronic Manufacturing Services   287    287         
Fertilizers and Agricultural Chemicals   18,938    14,373    4,565     
Gas Utilities   8,663    2,873    5,790     
Gold   36,663    33,204    3,459     
Independent Power Producers and Energy Traders   1,532    1,249    283     
Industrial Conglomerates   1,856        1,856     
Integrated Oil and Gas   60,726    44,463    16,263     
Integrated Telecommunication Services   2,146        2,146     
Multi-Sector Holdings   1,904        1,904     
Multi-Utilities   10,493    3,884    6,609     
Oil and Gas Drilling   1,434    1,434         
Oil and Gas Equipment and Services   12,594    12,594         
Oil and Gas Exploration and Production   56,327    36,481    19,846     
Oil and Gas Refining and Marketing   17,487    12,756    4,731     
Oil and Gas Storage and Transportation   9,542    9,542         
Packaged Foods and Meats   5,066    2,947    2,119     
Paper Products   1,465    1,154    311     
Precious Metals and Minerals   8,240    6,559    1,681     
Railroads   2,272    2,272         
Residential REITs   2,125    2,125         
Specialty Chemicals   48    48         
Steel   6,455    4,297    2,158     
Water Utilities   6,801    2,404    4,397     
Wireless Telecommunication Services   2,062        2,062     
Total   332,408    228,572    103,836     
Exchange Traded Funds   25,259    25,259         
Foreign Goverment Obligations   48,593        48,593     
Preferred Stocks   908        908     
U.S. Government Securities   91,496    6,149    85,347     
Warrants   98    98         
Short-Term Investments   66,568        66,568     
Total  $565,330   $260,078   $305,252   $ 
Foreign Currency Contracts*   11        11     
Total Return Swaps*   182        182     
Total  $193   $   $193   $ 
Liabilities:                    
Foreign Currency Contracts*   3        3     
Futures*   40    40         
Interest Rate Swaps*   32        32     
Total Return Swaps*   2,179        2,179     
Total  $2,254   $40   $2,214   $ 

 

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

 

15

 

The Hartford Global Real Asset Fund
Consolidated Investment Valuation Hierarchy Level Summary – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

For the six-month period ended April 30, 2013, investments valued at $15,887 were transferred from Level 1 to Level 2, and investments valued at $633 were transferred from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:  
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).  
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).  
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).
*Derivative instruments not reflected in the Consolidated  Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3 *
   Transfers
Out of
Level 3 *
   Balance
as of
April 30,
2013
 
Assets:                                    
Common Stocks  $53   $(1,570)  $1,571   $   $   $(28)  $27   $(53)  $ 
Total  $53   $(1,570)  $1,571   $   $   $(28)  $27   $(53)  $ 

 

*Investments are transferred into and out of Level 3 for a variety of reasons including, but not limited to:
1)Investments where trading has been halted (transfer into Level 3) or investments where trading has resumed (transfer out of Level 3).
2)Broker quoted investments (transfer into Level 3) or quoted prices in active markets (transfer out of Level 3).
3)Investments that have certain restrictions on trading (transfer into Level 3) or investments where trading restrictions have expired (transfer out of Level 3).

 

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

 

16

 

The Hartford Global Real Asset Fund
Consolidated Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $500,416)  $498,762 
Investments in repurchase agreements, at market value (cost $66,568)   66,568 
Cash   3,898*,†
Foreign currency on deposit with custodian (cost $905)   907 
Unrealized appreciation on foreign currency contracts   11 
Unrealized appreciation on swap contracts   182 
Receivables:     
Investment securities sold   6,598 
Fund shares sold   43,601 
Dividends and interest   1,325 
Other assets   67 
Total assets   621,919 
Liabilities:     
Unrealized depreciation on foreign currency contracts   3 
Unrealized depreciation on swap contracts   2,211 
Bank overdraft   250 
Payables:     
Investment securities purchased   10,626 
Fund shares redeemed   1,231 
Investment management fees   93 
Administrative fees    
Distribution fees   10 
Variation margin    
Accrued expenses   65 
Other liabilities   142 
Total liabilities   14,631 
Net assets  $607,288 
Summary of Net Assets:     
Capital stock and paid-in-capital  $657,638 
Distributions in excess of net investment loss   (328)
Accumulated net realized loss   (46,311)
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency   (3,711)
Net assets  $607,288 

 

*Cash of $1,918 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.
Cash of $1,980 was pledged as collateral for open swap contracts at April 30, 2013.

 

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

 

17

 

The Hartford Global Real Asset Fund
Consolidated Statement of Assets and Liabilities – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares authorized   550,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share  $10.47/$11.08 
Shares outstanding   8,585 
Net assets  $89,846 
Class C: Net asset value per share  $10.38 
Shares outstanding   3,729 
Net assets  $38,712 
Class I: Net asset value per share  $10.48 
Shares outstanding   6,294 
Net assets  $65,977 
Class R3: Net asset value per share  $10.53 
Shares outstanding   26 
Net assets  $277 
Class R4: Net asset value per share  $10.51 
Shares outstanding   299 
Net assets  $3,144 
Class R5: Net asset value per share  $10.50 
Shares outstanding   52 
Net assets  $550 
Class Y: Net asset value per share  $10.49 
Shares outstanding   38,952 
Net assets  $408,782 

 

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

 

18

 

The Hartford Global Real Asset Fund
Consolidated Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $2,967 
Interest   1,059 
Less: Foreign tax withheld   (195)
Total investment income   3,831 
      
Expenses:     
Investment management fees   2,710 
Administrative services fees    
Class R3   1 
Class R4   2 
Class R5    
Transfer agent fees    
Class A   89 
Class C   33 
Class I   38 
Class R3    
Class R4    
Class R5    
Class Y   3 
Distribution fees     
Class A   129 
Class C   226 
Class R3   1 
Class R4   3 
Custodian fees   24 
Accounting services fees   65 
Registration and filing fees   50 
Board of Directors' fees   6 
Audit fees   8 
Other expenses   39 
Total expenses (before waivers and fees paid indirectly)   3,427 
Expense waivers   (471)
Commission recapture   (2)
Total waivers and fees paid indirectly   (473)
Total expenses, net   2,954 
Net Investment Income   877 
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities   3,845 
Net realized loss on futures   (713)
Net realized loss on swap contracts   (5,359)
Net realized gain on foreign currency contracts   17 
Net realized loss on other foreign currency transactions   (30)
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions   (2,240)
Net Changes in Unrealized Depreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized depreciation of investments   (8,726)
Net unrealized depreciation of futures   (58)
Net unrealized appreciation of swap contracts   235 
Net unrealized appreciation of foreign currency contracts   38 
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   6 
Net Changes in Unrealized Depreciation of Investments, Other Financial Instruments and Foreign Currency Transactions   (8,505)
Net Loss on Investments, Other Financial Instruments and Foreign Currency Transactions   (10,745)
Net Decrease in Net Assets Resulting from Operations  $(9,868)

 

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

 

19

 

The Hartford Global Real Asset Fund
Consolidated Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $877   $1,136 
Net realized loss on investments, other financial instruments and foreign currency transactions   (2,240)   (27,014)
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions   (8,505)   24,079 
Net Decrease in Net Assets Resulting from Operations   (9,868)   (1,799)
Distributions to Shareholders:          
From net investment income          
Class A   (648)   (1,231)
Class C       (211)
Class I   (650)   (1,249)
Class R3       (8)
Class R4   (7)   (16)
Class R5   (2)   (23)
Class Y   (2,499)   (912)
Total distributions   (3,806)   (3,650)
Capital Share Transactions:          
Class A   (22,913)   (35,216)
Class C   (13,485)   (25,622)
Class I   (7,772)   (55,704)
Class R3   (1,680)   26 
Class R4   83    1,319 
Class R5   (1,487)   254 
Class Y   161,585    178,116 
Net increase from capital share transactions   114,331    63,173 
Net Increase in Net Assets   100,657    57,724 
Net Assets:          
Beginning of period   506,631    448,907 
End of period  $607,288   $506,631 
Undistributed (distribution in excess of) net investment income (loss)  $(328)  $2,601 

 

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

 

20

 

The Hartford Global Real Asset Fund
Notes to Consolidated Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Global Real Asset 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 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 primarily through advisory fee-based wrap programs. Class 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.

 

2.Significant Accounting Policies:

 

The following is a summary of significant accounting policies of the Fund in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value ("NAV") of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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

 

21

 

The Hartford Global Real Asset Fund
Notes to Consolidated Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable

 

22

 

 

 

market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Consolidated Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Consolidated Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

23

 

The Hartford Global Real Asset Fund
Notes to Consolidated Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

24

 

 
   
g)Basis for Consolidation – The Fund may invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund. The subsidiary is organized under the laws of the Cayman Islands and is consolidated in the Fund’s financial statements. All intercompany balances, revenues, and expenses have been eliminated in consolidation. The subsidiary acts as an investment vehicle in order to enter into certain investments for the Fund consistent with the investment objectives and policies specified in the Prospectus and Statement of Additional Information.

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Consolidated Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the Consolidated Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a value at least equal to the amount of the commitment. The Fund, as shown on the Consolidated Schedule of Investments, had when-issued or delayed-delivery investments as of April 30, 2013.

 

d)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. The Fund may invest in multiple series or tranches of a senior floating rate interest, which may have varying terms and carry different associated risks. The Fund may also enter into unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. In certain circumstances, the Fund may receive various fees upon the restructure of a senior floating rate interest by a borrower. Fees earned/paid may be recorded as a component of income or realized gain/loss in the Consolidated Statement of Operations.

 

25

 

The Hartford Global Real Asset Fund
Notes to Consolidated Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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.

 

e)Inflation Indexed Bonds – The Fund may invest in inflation indexed bonds. Inflation indexed bonds are fixed income investments whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation indexed bond will be included as interest income on the Consolidated Statement of Operations, even though investors do not receive the principal amount until maturity. The Fund, as shown on the Consolidated Schedule of Investments, had inflation indexed bonds as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Consolidated Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Consolidated Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Consolidated Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Consolidated Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts reflected in the Consolidated 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 foreign currency contracts as shown on the Consolidated Schedule of Investments as of April 30, 2013.

 

b)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Consolidated Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM.

 

26

 

 

 

The Fund, as shown on the Consolidated Schedule of Investments, had outstanding futures contracts as of April 30, 2013.

 

c)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Consolidated Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Consolidated Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Consolidated Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Consolidated Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Consolidated Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received (although such amounts are presented on a gross basis within the Consolidated Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

Interest Rate Swap Contracts 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 or inflation benchmark (e.g. London Interbank Offered Rate (“LIBOR”)), 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 contracts is recorded as a realized gain or loss. Interest rate swaps are marked to market daily and the change, if any, is recorded as an unrealized gain or loss in the Consolidated 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 contract 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 contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The Fund, as shown on the Consolidated Schedule of Investments, had outstanding interest rate swaps as of April 30, 2013.

 

27

 

The Hartford Global Real Asset Fund
Notes to Consolidated Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Total Return Swap ContractsThe Fund may invest in total return swap contracts. An investment in a total return swap allows the Fund to gain or mitigate exposure to underlying referenced securities. Total return swap contracts on commodities involve commitments where cash flows are exchanged based on the price of a commodity and based on a fixed or variable rate. One party would receive payments based on the price appreciation or depreciation of a commodity index, a portion of the index, or a single commodity in exchange for paying to or receiving from the counterparty seller an agreed-upon rate. A variable rate may be correlated to a base rate, such as the LIBOR, and is adjusted each period. Therefore, if interest rates increase over the term of the swap contract, the party paying the rate may be required to pay a higher rate at each swap reset date.

 

Total return swap contracts on indices involve commitments to pay interest in exchange for a market-linked return. One party pays out the total return of a specific reference asset, which may be an equity, index, or bond, and in return receives a regular stream of payments. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty. The Fund, as shown on the Consolidated Schedule of Investments, had outstanding total return swaps as of April 30, 2013.

 

The prices of commodity-linked derivative securities may move in different directions from investments in traditional equity and debt securities when the value of those traditional securities is declining due to adverse economic conditions. As an example, during periods of rising inflation, debt securities have historically tended to decline in value due to the general increase in prevailing interest rates. Conversely, during those same periods of rising inflation, prices of certain commodities, such as oil and metals, have historically tended to increase. There cannot be any guarantee that these investments will perform in that manner in the future, and at certain times the price movements of commodity-linked instruments have followed those of debt and equity securities. Commodities have historically tended to increase and decrease in value during different parts of the business cycle than financial assets. Nevertheless, at various times, commodities prices may move in tandem with prices of financial assets and thus may not provide overall portfolio diversification benefits. Exposure to commodity-linked derivatives is generally achieved through total return swaps, futures or options.

 

d)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Consolidated Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $11   $   $   $   $   $11 
Unrealized appreciation on swap contracts                   182        182 
Total  $   $11   $   $   $182   $   $193 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $3   $   $   $   $   $3 
Unrealized depreciation on swap contracts   32                2,179        2,211 
Variation margin payable *                            
Total  $32   $3   $   $   $2,179   $   $2,214 

 

* Only current day's variation margin is reported within the Consolidated Statement of Assets and Liabilities. The variation margin is included in the open futures cumulative depreciation of $(40) as reported in the Consolidated Schedule of Investments.

 

The volume of derivatives that is presented in the Consolidated Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

28

 

 

 

The Effect of Derivative Instruments on the Consolidated Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain (Loss) on Derivatives Recognized as a Result of Operations:          
Net realized gain (loss) on futures  $17   $   $   $   $(730)  $   $(713)
Net realized loss on swap contracts   (27)               (5,332)       (5,359)
Net realized gain on foreign currency contracts       17                    17 
Total  $(10)  $17   $   $   $(6,062)  $   $(6,055)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:  
Net change in unrealized depreciation of futures  $   $   $   $   $(58)  $   $(58)
Net change in unrealized appreciation (depreciation) of swap contracts   (32)               267        235 
Net change in unrealized appreciation of foreign currency contracts       38                    38 
Total  $(32)  $38   $   $   $209   $   $215 

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Consolidated Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic

 

29

 

The Hartford Global Real Asset Fund
Notes to Consolidated Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $3,650   $1,147 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis are as follows:

 

   Amount 
Undistributed Ordinary Income  $2,712 
Accumulated Capital Losses *   (33,046)
Unrealized Depreciation †   (6,342)
Total Accumulated Deficit  $(36,676)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 Consolidated Statement of Changes in Net Assets as from undistributed net investment income, from

 

30

 

 

 

accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $2,064 
Accumulated Net Realized Gain (Loss)   (3,824)
Capital Stock and Paid-in-Capital   1,760 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

   Amount 
Short Term Capital Loss Carryforward  $2,827 
Long Term Capital Loss Carryforward   23,537 
Total  $26,364 

 

Capital loss carryforwards with expiration:

 

Year of Expiration  Amount 
2019  $6,682 
Total  $6,682 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the

 

31

 

The Hartford Global Real Asset Fund
Notes to Consolidated Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $250 million   0.9500% 
On next $250 million   0.9300% 
On next $500 million   0.8500% 
On next $1.5 billion   0.7800% 
On next $2.5 billion   0.7500% 
Over $5 billion   0.7100% 

 

HFMC has contractually agreed to waive the management fee in an amount equal to the management fee paid to it by the Fund’s wholly owned Cayman Islands subsidiary fund. This waiver will remain in effect for as long as the Fund remains invested in that subsidiary fund.

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.025% 
On next $5 billion   0.020% 
Over $10 billion   0.015% 

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.35%      2.10%      1.10%      1.60%      1.30%      1.05%      1.00%   

 

32

 

 

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and expenses and extraordinary expenses as follows:

 

Class A   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.25%      2.00%      1.00%      1.50%      1.20%      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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, are included in the Consolidated 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A    1.27%
Class C    2.02 
Class I    1.02 
Class R3    1.51 
Class R4    1.23 
Class R5    1.01 
Class Y    0.96 

 

e)Distribution and Service Plan for Class A, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $92 and contingent deferred sales charges of $3 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class A, 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 0.25% of average daily net assets. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of the investment companies in the Hartford fund complex. The portion allocated to the Fund rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect

 

33

 

The Hartford Global Real Asset Fund
Notes to Consolidated Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Consolidated Statement of Operations. 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 Consolidated Statement of Operations. These fees are accrued daily and paid monthly.

 

8.Affiliate Holdings:

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage
of Fund
 
Class Y   20%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $491,161 
Sales Proceeds Excluding U.S. Government Obligations   419,550 
Cost of Purchases for U.S. Government Obligations   9,492 
Sales Proceeds for U.S. Government Obligations   8,167 

 

34

 

 

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of 
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
 Shares
 
Class A                                                  
Shares   502    55    (2,706)       (2,149)   2,704    104    (6,175)       (3,367)
Amount  $5,348   $585   $(28,846)  $   $(22,913)  $29,055   $1,089   $(65,360)  $   $(35,216)
Class C                                                  
Shares   95        (1,368)       (1,273)   512    16    (2,985)       (2,457)
Amount  $999   $   $(14,484)  $   $(13,485)  $5,473   $168   $(31,263)  $   $(25,622)
Class I                                                  
Shares   1,062    42    (1,823)       (719)   2,749    86    (8,048)       (5,213)
Amount  $11,332   $451   $(19,555)  $   $(7,772)  $29,387   $903   $(85,994)  $   $(55,704)
Class R3                                                  
Shares   5        (163)       (158)   10    1    (8)       3 
Amount  $56   $   $(1,736)  $   $(1,680)  $107   $8   $(89)  $   $26 
Class R4                                                  
Shares   187        (181)       6    154    1    (29)       126 
Amount  $2,011   $6   $(1,934)  $   $83   $1,620   $15   $(316)  $   $1,319 
Class R5                                                  
Shares   47        (187)       (140)   24    2    (3)       23 
Amount  $513   $3   $(2,003)      $(1,487)  $260   $23   $(29)  $   $254 
Class Y                                                  
Shares   17,009    218    (2,201)       15,026    19,876    73    (2,330)      17,619 
Amount  $182,685   $2,333   $(23,433)  $   $161,585   $202,116   $759   $(24,759)  $   $178,116 
Total                                                  
Shares   18,907    315    (8,629)       10,593    26,029    283    (19,578)       6,734 
Amount  $202,944   $3,378   $(91,991)  $   $114,331   $268,018   $2,965   $(207,810)  $   $63,173 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth

 

35

 

The Hartford Global Real Asset Fund
Notes to Consolidated Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

36

 

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37

 

The Hartford Global Real Asset Fund
Consolidated Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)                           
A  $10.68   $0.02   $(0.16)  $(0.14)  $(0.07)   $    $   $(0.07)  $10.47 
C   10.58    (0.02)   (0.18)   (0.20)                   10.38 
I   10.72    0.03    (0.17)   (0.14)   (0.10)           (0.10)   10.48 
R3   10.69    (0.05)   (0.11)   (0.16)                   10.53 
R4   10.71    (0.02)   (0.13)   (0.15)   (0.05)           (0.05)   10.51 
R5   10.73    (0.02)   (0.12)   (0.14)   (0.09)           (0.09)   10.50 
Y   10.73    0.02    (0.16)   (0.14)   (0.10)           (0.10)   10.49 
                                              
For the Year Ended October 31, 2012 (E)                                
A   11.05    0.03    (0.31)   (0.28)   (0.09)           (0.09)   10.68 
C   10.96    (0.05)   (0.30)   (0.35)   (0.03)           (0.03)   10.58 
I   11.09    0.06    (0.31)   (0.25)   (0.12)           (0.12)   10.72 
R3   11.04        (0.30)   (0.30)   (0.05)           (0.05)   10.69 
R4   11.07    0.03    (0.30)   (0.27)   (0.09)           (0.09)   10.71 
R5   11.10    0.06    (0.31)   (0.25)   (0.12)           (0.12)   10.73 
Y   11.10    0.04    (0.28)   (0.24)   (0.13)           (0.13)   10.73 
                                              
For the Year Ended October 31, 2011 (E)                                
A   11.06    0.09    0.03    0.12    (0.06)   (0.07)       (0.13)   11.05 
C   11.02    0.01    0.05    0.06    (0.05)   (0.07)       (0.12)   10.96 
I   11.07    0.14    0.02    0.16    (0.07)   (0.07)       (0.14)   11.09 
R3   11.04    0.06    0.04    0.10    (0.03)   (0.07)       (0.10)   11.04 
R4   11.06    0.09    0.04    0.13    (0.05)   (0.07)       (0.12)   11.07 
R5   11.07    0.13    0.04    0.17    (0.07)   (0.07)       (0.14)   11.10 
Y   11.07    0.12    0.05    0.17    (0.07)   (0.07)       (0.14)   11.10 
                                              
From May 28, 2010 (commencement of operations), through October 31, 2010  (E)                      
A(H)   10.00    0.01    1.05    1.06                    11.06 
C(H)   10.00    (0.03)   1.05    1.02                    11.02 
I(H)   10.00    0.01    1.06    1.07                    11.07 
R3(H)   10.00    (0.01)   1.05    1.04                    11.04 
R4(H)   10.00        1.06    1.06                    11.06 
R5(H)   10.00    0.02    1.05    1.07                    11.07 
Y(H)   10.00    0.03    1.04    1.07                    11.07 

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)Commenced operations on May 28, 2010.

 

38

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
                            
 (1.37)%(F)  $89,846    1.53%(G)   1.28%(G)   0.39%(G)   69%
 (1.89)(F)   38,712    2.26(G)   2.02(G)   (0.36)(G)    
 (1.37)(F)   65,977    1.22(G)   1.03(G)   0.60(G)    
 (1.50)(F)   277    1.87(G)   1.51(G)   (0.91)(G)    
 (1.41)(F)   3,144    1.52(G)   1.23(G)   (0.43)(G)    
 (1.36)(F)   550    1.22(G)   1.01(G)   (0.29)(G)    
 (1.33)(F)   408,782    1.11(G)   0.97(G)   0.37(G)    
                            
                            
 (2.50)   114,692    1.52    1.17    0.28    167 
 (3.20)   52,906    2.23    1.91    (0.46)    
 (2.26)   75,179    1.22    0.91    0.53     
 (2.75)   1,964    1.84    1.43    0.01     
 (2.44)   3,135    1.56    1.15    0.30     
 (2.19)   2,062    1.23    0.90    0.54     
 (2.14)   256,693    1.19    0.90    0.38     
                            
                            
 1.08    155,876    1.55    1.04    0.82    145 
 0.46    81,736    2.27    1.76    0.13     
 1.41    135,558    1.25    0.74    1.22     
 0.90    2,001    1.87    1.30    0.52     
 1.15    1,846    1.57    1.00    0.81     
 1.49    1,871    1.26    0.70    1.10     
 1.52    70,019    1.16    0.65    1.06     
                            
                            
 10.60(F)   26,248    1.62(G)   0.96(G)   0.13(G)   20 
 10.20(F)   8,650    2.38(G)   1.72(G)   (0.61)(G)    
 10.70(F)   10,821    1.45(G)   0.79(G)   0.33(G)    
 10.40(F)   2,208    2.01(G)   1.31(G)   (0.21)(G)    
 10.60(F)   2,211    1.71(G)   1.01(G)   0.09(G)    
 10.70(F)   2,214    1.41(G)   0.71(G)   0.39(G)    
 10.70(F)   11,643    1.32(G)   0.66(G)   0.43(G)    

 

39

 

The Hartford Global Real Asset Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company can be found in the Consolidated 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

40

 

 

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

41

 

The Hartford Global Real Asset Fund
Directors and Officers (Unaudited) – (continued)

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

42

 

The Hartford Global Real Asset 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $986.30   $6.28   $1,000.00   $1,018.47   $6.38    1.28%  181   365 
Class C  $1,000.00   $981.10   $9.95   $1,000.00   $1,014.75   $10.12    2.02   181   365 
Class I  $1,000.00   $986.30   $5.05   $1,000.00   $1,019.71   $5.14    1.03   181   365 
Class R3  $1,000.00   $985.00   $7.43   $1,000.00   $1,017.31   $7.55    1.51   181   365 
Class R4  $1,000.00   $985.90   $6.07   $1,000.00   $1,018.68   $6.17    1.23   181   365 
Class R5  $1,000.00   $986.40   $4.95   $1,000.00   $1,019.81   $5.04    1.01   181   365 
Class Y  $1,000.00   $986.70   $4.75   $1,000.00   $1,020.01   $4.83    0.97   181   365 
                                              

 

43

 

The Hartford Global Real Asset Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Global Real Asset Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

44

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

  

45

 

The Hartford Global Real Asset Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Natural Resources Risk: Investments in the natural resources sector include liquidity risk and risk of loss if there are adverse developments in the sector.

 

Inflation Protected Securities Risk: The market for inflation protected securities may be less developed or liquid, and more volatile, than other securities markets.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early).

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Cayman Subsidiary Risk: Investing in a Cayman Islands subsidiary exposes the Fund to the risks associated with the subsidiary and its investments.

 

Commodities Risk: Investments in commodities may be more volatile than investments in traditional securities.

 

46
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-GRA13 4/13 113977 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

19

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD GLOBAL RESEARCH FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Global Research Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   14
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   15
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   16
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   17
Notes to Financial Statements (Unaudited)   18
Financial Highlights (Unaudited)   32
Directors and Officers (Unaudited)   35
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   37
Quarterly Portfolio Holdings Information (Unaudited)   37
Expense Example (Unaudited)   38
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   39
Principal Risks (Unaudited)   41

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Global Research Fund inception 02/29/2008
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks long-term capital appreciation.

 

Performance Overview  2/29/08 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   Since
Inception▲
 
Global Research A#   14.63%   15.11%   2.85%   3.39%
Global Research A##        8.78%   1.69%   2.26%
Global Research B#   14.12%   14.24%   2.08%   2.61%
Global Research B##        9.24%   1.71%   2.44%
Global Research C#   14.25%   14.25%   2.10%   2.64%
Global Research C##        13.25%   2.10%   2.64%
Global Research I#   14.69%   15.41%   3.15%   3.70%
Global Research R3#   14.50%   14.86%   2.59%   3.13%
Global Research R4#   14.63%   15.24%   2.89%   3.43%
Global Research R5#   14.92%   15.64%   3.20%   3.73%
Global Research Y#   14.88%   15.61%   3.23%   3.77%
MSCI All Country World Index   13.78%   15.69%   2.09%   2.83%

 

Not Annualized
Inception: 02/29/2008
#Without sales charge
##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Global Research Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

   Net   Gross 
Global Research Class A   1.45%       1.78%    
Global Research Class B   2.20%       2.69%    
Global Research Class C   2.20%       2.47%    
Global Research Class I   1.20%       1.35%    
Global Research Class R3   1.65%       1.86%    
Global Research Class R4   1.35%       1.55%    
Global Research Class R5   1.05%       1.24%    
Global Research Class Y   1.00%       1.10%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Cheryl M. Duckworth, CFA Mark D. Mandel, CFA*
Senior Vice President and Associate Director of Global Industry Research Director and Director of Global Industry Research
* Mr. Mandel supervises a team of global industry analysts that manage the Fund. Mr. Mandel is not involved in day-to-day management of the Fund.

 

How did the Fund perform?

The Class A shares of The Hartford Global Research Fund returned 14.63%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the MSCI All Country World Index, which returned 13.78% for the same period. The Fund also outperformed the 13.10% average return of the Lipper Global Multi-Cap Growth peer group, a group of funds with investment strategies similar to those of the Fund.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Investors’ enthusiasm for stocks was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, the market responded favorably to the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

Nine out of ten sectors in the MSCI All Country World Index rose during the period. Health Care (+21%), Consumer Discretionary (+20%), and Financials (+19%) rose the most while returns in Materials (-1%), Energy (+4%), and Information Technology (+10%) lagged on a relative basis.

 

The Fund’s outperformance versus the benchmark was driven by security selection. Strong stock selection in Information Technology, Industrials, and Energy more than offset weaker stock selection in Consumer Discretionary, Telecommunication Services, and Health Care. Sector allocation had a limited impact on relative performance.

 

Top contributors to relative performance during the period included Apple (Information Technology), Exxon Mobil (Energy), and Delta Air Lines (Industrials). The Fund’s underweight in U.S.-based designer, manufacturer, and retailer of personal electronic products Apple contributed to relative performance as shares of the benchmark-component company fell when the company missed revenue expectations and issued disappointing earnings guidance. Shares of Exxon Mobil, a global integrated energy company, fell as fundamentals at Exxon Mobil continued to deteriorate, pressured by the company’s high cost base, which has been inflated by several recent acquisitions. Our underweight to this benchmark component contributed to relative performance. Owning Delta Air Lines, an U.S.-based air line carrier, contributed to performance. Delta generated solid profits in 2012, benefiting from continued capacity discipline and industry consolidation. Delta is expected to announce a formal dividend policy which could expand the base of potential investors. Citigroup (Financials) and Regeneron Pharmaceuticals (Health Care) were also among the top contributors to absolute performance.

 

3

 

The Hartford Global Research Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

The largest detractors from relative returns were BG Group (Energy), VeriFone Systems (Information Technology), and Teva Pharmaceutical (Health Care). U.K.-based integrated global natural gas company BG Group shares declined as the company reduced guidance on the volume production growth in 2013. VeriFone Systems, a US-based electronic payment solution provider, detracted from relative performance as shares fell on lowered earnings guidance due to weak macroeconomic conditions in Europe, lower revenue from Brazil-based business, and delays in customer projects. Israel-based global pharmaceutical company Teva Pharmaceutical remained under pressure due to concerns regarding potential new competition in a large product. In addition, investors remained cautious as they wait for the new Chief Executive Officer’s strategy to show results. Apple (Information Technology) was also among the top detractors to absolute performance.

 

What is the outlook?

The world economy is slowly emerging from a post-bubble environment. Looking ahead to 2014, we expect all regions to strengthen economically and inflation to remain subdued in many parts of the world. Central banks are playing a key role in anchoring bond yields and helping the financial sector’s healing process. The U.S Federal Reserve Board is likely to tighten monetary policy later in 2014, while the ECB and the BOJ are expected to leave monetary conditions accommodative longer. Overall, we expect the gradual return of a world economy that is driven by fundamentals rather than by swings in global risk sentiment.

 

The Fund ended the period most overweight the Information Technology, Consumer Staples, and Utilities sectors and most underweight the Financials, Telecommunication Services, and Materials sectors relative to the MSCI All Country World Index. The Fund’s largest absolute sector weights were in Financials, Information Technology, and Consumer Discretionary at the end of the period.

 

Diversification by Country

as of April 30, 2013

   Percentage of 
Country  Net Assets 
Australia   1.3%
Belgium   1.3 
Brazil   1.8 
Canada   3.0 
China   0.3 
Colombia   0.0 
Denmark   0.3 
Finland   0.0 
France   2.4 
Germany   1.5 
Greece   0.0 
Hong Kong   2.1 
India   0.7 
Indonesia   0.1 
Ireland   0.8 
Israel   0.8 
Italy   0.3 
Japan   5.5 
Jersey   0.0 
Luxembourg   0.2 
Malaysia   0.4 
Marshall Islands   0.1 
Mexico   0.0 
Netherlands   1.8 
Norway   1.2 
Papua New Guinea   0.1 
Philippines   0.2 
Poland   0.2 
Portugal   0.7 
Russia   0.0 
Singapore   0.3 
South Africa   0.5 
South Korea   1.7 
Spain   1.0 
Sweden   0.5 
Switzerland   3.0 
Taiwan   0.8 
Thailand   0.3 
Turkey   0.2 
United Kingdom   7.9 
United States   55.5 
Short-Term Investments   0.8 
Other Assets and Liabilities   0.4 
Total   100.0%

 

4

 

The Hartford Global Research Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.1%    
     Automobiles and Components - 1.4%     
 2   Bayerische Motoren Werke (BMW) AG  $193 
 16   Ford Motor Co.   216 
    Hyundai Motor Co., Ltd.   55 
 24   Nissan Motor Co., Ltd.   251 
 6   Toyota Motor Corp.   342 
         1,057 
     Banks - 7.6%     
 6   Alior Bank S.A. ●   145 
 22   Banco ABC Brasil S.A.   173 
 221   Banco Espirito Santo S.A. ●   253 
 67   Banco Santander Brasil S.A.   495 
 4   Bancorpsouth, Inc.   68 
    Banque Cantonale Vaudoise   157 
 14   Barclays Bank plc ADR   64 
 9   BNP Paribas   482 
 1   BOK Financial Corp.   73 
 7   BS Financial Group, Inc.   90 
 3   Canadian Imperial Bank of Commerce   265 
 76   China Construction Bank   64 
 1   Citizens & Northern Corp.   19 
    ConnectOne Bancorp Inc. ●   6 
 9   DGB Financial Group, Inc.   127 
 20   DNB ASA ●   328 
 1   Gronlandsbanken   93 
 8   Hana Financial Holdings   267 
 3   Home Capital Group, Inc.   196 
 30   HSBC Holdings plc   330 
 19   Itau Unibanco Banco Multiplo S.A. ADR   313 
 29   Mitsubishi UFJ Financial Group, Inc.   199 
 4   National Bank of Canada   283 
 22   Oversea-Chinese Banking Corp., Ltd.   192 
 3   PNC Financial Services Group, Inc.   236 
 2   Shinhan Financial Group Co., Ltd.   67 
 14   Spar Nord Bank A/S ●   87 
 21   Standard Chartered plc   524 
 105   Turkiye Sinai Kalkinma Bankasi A.S.   151 
         5,747 
     Capital Goods - 6.9%     
 3   AerCap Holdings N.V. ●   45 
 6   AMETEK, Inc.   228 
 6   BAE Systems plc   36 
 2   Boeing Co.   216 
 1   Brenntag AG   216 
    Carlisle Cos., Inc.   30 
 1   Caterpillar, Inc.   120 
 4   Colfax Corp. ●   180 
 4   Danaher Corp.   227 
 1   Doosan Corp.   61 
    Dover Corp.   30 
 2   Eaton Corp. plc   132 
 1   European Aeronautic Defence & Space Co. N.V.   42 
 14   First Tractor Co.   10 
 21   General Electric Co.   461 
 3   Honeywell International, Inc.   226 
 2   IDEX Corp.   123 
 4   Illinois Tool Works, Inc.   248 
 2   Ingersoll-Rand plc   116 
 8   Itochu Corp.   93 
 1   Joy Global, Inc.   69 
 6   KBR, Inc.   166 
 1   Komatsu Ltd.   17 
    Leighton Holdings Ltd.   9 
 1   Lockheed Martin Corp.   137 
 8   Luxfer Holdings plc   146 
 3   Mitsubishi Corp.   49 
    Moog, Inc. Class A ●   8 
 1   Northrop Grumman Corp.   50 
 4   Pentair Ltd.   216 
    Precision Castparts Corp.   19 
 2   Raytheon Co.   96 
 7   Rexel S.A.   159 
 9   Rolls-Royce Holdings plc   154 
 2   Safran S.A.   113 
 1   Siemens AG   75 
 5   SKF Ab Class B   106 
    SMC Corp. of America   69 
 3   Textron, Inc.   77 
 5   THK Co., Ltd.   96 
 3   United Technologies Corp.   302 
 2   Vinci S.A.   92 
 1   WESCO International, Inc. ●   99 
         5,164 
     Commercial and Professional Services - 0.2%     
 5   Brambles Ltd.   43 
 2   Huron Consulting Group, Inc. ●   67 
 2   Nielsen Holdings N.V.   75 
 4   Transfield Services Ltd.   7 
         192 
     Consumer Durables and Apparel - 1.6%     
 1   Adidas AG   126 
 2   Brunello Cucinelli S.p.A. ●   46 
 1   Cie Financiere Richemont S.A.   51 
 1   Coway Co., Ltd.   28 
 33   Daphne International Holdings Ltd.   34 
 2   iRobot Corp. ●   55 
 1   LG Electronics, Inc.   82 
 1   LVMH Moet Hennessy Louis Vuitton S.A. ☼   176 
 1   Michael Kors Holdings Ltd. ●   67 
 3   NIKE, Inc. Class B   215 
    Persimmon plc   6 
    PVH Corp.   46 
 1   Salvatore Ferragamo Italia S.p.A.   27 
 58   Samsonite International S.A.   143 
 29   Stella International Holdings Ltd.   84 
         1,186 
     Consumer Services - 0.4%     
 3   Carnival Corp.   93 
    Churchill Downs, Inc.   24 
    McDonald's Corp.   34 
 25   MGM China Holdings Ltd.   58 
 2   Norwegian Cruise Line Holdings Ltd. ●   48 
 7   Sands China Ltd.   35 
    Starwood Hotels & Resorts, Inc.   14 
    Whitbread plc   6 
    Wyndham Worldwide Corp.   17 
         329 

 

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

 

5

 

The Hartford Global Research Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.1% - (continued)    
     Diversified Financials - 4.5%     
 4   Aberdeen Asset Management plc  $26 
 3   Ameriprise Financial, Inc.   227 
 1   Banca Generali S.p.A.   30 
    BlackRock, Inc.   104 
 17   Citigroup, Inc.   786 
    Deutsche Bank AG   14 
 12   EFG International AG ●   164 
 2   IBJ Leasing Co., Ltd.   60 
 17   ING Groep N.V. ●   142 
 2   IntercontinentalExchange, Inc. ●   293 
 2   Invesco Ltd.   50 
 11   JP Morgan Chase & Co.   551 
 7   Julius Baer Group Ltd.   278 
 1   LPL Financial Holdings, Inc.   35 
 3   Morgan Stanley   55 
    Partners Group   50 
 5   SEI Investments Co.   150 
 18   UBS AG ☼   319 
 1   Warsaw Stock Exchange   17 
 2   Wisdomtree Investment, Inc. ●   19 
         3,370 
     Energy - 10.0%     
 4   Anadarko Petroleum Corp.   377 
 1   Baker Hughes, Inc.   54 
 29   Beach Energy Ltd.   40 
 43   BG Group plc   723 
 54   BP plc   391 
 5   BP plc ADR   225 
 6   Buru Energy Ltd. ●   12 
 13   Cairn Energy plc ●   60 
 2   Canadian Natural Resources Ltd. ADR   71 
 1   Chesapeake Energy Corp.   21 
 6   Chevron Corp.   777 
 43   CNOOC Ltd.   81 
 8   Cobalt International Energy, Inc. ●   229 
 2   ConocoPhillips Holding Co.   102 
 3   Consol Energy, Inc.   115 
 3   Denbury Resources, Inc. ●   47 
 1   Diamondback Energy, Inc. ●   16 
 1   Dril-Quip, Inc. ●   57 
 4   EnCana Corp. ADR   67 
 1   EOG Resources, Inc.   98 
    Exxon Mobil Corp.   35 
 4   Galp Energia SGPS S.A.   59 
 2   Genel Energy plc ●   24 
 2   GS Holdings Corp.   89 
 5   Halliburton Co.   203 
 8   Imperial Oil Ltd.   307 
 35   JX Holdings, Inc. ☼   189 
 26   Karoon Gas Australia Ltd. ●   113 
 3   Kinder Morgan, Inc.   126 
 82   Kunlun Energy Co., Ltd.   161 
 1   Marathon Petroleum Corp.   60 
 2   MEG Energy Corp. ●   51 
 1   National Oilwell Varco, Inc.   37 
 58   New Standard Energy Ltd. ●   9 
 5   Ocean Rig UDW, Inc. ●   76 
 7   Oil & Natural Gas Corp., Ltd.   42 
 8   Oil Search Ltd.   60 
 14   Ophilr Energy plc ●   90 
 2   Patterson-UTI Energy, Inc.   33 
 1   PBF Energy, Inc.   18 
 3   Peabody Energy Corp.   67 
 9   Petroleo Brasileiro S.A. ADR   172 
 6   Phillips 66   343 
 2   Pioneer Natural Resources Co.   186 
 5   Reliance Industries Ltd.   79 
 2   Reliance Industries Ltd. GDR ■   60 
 12   Repsol S.A. ●   285 
 5   Santos Ltd.   69 
 1   Sasol Ltd. ADR   41 
 1   Schlumberger Ltd.   70 
 2   Southwestern Energy Co. ●   63 
 5   Statoil ASA ☼   117 
 5   Suncor Energy, Inc.   151 
 5   Superior Energy Services, Inc. ●   126 
 1   Tesoro Corp.   48 
 4   Tonengeneral Sekiyu KK   43 
 1   Tourmaline Oil Corp. ●   24 
 9   Trican Well Service Ltd.   113 
 44   Whitehaven Coal Ltd.   88 
 1   Whiting Petroleum Corp. ●   44 
         7,534 
     Food and Staples Retailing - 2.3%     
 7   Carrefour S.A.   215 
 1   Costco Wholesale Corp.   148 
 3   CVS Caremark Corp.   202 
 6   Seven & I Holdings Co., Ltd.   237 
 29   Tesco plc   164 
 9   Walgreen Co.   433 
 9   Woolworths Ltd.   324 
         1,723 
     Food, Beverage and Tobacco - 9.8%     
 24   Altria Group, Inc.   883 
 6   Anheuser-Busch InBev N.V.   562 
 3   British American Tobacco plc   194 
 10   Coca-Cola Co.   424 
 2   Coca-Cola Enterprises, Inc.   88 
 17   Diageo Capital plc   505 
 4   Dr. Pepper Snapple Group   190 
 4   General Mills, Inc.   202 
 2   GLG Life Technology Corp. ⌂●†   1 
 2   H.J. Heinz Co.   176 
 1   Hillshire (The) Brands Co.   29 
 3   Imperial Tobacco Group plc   106 
 17   ITC Ltd.   107 
 4   Japan Tobacco, Inc.   169 
 5   Kraft Foods Group, Inc.   245 
 18   Lorillard, Inc.   790 
 10   Mondelez International, Inc.   305 
 11   Nestle S.A.   801 
 7   New Britain Palm Oil Ltd.   38 
 7   PepsiCo, Inc.   585 
 8   Philip Morris International, Inc.   771 
 5   Unilever N.V.   199 
 1   United Spirits Ltd.   26 
         7,396 

 

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

 

6

 

 

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.1% - (continued)    
     Health Care Equipment and Services - 2.7%     
 1   Abbott Laboratories  $32 
 1   Aetna, Inc.   49 
 1   Allscripts Healthcare Solutions, Inc. ●   11 
 9   Boston Scientific Corp. ●   68 
 2   Cardinal Health, Inc.   88 
 1   CIGNA Corp.   89 
 3   Covidien plc   203 
 1   HCA Holdings, Inc.   46 
 1   Hologic, Inc. ●   20 
    M3, Inc.   131 
 3   McKesson Corp.   344 
 4   Medtronic, Inc.   187 
 2   NMC Health plc ●   10 
 2   Qualicorp S.A. ●   20 
 1   Rhoen-Klinikum AG   17 
 10   Smith & Nephew plc   116 
 1   St. Jude Medical, Inc.   40 
    Straumann Holding AG   9 
 2   Stryker Corp.   106 
 6   UnitedHealth Group, Inc.   379 
 1   Vanguard Health Systems, Inc. ●   16 
    Zimmer Holdings, Inc.   31 
         2,012 
     Household and Personal Products - 0.1%     
 1   Reckitt Benckiser Group plc   79 
           
     Insurance - 4.0%     
 1   Aflac, Inc.   76 
 6   Ageas   231 
 5   American International Group, Inc. ●   212 
 2   Aon plc   124 
 9   AXA S.A.   161 
 3   Berkshire Hathaway, Inc. Class B ●   271 
 6   Brasil Insurance Participacoes e Administracao S.A.   66 
 7   Delta Lloyd N.V.   137 
 28   Direct Line Insurance Group plc   88 
 22   Discovery Ltd.   196 
 3   Hanover Insurance Group, Inc.   169 
    Markel Corp. ●   137 
 3   Marsh & McLennan Cos., Inc.   110 
 3   Progressive Corp.   73 
 1   Prudential Financial, Inc.   60 
 11   RMI Holdings ☼   28 
 28   Storebrand ASA   130 
 3   Swiss Re Ltd.   241 
 3   Unum Group   92 
 13   XL Group plc   414 
         3,016 
     Materials - 6.0%     
 2   Air Products & Chemicals, Inc.   194 
 3   Akzo Nobel N.V.   172 
 8   Allegheny Technologies, Inc.   205 
 32   AMVIG Holdings Ltd.   12 
 134   Aquarius Platinum Ltd.   89 
 12   ArcelorMittal ADR   150 
 3   Asahi Kasei Corp.   19 
 11   AuRico Gold, Inc.   54 
 4   Ball Corp.   173 
 2   Barrick Gold Corp.   30 
 2   BASF SE   185 
 5   BHP Billiton plc   137 
 1   Cabot Corp.   23 
 2   Celanese Corp.   79 
 2   Cemex Latam Holdings S.A. ●   12 
    CF Industries Holdings, Inc.   37 
 43   China Shanshui Cement Group   24 
 1   Crown Holdings, Inc. ●   59 
 1   Detour Gold Corp. ●   12 
 3   Dow Chemical Co.   99 
 7   EcoSynthetix, Inc. ●   26 
 7   Glencore Xstrata plc   34 
 3   Goldcorp, Inc.   78 
 8   Graphic Packaging Holding Co. ●   61 
 1   HeidelbergCement AG   58 
 1   Holcim Ltd.   42 
 121   Huabao International Holdings Ltd.   55 
 3   International Paper Co.   128 
 6   JSR Corp.   128 
 1   Lafarge S.A. ☼   33 
 3   LyondellBasell Industries Class A   184 
    Martin Marietta Materials, Inc.   18 
 1   MeadWestvaco Corp.   40 
 5   Methanex Corp.   207 
 2   Methanex Corp. ADR   94 
 4   Mitsubishi Chemical Holdings   20 
 36   Mitsui Chemicals, Inc.   84 
 129   Mongolian Mining Corp. ●   39 
 2   Mosaic Co.   139 
 11   Nine Dragons Paper Holdings   10 
 2   Nippon Shokubai Co., Ltd.   20 
    Nucor Corp.   13 
 3   Owens-Illinois, Inc. ●   85 
 42   Platinum Group Metals Ltd. ●   52 
 76   PTT Chemical Public Co., Ltd.   190 
 4   Rexam plc   29 
 8   Rio Tinto plc   369 
 26   Rubicon Minerals Corp. ●   45 
 1   Shin-Etsu Chemical Co., Ltd.   57 
 8   Showa Denko K.K.   13 
 9   Smurfit Kappa Group plc   128 
 6   Synthomer plc   19 
 1   Tikkurila Oyj   27 
 6   Ube Industries Ltd.   12 
 5   Universal Stainless & Alloy Products, Inc. ●   186 
    Westlake Chemical Corp.   15 
         4,503 
     Media - 2.6%     
 1   AMC Networks, Inc. Class A ●   38 
 3   Cablevision Systems Corp.   38 
 1   CBS Corp. Class B   38 
 1   Charter Communications, Inc. ●   142 
 3   Comcast Corp. Class A   132 
 4   Comcast Corp. Special Class A   170 
 3   DreamWorks Animation SKG, Inc. ●   55 
    Fuji Media Holdings, Inc.   59 
 2   Imax Corp. ●   40 
 7   Interpublic Group of Cos., Inc.   101 
 1   MDC Partners, Inc. Class A   19 
 2   Omnicom Group, Inc.   149 

 

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

 

7

 

The Hartford Global Research Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 98.1% - (continued)

     
     Media - 2.6% - (continued)     
 6   Pandora Media, Inc. ●  $87 
 8   Reed Elsevier Capital, Inc.   93 
 17   Sirius XM Radio, Inc. w/ Rights   55 
    Time Warner Cable, Inc.   35 
 4   Time Warner, Inc.   253 
 7   Walt Disney Co.   438 
         1,942 
     Pharmaceuticals, Biotechnology and Life Sciences - 7.5%     
 1   Acorda Therapeutics, Inc. ●   28 
 1   Actavis, Inc. ●   64 
    Actelion Ltd.   26 
 2   Agilent Technologies, Inc.   95 
 1   Algeta ASA ●   39 
    Alk-Abello A/S   14 
 8   Alkermes plc ●   251 
 2   Almirall S.A.   25 
 6   Arena Pharmaceuticals, Inc. ●   53 
 2   Astellas Pharma, Inc.   117 
 3   AstraZeneca plc   144 
 2   AstraZeneca plc ADR   99 
 1   Auxilium Pharmaceuticals, Inc. ●   21 
    Biogen Idec, Inc. ●   93 
 10   Bristol-Myers Squibb Co.   383 
 1   Cadence Pharmaceuticals, Inc. ●   8 
 1   Covance, Inc. ●   42 
 1   Cubist Pharmaceuticals, Inc. ●   29 
 11   Daiichi Sankyo Co., Ltd.   207 
 4   Eisai Co., Ltd.   196 
 20   Elan Corp. plc ADR ●   238 
 8   Eli Lilly & Co.   427 
 8   Exelixis, Inc. ●   41 
 6   Forest Laboratories, Inc. ●   232 
 4   Gilead Sciences, Inc. ●   194 
 2   H. Lundbeck A/S   30 
 1   Immunogen, Inc. ●   19 
 1   Incyte Corp. ●   28 
 1   Infinity Pharmaceuticals, Inc. ●   25 
 4   Ironwood Pharmaceuticals, Inc. ●   65 
 1   Johnson & Johnson   105 
 2   Medicines Co. ●   58 
 8   Merck & Co., Inc. ‡   362 
 2   Mylan, Inc. ●   55 
 1   NPS Pharmaceuticals, Inc. ●   15 
 1   Ono Pharmaceutical Co., Ltd.   53 
 1   Onyx Pharmaceuticals, Inc. ●   63 
 1   Prothena Corp. plc ●   5 
 2   Regeneron Pharmaceuticals, Inc. ●   363 
 3   Rigel Pharmaceuticals, Inc. ●   16 
    Roche Holding AG   107 
 1   Salix Pharmaceuticals Ltd. ●   69 
 1   Seattle Genetics, Inc. ●   40 
 12   Shionogi & Co., Ltd.   295 
    Targacept, Inc. ●   1 
 12   Teva Pharmaceutical Industries Ltd. ADR   473 
 4   UCB S.A. ●   216 
 1   Vertex Pharmaceuticals, Inc. ●   69 
 1   Xenoport, Inc. ●   7 
 1   Zoetis, Inc.   33 
         5,638 
     Real Estate - 3.0%     
    Acadia Realty Trust REIT   7 
    Alexander & Baldwin, Inc. ●   6 
 2   American Assets Trust, Inc. REIT   82 
 1   American Tower Corp. REIT   110 
 12   Ascendas REIT   27 
 4   Asesor De Activos Prisma SAP REIT ●   7 
    AvalonBay Communities, Inc. REIT   22 
 20   Ayala Land, Inc.   16 
 133   Bekasi Fajar Industrial Estate Tbk PT ●   14 
 4   Beni Stabili S.p.A.   3 
 1   Big Yellow Group REIT   8 
    Boston Properties, Inc. REIT   23 
    Camden Property Trust REIT   18 
    Canadian Apartment Properties REIT   8 
 50   China Overseas Grand Oceans Group Ltd.   78 
    Coresite Realty Corp. REIT   11 
    Cousins Properties, Inc. REIT   3 
    DDR Corp. REIT   8 
 1   Derwent London plc REIT   24 
 13   Dexus Property Group REIT   15 
 1   Douglas Emmett, Inc. REIT   16 
    EastGroup Properties, Inc. REIT   12 
 1   Education Realty Trust, Inc. REIT   6 
    Equity Lifestyle Properties, Inc. REIT   15 
    Essex Property Trust, Inc. REIT   24 
    EuroBank Properties REIT ●☼   4 
    Extra Space Storage, Inc. REIT   9 
 4   Fibra Uno Administracion S.A. REIT   13 
 7   Forest City Enterprises, Inc. Class A ●   123 
 21   Fortune REIT   19 
 1   General Growth Properties, Inc. REIT   25 
 1   Glimcher Realty Trust REIT   10 
    GSW Immobilien AG   6 
 11   Hammerson plc REIT   92 
 1   Health Care, Inc. REIT   41 
 1   Healthcare Trust of America, Inc. REIT   7 
 1   Host Hotels & Resorts, Inc. REIT   15 
    Icade REIT   6 
    Industrial & Infrastructure Fund Investment Corp. REIT   21 
    Japan Logistics Fund REIT   22 
    Kilroy Realty Corp. REIT   12 
 23   Link (The) REIT   132 
 1   Mitsubishi Estate Co., Ltd.   45 
 7   Mitsui Fudosan Co., Ltd.   236 
 1   Northwest Healthcare Properties REIT   9 
 5   Norwegian Property ASA   7 
    Ntt Urban Development Corp.   24 
 134   Pakuwon Jati TBK   6 
    Public Storage REIT   33 
 2   Rayonier, Inc. REIT   130 
 161   Robinsons Land Corp.   101 
 1   Simon Property Group, Inc. REIT   257 
 8   Sino Land Co., Ltd.   14 
    SL Green Realty Corp. REIT   17 
    Stag Industrial, Inc. REIT   9 
 5   Sun Hung Kai Properties Ltd.   79 
 29   Supalai Public Co., Ltd.   21 
    Taubman Centers, Inc. REIT   23 

 

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

 

8

 

 

 

Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 98.1% - (continued)

     
     Real Estate - 3.0% - (continued)     
    Unibail Rodamco REIT   $39 
 2   Unite Group plc    12 
    Wereldhave N.V. REIT    8 
 6   Westfield Group REIT    77 
 7   Westfield Retail Trust REIT    24 
 1   Wihlborgs Fastigheter A.B. ☼    10 
         2,301 
     Retailing - 4.8%     
 1   Aeropostale, Inc. ●    17 
 3   Amazon.com, Inc. ●    715 
 1   American Eagle Outfitters, Inc.    29 
 1   AutoZone, Inc. ●    262 
 4   Best Buy Co., Inc.    113 
 1   Dick's Sporting Goods, Inc.    55 
 5   Dollar Tree, Inc. ●    236 
    DSW, Inc.    31 
 2   Expedia, Inc.    119 
    Five Below, Inc. ●    16 
 1   GNC Holdings, Inc.    45 
 3   Hennes & Mauritz Ab    123 
 1   HSN, Inc.    46 
 1   Industria de Diseno Textil S.A.    74 
 140   Intime Department Store Group Co., Ltd.    166 
 4   Liberty Media - Interactive A ●    88 
 16   Lowe's Co., Inc.    627 
 16   Marks & Spencer Group plc    101 
 5   Myer Holdings Ltd.    15 
 1   Netflix, Inc. ●    187 
 1   Nordstrom, Inc.    49 
 1   Pier 1 Imports, Inc.    35 
    Pinault-Printemps-Redoute S.A.    66 
    Priceline.com, Inc. ●    180 
 1   Ryohin Keikaku Co., Ltd.    59 
 1   Urban Outfitters, Inc. ●    41 
 64   Zhongsheng Group Holdings Ltd.    90 
         3,585 
     Semiconductors and Semiconductor Equipment - 2.5%     
 7   ASM Pacific Technology Ltd.    70 
 1   ASML Holding N.V.    109 
 1   Cypress Semiconductor Corp.    10 
 1   First Solar, Inc. ●    61 
 2   Hynix Semiconductor, Inc.    54 
 21   Intel Corp.    492 
 1   International Rectifier Corp. ●    21 
 1   Lam Research Corp. ●    48 
 2   Maxim Integrated Products, Inc.    59 
 3   Micron Technology, Inc. ●    27 
 9   NXP Semiconductors N.V. ●    240 
 2   ON Semiconductor Corp. ●    15 
 11   RF Micro Devices, Inc. ●    59 
    Samsung Electronics Co., Ltd.    330 
 70   Taiwan Semiconductor Manufacturing Co., Ltd.    261 
         1,856 
     Software and Services - 6.9%     
 4   Accenture plc    350 
 4   Activision Blizzard, Inc.    61 
 1   Alliance Data Systems Corp. ●    101 
 5   Automatic Data Processing, Inc.    352 
    Blackhawk Network Holdings, Inc. ●    5 
 8   Cadence Design Systems, Inc. ●    115 
 2   Citrix Systems, Inc. ●    139 
 2   Cognizant Technology Solutions Corp. ●    161 
 1   CyrusOne, Inc.    24 
 7   Dropbox, Inc. ⌂●†    71 
 10   eBay, Inc. ●    523 
 1   Equinix, Inc. ●    134 
 1   Exlservice Holdings, Inc. ●    26 
 7   Facebook, Inc. ●    187 
 9   Genpact Ltd.    171 
    Google, Inc. ●    168 
 21   Higher One Holdings, Inc. ●    211 
 1   IBM Corp.    215 
 5   Kakaku.com, Inc.    139 
 1   LinkedIn Corp. Class A ●    256 
 17   Microsoft Corp.    557 
 2   Oracle Corp.    59 
 2   Pactera Technology International Ltd. ●    12 
 1   QLIK Technologies, Inc. ●    37 
 1   Red Hat, Inc. ●    51 
    Splunk, Inc. ●    19 
 2   Teradata Corp. ●    121 
 2   Vantiv, Inc. ●    50 
 9   VeriFone Systems, Inc. ●    189 
 2   Visa, Inc.    342 
    WEX, Inc. ●    27 
 12   Yahoo!, Inc. ●    292 
         5,165 
     Technology Hardware and Equipment - 3.8%     
 17   AAC Technologies Holdings, Inc.    81 
 6   Advantech Co., Ltd.    29 
 5   Anritsu Corp.    69 
 1   Apple, Inc.    411 
 3   Asustek Computer, Inc.    35 
 36   Cisco Systems, Inc.    745 
 25   Delta Electronics, Inc.    120 
 17   EMC Corp. ●    381 
 13   Hitachi Ltd.    83 
 4   JDS Uniphase Corp. ●    53 
 12   Juniper Networks, Inc. ●    195 
 5   Qualcomm, Inc.    281 
 1   Rogers Corp. ●    40 
 9   Telefonaktiebolaget LM Ericsson ADR    112 
 5   TPK Holding Co., Ltd.    102 
    Wacom Co., Ltd.    105 
 40   WPG Holdings Co., Ltd.    48 
         2,890 
     Telecommunication Services - 3.1%     
 39   Axiata Group Berhad    86 
 90   Bezeq Israeli Telecommunication Corp., Ltd.    131 
 18   Bharti Infratel Ltd.    61 
 25   Bharti Televentures    149 
 54   China Unicom Ltd.    78 
 2   Crown Castle International Corp. ●    139 
 12   Frontier Communications Co.    50 
 22   Leap Wireless International, Inc. ●    127 
 4   MTN Group Ltd.    76 
 5   NII Holdings, Inc. Class B ●    42 
 1   P.T. Telekomunikasi Indonesia ADR    48 

 

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

 

9

 

The Hartford Global Research Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.1% - (continued)    
     Telecommunication Services - 3.1% - (continued)     
 1   Philippine Long Distance Telephone Co. ADR  $52 
 34   Portugal Telecom SGPS S.A.   176 
 1   SBA Communications Corp. ●   89 
 3   SK Telecom Co., Ltd. ADR   64 
 1   SoftBank Corp.   37 
 30   Sprint Nextel Corp. ●   214 
 10   Telefonica S.A. ●   142 
 8   Telefonica S.A. ADR   111 
 12   Telenor ASA   273 
 3   TW Telecom, Inc. ●   89 
 41   Vodafone Group plc   125 
         2,359 
     Transportation - 2.5%     
 184   AirAsia Berhad   177 
 3   Celadon Group, Inc.   57 
 7   Covenant Transport ●   41 
 21   Delta Air Lines, Inc. ●   352 
 1   DSV A/S   14 
 1   Echo Global Logistics, Inc. ●   9 
 2   FedEx Corp.   198 
 1   Genesee & Wyoming, Inc. Class A ●   81 
 7   Hertz Global Holdings, Inc. ●   163 
 2   J.B. Hunt Transport Services, Inc.   151 
 1   Kansas City Southern   76 
    Landstar System, Inc.   22 
 9   Malaysia Airports Holdings BHD   17 
 2   Norfolk Southern Corp.   153 
 1   Santos Brasil Participacoes S.A.   13 
 1   Spirit Airlines, Inc. ●   14 
 10   Transurban Group   69 
 14   US Airways Group, Inc. ●   240 
 5   Vitran Corp., Inc. ●   26 
 2   XPO Logistics, Inc. ●   39 
         1,912 
     Utilities - 3.9%     
 1   Alliant Energy Corp.   73 
 2   American Electric Power Co., Inc.   104 
 5   Calpine Corp. ●   108 
 4   Cheung Kong Infrastructure Holdings Ltd.   32 
 6   Cia de Saneamento Basico do Estado de Sao Paulo ☼   79 
 1   Cia Paranaense de Energia-Copel   11 
 4   Duke Energy Corp.   321 
 3   E.On SE   58 
 22   Enel Green Power S.p.A.   46 
 13   Enel S.p.A.   51 
 9   ENN Energy Holdings Ltd.   53 
 8   GDF Suez   168 
 67   Guangdong Investment Ltd.   65 
 10   Iberdrola S.A.   56 
    Infraestructura Energetica Nova, SAB de C.V. ●   1 
 40   National Grid plc   511 
 7   NextEra Energy, Inc.   547 
 2   Northeast Utilities   105 
 13   NTPC Ltd.   37 
 2   OGE Energy Corp.   126 
 9   Osaka Gas Co., Ltd.   41 
 4   PG&E Corp.   214 
    Red Electrica Corporacion S.A.   21 
    Severn Trent plc   7 
 7   Snam S.p.A.   35 
 4   Suez Environment S.A.   61 
 6   Tokyo Gas Co., Ltd.   36 
         2,967 
     Total common stocks     
     (cost $63,891)  $73,923 
           
PREFERRED STOCKS - 0.4%     
     Automobiles and Components - 0.3%     
 1   Volkswagen AG N.V.  $200 
           
     Software and Services - 0.1%     
 7   FireEye, Inc. Private Placement ⌂†   89 
           
     Utilities - 0.0%     
 2   Cia Paranaense de Energie ☼   39 
           
     Total preferred stocks     
     (cost $304)  $328 
           
WARRANTS - 0.0%     
     Telecommunication Services - 0.0%     
    Micex AP Generis Warrant ■☼  $ 
           
     Total warrants     
     (cost $–)  $ 
           
EXCHANGE TRADED FUNDS - 0.3%     
     Other Investment Pools and Funds - 0.3%     
 5   Industrial Select Sector SPDR Fund  $194 
           
     Total exchange traded funds     
     (cost $191)  $194 
           
     Total long-term investments     
     (cost $64,386)  $74,445 
           
SHORT-TERM INVESTMENTS - 0.8%     
Repurchase Agreements - 0.8%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $24,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $24)
     
$24   0.17%, 4/30/2013  $24 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $65, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -
2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$66)
     
 65   0.15%, 4/30/2013   65 

 

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

 

10

 

 

 

Shares or Principal Amount  Market Value ╪ 
SHORT-TERM INVESTMENTS - 0.8% - (continued)    
Repurchase Agreements - 0.8% - (continued)    
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $124, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $127)
          
$124   0.15%, 4/30/2013       $124 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $173,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 – 2019, value of $176)
          
 173   0.14%, 4/30/2013        173 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $31, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $32)
          
 31   0.17%, 4/30/2013        31 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $105, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $107)
          
 105   0.14%, 4/30/2013        105 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$74, collateralized by U.S. Treasury Note
0.25% - 1.88%, 2014 - 2019, value of $75)
          
 74   0.17%, 4/30/2013        74 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$1, collateralized by U.S. Treasury Note
3.88%, 2018, value of $1)
          
 1   0.13%, 4/30/2013        1 
              597 
     Total short-term investments          
     (cost $597)       $597 
                
     Total investments          
     (cost $64,983) ▲   99.6%  $75,042 
     Other assets and liabilities   0.4%   271 
     Total net assets   100.0%  $75,313 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $67,875 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $8,652 
Unrealized Depreciation   (1,485)
Net Unrealized Appreciation  $7,167 

 

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

 

11

 

The Hartford Global Research Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

These securities were valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $161, which represents 0.2% 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.

 

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. Unless otherwise indicated, these issues are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $60, which represents 0.1% 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 Acquired  Shares/ Par   Security  Cost Basis 
05/2012   7   Dropbox, Inc.  $67 
12/2012   7   FireEye, Inc. Private Placement Preferred   78 
02/2011   2   GLG Life Technology Corp.   27 

 

At April 30, 2013, the aggregate value of these securities was $161, which represents 0.2% of total net assets.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $53 at April 30, 2013.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
AUD  Buy  05/03/2013  CSFB  $8   $8   $ 
AUD  Buy  05/01/2013  HSBC   6    6     
CAD  Buy  05/02/2013  BCLY   16    16     
CHF  Sell  05/06/2013  DEUT   17    17     
EUR  Buy  05/03/2013  JPM   13    13     
EUR  Buy  05/06/2013  JPM   8    8     
EUR  Buy  05/09/2013  JPM   1    1     
EUR  Sell  05/02/2013  BCLY   14    14     
EUR  Sell  05/03/2013  BCLY   10    10     
GBP  Buy  05/01/2013  DEUT   15    15     
GBP  Buy  05/02/2013  DEUT   8    8     
GBP  Sell  05/03/2013  BCLY   69    69     
HKD  Buy  05/03/2013  BCLY   24    24     
HKD  Sell  05/03/2013  BCLY   8    8     
JPY  Buy  07/01/2013  DEUT   15    15     
JPY  Buy  05/02/2013  SSG   2    2     
JPY  Sell  05/07/2013  CSFB   25    25     
JPY  Sell  07/01/2013  DEUT   431    403    28 
MXN  Sell  05/03/2013  DEUT   4    4     
NOK  Buy  05/02/2013  CSFB   3    3     
SEK  Buy  05/03/2013  BCLY   1    1     
ZAR  Buy  05/08/2013  DEUT   28    28     
                      $28 

 

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

 

 

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
Counterparty Abbreviations:
BCLY Barclays
CSFB Credit Suisse First Boston Corp.
DEUT Deutsche Bank Securities, Inc.
HSBC HSBC Bank USA
JPM JP Morgan Chase & Co.
SSG State Street Global Markets LLC
   
Currency Abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
CHF Swiss Franc
EUR EURO
GBP British Pound
HKD Hong Kong Dollar
JPY Japanese Yen
MXN Mexican New Peso
NOK Norwegian Krone
SEK Swedish Krona
ZAR South African Rand
   
Other Abbreviations:
ADR American Depositary Receipt
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GDR Global Depositary Receipt
REIT Real Estate Investment Trust
SPDR Standard & Poor's Depositary Receipt

 

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

 

13

 

The Hartford Global Research Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Automobiles and Components  $1,057   $216   $841   $ 
Banks   5,747    2,220    3,527     
Capital Goods   5,164    3,767    1,397     
Commercial and Professional Services   192    142    50     
Consumer Durables and Apparel   1,186    411    775     
Consumer Services   329    230    99     
Diversified Financials   3,370    2,270    1,100     
Energy   7,534    4,710    2,824     
Food and Staples Retailing   1,723    783    940     
Food, Beverage and Tobacco   7,396    4,752    2,643    1 
Health Care Equipment and Services   2,012    1,739    273     
Household and Personal Products   79        79     
Insurance   3,016    1,920    1,096     
Materials   4,503    2,498    2,005     
Media   1,942    1,790    152     
Pharmaceuticals, Biotechnology and Life Sciences   5,638    4,199    1,439     
Real Estate   2,301    1,285    1,016     
Retailing   3,585    2,891    694     
Semiconductors and Semiconductor Equipment   1,856    1,085    771     
Software and Services   5,165    4,955    139    71 
Technology Hardware and Equipment   2,890    2,218    672     
Telecommunication Services   2,359    1,086    1,273     
Transportation   1,912    1,652    260     
Utilities   2,967    1,689    1,278     
Total   73,923    48,508    25,343    72 
Exchange Traded Funds   194    194         
Preferred Stocks   328        239    89 
Warrants                
Short-Term Investments   597        597     
Total  $75,042   $48,702   $26,179   $161 
Foreign Currency Contracts*   28        28     
Total  $28   $   $28   $ 
Liabilities:                    
Foreign Currency Contracts*                
Total  $   $   $   $ 

 

For the six-month period ended April 30, 2013, investments valued at $541 were transferred from Level 1 to Level 2, and investments valued at $306 were transferred from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

  

Balance

as of

October

31, 2012

  

Realized

Gain

(Loss)

  

Change in

Unrealized

Appreciation

(Depreciation)

  

Net

Amortization

   Purchases   Sales  

Transfers

Into

Level 3

  

Transfers

Out of

Level 3

  

Balance

as of

April 30,

2013

 
Assets:                                             
Common Stocks  $71   $(515)  $516*  $   $   $   $   $   $72 
Preferred Stocks           11       78                89 
Total  $71   $(515)  $527   $   $78   $   $   $   $161 

 

*Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 rounds to zero.
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $11.

 

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

 

14

 

The Hartford Global Research Fund

Statement of Assets and Liabilities (Unaudited)

April 30, 2013
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $64,983)  $75,042 
Cash   9 
Foreign currency on deposit with custodian (cost $32)   32 
Unrealized appreciation on foreign currency contracts   28 
Receivables:     
Investment securities sold   616 
Fund shares sold   65 
Dividends and interest   191 
Other assets   61 
Total assets   76,044 
Liabilities:     
Unrealized depreciation on foreign currency contracts    
Payables:     
Investment securities purchased   640 
Fund shares redeemed   29 
Investment management fees   11 
Administrative fees    
Distribution fees   4 
Accrued expenses   47 
Total liabilities   731 
Net assets  $75,313 
Summary of Net Assets:     
Capital stock and paid-in-capital  $75,767 
Distributions in excess of net investment loss   (45)
Accumulated net realized loss   (10,496)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   10,087 
Net assets  $75,313 
      
Shares authorized   850,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $10.69/$11.31 
Shares outstanding   4,851 
Net assets  $51,869 
Class B: Net asset value per share  $10.54 
Shares outstanding   317 
Net assets  $3,342 
Class C: Net asset value per share  $10.53 
Shares outstanding   901 
Net assets  $9,489 
Class I: Net asset value per share  $10.71 
Shares outstanding   84 
Net assets  $905 
Class R3: Net asset value per share  $10.66 
Shares outstanding   40 
Net assets  $427 
Class R4: Net asset value per share  $10.70 
Shares outstanding   36 
Net assets  $387 
Class R5: Net asset value per share  $10.72 
Shares outstanding   35 
Net assets  $371 
Class Y: Net asset value per share  $10.70 
Shares outstanding   796 
Net assets  $8,523 

 

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

 

15

 

The Hartford Global Research Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $947 
Interest   1 
Less: Foreign tax withheld   (58)
Total investment income   890 
      
Expenses:     
Investment management fees   359 
Administrative services fees     
Class R3   1 
Class R4    
Class R5    
Transfer agent fees     
Class A   91 
Class B   10 
Class C   15 
Class I   1 
Class R3    
Class R4    
Class R5    
Class Y    
Distribution fees     
Class A   60 
Class B   17 
Class C   46 
Class R3   1 
Class R4    
Custodian fees   25 
Accounting services fees   7 
Registration and filing fees   38 
Board of Directors' fees   2 
Audit fees   9 
Other expenses   14 
Total expenses (before waivers and fees paid indirectly)   696 
Expense waivers   (85)
Transfer agent fee waivers   (26)
Commission recapture   (2)
Total waivers and fees paid indirectly   (113)
Total expenses, net   583 
Net Investment Income   307 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities   5,233 
Net realized gain on futures   6 
Net realized gain on foreign currency contracts   68 
Net realized loss on other foreign currency transactions   (8)
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   5,299 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   5,651 
Net unrealized appreciation of foreign currency contracts   19 
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   1 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   5,671 
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   10,970 
Net Increase in Net Assets Resulting from Operations  $11,277 

 

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

 

16

 

The Hartford Global Research Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $307   $1,286 
Net realized gain on investments, other financial instruments and foreign currency transactions   5,299    3,136 
Net unrealized appreciation of investments and foreign currency transactions   5,671    2,528 
Net Increase in Net Assets Resulting from Operations   11,277    6,950 
Distributions to Shareholders:          
From net investment income          
Class A   (887)   (125)
Class B   (31)   (1)
Class C   (103)   (2)
Class I   (17)   (3)
Class R3   (7)    
Class R4   (7)   (1)
Class R5   (7)   (2)
Class Y   (538)   (526)
Total from net investment income   (1,597)   (660)
From net realized gain on investments          
Class A       (2,778)
Class B       (307)
Class C       (611)
Class I       (31)
Class R3       (18)
Class R4       (18)
Class R5       (17)
Class Y       (4,181)
Total from net realized gain on investments       (7,961)
Total distributions   (1,597)   (8,621)
Capital Share Transactions:          
Class A   (459)   689 
Class B   (620)   (1,620)
Class C   (624)   (1,208)
Class I   102    157 
Class R3   9    64 
Class R4   11    25 
Class R5   7    20 
Class Y   (16,464)   (41,107)
Net decrease from capital share transactions   (18,038)   (42,980)
Net Decrease in Net Assets   (8,358)   (44,651)
Net Assets:          
Beginning of period   83,671    128,322 
End of period  $75,313   $83,671 
Undistributed (distribution in excess of) net investment income (loss)  $(45)  $1,245 

 

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

 

17

 

The Hartford Global Research Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Global Research 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of

 

18

 

 

 

 the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of

 

19

 

The Hartford Global Research Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

20

 

 

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period. 

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

21

 

The Hartford Global Research Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and

 

22

 

 

 

changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. As of April 30, 2013, the Fund had no outstanding futures contracts.

 

c)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
  

Interest Rate

Contracts

  

Foreign

Exchange

Contracts

  

Credit

Contracts

  

Equity

Contracts

  

Commodity

Contracts

  

Other

Contracts

   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $28   $   $   $   $   $28 
Total  $   $28   $   $   $   $   $28 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $   $   $   $   $   $ 
Total  $   $   $   $   $   $   $

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013. 

 

23

 

The Hartford Global Research Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
  

Interest Rate

Contracts

  

Foreign

Exchange

Contracts

  

Credit

Contracts

  

Equity

Contracts

  

Commodity

Contracts

  

Other

Contracts

   Total 
Realized Gain on Derivatives Recognized as a Result of Operations:         
Net realized gain on futures  $   $   $   $6   $   $   $6 
Net realized gain on foreign currency contracts       68                    68 
Total  $   $68   $   $6   $   $   $74 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:          
Net change in unrealized appreciation of foreign currency contracts  $   $19   $   $   $   $   $19 
Total  $   $19   $   $   $   $   $19 

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend

 

24

 

 

 

 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income   $854   $764 
Long-Term Capital Gains ‡    7,767     

 

The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income   $1,330 
Accumulated Capital Losses *    (12,979)
Unrealized Appreciation †    1,515 
Total Accumulated Deficit   $(10,134)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income   $193 
Accumulated Net Realized Gain (Loss)    (193)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

25

 

The Hartford Global Research Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2015  $3,985 
2016   4,004 
2017   2,256 
2018   2,734 
Total  $12,979 

 

As a result of mergers in the Fund, certain provisions in the IRC may limit the future utilization of capital losses.  During the year ended October 31, 2012, the Fund utilized $3,988 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.9000% 
On next $500 million   0.8750% 
On next $4 billion   0.8500% 
On next $5 billion   0.8475% 
Over $10 billion   0.8450% 

 

26

 

 

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.45%       2.20%      2.20%      1.20%      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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A    1.45%
Class B    2.20 
Class C    2.20 
Class I    1.20 
Class R3    1.65 
Class R4    1.35 
Class R5    1.05 
Class Y    1.00 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $69 and contingent deferred sales charges of $2 from the Fund.

 

27

 

The Hartford Global Research Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)
(000’s Omitted)

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

   Percentage
of Class
 
Class R3    83%
Class R4    92 
Class R5    97 
Class Y    1 

 

28

 

 

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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   $32,614 
Sales Proceeds Excluding U.S. Government Obligations    51,161 

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
  

Shares

Sold

  

Shares

Issued for

Reinvested

Dividends

  

Shares

Redeemed

  

Shares

Issued

from

Merger

  

Net Increase

(Decrease) of

Shares

  

Shares

Sold

  

Shares

Issued for

Reinvested

Dividends

  

Shares

Redeemed

  

Shares

Issued

from

Merger

  

Net Increase

(Decrease) of

Shares

 
Class A                                                  
Shares   394    88    (529)       (47)   903    343    (1,126)       120 
Amount  $3,971   $859   $(5,289)  $   $(459)  $8,135   $2,786   $(10,232)  $   $689 
Class B                                                  
Shares   4    3    (70)       (63)   15    32    (223)       (176)
Amount  $44   $28   $(692)  $   $(620)  $130   $256   $(2,006)  $   $(1,620)
Class C                                                  
Shares   20    9    (93)       (64)   51    70    (247)       (126)
Amount  $199   $94   $(917)  $   $(624)  $440   $556   $(2,204)  $   $(1,208)
Class I                                                  
Shares   52    1    (43)       10    54    3    (39)       18 
Amount  $533   $14   $(445)  $   $102   $483   $27   $(353)  $   $157 
Class R3                                                  
Shares   1    1    (1)       1    6    2    (1)       7 
Amount  $7   $7   $(5)  $   $9   $52   $18   $(6)  $   $64 
Class R4                                                  
Shares       1            1    1    2            3 
Amount  $4   $7   $   $   $11   $6   $19   $   $   $25 
Class R5                                                  
Shares       1            1    1    2            3 
Amount  $   $7   $   $   $7   $1   $19   $   $   $20 
Class Y                                                  
Shares   212    55    (1,868)       (1,601)   3,794    576    (9,202)       (4,832)
Amount  $2,134   $538   $(19,136)  $   $(16,464)  $34,267   $4,707   $(80,081)  $   $(41,107)
Total                                                  
Shares   683    159    (2,604)       (1,762)   4,825    1,030    (10,838)       (4,983)
Amount  $6,892   $1,554   $(26,484)  $   $(18,038)  $43,514   $8,388   $(94,882)  $   $(42,980)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013    23   $230 
For the Year Ended October 31, 2012    44   $402 

 

11.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 funds are 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

 

29

 

The Hartford Global Research Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. This commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

30

 

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31

 

The Hartford Global Research Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class 

Net Asset Value at

Beginning of

Period

  

Net Investment

Income (Loss)

  

Net Realized and

Unrealized Gain

(Loss) on

Investments

  

Total from

Investment

Operations

  

Dividends from Net

Investment Income

  

Distributions from

Realized Capital

Gains

  

Distributions from

Capital

   Total Distributions  

Net Asset Value at

End of Period

 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)                    
A  $9.50   $0.04   $1.33   $1.37   $(0.18)  $   $   $(0.18)  $10.69 
B   9.32        1.31    1.31    (0.09)           (0.09)   10.54 
C   9.32        1.32    1.32    (0.11)           (0.11)   10.53 
I   9.54    0.05    1.33    1.38    (0.21)           (0.21)   10.71 
R3   9.47    0.03    1.33    1.36    (0.17)           (0.17)   10.66 
R4   9.52    0.05    1.32    1.37    (0.19)           (0.19)   10.70 
R5   9.54    0.06    1.34    1.40    (0.22)           (0.22)   10.72 
Y   9.53    0.05    1.35    1.40    (0.23)           (0.23)   10.70 
                                              
For the Year Ended October 31, 2012 (E)                    
A   9.30    0.07    0.71    0.78    (0.02)   (0.56)       (0.58)   9.50 
B   9.17        0.71    0.71        (0.56)       (0.56)   9.32 
C   9.17    0.01    0.70    0.71        (0.56)       (0.56)   9.32 
I   9.33    0.09    0.73    0.82    (0.05)   (0.56)       (0.61)   9.54 
R3   9.26    0.06    0.71    0.77        (0.56)       (0.56)   9.47 
R4   9.31    0.08    0.72    0.80    (0.03)   (0.56)       (0.59)   9.52 
R5   9.33    0.11    0.72    0.83    (0.06)   (0.56)       (0.62)   9.54 
Y   9.32    0.13    0.70    0.83    (0.06)   (0.56)       (0.62)   9.53 
                                              
For the Year Ended October 31, 2011 (E)                    
A   9.56    0.06    (0.27)   (0.21)   (0.05)           (0.05)   9.30 
B   9.45    (0.02)   (0.26)   (0.28)                   9.17 
C   9.45    (0.02)   (0.26)   (0.28)                   9.17 
I   9.60    0.10    (0.28)   (0.18)   (0.09)           (0.09)   9.33 
R3   9.53    0.04    (0.27)   (0.23)   (0.04)           (0.04)   9.26 
R4   9.57    0.07    (0.27)   (0.20)   (0.06)           (0.06)   9.31 
R5   9.59    0.10    (0.27)   (0.17)   (0.09)           (0.09)   9.33 
Y   9.58    0.10    (0.26)   (0.16)   (0.10)           (0.10)   9.32 
                                              
For the Year Ended October 31, 2010 (E)                    
A   8.01    0.04    1.52    1.56    (0.01)           (0.01)   9.56 
B   7.97    (0.03)   1.51    1.48                    9.45 
C   7.97    (0.03)   1.51    1.48                    9.45 
I   8.02    0.07    1.53    1.60    (0.02)           (0.02)   9.60 
R3   8.00    0.02    1.51    1.53                    9.53 
R4   8.01    0.04    1.52    1.56                    9.57 
R5   8.02    0.07    1.51    1.58    (0.01)           (0.01)   9.59 
Y   8.01    0.07    1.52    1.59    (0.02)           (0.02)   9.58 
                                              
For the Year Ended October 31, 2009 (E)                    
A   6.55    0.03    1.50    1.53    (0.07)           (0.07)   8.01 
B   6.51    (0.05)   1.53    1.48    (0.02)           (0.02)   7.97 
C   6.51    (0.06)   1.54    1.48    (0.02)           (0.02)   7.97 
I   6.56    0.07    1.47    1.54    (0.08)           (0.08)   8.02 
R3   6.53    0.03    1.48    1.51    (0.04)           (0.04)   8.00 
R4   6.54    0.04    1.49    1.53    (0.06)           (0.06)   8.01 
R5   6.55    0.07    1.48    1.55    (0.08)           (0.08)   8.02 
Y   6.56    0.02    1.52    1.54    (0.09)           (0.09)   8.01 
                                              
From February 29, 2008 (commencement of operations), through October 31, 2008                    
A(I)   10.00    0.05    (3.50)   (3.45)                   6.55 
B(I)   10.00        (3.49)   (3.49)                   6.51 
C(I)   10.00        (3.49)   (3.49)                   6.51 
I(I)   10.00    0.07    (3.51)   (3.44)                   6.56 
R3(I)   10.00    0.03    (3.50)   (3.47)                   6.53 
R4(I)   10.00    0.04    (3.50)   (3.46)                   6.54 
R5(I)   10.00    0.06    (3.51)   (3.45)                   6.55 
Y(I)   10.00    0.07    (3.51)   (3.44)                   6.56 

 

32

 

- Ratios and Supplemental Data -

 

Total Return(B)  

Net Assets at End of Period

(000's)

  

Ratio of Expenses to Average Net Assets

Before Waivers and Reimbursements and

Including Expenses not Subject to Cap(C)

  

Ratio of Expenses to Average Net Assets

After Waivers and Reimbursements and

Including Expenses not Subject to Cap(C)

  

Ratio of Net Investment

Income to Average Net Assets

  

Portfolio

Turnover

Rate(D)

 
                      
                            
 14.63%(F)  $51,869    1.77%(G)   1.45%(G)   0.85%(G)   41%
 14.12(F)   3,342    2.71(G)   2.20(G)   0.08(G)    
 14.25(F)   9,489    2.46(G)   2.20(G)   0.10(G)    
 14.69(F)   905    1.39(G)   1.20(G)   1.10(G)    
 14.50(F)   427    1.88(G)   1.65(G)   0.65(G)    
 14.63(F)   387    1.55(G)   1.35(G)   0.96(G)    
 14.92(F)   371    1.25(G)   1.05(G)   1.26(G)    
 14.88(F)   8,523    1.16(G)   1.00(G)   1.01(G)    
                            
                            
 9.52    46,551    1.78    1.45    0.82    107 
 8.78    3,542    2.69    2.20    0.05     
 8.78    8,994    2.47    2.20    0.06     
 9.91    708    1.35    1.20    1.03     
 9.38    371    1.86    1.65    0.63     
 9.72    334    1.55    1.35    0.91     
 10.04    322    1.24    1.05    1.21     
 10.12    22,849    1.10    1.00    1.48     
                            
                            
 (2.22)   44,414    1.74    1.45    0.58    102 
 (2.96)   5,101    2.59    2.20    (0.17)    
 (2.96)   10,009    2.41    2.20    (0.17)    
 (1.93)   526    1.21    1.10    1.05     
 (2.42)   294    1.81    1.65    0.38     
 (2.09)   299    1.51    1.35    0.68     
 (1.81)   292    1.20    1.05    0.98     
 (1.77)   67,387    1.10    1.00    1.00     
                            
                            
 19.48    47,429    1.85    1.48    0.48    100 
 18.57    7,209    2.72    2.24    (0.30)    
 18.57    12,910    2.52    2.23    (0.30)    
 20.00    517    1.26    1.12    0.87     
 19.13    313    1.90    1.72    0.22     
 19.48    299    1.60    1.45    0.49     
 19.77    297    1.29    1.14    0.81     
 19.92    47,067    1.21    1.07    0.91     
                            
                            
 23.65    47,527    2.19    1.59    0.44    217(H)
 22.89    8,964    2.83    2.24    (0.82)    
 22.91    14,297    2.67    2.39    (0.99)    
 23.97    317    1.91    1.32    1.00     
 23.36    248    2.62    1.90    0.52     
 23.70    243    2.31    1.65    0.78     
 24.05    244    2.01    1.40    1.03     
 23.85    5,241    1.51    1.30    0.26     
                            
                            
 (34.50)(F)   12,746    1.92(G)   1.56(G)   0.78(G)   56 
 (34.90)(F)   223    2.70(G)   2.34(G)   0.03(G)    
 (34.90)(F)   225    2.71(G)   2.34(G)   0.02(G)    
 (34.40)(F)   199    1.67(G)   1.31(G)   1.06(G)    
 (34.70)(F)   196    2.36(G)   1.90(G)   0.47(G)    
 (34.60)(F)   196    2.06(G)   1.65(G)   0.72(G)    
 (34.50)(F)   196    1.76(G)   1.40(G)   0.97(G)    
 (34.40)(F)   197    1.66(G)   1.30(G)   1.07(G)    

 

33

 

The Hartford Global Research Fund
Financial Highlights – (continued)

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)During the year ended October 31, 2009, The Hartford Global Research 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.
(I)Commenced operations on February 29, 2008.

 

34

 

The Hartford Global Research Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

35

 

The Hartford Global Research 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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

36

 

 

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 Global Research 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
  

Beginning

Account Value

October 31, 2012

  

Ending Account

Value

April 30, 2013

  

Expenses paid

during the period

October 31, 2012

through

April 30, 2013

  

Beginning

Account Value

October 31, 2012

  

Ending Account

Value

April 30, 2013

  

Expenses paid

during the

period

October 31, 2012

through

April 30, 2013

  

Annualized

expense

ratio

  

Days in

the

current

1/2

year

  

Days

in the

full

year

 
Class A  $1,000.00   $1,146.30   $7.73   $1,000.00   $1,017.59   $7.26    1.45%  181   365 
Class B  $1,000.00   $1,141.20   $11.70   $1,000.00   $1,013.87   $11.00    2.20   181   365 
Class C  $1,000.00   $1,142.50   $11.70   $1,000.00   $1,013.87   $11.00    2.20   181   365 
Class I  $1,000.00   $1,146.90   $6.40   $1,000.00   $1,018.83   $6.02    1.20   181   365 
Class R3  $1,000.00   $1,145.00   $8.79   $1,000.00   $1,016.60   $8.26    1.65   181   365 
Class R4  $1,000.00   $1,146.30   $7.20   $1,000.00   $1,018.09   $6.77    1.35   181   365 
Class R5  $1,000.00   $1,149.20   $5.60   $1,000.00   $1,019.58   $5.27    1.05   181   365 
Class Y  $1,000.00   $1,148.80   $5.34   $1,000.00   $1,019.83   $5.02    1.00   181   365 
                                              

 

38

 

The Hartford Global Research Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Global Research Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the

 

39

 

The Hartford Global Research Fund
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) –(continued)

 

following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

40

 

The Hartford Global Research Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Small/Mid-cap Stock Risk: Small- and mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

41
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-GR13 4/13 113980 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

20

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD GROWTH ALLOCATION FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford Growth Allocation Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended  October 31, 2012 9
Notes to Financial Statements (Unaudited) 10
Financial Highlights (Unaudited) 20
Directors and Officers (Unaudited) 22
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 24
Quarterly Portfolio Holdings Information (Unaudited) 24
Expense Example (Unaudited) 25
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 26
Principal Risks (Unaudited) 28

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

The Hartford Growth Allocation Fund inception 05/28/2004
(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks long-term capital appreciation.

 

Performance Overview 5/28/04 - 4/30/13

 

  

The Chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes. 

 

Average Annual Total Returns (as of 4/30/13)

  

   6 Month†   1 Year   5 year   Since
Inception▲
 
Growth Allocation A#   11.36%       12.65%       3.55%       6.07%    
Growth Allocation A##        6.46%       2.39%       5.40%    
Growth Allocation B#   10.83%       11.75%       2.73%       5.38%*    
Growth Allocation B##        6.75%       2.37%       5.38%*    
Growth Allocation C#   10.98%       11.91%       2.80%       5.33%    
Growth Allocation C##        10.91%       2.80%       5.33%    
Growth Allocation I#   11.57%       13.05%       3.90%       6.35%    
Growth Allocation R3#   11.26%       12.38%       3.25%       5.83%    
Growth Allocation R4#   11.41%       12.80%       3.59%       6.10%    
Growth Allocation R5#   11.59%       13.07%       3.89%       6.32%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       5.73%       5.50%    
MSCI All Country World Index   13.78%       15.69%       2.09%       7.09%    

 

Not Annualized
Inception: 05/28/2004
# Without sales charge
## With sales charge
* Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Growth Allocation Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
 
   Net   Gross 
Growth Allocation Class A   1.35%      1.35%   
Growth Allocation Class B   2.15%      2.15%   
Growth Allocation Class C   2.08%      2.08%   
Growth Allocation Class I   1.03%      1.03%   
Growth Allocation Class R3   1.63%      1.63%   
Growth Allocation Class R4   1.33%      1.33%   
Growth Allocation Class R5   1.03%      1.03%   

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

    

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Richard P. Meagher, CFA Wendy M. Cromwell, CFA
Vice President, Asset Allocation Strategist and Portfolio Manager Senior Vice President, Director of Strategic Asset Allocation, Asset Allocation Strategies Group, and Portfolio Manager
   

 

How did the Fund perform?

The Class A shares of The Hartford Growth Allocation Fund returned 11.36%, before sales charge, for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. The Fund also outperformed the average return for the Lipper Mixed-Asset Target Growth Funds category, a group of funds with investment strategies similar to those of the Fund, which returned 10.46%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose .02% while shorter term yields declined anywhere between .02% - .08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the stock/bond mix of the Fund was approximately 80% equities

 

3

  

The Hartford Growth Allocation Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

  

and 20% fixed income. A modest underweight allocation (i.e. the Fund’s position was less than the benchmark position) to fixed income and overweight to equities contributed as equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative performance in the Capital Appreciation, Strategic Income and International Small Company Funds more than offset weak benchmark-relative results from the International Opportunities and MidCap Value Funds.

 

What is the outlook?

During the quarter we modestly reduced exposure to fixed income funds and increased exposure to international equity funds. We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

 

Composition by Investments

as of April 30, 2013

 

Fund Name  Percentage of Net
Assets
 
Powershares DB Commodity Index Tracking Fund   2.9%
The Hartford Alternative Strategies Fund, Class Y   9.8 
The Hartford Capital Appreciation Fund, Class Y   12.6 
The Hartford Dividend and Growth Fund, Class Y   21.0 
The Hartford Emerging Markets Research Fund, Class Y   10.0 
The Hartford International Opportunities Fund, Class Y   21.0 
The Hartford International Small Company Fund, Class Y   7.6 
The Hartford MidCap Value Fund, Class Y   4.1 
The Hartford Small Company Fund, Class Y   4.0 
The Hartford Strategic Income Fund, Class Y   7.0 
Other Assets and Liabilities   0.0 
Total   100.0%

  

4

 

The Hartford Growth Allocation Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount        Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 97.1% 
EQUITY FUNDS - 80.3%    
 2,621   The Hartford Capital Appreciation Fund, Class Y        $112,266 
 7,961   The Hartford Dividend and Growth Fund, Class Y         187,795 
 10,082   The Hartford Emerging Markets Research Fund, Class Y         89,626 
 11,296   The Hartford International Opportunities Fund, Class Y         187,963 
 4,339   The Hartford International Small Company Fund, Class Y         68,041 
 2,395   The Hartford MidCap Value Fund, Class Y         36,431 
 1,533   The Hartford Small Company Fund, Class Y         35,922 
               718,044 
     Total equity funds           
     (cost $592,414)        $718,044 
                 
 FIXED INCOME FUNDS - 16.8%           
 8,512   The Hartford Alternative Strategies Fund, Class Y        $87,754 
 6,592   The Hartford Strategic Income Fund, Class Y         62,685 
               150,439 
     Total fixed income funds           
     (cost $148,178)        $150,439 
                 
     Total investments in affiliated investment companies           
     (cost $740,592)        $868,483 
                 
EXCHANGE TRADED FUNDS - 2.9%           
 993   Powershares DB Commodity Index Tracking Fund ●        $26,093 
                 
     Total exchange traded funds           
     (cost $22,502)        $26,093 
                 
     Total long-term investments           
     (cost $763,094)        $894,576 
                 
     Total investments           
     (cost $763,094) ▲   100.0 %  $894,576 
     Other assets and liabilities     %   (238)
     Total net assets   100.0 %  $894,338 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

  

At April 30, 2013, the cost of securities for federal income tax purposes was $770,728 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $131,482 
Unrealized Depreciation   (7,634)
Net Unrealized Appreciation  $123,848 

 

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 Growth Allocation Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

  

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Affiliated Investment Companies  $868,483   $868,483   $   $ 
Exchange Traded Funds   26,093    26,093         
Total  $894,576   $894,576   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  

 

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

 

6

  

The Hartford Growth Allocation Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

  

Assets:     
Investments in securities, at market value (cost $22,502)  $26,093 
Investments in underlying affiliated funds, at market value (cost $740,592)   868,483 
Receivables:     
Investment securities sold   930 
Fund shares sold   849 
Dividends and interest    
Other assets   74 
Total assets   896,429 
Liabilities:     
Payables:     
Investment securities purchased   355 
Fund shares redeemed   1,469 
Investment management fees   19 
Administrative fees   1 
Distribution fees   71 
Accrued expenses   176 
Total liabilities   2,091 
Net assets  $894,338 
Summary of Net Assets:     
Capital stock and paid-in-capital  $813,226 
Distributions in excess of net investment loss   (14,533)
Accumulated net realized loss   (35,837)
Unrealized appreciation of investments   131,482 
Net assets  $894,338 
      
Shares authorized   400,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   

$13.24/$14.01

 
Shares outstanding   42,964 
Net assets  $568,790 
Class B: Net asset value per share  $13.16 
Shares outstanding   5,741 
Net assets  $75,581 
Class C: Net asset value per share  $13.14 
Shares outstanding   15,737 
Net assets  $206,782 
Class I: Net asset value per share  $13.18 
Shares outstanding   332 
Net assets  $4,370 
Class R3: Net asset value per share  $13.03 
Shares outstanding   1,376 
Net assets  $17,918 
Class R4: Net asset value per share  $13.19 
Shares outstanding   1,094 
Net assets  $14,430 
Class R5: Net asset value per share  $13.24 
Shares outstanding   489 
Net assets  $6,467 

 

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

 

7

 

The Hartford Growth Allocation Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

  

Investment Income:     
Dividends from underlying affiliated funds  $10,988 
Total investment income   10,988 
      
Expenses:     
Investment management fees   554 
Administrative services fees     
Class R3   18 
Class R4   11 
Class R5   4 
Transfer agent fees     
Class A   444 
Class B   100 
Class C   148 
Class I   2 
Class R3    
Class R4    
Class R5    
Distribution fees     
Class A   667 
Class B   414 
Class C   997 
Class R3   45 
Class R4   18 
Custodian fees    
Accounting services fees   51 
Registration and filing fees   68 
Board of Directors' fees   10 
Audit fees   8 
Other expenses   66 
Total expenses   3,625 
Net Investment Income   7,363 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   10,756 
Net realized gain on investments in underlying affiliated funds   9,982 
Net realized gain on investments in securities   379 
Net Realized Gain on Investments   21,117 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   65,288 
Net unrealized depreciation of investments   (1,575)
Net Changes in Unrealized Appreciation of Investments   63,713 
Net Gain on Investments   84,830 
Net Increase in Net Assets Resulting from Operations  $92,193 

 

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

 

8

 

The Hartford Growth Allocation Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

  

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $7,363   $2,358 
Net realized gain on investments   21,117    21,765 
Net unrealized appreciation of investments   63,713    50,829 
Net Increase in Net Assets Resulting from Operations   92,193    74,952 
Distributions to Shareholders:          
From net investment income          
Class A   (13,887)   (3,915)
Class B   (1,527)   (74)
Class C   (3,957)   (336)
Class I   (101)   (34)
Class R3   (442)   (81)
Class R4   (372)   (142)
Class R5   (214)   (59)
Total distributions   (20,500)   (4,641)
Capital Share Transactions:          
Class A   4,355    82,780*
Class B   (21,033)   2,099
Class C   (6,917)   24,441
Class I   797    592§
Class R3   (1,065)   6,502**
Class R4   (4,082)   1,032††
Class R5   (2,056)   2,818‡‡
Net increase (decrease) from capital share transactions   (30,001)   120,264 
Net Increase in Net Assets   41,692    190,575 
Net Assets:          
Beginning of period   852,646    662,071 
End of period  $894,338   $852,646 
Undistributed (distribution in excess of) net investment income (loss)  $(14,533)  $(1,396)

 

* Includes merger activity in the amount of  $125,680.  
Includes merger activity in the amount of  $23,691.  
Includes merger activity in the amount of  $46,191.  
§ Includes merger activity in the amount of  $570.  
** Includes merger activity in the amount of  $4,716.  
†† Includes merger activity in the amount of  $7,171.  
‡‡ Includes merger activity in the amount of  $3,371.  

 

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

 

9

 

The Hartford Growth Allocation Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

  

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAVof each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the

 

 

10

 

 

  

  “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

11

 

The Hartford Growth Allocation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

  

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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.

 

12

 

 

  

b)Net Investment Income (Loss), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income   $4,641   $2,840 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Accumulated Capital Losses *  $(50,716)
Unrealized Appreciation †   60,135 
Total Accumulated Earnings  $9,419 

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.

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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $365 
Accumulated Net Realized Gain (Loss)   (365)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

13

 

The Hartford Growth Allocation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

  

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2016  $16,872 
2017   10,578 
2018   11,932 
2019   9,937 
Total  $49,319 

  

As a result of mergers in the Fund, certain provisions in the IRC may limit the future utilization of capital losses.  During the year ended October 31, 2012, the Fund utilized $21,513 of prior year capital loss carryforwards.

  

As of October 31, 2012, the Fund elected to defer the following Late-Year Ordinary Losses:

 

   Amount 
Ordinary Income  $1,397 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

14

 

 

  

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.15%  
On next $500 million   0.10%  
On next $1.5 billion   0.09%  
On next $2.5 billion   0.08%  
On next $2.5 billion   0.07%  
On next $2.5 billion   0.06%  
Over $10 billion   0.05%  

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5 
 1.50%      2.25%      2.25%      1.25%      1.70%      1.40%      1.10%   

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

d)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $966 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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

 

15

 

The Hartford Growth Allocation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

  

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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/dealers of The Hartford for distributing the Fund's shares rounds to zero.  These commissions are in turn paid to sales representatives of the broker/dealers.

 

e)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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 six-month period ended April 30, 2013, the Fund's aggregate purchases and sales of investment securities (excluding short-term investments) were as follows:

 

   Amount 
Cost of Purchases for U.S. Government Obligations   108,965 
Sales Proceeds for U.S. Government Obligations   141,243 

 

16

 

 

  

7.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   3,734    1,117    (4,501)       350    4,753    347    (8,728)   11,114    7,486 
Amount  $47,245   $13,701   $(56,591)  $   $4,355   $54,915   $3,808   $(101,623)  $125,680   $82,780 
Class B                                                  
Shares   67    121    (1,859)       (1,671)   93    6    (1,971)   2,107    235 
Amount  $844   $1,478   $(23,355)  $   $(21,033)  $1,388   $70   $(23,050)  $23,691   $2,099 
Class C                                                  
Shares   807    304    (1,658)       (547)   1,350    29    (3,291)   4,112    2,200 
Amount  $10,142   $3,706   $(20,765)  $   $(6,917)  $16,017   $314   $(38,081)  $46,191   $24,441 
Class I                                                  
Shares   87    7    (30)       64    70    3    (75)   51    49 
Amount  $1,086   $88   $(377)  $   $797   $1,489   $28   $(1,495)  $570   $592 
Class R3                                                  
Shares   140    37    (259)       (82)   444    8    (292)   423    583 
Amount  $1,742   $442   $(3,249)  $   $(1,065)  $5,054   $81   $(3,349)  $4,716   $6,502 
Class R4                                                  
Shares   150    30    (510)       (330)   313    13    (845)   637    118 
Amount  $1,892   $366   $(6,340)  $   $(4,082)  $3,591   $141   $(9,871)  $7,171   $1,032 
Class R5                                                  
Shares   49    18    (229)       (162)   72    6    (121)   298    255 
Amount  $617   $214   $(2,887)  $   $(2,056)  $800   $59   $(1,412)  $3,371   $2,818 
Total                                                  
Shares   5,034    1,634    (9,046)       (2,378)   7,095    412    (15,323)   18,742    10,926 
Amount  $63,568   $19,995   $(113,564)  $   $(30,001)  $83,254   $4,501   $(178,881)  $211,390   $120,264 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   472   $5,992 
For the Year Ended October 31, 2012   234   $2,813 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

17

 

The Hartford Growth Allocation Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

9.Fund Merger:

 

Reorganization of The Hartford Equity Growth Allocation Fund into the Fund: At a meeting held on March 27, 2012, the Board of Directors of the 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 Equity Growth Allocation Fund (“Target Fund”), into a series of the Company, The Fund (“Acquiring Fund”) (the “Reorganization”). The Reorganization did not require shareholder approval by the shareholders of The Hartford Equity Growth Allocation Fund or the Fund.

 

Pursuant to the Reorganization Agreement, on May 25, 2012, each holder of Class A, Class B, Class C, Class I, Class R3, Class R4 and Class R5 shares of The Hartford Equity Growth Allocation Fund became the owner of full and fractional shares of the corresponding class in the Fund having an equal aggregate value.

 

This merger was accomplished by tax free exchange as detailed below:

 

   Net assets of Target
Fund on Merger
Date
   Net assets of
Acquiring Fund
immediately before
merger
   Net assets of
Acquiring
Fund
immediately
after merger
   Target Fund shares
exchanged
   Acquiring Fund
shares issued to the
Target Fund's
shareholders
 
                     
Class A  $125,680   $381,983   $507,663    10,978    11,114 
Class B   23,691    72,956    96,647    2,120    2,107 
Class C   46,191    148,660    194,851    4,142    4,112 
Class I   570    2,468    3,038    50    51 
Class R3   4,716    10,792    15,508    415    423 
Class R4   7,171    12,270    19,441    629    637 
Class R5   3,371    4,488    7,859    294    298 
Total  $211,390   $633,617   $845,007    18,628    18,742 

 

The Hartford Equity Growth Allocation Fund had the following unrealized depreciation, accumulated net realized losses and capital stock as of May 25, 2012:

 

Fund  Undistributed
Income
   Unrealized
Appreciation
(Depreciation)
   Accumulated
Net Realized
Gains
(Losses)
   Capital Stock   Total 
Target Fund  $   $12,642   $(32,477)  $231,225   $211,390 

 

Assuming the acquisition had been completed on November 1, 2011, the beginning of the annual reporting period of the Funds, the Fund’s pro forma results of operations for the year ended October 31, 2012, are as follows:

 

Fund  Net Investment Income   Net gain on investments   Net increase in net assets
resulting from operations
 
Acquiring Fund  $2,918   $25,414   $28,332 

 

Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practical to separate the amounts of revenue and earnings of The Hartford Equity Growth Allocation Fund that have been included in the Fund’s Statement of Operations since May 25, 2012.

 

18

 

 

  

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

19

 

The Hartford Growth Allocation Fund
Financial Highlights
- Selected Per-Share Data (A) -

  

Class

  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $12.21   $0.12   $1.24   $1.36   $(0.33)  $   $   $(0.33)  $13.24 
B   12.09    0.08    1.21    1.29    (0.22)           (0.22)   13.16 
C   12.08    0.08    1.23    1.31    (0.25)           (0.25)   13.14 
I   12.17    0.13    1.25    1.38    (0.37)           (0.37)   13.18 
R3   12.01    0.10    1.23    1.33    (0.31)           (0.31)   13.03 
R4   12.15    0.13    1.23    1.36    (0.32)           (0.32)   13.19 
R5   12.22    0.15    1.24    1.39    (0.37)           (0.37)   13.24 
                                              
For the Year Ended October 31, 2012 (E)
A   11.24    0.07    1.01    1.08    (0.11)           (0.11)   12.21 
B   11.11    (0.02)   1.01    0.99    (0.01)           (0.01)   12.09 
C   11.11    (0.02)   1.01    0.99    (0.02)           (0.02)   12.08 
I   11.21    0.11    1.00    1.11    (0.15)           (0.15)   12.17 
R3   11.07    0.02    1.01    1.03    (0.09)           (0.09)   12.01 
R4   11.18    0.07    1.02    1.09    (0.12)           (0.12)   12.15 
R5   11.25    0.10    1.02    1.12    (0.15)           (0.15)   12.22 
                                              
For the Year Ended October 31, 2011
A   11.01    0.06    0.24    0.30    (0.07)           (0.07)   11.24 
B   10.90    (0.03)   0.24    0.21                    11.11 
C   10.89    (0.02)   0.24    0.22                    11.11 
I   10.97    0.10    0.25    0.35    (0.11)           (0.11)   11.21 
R3   10.87    0.04    0.23    0.27    (0.07)           (0.07)   11.07 
R4   10.95    0.07    0.23    0.30    (0.07)           (0.07)   11.18 
R5   11.02    0.10    0.23    0.33    (0.10)           (0.10)   11.25 
                                              
For the Year Ended October 31, 2010 (E)
A   9.58    0.07    1.42    1.49    (0.06)           (0.06)   11.01 
B   9.50    (0.01)   1.41    1.40                    10.90 
C   9.49    (0.01)   1.41    1.40                    10.89 
I   9.55    0.10    1.42    1.52    (0.10)           (0.10)   10.97 
R3   9.50    0.03    1.41    1.44    (0.07)           (0.07)   10.87 
R4   9.53    0.07    1.42    1.49    (0.07)           (0.07)   10.95 
R5   9.58    0.10    1.43    1.53    (0.09)           (0.09)   11.02 
                                              
For the Year Ended October 31, 2009 (E)
A   8.58    0.12    1.24    1.36    (0.17)   (0.19)       (0.36)   9.58 
B   8.48    0.06    1.23    1.29    (0.08)   (0.19)       (0.27)   9.50 
C   8.48    0.06    1.23    1.29    (0.09)   (0.19)       (0.28)   9.49 
I   8.57    0.14    1.25    1.39    (0.22)   (0.19)       (0.41)   9.55 
R3   8.51    0.03    1.30    1.33    (0.15)   (0.19)       (0.34)   9.50 
R4   8.56    0.10    1.25    1.35    (0.19)   (0.19)       (0.38)   9.53 
R5   8.60    0.13    1.25    1.38    (0.21)   (0.19)       (0.40)   9.58 
                                              
For the Year Ended October 31, 2008
A   14.51    0.14    (4.81)   (4.67)   (0.47)   (0.79)       (1.26)   8.58 
B   14.37    0.03    (4.74)   (4.71)   (0.39)   (0.79)       (1.18)   8.48 
C   14.37    0.04    (4.75)   (4.71)   (0.39)   (0.79)       (1.18)   8.48 
I   14.49    0.37    (4.98)   (4.61)   (0.52)   (0.79)       (1.31)   8.57 
R3   14.46    0.18    (4.87)   (4.69)   (0.47)   (0.79)       (1.26)   8.51 
R4   14.51    0.43    (5.08)   (4.65)   (0.51)   (0.79)       (1.30)   8.56 
R5   14.54    0.46    (5.09)   (4.63)   (0.52)   (0.79)       (1.31)   8.60 

 

(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 expenses of the Underlying Funds.
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)During the year ended October 31, 2012, the Fund incurred $36.1 million in sales associated with the transition of assets from The Hartford Equity Growth Allocation Fund, which merged into the Fund on May 25, 2012. These sales are excluded from the portfolio turnover calculation.    

 

20

 

- Ratios and Supplemental Data -

  

Total Return(B)     Net Assets at End of Period
(000's)
    Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
    Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
    Ratio of Net Investment
Income to Average Net
Assets(C)
    Portfolio
Turnover
Rate(D)
 
   
                                             
  11.36 %(F)   $ 568,790       0.59 %(G)     0.59 %(G)     1.95 %(G)     13 %
   10.83 (F)      75,581        1.42 (G)       1.42 (G)        1.23 (G)        
   10.98 (F)     206,782        1.32 (G)       1.32 (G)        1.23 (G)        
   11.57 (F)     4,370        0.27 (G)       0.27 (G)        2.13 (G)        
   11.26 (F)     17,918        0.88 (G)       0.88 (G)        1.66 (G)        
   11.41 (F)     14,430        0.58 (G)       0.58 (G)        2.06 (G)        
   11.59 (F)     6,467        0.28 (G)       0.28 (G)        2.39 (G)        
                                             
                                             
  9.75       520,278       0.61       0.61       0.58        95 (H)
  8.93       89,586       1.41       1.41       (0.20 )      
  8.97       196,748       1.34       1.34       (0.15 )      
  10.08       3,268       0.29       0.29       0.91        
  9.43       17,513       0.89       0.89       0.21        
  9.83       17,299       0.59       0.59       0.60        
  10.11       7,954       0.29       0.29       0.82        
                                             
                                             
  2.72       394,691       0.59       0.59       0.54       36  
  1.93       79,711       1.38       1.38       (0.25 )      
  2.02       156,463       1.33       1.33       (0.19 )      
  3.15       2,455       0.26       0.26       0.86        
  2.48       9,689       0.89       0.89       0.24        
  2.74       14,605       0.59       0.59       0.55        
  3.02       4,457       0.29       0.29       0.86        
                                             
                                             
  15.60       405,386       0.61       0.61       0.67       23  
  14.74       93,002       1.41       1.41       (0.13 )      
  14.75       167,745       1.34       1.34       (0.07 )      
  15.96       3,005       0.27       0.27       1.02        
  15.21       6,314       0.90       0.90       0.35        
  15.67       13,734       0.59       0.59       0.66        
  16.06       4,838       0.29       0.29       0.98        
                                             
                                             
  17.06       366,509       0.68       0.68       1.45       7  
  16.13       95,176       1.51       1.44       0.70        
  16.10       160,530       1.43       1.43       0.72        
  17.47       2,335       0.28       0.28       1.70        
  16.76       1,081       1.00       1.00       0.35        
  16.96       10,597       0.61       0.61       1.22        
  17.38       5,040       0.31       0.31       1.62        
                                             
                                             
  (35.00 )     329,312       0.59       0.59       1.06       13  
  (35.52 )     89,717       1.41       1.41       0.26        
  (35.50 )     148,584       1.34       1.34       0.34        
  (34.75 )     1,310       0.23       0.23       0.97        
  (35.32 )     49       1.06       1.06       0.34        
  (34.95 )     4,825       0.59       0.59       0.17        
  (34.78 )     2,917       0.30       0.30       0.63        

 

21

 

The Hartford Growth Allocation Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

22

 

 

  

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

23

 

The Hartford Growth Allocation Fund
Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

  

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

24

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)            
   Beginning
Account Value
October 31, 2012
   Ending Account
 Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
 expense
ratio
    Days in
the
current
1/2
year
     Days
in the
full
year
 
Class A   $1,000.00   $1,113.60   $3.10   $1,000.00   $1,021.86   $2.97    0.59%   181    365 
Class B   $1,000.00   $1,108.30   $7.42   $1,000.00   $1,017.76   $7.10    1.42   181    365 
Class C   $1,000.00   $1,109.80   $6.93   $1,000.00   $1,018.22   $6.63    1.32   181    365 
Class I   $1,000.00   $1,115.70   $1.42   $1,000.00   $1,023.45   $1.36    0.27   181    365 
Class R3   $1,000.00   $1,112.60   $4.61   $1,000.00   $1,020.43   $4.41    0.88   181    365 
Class R4   $1,000.00   $1,114.10   $3.04   $1,000.00   $1,021.92   $2.90    0.58   181    365 
Class R5   $1,000.00   $1,115.90   $1.46   $1,000.00   $1,023.42   $1.39    0.28   181    365 

  

25

 

The Hartford Growth Allocation Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Growth Allocation Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the

 

26

 

 

 

following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

  

27

 

The Hartford Growth Allocation Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

28
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-GA13 4/13 113981 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

21

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD HEALTHCARE FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

  

The Hartford Healthcare Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 8
Statement of Assets and Liabilities at April 30, 213 (Unaudited) 9
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 10
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 11
Notes to Financial Statements (Unaudited) 12
Financial Highlights (Unaudited) 24
Directors and Officers (Unaudited) 27
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 29
Quarterly Portfolio Holdings Information (Unaudited) 29
Expense Example (Unaudited) 30
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 31
Principal Risks (Unaudited) 33

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Healthcare Fund inception 05/01/2000
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks long-term capital appreciation.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investments in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
Healthcare A#   20.98%       26.00%       10.25%       10.53%    
Healthcare A##        19.07%       9.01%       9.91%    
Healthcare B#   20.46%       24.90%       9.41%       10.06%*    
Healthcare B##        19.90%       9.13%       10.06%*    
Healthcare C#   20.59%       25.09%       9.48%       9.75%    
Healthcare C##        24.09%       9.48%       9.75%    
Healthcare I#   21.17%       26.40%       10.58%       10.78%    
Healthcare R3#   20.80%       25.70%       10.00%       10.56%    
Healthcare R4#   21.02%       26.07%       10.37%       10.81%    
Healthcare R5#   21.23%       26.50%       10.71%       11.03%    
Healthcare Y#   21.28%       26.59%       10.78%       11.08%    
S&P 500 Index   14.41%       16.88%       5.20%       7.88%    
S&P North American Health Care Sector Index   20.70%       29.01%       12.06%       9.63%    

 

Not Annualized
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

  

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund's Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

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 Index is 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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Healthcare Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Healthcare Class A   1.47%       1.47%    
Healthcare Class B   2.28%       2.38%    
Healthcare Class C   2.17%       2.17%    
Healthcare Class I   1.11%       1.11%    
Healthcare Class R3   1.65%       1.69%    
Healthcare Class R4   1.35%       1.38%    
Healthcare Class R5   1.05%       1.09%    
Healthcare Class Y   0.98%       0.98%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

  

Portfolio Managers            
Ann C. Gallo   Jean M. Hynes, CFA   Robert L. Deresiewicz   Kirk J. Mayer, CFA

Senior Vice President and

Global Industry Analyst

 

Senior Vice President and

Global Industry Analyst

 

Senior Vice President and

Global Industry Analyst

 

Senior Vice President and

Global Industry Analyst

 

How did the Fund perform?

The Class A shares of The Hartford Healthcare Fund returned 20.98%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the S&P North American Health Care Sector Index, which returned 20.70% for the same period. The Fund underperformed the 21.60% average return 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?

Health Care stocks (+21%) outperformed both the broader U.S. market (+14%) and the global equity market (+15%) during the period, as measured by the S&P North American Health Care Sector, S&P 500, and the MSCI World Indexes, respectively. Within the S&P North American Health Care Sector Index, all four sub-sectors posted positive returns. Specialty Pharmaceuticals/Biotechnology (+35%) gained the most while major Pharmaceuticals (+17%), Health Services (+16%), and Medical Technology (+13%) lagged on a relative basis.

 

With U.S. elections and the “Fiscal Cliff” behind us, we continue to believe that further Medicare and Medicaid cuts are inevitable as the U.S. Congress seeks to avoid prolonged sequestration, address the debt ceiling limit, and fund appropriations. While painful, we believe this approach will undoubtedly result in more targeted, thoughtful changes than the 2% across the board cut to Medicare reimbursement currently dictated by Sequestration. As we have said in the past, while it is impossible at this point to predict the details, the outcome is clear. The bar has been raised for companies seeking reimbursement for health care products and services in the U.S. and across the globe. Going forward, we believe success will likely accrue only to those companies able to offer a demonstrable improvement over current standards of care, or alternatively, to those companies able to offer an equivalent level of care but at lower cost. This is one of the key tenets upon which we have structured our portfolio.

 

The Fund outperformed its benchmark primarily due to strong security selection. Positive stock selection in Health Services was the primary driver of the Fund’s relative outperformance, more than offsetting weak security selection in Specialty Pharmaceuticals/Biotechnology, Major Pharmaceuticals, and Medical Technology.

 

Merck & Co (Major Pharmaceuticals), Express Scripts (Health Services), and Alkermes (Specialty Pharmaceuticals) contributed most to benchmark-relative results. Global pharmaceutical company Merck & Co saw shares rise as investors continued to gain confidence in Merck’s attractive vaccine portfolio and robust pipeline focused on diabetes, cancer, and cholesterol. The Fund did not own benchmark-component Express Scripts, which underperformed due to poor guidance and a contract dispute with drugstore chain Walgreens; this contributed positively to benchmark-relative performance. Shares of drug developer Alkermes rose on the announcement of positive phase two test results from its depression drug. Top contributors to absolute performance (i.e. total return) during the period also included Gilead Sciences (Specialty Pharmaceuticals) and Regeneron Pharmaceuticals (Specialty Pharmaceuticals).

 

Celgene (Specialty Pharmaceuticals), Teva Pharmaceuticals (Major Pharmaceuticals), and Volcano (Medical Technology) detracted from benchmark-relative performance. Not owning global biotechnology company Celgene hurt relative

 

3

 

The Hartford Healthcare Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

performance as the stock is a component of the benchmark and had strong performance during the period after the company reported better-than-expected long term guidance. Israel-based global pharmaceutical company Teva Pharmaceutical’s stock declined early in the period after management announced that it would take longer than expected to realize the benefits from a strategy to reduce costs. Shares of designer, manufacturer, and retailer of precision guided therapy tools Volcano Corporation fell after management provided revenue and earnings guidance below expectations. Top detractors from absolute performance during the period also included Rigel Pharmaceutical (Specialty Pharmaceuticals) and Orthofix (Medical Technology).

 

What is the outlook?

Within Health Care Services, relative to recent years, our holdings are more diversified among the various subsectors. Despite the near term uncertainty, we believe managed care companies are best positioned to address the cost issue longer term. With the U.S. elections behind us, it appears that clarity on the fate of Obamacare has improved dramatically. While uncertainty regarding the implementation of Affordable Care Act (ACA) exchanges will overhang the sector in the near / intermediate term, ultimately we believe that the impact of exchanges on the Health Maintenance Organizations (HMOs) will not be as bad as feared. Going forward we expect the HMOs to benefit from delays in implementation of the more onerous provisions of Obamacare and more discretion shifting the states from the federal government. While cost trend has stopped decelerating, the rate of acceleration remains below historic levels and is in line with expectations. We believe the uptick will remain muted as employers and individuals look to keep health care spending under control.

 

We also favor drug distributors and drug stores, which should continue to benefit from the ongoing conversion of approximately U.S. $100 billion of branded pharmaceuticals to generics over the next several years. Internationally, we see a number of attractive opportunities in emerging market stocks. In addition to the burgeoning middle class, many emerging market countries are attempting to increase domestic spending on healthcare and are increasingly looking to the private sector to achieve this objective.

 

We believe the solid performance enjoyed by the pharmaceutical and biotech sector will continue as the market begins to look through the patent cliff to continue. Cost-cutting measures, strong growth in emerging markets, an improving Food and Drug Administration posture, and robust product pipelines are offsetting the near-term loss of revenues from major patent expiries. Japanese pharmaceutical companies remain attractive given their strong balance sheets and the value of their pipelines relative to their market capitalizations, even after the recent strong moves. Likewise, certain large biotechnology companies continue to trade at attractive valuations. Among smaller biotechnology names there are select opportunities with great upside potential based on the promise of innovative products to address medical needs which are currently underserved.

 

Within Medical Technology, we continue to look for companies with underappreciated franchises or promising Research & Development projects. We continue to believe that cardiovascular disease represents one of the strongest areas for growth, with a large, under-penetrated market particularly for aerial fibrillation procedures. Longer-term prospects for the industry remain solid, as procedure volumes return to normal after the slowdown in 2010 - 2011 and emerging markets become more significant growth drivers.

 

As a result of bottom up stock decisions, the Fund ended the period most overweight (i.e. the Fund’s sector position was greater than the benchmark position) the Specialty Pharmaceuticals/Biotechnology sub-sector and most underweight the Major Pharmaceuticals sub-sector relative to the benchmark.

 

Diversification by Industry

as of April 30, 2013

 

Industry 

Percentage of
Net Assets

 
Biotechnology   24.9%
Drug Retail   4.2 
Health Care Distributors   5.9 
Health Care Equipment   17.9 
Health Care Facilities   1.6 
Health Care Supplies   0.4 
Health Care Technology   0.5 
Life Sciences Tools and Services   3.2 
Managed Health Care   10.0 
Pharmaceuticals   27.0 
Short-Term Investments   4.0 
Other Assets and Liabilities   0.4 
Total   100.0%

 

4

  

The Hartford Healthcare Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 95.6%     
     Biotechnology - 24.9%     
 70   Acorda Therapeutics, Inc. ●   $2,778 
 100   Algeta ASA ●    3,396 
 374   Alkermes plc ●    11,442 
 572   Anacor Pharmaceuticals, Inc. ●    3,833 
 302   Arena Pharmaceuticals, Inc. ●    2,486 
 264   Aveo Pharmaceuticals, Inc. ●    1,348 
 24   Biogen Idec, Inc. ●    5,213 
 190   Celldex Therapeutics, Inc. ●    2,483 
 77   Cubist Pharmaceuticals, Inc. ●    3,554 
 870   Elan Corp. plc ADR ●    10,184 
 807   Exelixis, Inc. ●    4,189 
 531   Gilead Sciences, Inc. ●    26,873 
 156   Incyte Corp. ●    3,452 
 65   Infinity Pharmaceuticals, Inc. ●    2,800 
 156   Ironwood Pharmaceuticals, Inc. ●    2,367 
 131   NPS Pharmaceuticals, Inc. ●    1,755 
 60   Onyx Pharmaceuticals, Inc. ●    5,697 
 61   Prothena Corp. plc ●    507 
 34   Puma Biotechnology, Inc. ●    1,091 
 62   Regeneron Pharmaceuticals, Inc. ●    13,317 
 566   Rigel Pharmaceuticals, Inc. ●    2,713 
 124   Seattle Genetics, Inc. ●    4,580 
 330   Tesaro, Inc. ●    9,078 
 86   Vertex Pharmaceuticals, Inc. ●    6,599 
         131,735 
     Drug Retail - 4.2%     
 179   CVS Caremark Corp.    10,431 
 241   Walgreen Co.    11,907 
         22,338 
     Health Care Distributors - 5.9%     
 322   Cardinal Health, Inc.    14,247 
 158   McKesson Corp.    16,752 
         30,999 
     Health Care Equipment - 17.9%     
 173   Abbott Laboratories    6,384 
 221   ABIOMED, Inc. ●    4,080 
 1,194   Boston Scientific Corp. ●    8,939 
 194   Covidien plc    12,379 
 272   Globus Medical, Inc. ●    4,134 
 103   Heartware International, Inc. ●    10,005 
 124   Hologic, Inc. ●    2,522 
 274   Medtronic, Inc.    12,809 
 165   Orthofix International N.V. ●    5,359 
 152   St. Jude Medical, Inc.    6,253 
 141   Stryker Corp.    9,240 
 201   Tornier N.V. ●    3,664 
 215   Volcano Corp. ●    4,366 
 61   Zimmer Holdings, Inc.    4,671 
         94,805 
     Health Care Facilities - 1.6%     
 137   HCA Holdings, Inc.    5,445 
 267   NMC Health plc ●    1,286 
 125   Vanguard Health Systems, Inc. ●    1,823 
         8,554 
     Health Care Supplies - 0.4%     
 55   Dentsply International, Inc.    2,321 
           
     Health Care Technology - 0.5%     
 203   Allscripts Healthcare Solutions, Inc. ●    2,804 
           
     Life Sciences Tools and Services - 3.2%     
 190   Agilent Technologies, Inc.    7,861 
 85   Covance, Inc. ●    6,367 
 56   MorphoSys AG ●    2,566 
         16,794 
     Managed Health Care - 10.0%     
 163   Aetna, Inc.    9,351 
 237   CIGNA Corp.    15,688 
 411   Qualicorp S.A. ●    4,003 
 394   UnitedHealth Group, Inc.    23,621 
         52,663 
     Pharmaceuticals - 27.0%     
 81   Actavis, Inc. ●    8,585 
 17   Alk-Abello A/S    1,254 
 100   Almirall S.A.    1,322 
 73   Astellas Pharma, Inc.    4,278 
 89   AstraZeneca plc ADR    4,626 
 277   Bristol-Myers Squibb Co.    11,018 
 147   Cadence Pharmaceuticals, Inc. ●    1,040 
 303   Daiichi Sankyo Co., Ltd.    5,925 
 88   Dr. Reddy's Laboratories Ltd. ADR    3,322 
 136   Eisai Co., Ltd.    6,225 
 228   Eli Lilly & Co.    12,638 
 274   Forest Laboratories, Inc. ●    10,250 
 56   H. Lundbeck A/S    1,113 
 97   Johnson & Johnson    8,233 
 248   Medicines Co. ●    8,376 
 242   Merck & Co., Inc.    11,393 
 180   Mylan, Inc. ●    5,237 
 152   Omthera Pharmaceuticals, Inc. ●    1,148 
 18   Ono Pharmaceutical Co., Ltd.    1,207 
 162   Optimer Pharmaceuticals, Inc. ●    2,507 
 22   Salix Pharmaceuticals Ltd. ●    1,129 
 504   Shionogi & Co., Ltd.    12,397 
 302   Teva Pharmaceutical Industries Ltd. ADR    11,561 
 104   UCB S.A. ●    6,122 
 282   Xenoport, Inc. ●    1,752 
 12   Zoetis, Inc.    406 
         143,064 
     Total common stocks     
     (cost $379,345)   $506,077 
           
     Total long-term investments     
     (cost $379,345)   $506,077 
           
SHORT-TERM INVESTMENTS - 4.0%     
     Repurchase Agreements - 4.0%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $846,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $863)
     
$846    0.17%, 4/30/2013   $846 

 

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

 

5

 

The Hartford Healthcare Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

  

Shares or Principal Amount    Market Value ╪ 
SHORT-TERM INVESTMENTS - 4.0% - (continued)         
     Repurchase Agreements - 4.0% - (continued)           
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $2,306, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $2,352)
         
$2,306   0.15%, 4/30/2013       $2,306 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $4,441, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $4,529)
          
 4,441   0.15%, 4/30/2013        4,441 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $6,167,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $6,291)
         
 6,167   0.14%, 4/30/2013        6,167 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,109, collateralized by
FHLMC 3.00% - 5.50%, 2037 - 2043,
FNMA 3.00%, 2043, value of $1,131)
         
 1,109   0.17%, 4/30/2013        1,109 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $3,758, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $3,833)
         
 3,758   0.14%, 4/30/2013        3,758 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$2,642, collateralized by U.S. Treasury
Note 0.25% - 1.88%, 2014 - 2019, value of
$2,695)
          
 2,642   0.17%, 4/30/2013        2,642 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$47, collateralized by U.S. Treasury Note
3.88%, 2018, value of $48)
         
 47   0.13%, 4/30/2013        47 
              21,316 
     Total short-term investments          
     (cost $21,316)       $21,316 
               
     Total investments         
     (cost $400,661) ▲    99.6%   $527,393 
     Other assets and liabilities    0.4%    2,297 
     Total net assets    100.0%   $529,690 

 

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

 

6

  

 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $406,026 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $136,597 
Unrealized Depreciation   (15,230)
Net Unrealized Appreciation  $121,367 

 

Non-income producing.

 

Foreign Currency Contracts Outstanding at April 30, 2013
 
Currency  Buy / Sell  Delivery Date 

Counterparty

  

Contract Amount

  

Market Value ╪

  

Unrealized
Appreciation/
(Depreciation)

 
JPY  Sell  07/01/2013   DEUT   $10,989   $10,261   $728 

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)  
   
Counterparty Abbreviations:  
DEUT Deutsche Bank Securities, Inc.  
   
Currency Abbreviations:  
JPY Japanese Yen  
   
Other Abbreviations:  
ADR American Depositary Receipt  
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.  
FNMA Federal National Mortgage Association  

 

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

 

7

 

The Hartford Healthcare Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks ‡  $506,077   $461,385   $44,692   $ 
Short-Term Investments   21,316        21,316     
Total  $527,393   $461,385   $66,008   $ 
Foreign Currency Contracts *   728        728     
Total  $728   $   $728   $ 

 

For the six-month period ended April 30, 2013, investments valued at $1,158 were transferred from Level 1 to Level 2, and there were no transfers from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).
The Fund has all or primarily all of the equity securities categorized in a particular level.  Refer to the Schedule of Investments for further industry breakout.
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

8

 

The Hartford Healthcare Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $400,661)  $527,393 
Cash   1 
Unrealized appreciation on foreign currency contracts   728 
Receivables:     
Investment securities sold   2,262 
Fund shares sold   1,411 
Dividends and interest   669 
Other assets   89 
Total assets   532,553 
Liabilities:     
Payables:     
Investment securities purchased   2,367 
Fund shares redeemed   274 
Investment management fees   78 
Administrative fees   1 
Distribution fees   33 
Accrued expenses   110 
Total liabilities   2,863 
Net assets  $529,690 
Summary of Net Assets:     
Capital stock and paid-in-capital  $442,400 
Distributions in excess of net investment loss   (761)
Accumulated net realized loss   (39,401)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   127,452 
Net assets  $529,690 
      
Shares authorized   500,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share  $24.33/$25.75 
Shares outstanding   13,697 
Net assets  $333,173 
Class B: Net asset value per share  $21.67 
Shares outstanding   669 
Net assets  $14,497 
Class C: Net asset value per share  $21.79 
Shares outstanding   4,235 
Net assets  $92,260 
Class I: Net asset value per share  $24.90 
Shares outstanding   2,193 
Net assets  $54,607 
Class R3: Net asset value per share  $25.09 
Shares outstanding   673 
Net assets  $16,895 
Class R4: Net asset value per share  $25.68 
Shares outstanding   519 
Net assets  $13,335 
Class R5: Net asset value per share  $26.21 
Shares outstanding   39 
Net assets  $1,021 
Class Y: Net asset value per share  $26.33 
Shares outstanding   148 
Net assets  $3,902 

 

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

 

9

 

The Hartford Healthcare Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $3,083 
Interest   6 
Less: Foreign tax withheld   (62)
Total investment income   3,027 
      
Expenses:     
Investment management fees   2,056 
Administrative services fees     
Class R3   14 
Class R4   9 
Class R5   1 
Transfer agent fees     
Class A   310 
Class B   25 
Class C   66 
Class I   27 
Class R3   1 
Class R4    
Class R5    
Class Y    
Distribution fees     
Class A   363 
Class B   70 
Class C   394 
Class R3   34 
Class R4   14 
Custodian fees   5 
Accounting services fees   32 
Registration and filing fees   47 
Board of Directors' fees   5 
Audit fees   7 
Other expenses   47 
Total expenses (before waivers and fees paid indirectly)   3,527 
Expense waivers   (2)
Transfer agent fee waivers   (5)
Commission recapture   (11)
Total waivers and fees paid indirectly   (18)
Total expenses, net   3,509 
Net Investment Loss   (482)
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   18,024 
Net realized gain on foreign currency contracts   1,829 
Net realized loss on other foreign currency transactions   (21)
Net Realized Gain on Investments and Foreign Currency Transactions   19,832 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   69,246 
Net unrealized appreciation of foreign currency contracts   457 
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   2 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   69,705 
Net Gain on Investments and Foreign Currency Transactions   89,537 
Net Increase in Net Assets Resulting from Operations  $89,055 

 

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

 

10

 

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

  

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment loss  $(482)  $(487)
Net realized gain on investments and foreign currency transactions   19,832    36,622 
Net unrealized appreciation of investments and foreign currency transactions   69,705    32,766 
Net Increase in Net Assets Resulting from Operations   89,055    68,901 
Capital Share Transactions:          
Class A   (396)   8,673 
Class B   (2,148)   (5,869)
Class C   3,383    (3,804)
Class I   7,880    (180)
Class R3   1,685    5,030 
Class R4   (1,229)   1,163 
Class R5   (1,813)   729 
Class Y   (35)   154 
Net increase from capital share transactions   7,327    5,896 
Net Increase in Net Assets   96,382    74,797 
Net Assets:          
Beginning of period   433,308    358,511 
End of period  $529,690   $433,308 
Undistributed (distribution in excess of) net investment income (loss)  $(761)  $(279)

 

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

 

11

 

The Hartford Healthcare Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Healthcare 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the

 

12

  

 

 

close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along

 

13

 

The Hartford Healthcare Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, income, and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions.

 

14

  

 

 

The Fund does not isolate that portion of portfolio investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

15

 

The Hartford Healthcare Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

b)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a value at least equal to the amount of the commitment. As of April 30, 2013, the Fund had no outstanding when-issued or delayed-delivery investments.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $728   $   $   $   $   $728 
Total  $   $728   $   $   $   $   $728 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

16

  

 

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain on Derivatives Recognized as a Result of Operations:                          
Net realized gain on foreign currency contracts  $   $1,829   $   $   $   $   $1,829 
Total  $   $1,829   $   $   $   $   $1,829 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:            
Net change in unrealized appreciation of foreign currency contracts  $   $457   $   $   $   $   $457 
Total  $   $457   $   $   $   $   $457 

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

17

 

The Hartford Healthcare Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

c)Components of Distributable Earnings – The Fund’s components of distributable earnings (deficit) on a tax basis at October 31, 2012, are as follows:

 

   Amount 
Accumulated Capital Losses *  $(53,876)
Unrealized Appreciation †   52,111 
Total Accumulated Deficit  $(1,765)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $208 
Accumulated Net Realized Gain (Loss)   21 
Capital Stock and Paid-in-Capital   (229)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2017  $53,876 
Total  $53,876 

 

During the year ended October 31, 2012, the Fund utilized $35,363 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

18

  

 

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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%  

 

19

 

The Hartford Healthcare Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

c)Operating Expenses Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 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%      1.65%      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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.42%
Class B   2.25 
Class C   2.12 
Class I   1.09 
Class R3   1.65 
Class R4   1.35 
Class R5   1.05 
Class Y   0.96 

  

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $467 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For

 

20

  

 

 

Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any

related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class Y   4%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $72,266 
Sales Proceeds Excluding U.S. Government Obligations   82,673 

 

21

 

The Hartford Healthcare Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
 Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
 Shares
 
Class A                                                  
Shares   1,407        (1,473)       (66)   4,253        (3,845)       408 
Amount  $30,986   $   $(31,382)  $   $(396)  $79,496   $   $(70,823)  $   $8,673 
Class B                                                  
Shares   14        (124)       (110)   59        (416)       (357)
Amount  $265   $   $(2,413)  $   $(2,148)  $995   $   $(6,864)  $   $(5,869)
Class C                                                  
Shares   479        (324)       155    471        (713)       (242)
Amount  $9,588   $   $(6,205)  $   $3,383   $8,136   $   $(11,940)  $   $(3,804)
Class I                                                  
Shares   540        (206)       334    493        (517)       (24)
Amount  $12,421   $   $(4,541)  $   $7,880   $9,483   $   $(9,663)  $   $(180)
Class R3                                                  
Shares   176        (106)       70    402        (139)       263 
Amount  $4,014   $   $(2,329)  $   $1,685   $7,715   $   $(2,685)  $   $5,030 
Class R4                                                  
Shares   127        (191)       (64)   270        (209)       61 
Amount  $3,012   $   $(4,241)  $   $(1,229)  $5,368   $   $(4,205)  $   $1,163 
Class R5                                                  
Shares   27        (103)       (76)   60        (23)       37 
Amount  $641   $   $(2,454)  $   $(1,813)  $1,202   $   $(473)  $   $729 
Class Y                                                  
Shares   10        (12)       (2)   25        (17)       8 
Amount  $238   $   $(273)  $   $(35)  $501   $   $(347)  $   $154 
Total                                                  
Shares   2,780        (2,539)       241    6,033        (5,879)       154 
Amount  $61,165   $   $(53,838)  $   $7,327   $112,896   $   $(107,000)  $   $5,896 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   28   $612 
For the Year Ended October 31, 2012   93   $1,727 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.Industry Classifications:

 

Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds,” equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s.

 

22

  

 

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

23

  

The Hartford Healthcare Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
 Period
   Net Investment 
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)                    
A  $20.11   $(0.01)  $4.23   $4.22   $   $   $   $   $24.33 
B   17.99    (0.09)   3.77    3.68                    21.67 
C   18.07    (0.08)   3.80    3.72                    21.79 
I   20.55    0.03    4.32    4.35                    24.90 
R3   20.77    (0.04)   4.36    4.32                    25.09 
R4   21.22        4.46    4.46                    25.68 
R5   21.62    0.04    4.55    4.59                    26.21 
Y   21.71    0.04    4.58    4.62                    26.33 
                                              
For the Year Ended October 31, 2012                    
A   16.80        3.31    3.31                    20.11 
B   15.15    (0.17)   3.01    2.84                    17.99 
C   15.20    (0.12)   2.99    2.87                    18.07 
I   17.10    0.07    3.38    3.45                    20.55 
R3   17.38    (0.02)   3.41    3.39                    20.77 
R4   17.70    0.02    3.50    3.52                    21.22 
R5   17.98    0.08    3.56    3.64                    21.62 
Y   18.05    0.10    3.56    3.66                    21.71 
                                              
For the Year Ended October 31, 2011 (E)                    
A   15.21    (0.04)   1.63    1.59                    16.80 
B   13.83    (0.16)   1.48    1.32                    15.15 
C   13.86    (0.14)   1.48    1.34                    15.20 
I   15.44    0.02    1.64    1.66                    17.10 
R3   15.76    (0.07)   1.69    1.62                    17.38 
R4   16.01    (0.02)   1.71    1.69                    17.70 
R5   16.21    0.04    1.73    1.77                    17.98 
Y   16.26    0.05    1.74    1.79                    18.05 
                                              
For the Year Ended October 31, 2010                    
A   13.07        2.14    2.14                    15.21 
B   11.98    (0.14)   1.99    1.85                    13.83 
C   11.99    (0.11)   1.98    1.87                    13.86 
I   13.23    0.04    2.17    2.21                    15.44 
R3   13.57    (0.02)   2.21    2.19                    15.76 
R4   13.74    0.02    2.25    2.27                    16.01 
R5   13.87    0.06    2.28    2.34                    16.21 
Y   13.90    0.08    2.28    2.36                    16.26 
                                              
For the Year Ended October 31, 2009 (E)                    
A   12.69    (0.02)   1.01    0.99        (0.61)       (0.61)   13.07 
B   11.74    (0.08)   0.93    0.85        (0.61)       (0.61)   11.98 
C   11.78    (0.10)   0.92    0.82        (0.61)       (0.61)   11.99 
I   12.81    0.01    1.02    1.03        (0.61)       (0.61)   13.23 
R3   13.19    (0.05)   1.04    0.99        (0.61)       (0.61)   13.57 
R4   13.29        1.06    1.06        (0.61)       (0.61)   13.74 
R5   13.38    0.03    1.07    1.10        (0.61)       (0.61)   13.87 
Y   13.40    0.01    1.10    1.11        (0.61)       (0.61)   13.90 
                                              
For the Year Ended October 31, 2008                    
A   18.85    (0.03)   (4.83)   (4.86)       (1.30)       (1.30)   12.69 
B   17.67    (0.18)   (4.45)   (4.63)       (1.30)       (1.30)   11.74 
C   17.71    (0.14)   (4.49)   (4.63)       (1.30)       (1.30)   11.78 
I   18.96    0.01    (4.86)   (4.85)       (1.30)       (1.30)   12.81 
R3   19.59    (0.03)   (5.07)   (5.10)       (1.30)       (1.30)   13.19 
R4   19.66        (5.07)   (5.07)       (1.30)       (1.30)   13.29 
R5   19.70    0.03    (5.05)   (5.02)       (1.30)       (1.30)   13.38 
Y   19.74    0.05    (5.09)   (5.04)       (1.30)       (1.30)   13.40 

 

24

 

- Ratios and Supplemental Data -

  

Total Return(B)   Net Assets at End of Period
 (000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
                      
 20.98%(F)  $333,173    1.43%(G)   1.43%(G)   (0.09)%(G)   16%
 20.46(F)   14,497    2.33(G)   2.25(G)   (0.92)(G)    
 20.59(F)   92,260    2.13(G)   2.13(G)   (0.80)(G)    
 21.17(F)   54,607    1.09(G)   1.09(G)   0.23(G)    
 20.80(F)   16,895    1.67(G)   1.65(G)   (0.32)(G)    
 21.02(F)   13,335    1.37(G)   1.35(G)   (0.03)(G)    
 21.23(F)   1,021    1.08(G)   1.05(G)   0.31(G)    
 21.28(F)   3,902    0.96(G)   0.96(G)   0.37(G)    
                            
                            
 19.70    276,741    1.47    1.47        46 
 18.75    14,015    2.38    2.28    (0.84)    
 18.88    73,728    2.17    2.17    (0.71)    
 20.18    38,199    1.11    1.11    0.35     
 19.51    12,521    1.69    1.65    (0.15)    
 19.89    12,363    1.38    1.35    0.11     
 20.24    2,489    1.09    1.05    0.43     
 20.28    3,252    0.98    0.98    0.48     
                            
                            
 10.45    224,294    1.49    1.49    (0.24)   44 
 9.54    17,208    2.38    2.28    (1.04)    
 9.67    65,692    2.18    2.18    (0.93)    
 10.75    32,213    1.18    1.18    0.09     
 10.28    5,905    1.71    1.65    (0.39)    
 10.56    9,241    1.39    1.35    (0.09)    
 10.92    1,403    1.09    1.05    0.21     
 11.01    2,555    0.99    0.99    0.27     
                            
                            
 16.37    236,781    1.49    1.49    (0.03)   36 
 15.44    23,023    2.39    2.28    (0.84)    
 15.60    71,124    2.18    2.18    (0.72)    
 16.70    14,176    1.22    1.22    0.24     
 16.14    3,549    1.70    1.70    (0.17)    
 16.52    7,939    1.37    1.37    0.11     
 16.87    1,895    1.08    1.08    0.38     
 16.98    2,294    0.97    0.97    0.50     
                            
                            
 8.48    234,603    1.58    1.55    (0.18)   80 
 7.95    31,746    2.54    2.11    (0.75)    
 7.66    74,424    2.28    2.28    (0.91)    
 8.73    15,934    1.27    1.27    0.04     
 8.15    1,330    1.79    1.79    (0.36)    
 8.64    6,147    1.40    1.40         
 8.89    1,412    1.11    1.11    0.27     
 8.95    1,813    0.99    0.99    0.11     
                            
                            
 (27.59)   299,699    1.41    1.41    (0.18)   67 
 (28.17)   45,475    2.32    2.24    (1.02)    
 (28.10)   93,208    2.15    2.15    (0.92)    
 (27.36)   43,036    1.11    1.11    0.10     
 (27.78)   503    1.91    1.85    (0.67)    
 (27.52)   3,921    1.35    1.35    (0.02)    
 (27.18)   1,449    1.05    1.05    0.27     
 (27.23)   155,104    0.95    0.95    0.28     

  

25

 

The Hartford Healthcare Fund
Financial Highlights – (continued)

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.

 

26

 

The Hartford Healthcare Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

27

 

The Hartford Healthcare Fund
Directors and Officers (Unaudited) – (continued)

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

  

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

28

  

 

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 Healthcare 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)            
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
  Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,209.80   $7.81   $1,000.00   $1,017.73   $7.13   1.43%  181    365 
Class B  $1,000.00   $1,204.60   $12.32   $1,000.00   $1,013.62   $11.25   2.25   181    365 
Class C  $1,000.00   $1,205.90   $11.65   $1,000.00   $1,014.24   $10.63   2.13   181    365 
Class I  $1,000.00   $1,211.70   $5.98   $1,000.00   $1,019.39   $5.46   1.09   181    365 
Class R3  $1,000.00   $1,208.00   $9.05   $1,000.00   $1,016.60   $8.27   1.65   181    365 
Class R4  $1,000.00   $1,210.20   $7.41   $1,000.00   $1,018.09   $6.77   1.35   181    365 
Class R5  $1,000.00   $1,212.30   $5.77   $1,000.00   $1,019.58   $5.27   1.05   181    365 
Class Y  $1,000.00   $1,212.80   $5.29   $1,000.00   $1,020.01   $4.83   0.96   181    365 

 

30

 

The Hartford Healthcare Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Healthcare Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

31

 

The Hartford Healthcare Fund
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

32

 

The Hartford Healthcare Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Health Sector Risk: Risks of focusing investments on the health care sector include regulatory and legal developments, patent considerations, intense competitive pressures, rapid technological changes and potential product obsolescence, and liquidity risk.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Small/Mid-cap Stock Risk: Small- and mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

33

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-HC13 4/13 113984 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

24

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD HIGH YIELD FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford High Yield Fund

  

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 6
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 14
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 15
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 16
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 17
Notes to Financial Statements (Unaudited) 18
Financial Highlights (Unaudited) 34
Directors and Officers (Unaudited) 37
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 39
Quarterly Portfolio Holdings Information (Unaudited) 39
Expense Example (Unaudited) 40
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 41
Principal Risks (Unaudited) 43

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

  

 

  

The Hartford High Yield Fund inception 09/30/1998

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks to provide high current income, and long-term total return.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

  

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
High Yield A#   6.42%       11.76%       9.01%       7.68%    
High Yield A##        6.73%       8.02%       7.19%    
High Yield B#   5.92%       11.00%       8.21%       7.08%*    
High Yield B##        6.00%       7.92%       7.08%*    
High Yield C#   6.04%       10.97%       8.22%       6.92%    
High Yield C##        9.97%       8.22%       6.92%    
High Yield I#   6.51%       12.13%       9.41%       7.91%    
High Yield R3#   6.26%       11.58%       8.72%       7.68%    
High Yield R4#   6.41%       11.90%       9.07%       7.89%    
High Yield R5#   6.57%       12.10%       9.33%       8.06%    
High Yield Y#   6.47%       12.17%       9.38%       8.10%    
Barclays U.S. Corporate High-Yield Index   7.26%       13.98%       11.11%       9.69%    

 

Not Annualized
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 4.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 5/31/07. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of March 5, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays U.S. Corporate High-Yield 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 Securities and Exchange Commission.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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 invdestment adviser, without which performance would have been lower. For information on current expense waivers/reimbursements, please see the prospectus.

 

2

 

The Hartford High Yield Fund
Manager Discussion
April 30, 2013 (Unaudited)

  

Operating Expenses*
   Net   Gross 
High Yield Class A   1.05%       1.12%    
High Yield Class B   1.80%       2.00%    
High Yield Class C   1.80%       1.82%    
High Yield Class I   0.80%       0.83%    
High Yield Class R3   1.35%       1.49%    
High Yield Class R4   1.05%       1.16%    
High Yield Class R5   0.75%       0.86%    
High Yield Class Y   0.70%       0.73%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

  

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers
Christopher A. Jones, CFA
Senior Vice President and Fixed Income Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford High Yield Fund returned 6.42%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmark, the Barclays U.S. Corporate High-Yield Index, which returned 7.26% for the same period. The Fund also underperformed the 6.88% average return of the Lipper High Current Yield 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 semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield 0.02% while shorter term yields declined anywhere between 0.02%-0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage Backed Securities, outperformed Treasuries on a duration-adjusted basis.

 

High Yield outperformed all other U.S. fixed income sectors over the six-month period on both a total return and excess return basis. The Barclays U.S. Corporate High-Yield Index returned 7.26% for the six-months ended April 30, 2013 and outperformed duration equivalent Treasuries by 6.4%. The Option-Adjusted Spread of the Barclays U.S. Corporate High-Yield Index was 4.3% on April 30, 2013, a decrease of 1.11% (from 5.4%) from October 31, 2012.

 

The Fund underperformed its benchmark, the Barclays U.S. Corporate High-Yield Index, during the six-month period as the Fund maintained a slightly defensive, higher quality bias relative to the index. Additionally, both sector allocation and security selection decisions weighed on relative results. An overweight (i.e. the Fund’s sector position was greater than the benchmark position) to the technology sector contributed modestly to relative performance during the period, while an overweight to the media cable sector detracted from relative returns. We view the media cable segment as attractive due to

 

3

  

The Hartford High Yield Fund
Manager Discussion  – (continued)
April 30, 2013 (Unaudited)

 

its historically stable cash flows, high Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margins, and relatively strong balance sheets of issuers across the sector. Historically, these characteristics have allowed the sector to perform well across the down side of credit cycles. Within the technology sector, we see the best opportunities in payment processing and service companies. This is due to their recurring revenue streams, low capital expenditures, and high barriers to entry. We are generally more skeptical of hardware companies. Within the wireless sector, exposure to NII Holdings represented the primary contributor to positive relative performance during the period. NII Holdings showed an improvement in operations and announced a tower sale in Peru which improved the firm’s liquidity profile. Within the chemicals sector, an overweight to Ferro Corp benefitted relative returns. Ferro had weak fourth quarter results due to soft demand in solar and overall weakness in Europe. In the energy sector, an overweight to Endeavor International detracted from relative results. The company had to suspend drilling in a North Sea well damaged by a severe storm and was exploring possible asset sales. Finally, an overweight to Radiation Therapy hurt relative performance in the health care sector. The combination of reimbursement cuts and volume challenges within the prostate business line have made 2013 a difficult year for Radiation Therapy.

 

Bond credit quality positioning had minimal impact on performance during the period, although a slight underweight to CCC-rated bonds modestly detracted from relative results, as risk assets rallied during the period. A small cash position also served as a drag to relative performance. Finally, the Barclays U.S. Corporate High-Yield Index credit default swap positions, implemented to gain synthetic index exposure, modestly helped relative performance.

 

What is the outlook?

Our outlook for U.S. high yield bonds remains positive, given what we believe are strong fundamentals, attractive yield advantage, and a supportive technical backdrop, albeit less robust than last year. The trailing 12-month par-weighted default rate declined to 0.99% in April, well below the 25-year average of 4.2% (source JP Morgan). We believe that issuers have meaningfully strengthened their balance sheets and liquidity positions since the 2008 credit crisis, and proceeds from new issuance have been used mainly to refinance existing debt, although there are signs of a pickup in shareholder-friendly actions such as Mergers & Acquisitions activity and leveraged buyouts. The sector’s average yield of 5.2% compares favorably to other fixed income sectors. However, with many bond issues trading above par, it appears that capital appreciation is likely to be limited because of the callable nature of high yield debt.

 

In aggregate, we recognize the risks of a severe macro economic backdrop. However, we believe that high yield still offers a reasonably attractive entry point for investors with a longer-time horizon. Over the course of 2013, we expect that a sustained global low-interest-rate environment will drive continued brisk demand for high-yield assets from income-hungry investors.

 

Distribution by Credit Quality

as of April 30, 2013

Credit Rating *  Percentage of
Net Assets
 
Baa / BBB   1.8%
Ba / BB   30.6 
B   40.0 
Caa / CCC or Lower   17.1 
Unrated   3.4 
Non-Debt Securities and Other Short-Term Instruments   5.8 
Other Assets & Liabilities   1.3 
Total   100.0%

  

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

4

 

 

 

Diversification by Industry

as of April 30, 2013

 

Industry  Percentage of
Net Assets
 
Fixed Income Securities     
Accommodation and Food Services   1.8%
Administrative Waste Management and Remediation   1.5 
Agriculture, Forestry, Fishing and Hunting   0.2 
Arts, Entertainment and Recreation   8.6 
Beverage and Tobacco Product Manufacturing   0.6 
Chemical Manufacturing   2.0 
Computer and Electronic Product Manufacturing   2.8 
Construction   3.2 
Fabricated Metal Product Manufacturing   0.9 
Finance and Insurance   12.8 
Food Manufacturing   0.5 
Food Services   0.6 
Furniture and Related Product Manufacturing   0.1 
Health Care and Social Assistance   6.7 
Information   17.0 
Machinery Manufacturing   1.0 
Mining   2.6 
Miscellaneous Manufacturing   1.9 
Motor Vehicle and Parts Manufacturing   1.7 
Nonmetallic Mineral Product Manufacturing   1.3 
Other Services   1.1 
Paper Manufacturing   0.3 
Petroleum and Coal Products Manufacturing   6.8 
Pipeline Transportation   1.9 
Plastics and Rubber Products Manufacturing   1.0 
Primary Metal Manufacturing   0.3 
Printing and Related Support Activities   0.3 
Professional, Scientific and Technical Services   1.0 
Real Estate, Rental and Leasing   5.0 
Retail Trade   4.2 
Transportation Equipment Manufacturing   0.4 
Utilities   2.4 
Wholesale Trade   0.4 
Total   92.9%
Equity Securities     
Diversified Financials   1.1 
Energy   0.1 
Software and Services   0.0 
Telecommunication Services   0.2 
Total   1.4%
Short-Term Investments   4.4 
Other Assets and Liabilities   1.3 
Total   100.0%

 

5

 

The Hartford High Yield Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(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    0.00%, 12/25/2036 ■●   $ 
           
     Total asset & commercial mortgage backed securities     
     (cost $916)   $ 
           

CORPORATE BONDS - 90.4%

     
     Accommodation and Food Services - 1.8%     
     Caesars Entertainment Operating Co., Inc.     
$4,075   8.50%, 02/15/2020   $3,932 
     Caesars Operating Escrow     
 1,815   9.00%, 02/15/2020 ■    1,788 
     Choice Hotels International, Inc.     
 211   5.70%, 08/28/2020    233 
 2,770   5.75%, 07/01/2022 ‡    3,103 
     Wynn Las Vegas LLC     
 1,456   7.75%, 08/15/2020    1,667 
         10,723 
     Administrative Waste Management and Remediation - 1.5%     
     Casella Waste Systems, Inc.     
 1,770   7.75%, 02/15/2019    1,712 
     Equinix, Inc.     
 150   4.88%, 04/01/2020    157 
 895   5.38%, 04/01/2023    937 
 1,455   7.00%, 07/15/2021    1,648 
     Iron Mountain, Inc.     
 1,585   5.75%, 08/15/2024    1,633 
 2,631   7.75%, 10/01/2019    2,973 
         9,060 
     Agriculture, Forestry, Fishing and Hunting - 0.2%     
     Ainsworth Lumber Ltd.     
 990   7.50%, 12/15/2017 ■    1,079 
           
     Arts, Entertainment and Recreation - 8.6%     
     AMC Entertainment, Inc.     
 4,211   8.75%, 06/01/2019    4,637 
 2,039   9.75%, 12/01/2020    2,370 
     Carlson Wagonlit B.V.     
 936   6.88%, 06/15/2019 ■    992 
     CCO Holdings LLC     
 5,130   5.25%, 09/30/2022    5,226 
 1,640   7.25%, 10/30/2017    1,775 
 3,435   7.38%, 06/01/2020    3,856 
 2,170   8.13%, 04/30/2020    2,452 
     Cedar Fair L.P.     
 1,560   5.25%, 03/15/2021 ■    1,595 
     Chester Downs & Marina LLC     
 721   9.25%, 02/01/2020 ■    695 
     Cinemark USA, Inc.     
 370   5.13%, 12/15/2022 ■    383 
     Emdeon, Inc.     
 1,625   11.00%, 12/31/2019    1,897 
     Fidelity National Information Services, Inc.     
 1,945   5.00%, 03/15/2022 ╦    2,144 
     Gray Television, Inc.     
 3,375   7.50%, 10/01/2020    3,662 
     Great Canadian Gaming Co.     
CAD   935     6.63%, 07/25/2022 ■    975 
     Greektown Superholdings, Inc.     
 2,840   13.00%, 07/01/2015    3,050 
     Isle of Capri Casinos, Inc.     
 2,970   8.88%, 06/15/2020    3,267 
     NAI Entertainment Holdings LLC     
 860   8.25%, 12/15/2017 ■    933 
     NBC Universal Enterprise     
 1,980   5.25%, 12/19/2049 ■    1,999 
     Regal Entertainment Group     
 336   5.75%, 02/01/2025    339 
 2,450   9.13%, 08/15/2018    2,744 
     Sirius XM Radio, Inc.     
 5,025   5.25%, 08/15/2022 ■    5,188 
     Univision Communications, Inc.     
 2,090   6.75%, 09/15/2022 ■    2,320 
         52,499 
     Beverage and Tobacco Product Manufacturing - 0.6%     
     Constellation Brands, Inc.     
 380   4.25%, 05/01/2023 ☼    380 
 2,830   6.00%, 05/01/2022    3,265 
         3,645 
     Chemical Manufacturing - 2.0%     
     Ferro Corp.     
 2,632   7.88%, 08/15/2018    2,770 
     Hexion Specialty Chemicals     
 2,145   8.88%, 02/01/2018    2,274 
     Hexion U.S. Finance Corp.     
 880   6.63%, 04/15/2020    917 
     Ineos Group Holdings plc     
 4,579   8.50%, 02/15/2016 ■    4,654 
     MPM Escrow LLC/MPM Finance Corp.     
 1,455   8.88%, 10/15/2020    1,586 
         12,201 
     Computer and Electronic Product Manufacturing - 2.8%     
     CDW Escrow Corp.     
 5,970   8.50%, 04/01/2019    6,694 
     CDW LLC/CDW Finance     
 1,970   8.00%, 12/15/2018    2,209 
     Freescale Semiconductor, Inc.     
 1,390   8.05%, 02/01/2020    1,498 
 1,165   9.25%, 04/15/2018 ■    1,282 
     Micron Technology, Inc.     
 1,020   1.63%, 02/15/2033 ۞■    1,155 
 869   2.13%, 02/15/2033 ۞■    969 
     ON Semiconductor Corp.     
 887   2.63%, 12/15/2026 ۞    1,008 
     Seagate HDD Cayman     
 1,555   7.75%, 12/15/2018    1,714 
     Sensata Technologies B.V.     
 680   4.88%, 10/15/2023 ■    695 
         17,224 
     Construction - 3.2%     
     American Builders & Contractors Supply Co., Inc.     
 535   5.63%, 04/15/2021 ■    556 
     K Hovnanian Enterprises, Inc.     
 2,426   9.13%, 11/15/2020 ■    2,754 

 

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

 

6

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 

CORPORATE BONDS - 90.4% - (continued)

     
     Construction - 3.2% - (continued)     
     KB Home     
$1,895   1.38%, 02/01/2019 ۞   $2,197 
 1,635   7.50%, 09/15/2022    1,864 
 2,660   8.00%, 03/15/2020    3,132 
     Lennar Corp.     
 3,630   4.75%, 12/15/2017    3,843 
 2,095   4.75%, 11/15/2022 ■    2,111 
     Pulte Homes, Inc.     
 570   6.38%, 05/15/2033    579 
 1,523   7.88%, 06/15/2032    1,692 
     Ryland Group, Inc.     
 705   5.38%, 10/01/2022    731 
         19,459 
     Fabricated Metal Product Manufacturing - 0.9%     
     BWAY Holding Co.     
 1,473   10.00%, 06/15/2018    1,650 
     Masco Corp.     
 1,430   5.85%, 03/15/2017    1,579 
 795   5.95%, 03/15/2022    900 
 225   7.13%, 03/15/2020    262 
     Ply Gem Industries, Inc.     
 890   9.38%, 04/15/2017    982 
         5,373 
     Finance and Insurance - 12.2%     
     Ally Financial, Inc.     
 4,240   5.50%, 02/15/2017    4,621 
 2,265   7.50%, 09/15/2020    2,797 
     CIT Group, Inc.     
 1,555   5.25%, 03/15/2018    1,718 
 5,299   5.50%, 02/15/2019 ■    5,975 
 2,260   6.63%, 04/01/2018 ■    2,639 
     Community Choice Financial, Inc.     
 2,700   10.75%, 05/01/2019    2,626 
     Credit Acceptance Corp.     
 1,036   9.13%, 02/01/2017    1,129 
     Felcor Lodging L.P.     
 3,510   5.63%, 03/01/2023 ■    3,637 
     Fibria Overseas Finance Ltd.     
 2,505   7.50%, 05/04/2020 ■    2,850 
     Ineos Finance plc     
 821   7.50%, 05/01/2020 ■    918 
 691   8.38%, 02/15/2019 ■    779 
 1,285   9.00%, 05/15/2015 ■    1,346 
     ING US, Inc.     
 1,795   5.50%, 07/15/2022 ■    2,041 
     Ladder Capital Finance Holdings LLC     
 2,355   7.38%, 10/01/2017 ■    2,446 
     Lloyds Banking Group plc     
 4,380   7.88%, 11/01/2020 ■    4,783 
     National Money Mart Co.     
 2,615   10.38%, 12/15/2016    2,814 
     Nationstar Mortgage LLC     
 140   6.50%, 07/01/2021 ■    147 
 2,496   7.88%, 10/01/2020 ■    2,796 
     Nuveen Investments, Inc.     
 2,865   9.13%, 10/15/2017 ■    3,058 
 2,390   9.50%, 10/15/2020 ■    2,575 
     Provident Funding Associates L.P.     
 3,464   10.25%, 04/15/2017 ■    3,871 
     Royal Bank of Scotland Group plc     
 4,255   6.13%, 12/15/2022    4,578 
     SLM Corp.     
 1,735   6.25%, 01/25/2016    1,887 
 1,354   7.25%, 01/25/2022    1,506 
 1,655   8.45%, 06/15/2018    1,943 
     Softbank Corp.     
 2,600   4.50%, 04/15/2020 ■    2,694 
     TitleMax, Inc.     
 3,655   13.25%, 07/15/2015    3,984 
     UBS AG Stamford CT     
 1,885   7.63%, 08/17/2022    2,186 
         74,344 
     Food Manufacturing - 0.5%     
     Pinnacle Foods Finance LLC     
 2,695   4.88%, 05/01/2021 ■    2,773 
           
     Food Services - 0.6%     
     ARAMARK Corp.     
 3,440   5.75%, 03/15/2020 ■    3,603 
           
     Furniture and Related Product Manufacturing - 0.1%     
     Tempur-Pedic International, Inc.     
 410   6.88%, 12/15/2020 ■    447 
           
     Health Care and Social Assistance - 6.6%     
     Alere, Inc.     
 3,115   9.00%, 05/15/2016    3,271 
     Biomet, Inc.     
 4,170   6.50%, 08/01/2020 - 10/01/2020 ■    4,411 
     Community Health Systems, Inc.     
 1,675   5.13%, 08/15/2018    1,792 
 1,985   7.13%, 07/15/2020    2,218 
     Exelixis, Inc.     
 1,200   4.25%, 08/15/2019 ۞    1,248 
     Fresenius Medical Care U.S. Finance II, Inc.     
 2,045   5.88%, 01/31/2022 ■    2,342 
     HCA Holdings, Inc.     
 1,735   6.25%, 02/15/2021    1,900 
     HCA, Inc.     
 3,005   7.25%, 09/15/2020    3,332 
 6,576   7.50%, 11/15/2095    6,099 
 1,724   8.50%, 04/15/2019    1,901 
     Health Management Associates, Inc.     
 2,562   7.38%, 01/15/2020    2,844 
     Hologic, Inc.     
 2,925   2.00%, 03/01/2042 ۞    2,982 
 310   6.25%, 08/01/2020    335 
     Radiation Therapy Services, Inc.     
 571   8.88%, 01/15/2017    545 
 2,500   9.88%, 04/15/2017    1,500 
     Savient Pharmaceuticals, Inc.     
 2,815   4.75%, 02/01/2018 ۞    676 
     Tenet Healthcare Corp.     
 1,075   4.50%, 04/01/2021 ■    1,096 
 1,610   4.75%, 06/01/2020 ■    1,674 
         40,166 

  

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

 

7

  

The Hartford High Yield Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 

CORPORATE BONDS - 90.4% - (continued)

     
     Information - 16.8%     
     Altice Financing S.A.     
$1,285   7.88%, 12/15/2019 ■   $1,420 
 925   9.88%, 12/15/2020 ■    1,054 
     Audatex North America, Inc.     
 2,265   6.75%, 06/15/2018 ■    2,438 
     CSC Holdings, Inc.     
 1,505   7.63%, 07/15/2018    1,768 
     DISH DBS Corp.     
 1,770   5.00%, 03/15/2023 ■    1,717 
 3,655   5.88%, 07/15/2022    3,728 
 1,345   6.75%, 06/01/2021    1,453 
 3,997   7.88%, 09/01/2019    4,557 
     First Data Corp.     
 1,525   6.75%, 11/01/2020 ■    1,635 
 4,945   7.38%, 06/15/2019 ■    5,378 
 3,805   8.25%, 01/15/2021 ■    4,043 
     GCI, Inc.     
 550   6.75%, 06/01/2021    525 
     Harron Communications L.P.     
 2,630   9.13%, 04/01/2020 ■    2,982 
     Hughes Satellite Systems Corp.     
 2,300   6.50%, 06/15/2019    2,559 
     Inmarsat Finance plc     
 615   7.38%, 12/01/2017 ■    653 
     Intelsat Jackson Holdings S.A.     
 1,315   7.50%, 04/01/2021    1,483 
 4,034   8.50%, 11/01/2019    4,538 
     Intelsat Luxembourg S.A.     
 640   6.75%, 06/01/2018 ■    674 
 6,050   7.75%, 06/01/2021 ■    6,383 
     InterActiveCorp     
 1,035   4.75%, 12/15/2022 ■    1,040 
     Lawson Software, Inc.     
 1,780   9.38%, 04/01/2019    2,029 
     Level 3 Communications, Inc.     
 405   8.88%, 06/01/2019 ■    447 
     Level 3 Escrow, Inc.     
 541   8.13%, 07/01/2019    596 
     Level 3 Financing, Inc.     
 1,119   7.00%, 06/01/2020 ■    1,183 
 4,355   10.00%, 02/01/2018    4,796 
     MetroPCS Wireless, Inc.     
 1,580   6.63%, 11/15/2020    1,710 
 3,340   7.88%, 09/01/2018    3,678 
     Nara Cable Funding Ltd.     
 3,290   8.88%, 12/01/2018 ■    3,520 
     NII Capital Corp.     
 2,420   7.63%, 04/01/2021    2,142 
     NII International Telecom Sarl     
 600   11.38%, 08/15/2019 ■    693 
     Paetec Holding Corp.     
 1,361   9.88%, 12/01/2018    1,565 
     SBA Communications Corp.     
 840   5.63%, 10/01/2019 ■    884 
     SBA Telecommunications, Inc.     
 671   5.75%, 07/15/2020 ■    715 
     Softbrands, Inc.     
 1,840   11.50%, 07/15/2018    2,171 
     Sprint Nextel Corp.     
 1,255   7.00%, 03/01/2020 ■    1,427 
 2,103   9.00%, 11/15/2018 ■    2,587 
     Syniverse Holdings, Inc.     
 3,595   9.13%, 01/15/2019    3,981 
     Unitymedia Hessen GmbH & Co.     
 4,445   5.50%, 01/15/2023 ■    4,601 
     UPCB Finance III Ltd.     
 2,015   6.63%, 07/01/2020 ■    2,191 
     UPCB Finance VI Ltd.     
 1,310   6.88%, 01/15/2022 ■    1,438 
     Videotron Ltee     
 1,651   9.13%, 04/15/2018    1,738 
     Wind Acquisition Finance S.A.     
 1,185   6.50%, 04/30/2020 ■    1,241 
 1,360   7.25%, 02/15/2018 ■    1,428 
     Windstream Corp.     
 905   6.38%, 08/01/2023    937 
 2,050   7.50%, 04/01/2023    2,234 
 1,045   7.75%, 10/15/2020    1,147 
     Zayo Group LLC     
 445   8.13%, 01/01/2020    502 
 320   10.13%, 07/01/2020    378 
         101,987 
     Machinery Manufacturing - 1.0%     
     Case New Holland, Inc.     
 4,344   7.88%, 12/01/2017    5,169 
     Gibraltar Industries, Inc.     
 685   6.25%, 02/01/2021 ■    735 
     Weekley Homes LLC     
 395   6.00%, 02/01/2023 ■    410 
         6,314 
     Mining - 2.2%     
     American Rock Salt Co. LLC     
 756   8.25%, 05/01/2018 ■    731 
     FMG Resources Pty Ltd.     
 571   6.00%, 04/01/2017 ■    594 
 6,019   7.00%, 11/01/2015 ■    6,305 
     Peabody Energy Corp.     
 4,055   6.00%, 11/15/2018    4,379 
 1,116   6.50%, 09/15/2020    1,217 
         13,226 
     Miscellaneous Manufacturing - 1.9%     
     BE Aerospace, Inc.     
 1,558   6.88%, 10/01/2020    1,749 
     DigitalGlobe, Inc.     
 2,655   5.25%, 02/01/2021 ■    2,681 
     Reynolds Group Issuer, Inc.     
 850   7.13%, 04/15/2019 Δ    916 
 1,275   7.88%, 08/15/2019    1,428 
     TransDigm Group, Inc.     
 915   5.50%, 10/15/2020 ■    977 
 3,645   7.75%, 12/15/2018    4,037 
         11,788 
     Motor Vehicle and Parts Manufacturing - 1.7%     
     American Axle & Manufacturing Holdings, Inc.     
 1,485   6.63%, 10/15/2022    1,587 

 

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

 

8

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 

CORPORATE BONDS - 90.4% - (continued)

     
     Motor Vehicle and Parts Manufacturing - 1.7% - (continued)     
     Meritor, Inc.     
$3,510   10.63%, 03/15/2018   $3,870 
     Tenneco, Inc.     
 2,485   7.75%, 08/15/2018    2,730 
     TRW Automotive, Inc.     
 1,220   7.25%, 03/15/2017 ■    1,411 
 390   8.88%, 12/01/2017 ■    422 
         10,020 
     Nonmetallic Mineral Product Manufacturing - 1.3%     
     Ardagh Packaging Finance plc     
 340   4.88%, 11/15/2020 ■    348 
 1,050   7.00%, 11/15/2020 ■    1,110 
 323   7.38%, 10/15/2017 ■    356 
 1,987   9.13%, 10/15/2020 ■    2,245 
     Cemex S.A.B. de C.V.     
 1,085   3.75%, 03/15/2018    1,430 
     Silgan Holdings, Inc.     
 2,050   5.00%, 04/01/2020    2,132 
         7,621 
     Other Services - 1.1%     
     Service Corp. International     
 990   7.00%, 05/15/2019    1,083 
 4,565   7.63%, 10/01/2018    5,426 
         6,509 
     Paper Manufacturing - 0.3%     
     Boise Cascade LLC     
 775   6.38%, 11/01/2020 ■    829 
     Clearwater Paper Corp.     
 540   4.50%, 02/01/2023 ■    537 
     P.H. Glatfelter Co.     
 415   5.38%, 10/15/2020    438 
         1,804 
     Petroleum and Coal Products Manufacturing - 6.8%     
     Antero Resources Finance Corp.     
 2,745   6.00%, 12/01/2020    2,903 
 2,555   7.25%, 08/01/2019    2,772 
     Chesapeake Energy Corp.     
 3,528   2.50%, 05/15/2037 ۞    3,407 
     Continental Resources, Inc.     
 2,740   5.00%, 09/15/2022    2,980 
     Denbury Resources, Inc.     
 2,295   4.63%, 07/15/2023    2,318 
     Endeavour International Corp.     
 2,487   12.00%, 03/01/2018    2,356 
     EPE Holding/EP Energy Bond     
 1,210   8.13%, 12/15/2017 ■Þ    1,253 
     Everest Acquisition LLC     
 405   6.88%, 05/01/2019    443 
 3,865   9.38%, 05/01/2020    4,503 
     Ferrellgas Partners L.P.     
 2,595   6.50%, 05/01/2021    2,731 
     Harvest Operations Corp.     
 1,336   6.88%, 10/01/2017    1,496 
     MEG Energy Corp.     
 1,175   6.38%, 01/30/2023 ■    1,240 
     Newfield Exploration Co.     
 1,700   5.63%, 07/01/2024    1,828 
 1,464   5.75%, 01/30/2022    1,620 
     Plains Exploration & Production Co.     
 474   6.75%, 02/01/2022    536 
     Range Resources Corp.     
 1,160   5.00%, 08/15/2022    1,235 
 1,245   5.75%, 06/01/2021    1,360 
     Rosetta Resources, Inc.     
 1,725   5.63%, 05/01/2021 ☼    1,798 
 2,387   9.50%, 04/15/2018    2,644 
     Seadrill Ltd.     
 2,000   5.63%, 09/15/2017 ■    2,045 
         41,468 
     Pipeline Transportation - 1.9%     
     El Paso Corp.     
 2,245   7.00%, 06/15/2017    2,583 
 365   7.75%, 01/15/2032    416 
 2,218   7.80%, 08/01/2031    2,510 
     Energy Transfer Equity L.P.     
 1,757   7.50%, 10/15/2020    2,056 
     Kinder Morgan Finance Co.     
 2,025   6.00%, 01/15/2018 ■    2,249 
     MarkWest Energy Partners L.P.     
 700   5.50%, 02/15/2023    768 
 960   6.25%, 06/15/2022    1,068 
         11,650 
     Plastics and Rubber Products Manufacturing - 1.0%     
     Associated Materials LLC     
 115   9.13%, 11/01/2017    124 
 815   9.13%, 11/01/2017 ■☼    879 
     Continental Rubber of America Corp.     
 2,455   4.50%, 09/15/2019 ■    2,548 
     Nortek, Inc.     
 1,575   8.50%, 04/15/2021    1,760 
 945   8.50%, 04/15/2021 ■    1,054 
         6,365 
     Primary Metal Manufacturing - 0.3%     
     Novelis, Inc.     
 1,608   8.75%, 12/15/2020    1,825 
           
     Printing and Related Support Activities - 0.3%     
     Quebecor Media, Inc.     
 1,540   5.75%, 01/15/2023 ■    1,605 
           
     Professional, Scientific and Technical Services - 1.0%     
     Lamar Media Corp.     
 1,035   7.88%, 04/15/2018    1,131 
     SunGard Data Systems, Inc.     
 710   6.63%, 11/01/2019 ■    755 
 2,615   7.38%, 11/15/2018    2,824 
 1,075   7.63%, 11/15/2020    1,188 
         5,898 
     Real Estate, Rental and Leasing - 5.0%     
     Air Lease Corp.     
 1,140   4.75%, 03/01/2020    1,180 
 3,751   6.13%, 04/01/2017    4,107 
     Ashtead Capital, Inc.     
 285   6.50%, 07/15/2022 ■    314 
     CBRE Services, Inc.     
 2,665   5.00%, 03/15/2023    2,728 

 

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

 

9

 

The Hartford High Yield Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 

CORPORATE BONDS - 90.4% - (continued)

     
     Real Estate, Rental and Leasing - 5.0% - (continued)     
     Hertz Global Holdings, Inc.     
$890   5.88%, 10/15/2020   $972 
 580   6.25%, 10/15/2022    649 
     International Lease Finance Corp.     
 3,380   5.75%, 05/15/2016    3,677 
 6,990   5.88%, 04/01/2019 - 08/15/2022    7,686 
 1,220   6.25%, 05/15/2019    1,368 
 2,270   8.88%, 09/01/2017    2,755 
     Realogy Corp.     
 1,282   7.63%, 01/15/2020 ■    1,471 
     United Rental Financing Escrow Corp.     
 377   7.38%, 05/15/2020    427 
     United Rentals North America, Inc.     
 1,393   5.75%, 07/15/2018    1,519 
 925   6.13%, 06/15/2023    997 
 375   7.63%, 04/15/2022    430 
         30,280 
     Retail Trade - 3.6%     
     99 Cents Only Stores     
 2,510   11.00%, 12/15/2019    2,899 
     AmeriGas Partners L.P.     
 2,266   6.25%, 08/20/2019    2,453 
     Building Materials Corp.     
 2,001   7.50%, 03/15/2020 ■    2,211 
     GRD Holding III Corp.     
 2,560   10.75%, 06/01/2019 ■    2,749 
     JC Penney Corp., Inc.     
 1,035   5.65%, 06/01/2020    889 
 955   6.38%, 10/15/2036    765 
 1,770   7.40%, 04/01/2037    1,485 
 185   7.95%, 04/01/2017    181 
     Michaels Stores, Inc.     
 2,885   7.75%, 11/01/2018    3,170 
     PC Merger Sub, Inc.     
 2,395   8.88%, 08/01/2020 ■    2,706 
     Sally Holdings LLC     
 985   5.75%, 06/01/2022    1,061 
 985   6.88%, 11/15/2019    1,102 
         21,671 
     Transportation Equipment Manufacturing - 0.4%     
     Huntington Ingalls Industries, Inc.     
 2,065   7.13%, 03/15/2021    2,297 
           
     Utilities - 1.8%     
     AES (The) Corp.     
 2,915   8.00%, 10/15/2017    3,491 
 1,636   9.75%, 04/15/2016    1,980 
     Calpine Corp.     
 2,182   7.88%, 01/15/2023 ■    2,498 
     Dolphin Subsidiary II, Inc.     
 990   7.25%, 10/15/2021    1,054 
     Texas Competitive Electric Co.     
 2,400   11.50%, 10/01/2020 ■    1,890 
         10,913 
     Wholesale Trade - 0.4%     
     J.M. Huber Corp.     
 2,370   9.88%, 11/01/2019 ■    2,726 
           
     Total corporate bonds     
     (cost $516,075)   $548,563 
           

SENIOR FLOATING RATE INTERESTS ♦ - 2.5%

     
     Finance and Insurance - 0.6%     
     Asurion LLC     
$1,612   4.50%, 05/24/2019   $1,630 
     Macquarie Aircraft Leasing Finance S.A., Second Lien Term Loan     
 1,850   4.20%, 11/29/2013    1,813 
         3,443 
     Health Care and Social Assistance - 0.1%     
     Hologic, Inc.     
 556   4.50%, 08/01/2019    563 
           
     Information - 0.2%     
     Alcatel-Lucent     
 975   6.25%, 06/29/2016    989 
 424   7.25%, 01/30/2019    434 
         1,423 
     Mining - 0.4%     
     Arch Coal, Inc.     
 2,650   5.75%, 05/16/2018    2,684 
           
     Retail Trade - 0.6%     
     EB Sports Corp.     
 3,694   11.50%, 12/31/2015 Þ    3,657 
           
     Utilities - 0.6%     
     Texas Competitive Electric Holdings Co. LLC     
 5,000   4.73%, 10/10/2017    3,677 
           
     Total senior floating rate interests     
     (cost $14,843)   $15,447 
           

COMMON STOCKS - 0.1%

     
     Energy - 0.1%     
 104,555   KCA Deutag ⌂●†   $494 
           
     Software and Services - 0.0%     
 16   Stratus Technologies, Inc. ⌂●†    27 
           
     Total common stocks     
     (cost $1,417)   $521 
           

PREFERRED STOCKS - 1.3%

     
     Diversified Financials - 1.1%     
 84   Citigroup Capital XIII   $2,384 
 159   GMAC Capital Trust I ۞    4,367 
         6,751 
     Software and Services - 0.0%     
 4   Stratus Technologies, Inc. ⌂†    66 

 

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

 

10

 

 

 

Shares or Principal Amount ╬         

Market Value ╪

 
PREFERRED STOCKS - 1.3% - (continued)           
     Telecommunication Services - 0.2%           
 23   Intelsat S.A., 5.75%  ۞        $1,242 
                 
     Total preferred stocks           
     (cost $7,055)        $8,059 
                 
     Total long-term investments           
     (cost $540,306)        $572,590 
                 
SHORT-TERM INVESTMENTS - 4.4%           
Repurchase Agreements - 4.4%           
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $1,062,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $1,083)
          
$1,062   0.17%, 4/30/2013        $1,062 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $2,893, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $2,951)
          
 2,893   0.15%, 4/30/2013         2,893 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $5,572, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $5,684)
          
 5,572   0.15%, 4/30/2013         5,572 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $7,739,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $7,894)
          
 7,739   0.14%, 4/30/2013         7,739 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $1,392,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value of
$1,419)
          
 1,392   0.17%, 4/30/2013         1,392 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $4,716, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $4,810)
          
 4,716   0.14%, 4/30/2013         4,716 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $3,316, collateralized by U.S.
Treasury Note 0.25% - 1.88%, 2014 - 2019,
value of $3,382)
          
 3,316   0.17%, 4/30/2013         3,316 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$59, collateralized by U.S. Treasury Note
3.88%, 2018, value of $60)
          
 59   0.13%, 4/30/2013         59 
               26,749 
     Total short-term investments           
     (cost $26,749)        $26,749 
                 
     Total investments           
     (cost $567,055) ▲   98.7 %  $599,339 
     Other assets and liabilities   1.3 %   7,763 
     Total net assets   100.0 %  $607,102 

 

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

 

11

 

The Hartford High Yield Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $567,910 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation   $35,961 
Unrealized Depreciation    (4,532)
Net Unrealized Appreciation   $31,429 

 

These securities are valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $587, which represents 0.1% of total net assets.

 

Non-income producing.  For long-term debt securities, items identified are in default as to payment of interest and/or principal. 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.

 

This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.  In addition, cash of $1,290 was received from broker(s) as collateral in connection with swap contracts.

 

ΔVariable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

ÞThis security may pay interest in additional principal instead of cash.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $192,680, which represents 31.7% 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 Acquired  Shares/ Par   Security  Cost Basis 
03/2011   104,555   KCA Deutag  $1,417 
03/2010 - 07/2010   4   Stratus Technologies, Inc. Preferred    
03/2010 - 07/2010   16   Stratus Technologies, Inc.    

 

At April 30, 2013, the aggregate value of these securities was $587, which represents 0.1% of total net assets.

 

۞Convertible security.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $2,831 at April 30, 2013.

 

All principal or contract amounts are in U.S. dollars unless otherwise indicated.

 

Senior floating rate interests 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 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.  Unless otherwise noted, the interest rate disclosed for these securities represents the average coupon as of April 30, 2013.

 

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

 

12

 

 

 

Credit Default Swap Contracts Outstanding at April 30, 2013

 

Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices:                    
Sell protection:                         
CDX.NA.HY.19  BOA  $14,320    5.00%  12/20/17  $349   $1,015   $666 

  

(a)The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.  Notional shown in U.S. dollars unless otherwise noted.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
CAD  Sell  05/22/2013  BCLY  $914   $928   $(14)

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
BCLY Barclays
BOA Banc of America Securities LLC
 
Currency Abbreviations:
CAD Canadian Dollar
 
Index Abbreviations:
CDX.NA.HY Credit Derivatives North American High Yield
 
Other Abbreviations:
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
LIBOR London Interbank Offered Rate

 

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

 

13

 

The Hartford High Yield Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Asset & Commercial Mortgage Backed Securities  $   $   $   $ 
Common Stocks ‡   521            521 
Corporate Bonds   548,563        548,563     
Preferred Stocks   8,059    7,993        66 
Senior Floating Rate Interests   15,447        15,447     
Short-Term Investments   26,749        26,749     
Total  $599,339   $7,993   $590,759   $587 
Credit Default Swaps *   666        666     
Total  $666   $   $666   $ 
Liabilities:                    
Foreign Currency Contracts *   14        14     
Total  $14   $   $14   $ 

  

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.
The Fund has all or primarily all of the equity securities categorized in a particular level.  Refer to the Schedule of Investments for further industry breakout.
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

  

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3
   Transfers
Out of
Level 3
   Balance
as of
April 30,
2013
 
Assets:                                             
Common Stocks   $878   $   $(357)*  $   $   $   $   $   $521 
Preferred Stocks    63        3                       66 
Total   $941   $   $(354)  $   $   $   $   $   $587 

 

*Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $(357).
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $3.

 

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

 

14

 

The Hartford High Yield Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $567,055)   $599,339 
Cash    24 
Unrealized appreciation on swap contracts    666 
Receivables:     
Investment securities sold    2,177 
Fund shares sold    2,325 
Dividends and interest    9,900 
Swap premiums paid    349 
Other assets    99 
Total assets    614,879 
Liabilities:     
Unrealized depreciation on foreign currency contracts    14 
Payables:     
Investment securities purchased    5,386 
Fund shares redeemed    727 
Investment management fees    63 
Dividends    117 
Administrative fees     
Distribution fees    37 
Collateral received from broker    1,290 
Accrued expenses    103 
Other liabilities    40 
Total liabilities    7,777 
Net assets   $607,102 
Summary of Net Assets:     
Capital stock and paid-in-capital   $613,321 
Undistributed net investment income    165 
Accumulated net realized loss    (39,320)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency    32,936 
Net assets   $607,102 
      
Shares authorized    500,000 
Par value   $0.001 
Class A: Net asset value per share/Maximum offering price per share    

$7.80/$8.17

 
    Shares outstanding    49,804 
    Net assets   $388,507 
Class B: Net asset value per share    $7.76 
    Shares outstanding    1,331 
    Net assets   $10,331 
Class C: Net asset value per share    $7.78 
    Shares outstanding    15,030 
    Net assets   $116,881 
Class I: Net asset value per share    $7.84 
    Shares outstanding    9,699 
    Net assets   $76,032 
Class R3: Net asset value per share    $7.80 
    Shares outstanding    349 
    Net assets   $2,720 
Class R4: Net asset value per share    $7.81 
    Shares outstanding    317 
    Net assets   $2,475 
Class R5: Net asset value per share    $7.80 
    Shares outstanding    87 
    Net assets   $681 
Class Y: Net asset value per share    $7.79 
    Shares outstanding    1,216 
    Net assets   $9,475 

 

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

 

15

 

The Hartford High Yield Fund
Statement of Operations
For the Six Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends   $246 
Interest    18,148 
Less: Foreign tax withheld     
Total investment income    18,394 
      
Expenses:     
Investment management fees    1,836 
Administrative services fees     
Class R3    2 
Class R4    2 
Class R5     
Transfer agent fees     
Class A    341 
Class B    15 
Class C    52 
Class I    30 
Class R3    1 
Class R4     
Class R5     
Class Y     
Distribution fees     
Class A    464 
Class B    53 
Class C    549 
Class R3    6 
Class R4    3 
Custodian fees    6 
Accounting services fees    57 
Registration and filing fees    63 
Board of Directors' fees    7 
Audit fees    7 
Other expenses    37 
Total expenses (before waivers and fees paid indirectly)    3,531 
Expense waivers    (181)
Custodian fee offset     
Total waivers and fees paid indirectly    (181)
Total expenses, net    3,350 
Net Investment Income    15,044 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities    4,540 
Net realized gain on swap contracts    61 
Net realized gain on foreign currency contracts    36 
Net realized gain on other foreign currency transactions     
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions    4,637 
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized appreciation of investments    14,935 
Net unrealized appreciation of swap contracts    648 
Net unrealized depreciation of foreign currency contracts    (31)
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies     
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions    15,552 
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions    20,189 
Net Increase in Net Assets Resulting from Operations   $35,233 

 

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

 

16

 

The Hartford High Yield Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income   $15,044   $29,134 
Net realized gain (loss) on investments, other financial instruments and foreign currency transactions    4,637    (141)
Net unrealized appreciation of investments, other financial instruments and foreign currency transactions    15,552    20,308 
Net Increase in Net Assets Resulting from Operations    35,233    49,301 
Distributions to Shareholders:          
From net investment income          
Class A    (10,145)   (17,413)
Class B    (254)   (625)
Class C    (2,604)   (5,228)
Class I    (1,707)   (4,380)
Class R3    (60)   (95)
Class R4    (59)   (54)
Class R5    (17)   (26)
Class Y    (381)   (1,150)
Total distributions    (15,227)   (28,971)
Capital Share Transactions:          
Class A    9,662    72,845 
Class B    (1,029)   (2,524)
Class C    9,479    (3,149)
Class I    9,679    (24,472)
Class R3    697    430 
Class R4    1,203    661 
Class R5    230    93 
Class Y    (6,391)   (5,418)
Net increase from capital share transactions    23,530    38,466 
Net Increase in Net Assets    43,536    58,796 
Net Assets:          
Beginning of period    563,566    504,770 
End of period   $607,102   $563,566 
Undistributed (distribution in excess of) net investment income (loss)   $165   $348 

  

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

 

17

 

The Hartford High Yield Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current

 

18

 

 

 

or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

19

 

The Hartford High Yield Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

20

 

 

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Trade date for senior floating rate interests purchased in the primary loan market is considered the date on which the loan allocations are determined. Trade date for senior floating rate interests purchased in the secondary loan market is the date on which the transaction is entered into.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. Paydown gains and losses on mortgage-related and other asset-backed securities are included in interest income in the Statement of Operations, as applicable.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund. Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

21

 

The Hartford High Yield Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Normally, dividends from net investment income are declared daily and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

d)Senior Floating Rate Interests – The Fund, as shown on the Schedule of Investments, invests 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. The Fund may invest in multiple series or tranches of a senior floating rate interest, which may have varying terms and carry different associated risks. The Fund may also enter into unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities,

 

22

 

 

 

which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. In certain circumstances, the Fund may receive various fees upon the restructure of a senior floating rate interest by a borrower. Fees earned/paid may be recorded as a component of income or realized gain/loss in the Statement of Operations.

 

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.

 

e)Mortgage Related and Other Asset Backed Securities The Fund may invest in mortgage related and other asset backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations, commercial mortgage backed securities, stripped mortgage backed securities, asset backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. Mortgage related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. These securities provide a monthly payment that consists of both interest and principal payments. Interest payments may be determined by fixed or adjustable rates. The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. The timely payment of principal and interest of certain mortgage related securities is guaranteed by the full faith and credit of the United States Government. Mortgage related and other asset backed securities created and guaranteed by non-governmental issuers, including government-sponsored corporations, may be supported by various forms of insurance or guarantees, but there can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund, as shown on the  Schedule of Investments, had mortgage related and other asset backed securities as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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

 

23

 

The Hartford High Yield Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

relative to the U.S. dollar. The Fund had outstanding foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

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 investment or index in the event of a credit event, such as payment default or bankruptcy.

 

Under a credit default swap contract, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying investment 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. Although specified events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. These potential amounts would be partially offset by any recovery values of the respective referenced obligations or upfront payments received upon entering into the contract.

 

Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap contracts on corporate issues, sovereign government issues or U.S. municipal issues as of period-end are disclosed in the notes to the Schedule of Investments, as applicable, and serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments

 

24

 

 

 

required to be made to enter into the contract. Wider credit spreads represent a deterioration of the referenced entity’s soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. For credit default swap contracts on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced equity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. The Fund, as shown on the Schedule of Investments, had outstanding credit default swaps as of April 30, 2013.

 

c)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on swap contracts  $   $   $666   $   $   $   $666 
Total  $   $   $666   $   $   $   $666 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $14   $   $   $   $   $14 
Total  $   $14   $   $   $   $   $14 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

  

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
  

Interest Rate
Contracts

  

Foreign
Exchange
Contracts

  

Credit
Contracts

  

Equity
Contracts

  

Commodity
Contracts

  

Other
Contracts

  

Total

 
Realized Gain on Derivatives Recognized as a Result of Operations: 
Net realized gain on swap contracts  $   $   $61   $   $   $   $61 
Net realized gain on foreign currency contracts       36                    36 
Total  $   $36   $61   $   $   $   $97 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations: 
Net change in unrealized appreciation of swap contracts  $   $   $648   $   $   $   $648 
Net change in unrealized depreciation of foreign currency contracts       (31)                   (31)
Total  $   $(31)  $648   $   $   $   $617 

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

25

 

The Hartford High Yield Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. Senior floating rate interests and securities subject to prepayment and extension risk generally offer less potential for gains when interest rates decline. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities, senior floating rate interests, and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

26

 

 

 

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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $29,262   $29,686 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $394 
Accumulated Capital Losses *   (43,083)
Unrealized Appreciation †   16,510 
Total Accumulated Deficit  $(26,179)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $3 
Accumulated Net Realized Gain (Loss)   (185)
Capital Stock and Paid-in-Capital   182 

  

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

   Amount 
Long Term Capital Loss Carryforward  $1,154 
Total  $1,154 

 

27

 

The Hartford High Yield Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Capital loss carryforwards with expiration:

 

Year of Expiration  Amount 
2014  $2,064 
2016   21,761 
2017   18,104 
Total  $41,929 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.650%  
On next $500 million   0.600%  
On next $1.5 billion   0.595%  
On next $2.5 billion   0.590%  
On next $5 billion   0.580%  
Over $10 billion   0.570%  

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services

 

28

  

 

 

to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.020%  
On next $5 billion   0.018%  
Over $10 billion   0.016%  

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

  

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.05%      1.80%      1.80%      0.80%      1.35%      1.05%      0.75%      0.70%   

 

d)Fees Paid Indirectly The Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, this amount, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.05%
Class B   1.80 
Class C   1.79 
Class I   0.80 
Class R3   1.35 
Class R4   1.05 
Class R5   0.75 
Class Y   0.70 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $647 and contingent deferred sales charges of $16 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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,

 

29

 

The Hartford High Yield Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R5   22%
Class Y   1 

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $110,587 
Sales Proceeds Excluding U.S. Government Obligations   105,234 

 

30

 

 

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   8,724    1,264    (8,729)       1,259    33,830    2,070    (26,324)       9,576 
Amount  $66,559   $9,685   $(66,582)  $   $9,662   $248,181   $15,175   $(190,511)  $   $72,845 
Class B                                                  
Shares   120    30    (285)       (135)   263    75    (687)       (349)
Amount  $912   $229   $(2,170)  $   $(1,029)  $1,919   $547   $(4,990)  $   $(2,524)
Class C                                                  
Shares   3,621    291    (2,680)       1,232    8,901    574    (9,983)       (508)
Amount  $27,630   $2,224   $(20,375)  $   $9,479   $64,496   $4,191   $(71,836)  $   $(3,149)
Class I                                                  
Shares   4,310    203    (3,298)       1,215    13,950    518    (17,901)       (3,433)
Amount  $33,219   $1,560   $(25,100)  $   $9,679   $101,163   $3,808   $(129,443)  $   $(24,472)
Class R3                                                  
Shares   117    8    (33)       92    91    13    (45)       59 
Amount  $893   $60   $(256)  $   $697   $664   $95   $(329)  $   $430 
Class R4                                                  
Shares   199    7    (47)       159    152    7    (68)       91 
Amount  $1,508   $54   $(359)  $   $1,203   $1,106   $50   $(495)  $   $661 
Class R5                                                  
Shares   34    2    (6)       30    29    3    (20)       12 
Amount  $258   $17   $(45)  $   $230   $213   $26   $(146)  $   $93 
Class Y                                                  
Shares   195    50    (1,084)       (839)   591    157    (1,493)       (745)
Amount  $1,480   $381   $(8,252)  $   $(6,391)  $4,305   $1,145   $(10,868)  $   $(5,418)
Total                                                  
Shares   17,320    1,855    (16,162)       3,013    57,807    3,417    (56,521)       4,703 
Amount  $132,459   $14,210   $(123,139)  $   $23,530   $422,047   $25,037   $(408,618)  $   $38,466 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   80   $609 
For the Year Ended October 31, 2012   145   $1,055 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

31

 

The Hartford High Yield Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

32

 

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33

 

The Hartford High Yield Fund
Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) 
A  $7.53   $0.20   $0.28   $0.48   $(0.21)  $   $   $(0.21)  $7.80 
B   7.50    0.18    0.26    0.44    (0.18)           (0.18)   7.76 
C   7.51    0.18    0.27    0.45    (0.18)           (0.18)   7.78 
I   7.57    0.22    0.27    0.49    (0.22)           (0.22)   7.84 
R3   7.53    0.19    0.28    0.47    (0.20)           (0.20)   7.80 
R4   7.54    0.20    0.28    0.48    (0.21)           (0.21)   7.81 
R5   7.53    0.22    0.27    0.49    (0.22)           (0.22)   7.80 
Y   7.53    0.22    0.26    0.48    (0.22)           (0.22)   7.79 
                                              
For the Year Ended October 31, 2012                 
A   7.20    0.44    0.33    0.77    (0.44)           (0.44)   7.53 
B   7.17    0.38    0.33    0.71    (0.38)           (0.38)   7.50 
C   7.18    0.38    0.33    0.71    (0.38)           (0.38)   7.51 
I   7.23    0.46    0.34    0.80    (0.46)           (0.46)   7.57 
R3   7.20    0.42    0.33    0.75    (0.42)           (0.42)   7.53 
R4   7.20    0.44    0.34    0.78    (0.44)           (0.44)   7.54 
R5   7.20    0.46    0.33    0.79    (0.46)           (0.46)   7.53 
Y   7.19    0.47    0.33    0.80    (0.46)           (0.46)   7.53 
                                              
For the Year Ended October 31, 2011       
A   7.37    0.53    (0.17)   0.36    (0.53)           (0.53)   7.20 
B   7.34    0.48    (0.17)   0.31    (0.48)           (0.48)   7.17 
C   7.35    0.47    (0.16)   0.31    (0.48)           (0.48)   7.18 
I   7.39    0.55    (0.16)   0.39    (0.55)           (0.55)   7.23 
R3   7.36    0.51    (0.16)   0.35    (0.51)           (0.51)   7.20 
R4   7.37    0.53    (0.17)   0.36    (0.53)           (0.53)   7.20 
R5   7.37    0.56    (0.18)   0.38    (0.55)           (0.55)   7.20 
Y   7.36    0.57    (0.18)   0.39    (0.56)           (0.56)   7.19 
                                              
For the Year Ended October 31, 2010                              
A   6.73    0.59    0.65    1.24    (0.60)           (0.60)   7.37 
B   6.71    0.54    0.64    1.18    (0.55)           (0.55)   7.34 
C   6.71    0.54    0.65    1.19    (0.55)           (0.55)   7.35 
I   6.74    0.61    0.66    1.27    (0.62)           (0.62)   7.39 
R3   6.73    0.56    0.65    1.21    (0.58)           (0.58)   7.36 
R4   6.73    0.59    0.65    1.24    (0.60)           (0.60)   7.37 
R5   6.73    0.61    0.65    1.26    (0.62)           (0.62)   7.37 
Y   6.73    0.62    0.64    1.26    (0.63)           (0.63)   7.36 
                                              
For the Year Ended October 31, 2009                      
A   5.52    0.59    1.22    1.81    (0.60)           (0.60)   6.73 
B   5.51    0.55    1.21    1.76    (0.56)           (0.56)   6.71 
C   5.51    0.54    1.21    1.75    (0.55)           (0.55)   6.71 
I   5.53    0.61    1.21    1.82    (0.61)           (0.61)   6.74 
R3   5.52    0.57    1.22    1.79    (0.58)           (0.58)   6.73 
R4   5.53    0.59    1.21    1.80    (0.60)           (0.60)   6.73 
R5   5.53    0.60    1.21    1.81    (0.61)           (0.61)   6.73 
Y   5.53    0.61    1.21    1.82    (0.62)           (0.62)   6.73 
                                              
For the Year Ended October 31, 2008 (G)                      
A   7.92    0.58    (2.40)   (1.82)   (0.58)           (0.58)   5.52 
B   7.91    0.53    (2.41)   (1.88)   (0.52)           (0.52)   5.51 
C   7.91    0.53    (2.41)   (1.88)   (0.52)           (0.52)   5.51 
I   7.93    0.60    (2.40)   (1.80)   (0.60)           (0.60)   5.53 
R3   7.93    0.56    (2.41)   (1.85)   (0.56)           (0.56)   5.52 
R4   7.93    0.59    (2.41)   (1.82)   (0.58)           (0.58)   5.53 
R5   7.93    0.60    (2.40)   (1.80)   (0.60)           (0.60)   5.53 
Y   7.93    0.60    (2.40)   (1.80)   (0.60)           (0.60)   5.53 

 

34

  

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
  
                            
 6.42%(E)  $388,507    1.14%(F)   1.05%(F)   5.39%(F)   19%
  5.92(E)   10,331     1.98(F)    1.80 (F)    4.64 (F)    
  6.04(E)   116,881     1.80(F)    1.79(F)    4.65(F)    
  6.51(E)   76,032     0.81(F)    0.80(F)    5.63(F)    
  6.26(E)   2,720     1.45(F)    1.35(F)    5.09(F)    
  6.41(E)   2,475     1.12(F)    1.05(F)    5.41(F)    
  6.57(E)   681     0.83(F)    0.75(F)    5.69(F)    
  6.47(E)   9,475     0.71(F)    0.70(F)    5.74(F)    
                            
 
 11.00    365,718    1.12    1.05    5.97    138 
 10.24    10,990    2.00    1.80    5.28     
 10.23    103,639    1.82    1.79    5.24     
 11.39    64,195    0.83    0.80    6.24     
 10.68    1,934    1.49    1.35    5.65     
 11.15    1,191    1.16    1.05    5.85     
 11.34    431    0.86    0.75    6.25     
 11.55    15,468    0.73    0.70    6.39     
                            
 
 4.95    280,568    1.14    1.05    7.19    117 
 4.19    13,007    1.99    1.80    6.45     
 4.20    102,694    1.83    1.80    6.43     
 5.36    86,138    0.82    0.79    7.38     
 4.79    1,423    1.51    1.35    6.85     
 4.95    483    1.19    1.05    7.13     
 5.27    321    0.84    0.75    7.45     
 5.32    20,136    0.73    0.70    7.53     
                            
 
 19.14    284,606    1.20    1.20    8.43    141 
 18.17    19,919    2.06    1.95    7.73     
 18.38    85,523    1.89    1.89    7.73     
 19.63    21,098    0.88    0.88    8.51     
 18.70    371    1.61    1.45    8.16     
 19.20    318    1.27    1.15    8.24     
 19.51    492    0.90    0.88    8.52     
 19.47    44,553    0.79    0.79    8.85     
                            
 
 35.01    202,256    1.30    1.15    10.16    182 
 34.05    22,749    2.18    1.80    9.54     
 33.90    51,777    1.96    1.90    9.41     
 35.30    2,068    0.86    0.86    10.36     
 34.68    166    1.69    1.40    9.89     
 34.83    18    1.36    1.10    10.21     
 35.11    11    0.89    0.89    10.46     
 35.21    49,568    0.79    0.79    10.50     
                            
 
 (24.40)   117,343    1.30    1.15    8.07    111 
 (25.00)   17,838    2.13    1.87    7.34     
 (25.01)   21,634    1.97    1.90    7.30     
 (24.11)   777    0.82    0.82    8.82     
 (24.70)   14    1.63    1.40    7.93     
 (24.32)   8    1.19    1.10    8.15     
 (24.16)   8    0.90    0.90    8.35     
 (24.09)   13,394    0.79    0.79    8.57     

 

35

 

The Hartford High Yield Fund
Financial Highlights – (continued)

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Not annualized.
(F)Annualized.
(G)Per share amounts have been calculated using average shares outstanding method.

  

36

   

The Hartford High Yield Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

37

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

38

 

 

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

  

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
     Days in
the
current
1/2
year
     Days
in the
full
year
 
Class A  $1,000.00   $1,064.20   $5.38   $1,000.00   $1,019.58   $5.26    1.05%   181    365 
Class B  $1,000.00   $1,059.20   $9.20   $1,000.00   $1,015.86   $9.01    1.80    181    365 
Class C  $1,000.00   $1,060.40   $9.16   $1,000.00   $1,015.91   $8.96    1.79    181    365 
Class I  $1,000.00   $1,065.10   $4.10   $1,000.00   $1,020.83   $4.01    0.80    181    365 
Class R3  $1,000.00   $1,062.60   $6.91   $1,000.00   $1,018.09   $6.76    1.35    181    365 
Class R4  $1,000.00   $1,064.10   $5.38   $1,000.00   $1,019.58   $5.26    1.05    181    365 
Class R5  $1,000.00   $1,065.70   $3.85   $1,000.00   $1,021.07   $3.76    0.75    181    365 
Class Y  $1,000.00   $1,064.70   $3.59   $1,000.00   $1,021.32   $3.51    0.70    181    365 

 

40

 

The Hartford High Yield Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford High Yield Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

41

 

The Hartford High Yield Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

  

42

 

The Hartford High Yield Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early).

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

43
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-HY13 4/13 113985 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

25

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD INFLATION PLUS FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford Inflation Plus Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   9
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   10
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   11
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   12
Notes to Financial Statements (Unaudited)   13
Financial Highlights (Unaudited)   28
Directors and Officers (Unaudited)   31
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   33
Quarterly Portfolio Holdings Information (Unaudited)   33
Expense Example (Unaudited)   34
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   35
Principal Risks (Unaudited)   37

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Inflation Plus Fund inception 10/31/2002
(sub-advised by Wellington Management Company LLP)

 

Investment objective – Seeks a total return that exceeds the rate of inflation over an economic cycle.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investments in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
Inflation Plus A#   -0.01%       3.89%       6.25%       5.89%    
Inflation Plus A##        -0.78%       5.28%       5.40%    
Inflation Plus B#   -0.38%       3.13%       5.46%       5.31%*    
Inflation Plus B##        -1.83%       5.13%       5.31%*    
Inflation Plus C#   -0.38%       3.13%       5.46%       5.11%    
Inflation Plus C##        2.14%       5.46%       5.11%    
Inflation Plus I#   0.11%       4.13%       6.53%       6.09%    
Inflation Plus R3#   -0.23%       3.51%       5.85%       5.69%‡    
Inflation Plus R4#   -0.02%       3.87%       6.19%       5.90%‡    
Inflation Plus R5#   0.11%       4.15%       6.48%       6.09%‡    
Inflation Plus Y#   0.21%       4.26%       6.59%       6.18%‡    
Barclays U.S. TIPS Index   0.25%       4.41%       6.51%       6.43%    

 

Not Annualized
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.
Rates shown are since inception date of Class Y shares.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 4.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced on 8/31/06. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses. Class Y shares commenced operations on 11/28/03.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of March 5, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays 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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Inflation Plus Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Inflation Plus Class A   0.85%      0.86%   
Inflation Plus Class B   1.60%      1.66%   
Inflation Plus Class C   1.59%      1.59%   
Inflation Plus Class I   0.60%      0.64%   
Inflation Plus Class R3   1.20%      1.21%   
Inflation Plus Class R4   0.90%      0.91%   
Inflation Plus Class R5   0.60%      0.62%   
Inflation Plus Class Y   0.50%      0.50%   

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Manager
Lindsay T. Politi
Vice President and Fixed Income Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Inflation Plus Fund returned -0.01%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmark, the Barclays U.S. TIPS Index, which returned 0.25% for the same period. The Fund also underperformed the 0.18% average return of the Lipper Inflation Protected Bond Funds peer group, a group of funds that invest primarily in inflation-indexed fixed income securities. Inflation-linked bonds are fixed income securities structured to provide protection against inflation.

 

Why did the Fund perform this way?

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02%-0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage Backed Securities, outperformed Treasuries on a duration-adjusted basis.

 

During the period, an out-of-benchmark allocation to bank loans was additive to relative performance. In the first quarter of 2013, the Fund benefited from a long breakeven inflation position, which means that the Fund was positioned to benefit from an increase in the market’s near term inflation expectations. This position was constructed by holding TIPS as well as a Consumer Price Index swap, which is a derivative contract that can be used to capture changes in the market’s inflation expectations. This was offset by security selection in 2014 and 2041 TIPS maturities, which detracted from benchmark-relative returns.

 

What is the outlook?

We expect headline inflation to rise in the next twelve months to the 2.00-2.25% range on the heels of modest economic growth. We believe the Fed will remain accommodative for

 

3

 

The Hartford Inflation Plus Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

an extended period to support U.S. growth and to reduce unemployment. We believe that the impetus for higher inflation in this timeframe will be increased consumer spending, particularly across higher income brackets, resulting from the wealth effect created by recent home price appreciation and strong returns in the capital markets.

 

Distribution by Credit Quality

as of April 30, 2013

Credit Rating *  Percentage of
Net Assets
 
Baa / BBB   0.1%
Ba / BB   1.8 
B   1.6 
U.S. Government Agencies and Securities   96.1 
Non-Debt Securities and Other Short-Term Instruments   0.4 
Other Assets & Liabilities   0.0 
Total   100.0%

 

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

Diversification by Industry

as of April 30, 2013

Industry  Percentage of
Net Assets
 
Administrative Waste Management and Remediation   0.0%
Air Transportation   0.2 
Apparel Manufacturing   0.0 
Arts, Entertainment and Recreation   0.0 
Chemical Manufacturing   0.1 
Computer and Electronic Product Manufacturing   0.1 
Educational Services   0.0 
Finance and Insurance   0.3 
Food Manufacturing   0.1 
Food Services   0.1 
Health Care and Social Assistance   0.6 
Information   0.9 
Media   0.1 
Mining   0.1 
Miscellaneous Manufacturing   0.1 
Motor Vehicle and Parts Manufacturing   0.0 
Other Services   0.1 
Petroleum and Coal Products Manufacturing   0.1 
Pipeline Transportation   0.1 
Plastics and Rubber Products Manufacturing   0.1 
Primary Metal Manufacturing   0.0 
Professional, Scientific and Technical Services   0.0 
Real Estate, Rental and Leasing   0.0 
Retail Trade   0.1 
Soap, Cleaning Compound and Toilet Manufacturing   0.1 
U.S. Government Agencies   0.0 
U.S. Government Securities   96.1 
Utilities   0.2 
Short-Term Investments   0.4 
Other Assets and Liabilities   0.0 
Total   100.0%

 

4

 

The Hartford Inflation Plus Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

SENIOR FLOATING RATE INTERESTS ♦ - 3.5%

     
     Administrative Waste Management and Remediation - 0.0%     
     ADS Waste Holdings, Inc.     
$838   4.25%, 10/09/2019  $848 
           
     Air Transportation - 0.2%     
     AWAS Finance Luxembourg S.aár.l.     
 382   4.75%, 07/16/2018   384 
     Delta Air Lines, Inc.     
 259   4.00%, 10/18/2018   262 
     Delta Air Lines, Inc., Term Loan     
 2,475   4.25%, 04/20/2017   2,507 
         3,153 
     Apparel Manufacturing - 0.0%     
     PVH Corp.     
 510   3.25%, 02/13/2020   514 
           
     Arts, Entertainment and Recreation - 0.0%     
     Penn National Gaming, Inc.     
 424   3.75%, 07/16/2018   428 
           
     Chemical Manufacturing - 0.1%     
     DuPont Performance Coatings, Inc.     
 100   4.75%, 02/01/2020   101 
     Ineos US Finance LLC     
 1,309   6.50%, 05/04/2018   1,323 
         1,424 
     Computer and Electronic Product Manufacturing - 0.1%     
     Freescale Semiconductor, Inc.     
 2,000   5.00%, 03/01/2020   2,028 
           
     Educational Services - 0.0%     
     Bright Horizons Family Solutions, Inc.     
 259   4.00%, 01/30/2020   262 
           
     Finance and Insurance - 0.3%     
     Asurion LLC     
 2,748   4.50%, 05/24/2019   2,779 
     Chrysler Group LLC     
 975   6.00%, 05/24/2017   988 
     Nuveen Investments, Inc.     
 500   4.20%, 05/13/2017   506 
     Ocwen Financial Corp.     
 215   5.00%, 02/15/2018   218 
     RPI Finance Trust     
 2,373   4.00%, 11/09/2018   2,387 
         6,878 
     Food Manufacturing - 0.1%     
     H. J. Heinz Co.     
 935   03/27/2020 ◊☼    943 
           
     Food Services - 0.1%     
     Wendy's International, Inc.     
 1,194   4.51%, 05/15/2019   1,200 
           
     Health Care and Social Assistance - 0.6%     
     Alkermes, Inc.     
 373   3.50%, 09/25/2019   374 
     American Renal Holdings, Inc.     
 670   4.50%, 08/20/2019   671 
     Aptalis Pharma, Inc.     
 2,211   5.50%, 02/10/2017   2,231 
     Bausch & Lomb, Inc.     
 1,315   5.25%, 05/17/2019   1,329 
     DaVita, Inc.     
 454   4.00%, 11/01/2019   459 
     HCA, Inc., Tranche B-3 Term Loan     
 2,000   2.95%, 05/01/2018   2,000 
     Health Management Associates, Inc.     
 1,950   3.50%, 11/16/2018   1,967 
     Hologic, Inc.     
 1,265   4.50%, 08/01/2019   1,282 
     IMS Health, Inc.     
 242   3.75%, 09/01/2017   244 
     Jazz Pharmaceuticals, Inc.     
 284   5.25%, 06/12/2018   288 
     MultiPlan, Inc.     
 1,726   4.00%, 08/26/2017   1,743 
     Truven Health Analytics, Inc.     
 496   4.50%, 06/06/2019   502 
     Warner Chilcott Corp., Term Loan B-1     
 170   4.25%, 03/15/2018   173 
     Warner Chilcott Corp., Term Loan B-2     
 60   4.25%, 03/15/2018   61 
     Warner Chilcott Corp., Term Loan B-3     
 134   4.25%, 03/15/2018   136 
     Warner Chilcott plc     
 74   4.25%, 03/15/2018   75 
         13,535 
     Information - 0.9%     
     Charter Communications Operating LLC     
 2,594   4.00%, 05/15/2019   2,601 
     Emdeon, Inc.     
 455   3.75%, 11/02/2018   459 
     First Data Corp.     
 515   4.20%, 09/30/2018   513 
     Kronos, Inc.     
 1,047   4.50%, 10/30/2019   1,060 
     Lawson Software, Inc.     
 1,345   5.25%, 04/05/2018   1,366 
     Level 3 Financing, Inc.     
 401   4.75%, 08/01/2019   405 
 640   5.25%, 08/01/2019   648 
     MetroPCS Wireless, Inc., Term Loan B3     
 2,376   4.88%, 03/17/2018   2,376 
     MISYS plc     
 1,746   7.25%, 12/12/2018   1,775 
     Nine Entertainment Group Ltd     
 370   3.50%, 02/05/2020   371 
     Syniverse Holdings, Inc.     
 1,519   5.00%, 04/23/2019   1,530 
     Telesat Canada     
 4,368   3.50%, 03/28/2019   4,402 
     Virgin Media Finance plc     
 1,650   02/15/2020 ◊☼    1,651 
     Windstream Corp.     
 140   3.50%, 01/23/2020   140 
         19,297 

 

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

 

5

 

The Hartford Inflation Plus Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

SENIOR FLOATING RATE INTERESTS ♦ - 3.5% - (continued)

     
     Media - 0.1%     
     Gray Television, Inc.     
$337   4.75%, 10/12/2019  $342 
     Univision Communications, Inc.     
 1,025   4.75%, 03/01/2020   1,035 
         1,377 
     Mining - 0.1%     
     Arch Coal, Inc.     
 1,206   5.75%, 05/16/2018   1,221 
     Fortescue Metals Group Ltd.     
 1,025   5.25%, 10/18/2017   1,043 
         2,264 
     Miscellaneous Manufacturing - 0.1%     
     DigitalGlobe, Inc.     
 595   3.75%, 01/31/2020   601 
     Reynolds Group Holdings, Inc.     
 1,095   4.75%, 09/28/2018   1,112 
     TransDigm Group, Inc.     
 136   3.75%, 02/28/2020   138 
         1,851 
     Motor Vehicle and Parts Manufacturing - 0.0%     
     Allison Transmission, Inc.     
 924   4.25%, 08/23/2019   936 
           
     Other Services - 0.1%     
     Rexnord LLC     
 2,207   3.75%, 04/01/2018   2,228 
           
     Petroleum and Coal Products Manufacturing - 0.1%     
     MEG Energy Corp.     
 873   3.75%, 03/31/2020   882 
     Plains Exploration & Production Co.     
 721   4.00%, 11/30/2019   721 
     Samson Investment Co.     
 510   6.00%, 09/25/2018   516 
         2,119 
     Pipeline Transportation - 0.1%     
     EP Energy LLC     
 1,250   5.00%, 05/24/2018   1,255 
           
     Plastics and Rubber Products Manufacturing - 0.1%     
     Berry Plastics Group, Inc.     
 1,025   3.50%, 02/10/2020   1,024 
     Goodyear (The) Tire & Rubber Co.     
 2,000   4.75%, 04/30/2019   2,015 
         3,039 
     Primary Metal Manufacturing - 0.0%     
     Novelis, Inc.     
 388   3.75%, 03/10/2017   394 
           
     Professional, Scientific and Technical Services - 0.0%     
     Getty Images, Inc.     
 863   4.75%, 10/18/2019   875 
           
     Real Estate, Rental and Leasing - 0.0%     
     Delos Aircraft, Inc.     
 400   4.75%, 04/12/2016   402 
           
     Retail Trade - 0.1%     
     Aramark Corp.     
 400   4.00%, 08/22/2019   405 
     Michaels Stores, Inc.     
 420   3.75%, 01/28/2020   424 
     Neiman (The) Marcus Group, Inc.     
 165   4.00%, 05/16/2018   166 
     Rite Aid Corp.     
 355   4.00%, 02/21/2020   359 
         1,354 
     Soap, Cleaning Compound and Toilet Manufacturing - 0.1%     
     Yankee (The) Candle Co., Inc.     
 1,419   5.25%, 04/02/2019   1,425 
           
     Utilities - 0.2%     
     Calpine Corp.     
 1,219   4.00%, 10/09/2019   1,234 
     Energy Transfer Equity L.P.     
 2,000   3.75%, 03/24/2017   2,008 
     LSP Madison Funding LLC     
 329   5.50%, 06/28/2019   333 
         3,575 
     Total senior floating rate interests     
     (cost $72,534)   $73,604 
           

U.S. GOVERNMENT AGENCIES - 0.0%

     
     FNMA - 0.0%     
$4   9.75%, 07/01/2020  $4 
 2   10.50%, 12/01/2018   2 
    11.50%, 07/01/2015    
         6 
     GNMA - 0.0%     
 3   11.00%, 12/20/2015 - 12/20/2018   4 
           
     Total U.S. government agencies     
     (cost $10)   $10 
           

U.S. GOVERNMENT SECURITIES - 96.1%

     
U.S. Treasury Securities - 96.1%     
     U.S. Treasury Bonds - 29.5%     
$13,775    0.63%, 02/15/2043 ◄   $14,539 
 55,441    0.75%, 02/15/2042 ◄    61,805 
 68,335    1.75%, 01/15/2028 ◄    97,821 
 49,455    2.00%, 01/15/2026 ◄    75,946 
 56,641    2.13%, 02/15/2040 - 02/15/2041 ◄    88,104 
 57,085    2.38%, 01/15/2025 - 01/15/2027 ◄    92,890 
 42,685    2.50%, 01/15/2029 ◄    65,536 
 5,000    3.63%, 04/15/2028 ◄╦‡    11,366 
 48,300    3.88%, 04/15/2029 ◄    112,539 
         620,546 

 

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

 

6

 

 

 

Shares or Principal Amount          Market Value ╪ 
U.S. GOVERNMENT SECURITIES - 96.1% - (continued)             
U.S. Treasury Securities - 96.1% - (continued)             
     U.S. Treasury Notes - 66.6%             
$498,040    0.13%, 04/15/2016 - 01/15/2023 ◄          $546,154 
 20,925    0.50%, 04/15/2015 ◄           23,219 
 113,075    0.63%, 07/15/2021 ◄           133,021 
 95,675    1.13%, 01/15/2021 ◄           119,296 
 72,590    1.25%, 07/15/2020 ◄           91,773 
 123,680    1.38%, 07/15/2018 - 01/15/2020 ◄           155,841 
 98,050    1.63%, 01/15/2018 ◄           125,137 
 38,250    1.88%, 07/15/2015 - 07/15/2019 ◄           49,741 
 51,725    2.00%, 01/15/2016 ◄           66,399 
 44,330    2.13%, 01/15/2019 ◄           57,905 
 22,475    2.38%, 01/15/2017 ◄           29,750 
                 1,398,236 
                 2,018,782 
     Total U.S. government securities             
     (cost $1,900,746)          $2,018,782 
                   
     Total long-term investments             
     (cost $1,973,290)          $2,092,396 
                   
SHORT-TERM INVESTMENTS - 0.4%             
Repurchase Agreements - 0.4%             
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $332,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $339)
            
$332    0.17%, 4/30/2013          $332 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $905, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015
- 2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$924)
            
 905    0.15%, 4/30/2013           905 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,744, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 -
2021, value of $1,779)
            
 1,744    0.15%, 4/30/2013           1,744 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $2,422,
collateralized by U.S. Treasury Note
0.75% - 2.13%, 2015 - 2019, value of
$2,470)
            
 2,422    0.14%, 4/30/2013           2,422 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $436,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value of
$444)
            
 436    0.17%, 4/30/2013           436 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,476, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 -
2022, value of $1,505)
            
 1,476    0.14%, 4/30/2013           1,476 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,038, collateralized by U.S.
Treasury Note 0.25% - 1.88%, 2014 -
2019, value of $1,058)
            
 1,038    0.17%, 4/30/2013           1,038 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$18, collateralized by U.S. Treasury Note
3.88%, 2018, value of $19)
            
 18    0.13%, 4/30/2013           18 
                 8,371 
     Total short-term investments             
     (cost $8,371)          $8,371 
                   
     Total investments             
     (cost $1,981,661) ▲     100.0 %  $2,100,767 
     Other assets and liabilities     %   483 
     Total net assets     100.0 %  $2,101,250 

 

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

 

7

 

The Hartford Inflation Plus Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $1,982,682 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $120,194 
Unrealized Depreciation   (2,109)
Net Unrealized Appreciation  $118,085 

 

This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

 

The principal amount for this security is adjusted for inflation and the interest payments equal a fixed percentage of the inflation-adjusted principal amount.

 

All or a portion of this position represents unsettled loan commitment.  The coupon rate will be determined at time of settlement.

 

This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $2,579 at April 30, 2013.

 

Senior floating rate interests 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 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.  Unless otherwise noted, the interest rate disclosed for these securities represents the average coupon as of April 30, 2013.

 

Interest Rate Swap Contracts Outstanding at April 30, 2013

 

Counterparty  Payments made by Fund  Payments received by Fund  Notional
Amount *
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
BCLY  1.50% Fixed  CPURNSA 231.37   75,000   12/13/13  $   $(236)  $(236)
CSI  2.48% Fixed  CPURNSA 230.54   93,475   01/23/18       (1,258)   (1,258)
                 $   $(1,494)  $(1,494)

 

* Notional shown in U.S. dollars unless otherwise noted.

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
BCLY Barclays
CSI Credit Suisse International
 
Index Abbreviations:
CPURNSA Consumer Price All Urban Non-Seasonally Adjusted
 
Other Abbreviations:
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
LIBOR London Interbank Offered Rate

 

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

 

8

 

The Hartford Inflation Plus Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Senior Floating Rate Interests   73,604        73,604     
U.S. Government Agencies   10        10     
U.S. Government Securities   2,018,782    128,661    1,890,121     
Short-Term Investments   8,371        8,371     
Total  $2,100,767   $128,661   $1,972,106   $ 
Liabilities:                    
Interest Rate Swaps *   1,494        1,494     
Total  $1,494   $   $1,494   $ 

 

For the six-month period ended April 30, 2013, investments valued at $246,198 were transferred from Level 1 to Level 2, and there were no transfers from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).
 *Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

9

 

The Hartford Inflation Plus Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $1,981,661)  $2,100,767 
Cash   2,550 
Receivables:     
Investment securities sold   688 
Fund shares sold   2,249 
Dividends and interest   5,276 
Other assets   133 
Total assets   2,111,663 
Liabilities:     
Unrealized depreciation on swap contracts   1,494 
Payables:     
Investment securities purchased   2,579 
Fund shares redeemed   5,729 
Investment management fees   160 
Administrative fees   4 
Distribution fees   151 
Accrued expenses   296 
Total liabilities   10,413 
Net assets  $2,101,250 
Summary of Net Assets:     
Capital stock and paid-in-capital  $1,940,383 
Distributions in excess of net investment loss   (1,003)
Accumulated net realized gain   44,258 
Unrealized appreciation of investments   117,612 
Net assets  $2,101,250 
      
Shares authorized   6,245,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $12.19/$12.76 
Shares outstanding   62,562 
Net assets  $762,683 
Class B: Net asset value per share  $11.95 
Shares outstanding   3,558 
Net assets  $42,503 
Class C: Net asset value per share  $11.94 
Shares outstanding   52,498 
Net assets  $626,881 
Class I: Net asset value per share  $12.31 
Shares outstanding   17,863 
Net assets  $219,919 
Class R3: Net asset value per share  $12.09 
Shares outstanding   7,294 
Net assets  $88,220 
Class R4: Net asset value per share  $12.20 
Shares outstanding   3,108 
Net assets  $37,904 
Class R5: Net asset value per share  $12.28 
Shares outstanding   693 
Net assets  $8,511 
Class Y: Net asset value per share  $12.32 
Shares outstanding   25,547 
Net assets  $314,629 

 

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

 

10

 

The Hartford Inflation Plus Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Interest  $12,881 
Total investment income   12,881 
      
Expenses:     
Investment management fees   5,209 
Administrative services fees     
Class R3   90 
Class R4   29 
Class R5   4 
Transfer agent fees     
Class A   491 
Class B   43 
Class C   307 
Class I   212 
Class R3   4 
Class R4   1 
Class R5   1 
Class Y   4 
Distribution fees     
Class A   1,005 
Class B   237 
Class C   3,372 
Class R3   226 
Class R4   49 
Custodian fees   8 
Accounting services fees   159 
Registration and filing fees   101 
Board of Directors' fees   26 
Audit fees   15 
Other expenses   136 
Total expenses (before waivers and fees paid indirectly)   11,729 
Expense waivers   (177)
Custodian fee offset    
Total waivers and fees paid indirectly   (177)
Total expenses, net   11,552 
Net Investment Income   1,329 
Net Realized Gain on Investments and Other Financial Instruments:     
Net realized gain on investments in securities   44,466 
Net realized gain on futures   833 
Net realized loss on swap contracts   (18)
Net Realized Gain on Investments and Other Financial Instruments   45,281 
Net Changes in Unrealized Depreciation of Investments and Other Financial Instruments:     
Net unrealized depreciation of investments   (50,090)
Net unrealized depreciation of swap contracts   (1,494)
Net Changes in Unrealized Depreciation of Investments and Other Financial Instruments   (51,584)
Net Loss on Investments, Other Financial Instruments and Foreign Currency Transactions   (6,303)
Net Decrease in Net Assets Resulting from Operations  $(4,974)

 

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

 

11

 

The Hartford Inflation Plus Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

  

For the Six-Month

Period Ended

April 30, 2013
(Unaudited)

   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $1,329   $12,234 
Net realized gain on investments, other financial instruments and foreign currency transactions   45,281    91,777 
Net unrealized appreciation (depreciation) of investments and other financial instruments   (51,584)   61,830 
Net Increase (Decrease) in Net Assets Resulting from Operations   (4,974)   165,841 
Distributions to Shareholders:          
From net investment income          
Class A   (2,474)   (4,916)
Class B   (90)   (215)
Class C   (1,248)   (2,606)
Class I   (963)   (2,084)
Class R3   (221)   (418)
Class R4   (115)   (207)
Class R5   (27)   (51)
Class Y   (1,297)   (2,282)
Total from net investment income   (6,435)   (12,779)
From net realized gain on investments          
Class A   (28,409)   (33,827)
Class B   (1,765)   (2,972)
Class C   (24,327)   (28,745)
Class I   (9,692)   (13,598)
Class R3   (3,142)   (2,836)
Class R4   (1,360)   (1,125)
Class R5   (272)   (299)
Class Y   (12,267)   (12,276)
Total from net realized gain on investments   (81,234)   (95,678)
Total distributions   (87,669)   (108,457)
Capital Share Transactions:          
Class A   (56,569)   (6,243)
Class B   (8,647)   (19,889)
Class C   (62,135)   25,132 
Class I   (67,122)   (10,330)
Class R3   (2,323)   26,489 
Class R4   (1,847)   14,507 
Class R5   702    (6,893)
Class Y   (49,873)   68,734 
Net increase (decrease) from capital share transactions   (247,814)   91,507 
Net Increase (Decrease) in Net Assets   (340,457)   148,891 
Net Assets:          
Beginning of period   2,441,707    2,292,816 
End of period  $2,101,250   $2,441,707 
Undistributed (distribution in excess of) net investment income (loss)  $(1,003)  $4,103 

 

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

 

12

 

The Hartford Inflation Plus Fund
Notes to Financial Statements
April 30, 2013  (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current

 

13

 

The Hartford Inflation Plus Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

 

14

 

 

 

·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

15

 

The Hartford Inflation Plus Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

Trade date for senior floating rate interests purchased in the primary loan market is considered the date on which the loan allocations are determined. Trade date for senior floating rate interests purchased in the secondary loan 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. Paydown gains and losses on mortgage-related and other asset-backed securities are included in interest income in the Statement of Operations.

 

d)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Normally, dividends from net investment income are declared daily and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into,

 

16

 

 

 

and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

c)Senior Floating Rate Interests – The Fund, as shown on the Schedule of Investments, invests 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. The Fund may invest in multiple series or tranches of a senior floating rate interest, which may have varying terms and carry different associated risks. The Fund may also enter into unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. In certain circumstances, the Fund may receive various fees upon the restructure of a senior floating rate interest by a borrower. Fees earned/paid may be recorded as a component of income or realized gain/loss in the Statement of Operations.

 

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.

 

d)Inflation Indexed Bonds – The Fund may invest in inflation indexed bonds. Inflation indexed bonds are fixed income investments whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation indexed bond will be included as interest income on the Statement of Operations, even though investors do not receive the principal amount until maturity. The Fund, as shown on the Schedule of Investments, had inflation indexed bonds as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange.

 

17

 

The Hartford Inflation Plus Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. As of April 30, 2013, the Fund had no outstanding futures contracts.

 

b)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

Interest Rate Swap Contracts 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 or inflation benchmark (e.g. London Interbank Offered Rate (“LIBOR”)), 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 contracts is recorded as a realized gain or loss. 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 contract 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 contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash

 

18

 

 

 

flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The Fund, as shown on the Schedule of Investments, had outstanding interest rate swaps as of April 30, 2013.

 

c)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Liabilities:                                   
Unrealized depreciation on swap contracts  $1,494   $   $   $   $   $   $1,494 
Total  $1,494   $   $   $   $   $   $1,494 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain (Loss) on Derivatives Recognized as a Result of Operations:
Net realized gain on futures  $833   $   $   $   $   $   $833 
Net realized loss on swap contracts   (18)                       (18)
Total  $815   $   $   $   $   $   $815 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized depreciation of swap contracts  $(1,494)  $   $   $   $   $   $(1,494)
Total  $(1,494)  $   $   $   $   $   $(1,494)

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. Senior floating rate interests and securities subject to prepayment and extension risk generally offer less potential for gains when interest rates decline. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage

 

19

 

The Hartford Inflation Plus Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

backed securities, senior floating rate interests, and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $58,892   $111,824 
Long-Term Capital Gains ‡   49,442    38,315 

 

The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

20

 

 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $63,917 
Undistributed Long-Term Capital Gain   21,679 
Unrealized Appreciation *   168,175 
Total Accumulated Earnings  $253,771 

 

*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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $325 
Accumulated Net Realized Gain (Loss)   (325)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

During the year ended October 31, 2012, the Fund utilized $7,265 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

21

 

The Hartford Inflation Plus Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.500%   
On next $500 million   0.450%   
On next $1.5 billion   0.445%   
On next $2.5 billion   0.440%   
On next $5 billion   0.430%   
Over $10 billion   0.420%   

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 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%      1.20%      0.90%      0.60%      0.55%   

 

22

 

 

 

c)Fees Paid Indirectly The Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, this amount, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended 
April 30, 2013
 
Class A   0.85%
Class B   1.60 
Class C   1.59 
Class I   0.60 
Class R3   1.20 
Class R4   0.90 
Class R5   0.60 
Class Y   0.50 

 

d)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $973 and contingent deferred sales charges of $147 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to

 

23

 

The Hartford Inflation Plus Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage
of Fund
 
Class Y   10%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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   $683,453 
Sales Proceeds Excluding U.S. Government Obligations    966,271 
Cost of Purchases for U.S. Government Obligations    283,025 
Sales Proceeds for U.S. Government Obligations    284,259 

 

24

 

 

 

10. Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   5,794    2,395    (12,887)       (4,698)   18,772    2,984    (22,159)       (403)
Amount  $70,744   $29,219   $(156,532)  $   $(56,569)  $229,638   $35,647   $(271,528)  $   $(6,243)
Class B                                                  
Shares   62    133    (919)       (724)   265    226    (2,131)       (1,640)
Amount  $746   $1,594   $(10,987)  $   $(8,647)  $3,191   $2,663   $(25,743)  $   $(19,889)
Class C                                                  
Shares   3,587    1,830    (10,666)       (5,249)   12,630    2,204    (12,668)       2,166 
Amount  $43,051   $21,931   $(127,117)  $   $(62,135)  $152,234   $25,941   $(153,043)  $   $25,132 
Class I                                                  
Shares   3,102    667    (9,254)       (5,485)   14,628    946    (16,373)       (799)
Amount  $38,194   $8,218   $(113,534)  $   $(67,122)  $180,227   $11,382   $(201,939)  $   $(10,330)
Class R3                                                  
Shares   753    273    (1,219)       (193)   3,031    271    (1,111)       2,191 
Amount  $9,104   $3,307   $(14,734)  $   $(2,323)  $36,906   $3,225   $(13,642)  $   $26,489 
Class R4                                                  
Shares   694    98    (943)       (151)   2,325    104    (1,236)       1,193 
Amount  $8,447   $1,201   $(11,495)  $   $(1,847)  $28,471   $1,239   $(15,203)  $   $14,507 
Class R5                                                  
Shares   239    24    (206)       57    496    28    (1,077)       (553)
Amount  $2,935   $297   $(2,530)  $   $702   $6,102   $339   $(13,334)  $   $(6,893)
Class Y                                                  
Shares   4,691    1,082    (9,851)       (4,078)   13,671    1,178    (9,276)       5,573 
Amount  $57,555   $13,318   $(120,746)  $   $(49,873)  $169,942   $14,179   $(115,387)  $   $(68,734)
Total                                                  
Shares   18,922    6,502    (45,945)       (20,521)   65,818    7,941    (66,031)       7,728 
Amount  $230,776   $79,085   $(557,675)  $   $(247,814)  $806,711   $94,615   $(809,819)  $   $91,507 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   101   $1,224 
For the Year Ended October 31, 2012   347   $4,255 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group,

 

25

 

The Hartford Inflation Plus Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

13.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

14.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

26

 

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27

 

The Hartford Inflation Plus Fund
Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited)                          
A  $12.65   $0.02   $(0.02)  $   $(0.04)  $(0.42)  $   $(0.46)  $12.19 
B   12.44    (0.04)   (0.01)   (0.05)   (0.02)   (0.42)       (0.44)   11.95 
C   12.43    (0.03)   (0.02)   (0.05)   (0.02)   (0.42)       (0.44)   11.94 
I   12.76    0.03    (0.02)   0.01    (0.04)   (0.42)       (0.46)   12.31 
R3   12.57        (0.03)   (0.03)   (0.03)   (0.42)       (0.45)   12.09 
R4   12.66    0.02    (0.02)       (0.04)   (0.42)       (0.46)   12.20 
R5   12.73    0.04    (0.03)   0.01    (0.04)   (0.42)       (0.46)   12.28 
Y   12.76    0.04    (0.01)   0.03    (0.05)   (0.42)       (0.47)   12.32 
                                              
For the Year Ended October 31, 2012 (G)                          
A   12.36    0.08    0.80    0.88    (0.07)   (0.52)       (0.59)   12.65 
B   12.22    (0.01)   0.79    0.78    (0.04)   (0.52)       (0.56)   12.44 
C   12.21    (0.01)   0.79    0.78    (0.04)   (0.52)       (0.56)   12.43 
I   12.44    0.11    0.81    0.92    (0.08)   (0.52)       (0.60)   12.76 
R3   12.31    0.05    0.78    0.83    (0.05)   (0.52)       (0.57)   12.57 
R4   12.37    0.08    0.80    0.88    (0.07)   (0.52)       (0.59)   12.66 
R5   12.42    0.13    0.78    0.91    (0.08)   (0.52)       (0.60)   12.73 
Y   12.44    0.12    0.80    0.92    (0.08)   (0.52)       (0.60)   12.76 
                                              
For the Year Ended October 31, 2011                          
A(H)   12.27    0.35    0.58    0.93    (0.32)   (0.52)       (0.84)   12.36 
B   12.16    0.26    0.57    0.83    (0.25)   (0.52)       (0.77)   12.22 
C   12.15    0.26    0.57    0.83    (0.25)   (0.52)       (0.77)   12.21 
I   12.34    0.37    0.59    0.96    (0.34)   (0.52)       (0.86)   12.44 
R3   12.23    0.30    0.59    0.89    (0.29)   (0.52)       (0.81)   12.31 
R4   12.28    0.34    0.58    0.92    (0.31)   (0.52)       (0.83)   12.37 
R5   12.31    0.36    0.61    0.97    (0.34)   (0.52)       (0.86)   12.42 
Y   12.33    0.39    0.59    0.98    (0.35)   (0.52)       (0.87)   12.44 
                                              
For the Year Ended October 31, 2010 (G)                          
A   11.39    0.17    0.96    1.13    (0.18)   (0.07)       (0.25)   12.27 
B   11.30    0.09    0.95    1.04    (0.11)   (0.07)       (0.18)   12.16 
C   11.29    0.08    0.96    1.04    (0.11)   (0.07)       (0.18)   12.15 
I   11.45    0.20    0.96    1.16    (0.20)   (0.07)       (0.27)   12.34 
R3   11.36    0.12    0.96    1.08    (0.14)   (0.07)       (0.21)   12.23 
R4   11.40    0.15    0.97    1.12    (0.17)   (0.07)       (0.24)   12.28 
R5   11.42    0.18    0.98    1.16    (0.20)   (0.07)       (0.27)   12.31 
Y   11.43    0.21    0.97    1.18    (0.21)   (0.07)       (0.28)   12.33 
                                              
For the Year Ended October 31, 2009 (G)                          
A   9.78    0.09    1.59    1.68    (0.07)           (0.07)   11.39 
B   9.76    (0.07)   1.66    1.59    (0.05)           (0.05)   11.30 
C   9.75    (0.01)   1.60    1.59    (0.05)           (0.05)   11.29 
I   9.81    0.19    1.52    1.71    (0.07)           (0.07)   11.45 
R3   9.78    0.26    1.38    1.64    (0.06)           (0.06)   11.36 
R4   9.79    0.30    1.37    1.67    (0.06)           (0.06)   11.40 
R5   9.80    0.30    1.39    1.69    (0.07)           (0.07)   11.42 
Y   9.80    0.02    1.68    1.70    (0.07)           (0.07)   11.43 
                                              
For the Year Ended October 31, 2008                          
A   10.66    0.60    (0.87)   (0.27)   (0.61)           (0.61)   9.78 
B   10.64    0.53    (0.88)   (0.35)   (0.53)           (0.53)   9.76 
C   10.63    0.52    (0.87)   (0.35)   (0.53)           (0.53)   9.75 
I   10.68    0.62    (0.85)   (0.23)   (0.64)           (0.64)   9.81 
R3   10.67    0.53    (0.85)   (0.32)   (0.57)           (0.57)   9.78 
R4   10.67    0.57    (0.86)   (0.29)   (0.59)           (0.59)   9.79 
R5   10.68    0.58    (0.83)   (0.25)   (0.63)           (0.63)   9.80 
Y   10.69    0.66    (0.91)   (0.25)   (0.64)           (0.64)   9.80 

 

28

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
  
  
 (0.01)%(E)  $762,683    0.87%(F)   0.85%(F)   0.33%(F)   41%
 (0.38)(E)   42,503    1.68(F)   1.60(F)   (0.45)(F)    
 (0.38)(E)   626,881    1.59(F)   1.59(F)   (0.43)(F)    
 0.11(E)   219,919    0.66(F)   0.60(F)   0.44(F)    
 (0.23)(E)   88,220    1.21(F)   1.20(F)   0.02(F)    
 (0.02)(E)   37,904    0.90(F)   0.90(F)   0.29(F)    
 0.11(E)   8,511    0.62(F)   0.60(F)   0.76(F)    
 0.21(E)   314,629    0.50(F)   0.50(F)   0.53(F)    
                            
 
 7.41    851,003    0.86    0.85    0.69    102 
 6.65    53,262    1.66    1.60    (0.11)    
 6.66    717,899    1.59    1.59    (0.04)    
 7.70    297,985    0.64    0.60    0.91     
 7.07    94,112    1.21    1.20    0.41     
 7.39    41,261    0.91    0.90    0.69     
 7.63    8,096    0.62    0.60    1.05     
 7.73    378,089    0.50    0.50    0.99     
                            
 
 8.19    836,386    0.87    0.85    2.89    232 
 7.35    72,383    1.67    1.60    2.14     
 7.36    678,916    1.60    1.60    2.16     
 8.45    300,497    0.64    0.60    3.19     
 7.83    65,208    1.22    1.20    2.70     
 8.14    25,566    0.92    0.90    2.93     
 8.55    14,764    0.63    0.60    3.69     
 8.63    299,096    0.51    0.51    3.37     
                            
 
 10.06    822,952    0.92    0.90    1.52    322 
 9.28    103,313    1.71    1.65    0.77     
 9.28    674,801    1.65    1.65    0.75     
 10.32    243,916    0.71    0.65    1.74     
 9.67    33,638    1.29    1.25    1.09     
 9.97    14,398    0.98    0.97    1.35     
 10.30    2,878    0.68    0.67    1.60     
 10.49    318,524    0.57    0.57    1.88     
                            
 
 17.20    608,161    0.96    0.85    0.89    145 
 16.30    95,935    1.75    1.60    (0.64)    
 16.32    463,764    1.69    1.60    (0.07)    
 17.53    137,773    0.74    0.60    1.92     
 16.78    5,355    1.38    1.25    2.73     
 17.14    2,758    1.02    1.00    3.07     
 17.30    258    0.76    0.76    2.91     
 17.44    165,637    0.59    0.59    0.16     
                            
 
 (3.08)   307,863    1.01     0.91(I)   5.60    437 
 (3.81)   75,789    1.80     1.66 (I)   4.82     
 (3.82)   241,305    1.75     1.66 (I)   4.86     
 (2.74)   27,135    0.75     0.65(I)   5.28     
 (3.56)   216    1.43     1.30(I)   5.63     
 (3.23)   17    1.12     1.06(I)   5.29     
 (2.94)   28    0.75     0.75(I)   4.92     
 (2.90)   138,292    0.65     0.65(I)   5.85     

 

29

 

The Hartford Inflation Plus Fund
Financial Highlights – (continued)

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Not annualized.
(F)Annualized.
(G)Per share amounts have been calculated using average shares outstanding method.
(H)Class L was merged into Class A on August 5, 2011.
(I)Excluding the expenses not subject to cap, the ratio would have been 0.85%, 1.60%, 1.60%, 0.60%, 1.25%, 1.00%, 0.70% and 0.60% for Class A, Class B, Class C, Class I, Class R3, Class R4, Class R5 and Class Y, respectively.

 

30

 

The Hartford Inflation Plus Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

31

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

32

 

 

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
  

Beginning

Account Value
October 31, 2012

  

Ending Account

Value
April 30, 2013

  

Expenses paid

during the period
October 31, 2012
through
April 30, 2013

   Beginning
Account Value
October 31, 2012
  

Ending Account

Value
April 30, 2013

  

Expenses paid

during the

period
October 31, 2012
through
April 30, 2013

   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $999.90   $4.22   $1,000.00   $1,020.58   $4.26    0.85%   181    365 
Class B  $1,000.00   $996.20   $7.92   $1,000.00   $1,016.85   $8.01    1.60    181    365 
Class C  $1,000.00   $996.20   $7.86   $1,000.00   $1,016.91   $7.95    1.59    181    365 
Class I  $1,000.00   $1,001.10   $2.98   $1,000.00   $1,021.82   $3.01    0.60    181    365 
Class R3  $1,000.00   $997.70   $5.95   $1,000.00   $1,018.84   $6.01    1.20    181    365 
Class R4  $1,000.00   $999.80   $4.47   $1,000.00   $1,020.33   $4.51    0.90    181    365 
Class R5  $1,000.00   $1,001.10   $2.98   $1,000.00   $1,021.82   $3.01    0.60    181    365 
Class Y  $1,000.00   $1,002.10   $2.48   $1,000.00   $1,022.32   $2.50    0.50    181    365 

 

34

 

The Hartford Inflation Plus Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Inflation Plus Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

35

 

The Hartford Inflation Plus Fund
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

36

 

The Hartford Inflation Plus Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early). These risks also apply to the Fund’s investments in U.S. government securities, which may not be guaranteed by the U.S. government.

 

Inflation Protected Securities Risk: The market for inflation protected securities may be less developed or liquid, and more volatile, than other securities markets.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Mortgage-Backed Securities Risk: Mortgage-backed securities are subject to interest rate risk, credit risk, prepayment risk, extension risk, and the risk that an investment’s value may be reduced or become worthless if it receives interest or income payments only after other investments in the same pool.

 

Foreign Investment and Sovereign Debt Risk: Investments in foreign investments and sovereign debt can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, risks that stem from substantially lower trading volume on foreign markets, and default risk. Sovereign debt investments are also subject to credit risk and the risk of default.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

37
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-IP13 4/13 113986 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

26

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD INTERNATIONAL GROWTH FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford International Growth Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   8
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   9
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   10
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   11
Notes to Financial Statements (Unaudited)   12
Financial Highlights (Unaudited)   26
Directors and Officers (Unaudited)   29
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   31
Quarterly Portfolio Holdings Information (Unaudited)   31
Expense Example (Unaudited)   32
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   33
Principal Risks (Unaudited)   35

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford International Growth Fund inception 04/30/2001

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks capital appreciation.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The Chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
International Growth A#   16.98%       16.14%       -2.96%       7.43%    
International Growth A##        9.76%       -4.05%       6.83%    
International Growth B#   16.63%       15.35%       -3.58%       6.95%*    
International Growth B##        10.35%       -3.97%       6.95%*    
International Growth C#   16.56%       15.28%       -3.68%       6.63%    
International Growth C##        14.28%       -3.68%       6.63%    
International Growth I#   17.23%       16.63%       -2.60%       7.69%    
International Growth R3#   16.93%       16.10%       -3.17%       7.43%    
International Growth R4#   17.16%       16.46%       -2.81%       7.68%    
International Growth R5#   17.29%       16.83%       -2.52%       7.88%    
International Growth Y#   17.39%       16.93%       -2.41%       7.96%    
MSCI EAFE Growth Index   17.44%       17.50%       0.09%       9.30%    

 

Not Annualized
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund's Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford International Growth Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*        
   Net   Gross 
International Growth Class A   1.55%       1.68%    
International Growth Class B   2.30%       2.67%    
International Growth Class C   2.30%       2.39%    
International Growth Class I   1.28%       1.28%    
International Growth Class R3   1.60%       1.83%    
International Growth Class R4   1.30%       1.46%    
International Growth Class R5   1.00%       1.16%    
International Growth Class Y   0.95%       1.02%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
John A. Boselli, CFA Jean-Marc Berteaux
Director and Equity Portfolio Manager Senior Vice President and Equity Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford International Growth Fund returned 16.98%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmark, the MSCI EAFE Growth Index, which returned 17.44% for the same period. The Fund outperformed the 12.03% average return of 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 surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Investors’ enthusiasm for stocks was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, the market responded favorably to the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

Within the benchmark, Telecommunication Services (+34%), Financials (+26%), and Consumer Discretionary (+24%) performed best while Energy (-7%) and Materials (+3%) lagged the broader index.

 

The Fund’s underperformance relative to the MSCI EAFE Growth Index was primarily the result of weak security selection. Weak stock selection within the Financials, Consumer Staples, and Telecommunication Services sectors more than offset strong selection within Information Technology and Health Care. Sector allocation, a residual of bottom-up stock selection, contributed positively to benchmark-relative performance. The Fund’s underweight exposure (i.e. the Fund’s sector position was less than the benchmark position) to the Materials sector and overweight exposure to Consumer Discretionary contributed to relative results.

 

Toyota Motor (Consumer Discretionary), Barrick Gold (Materials), and Fresnillo (Materials) were the top detractors from benchmark-relative performance. Not owning benchmark component Toyota Motor, a Japanese auto company, detracted during the period as the stock rose sharply due to yen depreciation. Shares of Barrick Gold, a Canada-based gold exploration and mining company, underperformed during the period as the price of gold fell sharply and as investors feared that rising costs, primarily higher costs to extract gold, will continue to cause Barrick's incremental returns to be challenged. Shares of Fresnillo, a Mexico-based silver and gold mining company, also fell during the period as investors were concerned about the falling gold prices.

 

Top contributors to the Fund’s relative performance during the period were Bridgestone (Consumer Discretionary), BHP Billiton (Materials), and Virgin Media (Consumer Discretionary). Based in Japan, Bridgestone is the world's largest tire and rubber company and also manufactures other diversified products. The stock rose during the period as investors were positive on Japanese exporters, like Bridgestone, who benefited from a weakening yen and lower

 

3

 

The Hartford International Growth Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

commodity prices. BHP Billiton is an Australia-based diversified metals and mining company. Shares fell during the period due to concerns over growth in China. Not owning the benchmark component contributed to relative results. Shares of Virgin Media, a U.K.-focused entertainment and communications business that provides services including broadband internet, television, and telephone services, rose during the period after announcing it would be acquired by Liberty Global. ARM (Information Technology) and Rolls-Royce (Industrials) also contributed positively to the Fund’s absolute performance (i.e. total return).

 

What is the outlook?

The world economy is slowly but steadily emerging from a post-bubble overhang. Looking into 2014, we expect all regions to strengthen economically while inflation should remain subdued in many parts of the world. Central banks are playing a key role in anchoring bond yields and helping the financial sector healing process. The U.S. Federal Reserve Board is likely to tighten monetary policy later next year, while the European Central Bank and Bank of Japan are expected to leave monetary conditions accommodative for longer. Overall, we expect a return of a world economy that is determined by regional macro fundamentals rather than by swings in global risk sentiment.

 

We select stocks individually based on their merits. As a result of bottom-up stock selection, consumer discretionary was the Fund’s 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 industrials and information technology. The largest underweights relative to the benchmark were the consumer staples, materials, and energy sectors.

 

Diversification by Industry

as of April 30, 2013

Industry (Sector)  Percentage of
Net Assets
 
Automobiles and Components (Consumer Discretionary)   2.9%
Banks (Financials)   3.9 
Capital Goods (Industrials)   10.0 
Commercial and Professional Services (Industrials)   4.3 
Consumer Durables and Apparel (Consumer Discretionary)   9.6 
Consumer Services (Consumer Discretionary)   4.9 
Diversified Financials (Financials)   2.3 
Energy (Energy)   1.8 
Food and Staples Retailing (Consumer Staples)   1.0 
Food, Beverage and Tobacco (Consumer Staples)   11.0 
Health Care Equipment and Services (Health Care)   3.2 
Insurance (Financials)   6.3 
Materials (Materials)   4.9 
Media (Consumer Discretionary)   1.6 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   8.5 
Real Estate (Financials)   2.1 
Retailing (Consumer Discretionary)   1.5 
Semiconductors and Semiconductor Equipment (Information Technology)   3.9 
Software and Services (Information Technology)   4.9 
Technology Hardware and Equipment (Information Technology)   1.2 
Telecommunication Services (Services)   0.8 
Transportation (Industrials)   5.0 
Utilities (Utilities)   2.7 
Short-Term Investments   1.6 
Other Assets and Liabilities   0.1 
Total   100.0%

 

4

 

The Hartford International Growth Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 97.5%     
     Australia - 1.2%     
 204   Transurban Group  $1,441 
           
     Austria - 0.8%     
 14   Andritz AG   911 
           
     Belgium - 2.2%     
 20   Anheuser-Busch InBev N.V.   1,879 
 15   UCB S.A. ●   856 
         2,735 
     Brazil - 1.5%     
 80   BR Properties S.A.   892 
 64   Cia de Saneamento Basico do Estado de Sao Paulo ☼   898 
         1,790 
     Canada - 4.6%     
 11   Alimentation Couche-Tard, Inc. Class B   683 
 24   Barrick Gold Corp.   482 
 90   CAE, Inc.   976 
 48   Methanex Corp.   2,016 
 109   Trican Well Service Ltd.   1,425 
         5,582 
     China - 0.6%     
 1,254   Greatview Aseptic Packaging Co., Ltd.   749 
           
     Colombia - 0.4%     
 32   Almacenes Exito S.A.   532 
           
     Denmark - 1.5%     
 70   DSV A/S   1,772 
           
     Finland - 1.5%     
 123   Outotec Oyj   1,798 
           
     France - 8.6%     
 92   AXA S.A.   1,719 
 7   Bureau Veritas S.A. ☼   827 
 19   Cie Generale d'Optique Essilor International S.A.   2,125 
 81   Club Mediterranee S.A. ●   1,378 
 9   Dassault Systemes S.A.   1,090 
 37   Safran S.A.   1,795 
 10   Sanofi-Aventis S.A.   1,118 
 9   Vallourec S.A.   434 
         10,486 
     Germany - 6.4%     
 19   Adidas AG   2,009 
 7   Brenntag AG   1,226 
 8   Hannover Rueck SE   655 
 11   MTU Aero Engines Holdings AG   1,000 
 21   SAP AG   1,706 
 45   United Internet AG   1,243 
         7,839 
     Hong Kong - 5.7%     
 184   AAC Technologies Holdings, Inc.   901 
 283   AIA Group Ltd.   1,258 
 964   Guangdong Investment Ltd.   933 
 849   Samsonite International S.A.   2,093 
 222   Sands China Ltd.   1,167 
 273   Techtronic Industries Co., Ltd.   653 
         7,005 
     India - 3.1%     
 70   HCL Technologies Ltd.   931 
 65   HDFC Bank Ltd.   823 
 168   ITC Ltd.   1,029 
 57   Sun Pharmaceutical Industries Ltd.   1,006 
         3,789 
     Indonesia - 0.6%     
 146   PT Gudang Garam Tbk   743 
           
     Ireland - 2.8%     
 142   Experian plc   2,492 
 11   Paddy Power plc ☼   961 
         3,453 
     Italy - 1.9%     
 34   Salvatore Ferragamo Italia S.p.A.   1,004 
 239   Unicredit S.p.A.   1,249 
         2,253 
     Japan - 8.7%     
 73   Bridgestone Corp.   2,739 
 49   Daiichi Sankyo Co., Ltd.   956 
 9   IBJ Leasing Co., Ltd.   302 
 118   Isuzu Motors Ltd.   786 
 44   Japan Tobacco, Inc.   1,653 
 56   Shionogi & Co., Ltd.   1,375 
 575   Taiheyo Cement Corp.   1,494 
 27   Tokio Marine Holdings, Inc. ☼   842 
 45   Yusen Logistics Co. Ltd.   471 
         10,618 
     Malaysia - 0.5%     
 610   AirAsia Berhad   588 
           
     Netherlands - 1.0%     
 17   Heineken N.V.   1,190 
           
     Norway - 0.8%     
 44   Telenor ASA   987 
           
     Panama - 1.5%     
 15   Copa Holdings S.A. Class A ‡   1,880 
           
     Philippines - 1.3%     
 2,063   Ayala Land, Inc.   1,629 
           
     South Africa - 1.4%     
 103   Discovery Ltd.   936 
 176   Life Healthcare Group Holdings Pte Ltd.   743 
         1,679 
     South Korea - 2.1%     
 2   Samsung Electronics Co., Ltd.   2,534 
           
     Sweden - 2.3%     
 19   Assa Abloy Ab   769 
 49   Electrolux Ab Series B   1,382 
 20   Hennes & Mauritz Ab   708 
         2,859 

 

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

 

5

 

The Hartford International Growth Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 97.5% - (continued)     
     Switzerland - 10.1%     
 19   Actelion Ltd.  $1,135 
 18   Cie Financiere Richemont S.A.   1,471 
 21   Nestle S.A.   1,469 
 12   Novartis AG ☼   904 
 5   Partners Group   1,204 
 12   Roche Holding AG   3,076 
    SGS S.A.   1,018 
 2   Swatch Group AG   1,055 
 13   Swiss Re Ltd.   998 
         12,330 
     Taiwan - 1.3%     
 129   Delta Electronics, Inc.   619 
 261   Taiwan Semiconductor Manufacturing Co., Ltd.   969 
         1,588 
     Thailand - 1.4%     
 691   Bank of Ayudhya plc   773 
 128   Kasikornbank PCL   928 
         1,701 
     Turkey - 0.8%     
 175   Turkiye Garanti Bankasi A.S.   971 
           
     United Kingdom - 19.2%     
 187   Aberdeen Asset Management plc   1,306 
 77   Arm Holdings plc   1,197 
 49   BG Group plc   832 
 38   British American Tobacco plc   2,088 
 55   Burberry Group plc   1,154 
 188   Compass Group plc   2,474 
 45   Diageo Capital plc   1,380 
 34   Fresnillo plc   614 
 18   Intertek Group plc   939 
 115   National Grid plc   1,467 
 17   Next plc   1,141 
 51   Persimmon plc   859 
 71   Prudential plc   1,224 
 185   Rolls-Royce Holdings plc   3,245 
 47   Unilever plc   2,033 
 18   Virgin Media, Inc.   893 
 38   Xstrata plc   578 
         23,424 
     United States - 1.7%     
 29   Amdocs Ltd.   1,028 
 17   Covidien plc   1,072 
         2,100 
     Total common stocks     
     (cost $95,713)  $118,956 
           
PREFERRED STOCKS - 0.8%     
     Germany - 0.8%     
 26   ProSieben Sat.1 Media AG  $1,001 
           
     Total preferred stocks     
     (cost $906)  $1,001 
           
     Total long-term investments     
     (cost $96,619)  $119,957 
           
SHORT-TERM INVESTMENTS - 1.6%     
     Repurchase Agreements - 1.6%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $80,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $82)
     
$80   0.17%, 4/30/2013  $80 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $218, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -
2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$222)
     
 218   0.15%, 4/30/2013   218 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $420, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $428)
     
 419   0.15%, 4/30/2013   419 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $583,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $594)
     
 583   0.14%, 4/30/2013   583 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $105, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $107)
     
 105   0.17%, 4/30/2013   105 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $355, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $362)
     
 355   0.14%, 4/30/2013   355 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$250, collateralized by U.S. Treasury Note
0.25% - 1.88%, 2014 - 2019, value of $255)
     
 250   0.17%, 4/30/2013   250 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$4, collateralized by U.S. Treasury Note
3.88%, 2018, value of $5)
     
 4   0.13%, 4/30/2013   4 
         2,014 
     Total short-term investments     
     (cost $2,014)  $2,014 
                   
     Total investments             
     (cost $98,633) ▲     99.9 %  $121,971 
     Other assets and liabilities     0.1 %   103 
     Total net assets     100.0 %  $122,074 

 

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

 

6

 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.
   
  Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $98,890 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $25,893 
Unrealized Depreciation   (2,812)
Net Unrealized Appreciation  $23,081 

 

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.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $1,316 at April 30, 2013.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
CHF  Buy  05/06/2013  DEUT  $122   $122   $ 
EUR  Buy  05/03/2013  JPM   122    122     
EUR  Buy  05/06/2013  JPM   122    122     
EUR  Buy  05/07/2013  JPM   100    100     
GBP  Buy  05/03/2013  BCLY   122    122     
JPY  Buy  05/07/2013  CSFB   39    39     
JPY  Buy  05/01/2013  HSBC   179    182    3 
JPY  Buy  05/02/2013  SSG   43    44    1 
                      $4 

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)  
   
Counterparty Abbreviations:  
BCLY Barclays  
CSFB Credit Suisse First Boston Corp.  
DEUT Deutsche Bank Securities, Inc.  
HSBC HSBC Bank USA  
JPM JP Morgan Chase & Co.  
SSG State Street Global Markets LLC  
   
Currency Abbreviations:  
CHF Swiss Franc  
EUR EURO  
GBP British Pound  
JPY Japanese Yen  
   
Other Abbreviations:  
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.  
FNMA Federal National Mortgage Association  

 

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

 

7

 

The Hartford International Growth Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Australia  $1,441   $   $1,441   $ 
Austria   911        911     
Belgium   2,735        2,735     
Brazil   1,790    1,790         
Canada   5,582    5,582         
China   749        749     
Colombia   532    532         
Denmark   1,772        1,772     
Finland   1,798        1,798     
France   10,486        10,486     
Germany   7,839        7,839     
Hong Kong   7,005        7,005     
India   3,789        3,789     
Indonesia   743        743     
Ireland   3,453    961    2,492     
Italy   2,253        2,253     
Japan   10,618        10,618     
Malaysia   588        588     
Netherlands   1,190        1,190     
Norway   987        987     
Panama   1,880    1,880         
Philippines   1,629        1,629     
South Africa   1,679    743    936     
South Korea   2,534        2,534     
Sweden   2,859        2,859     
Switzerland   12,330        12,330     
Taiwan   1,588        1,588     
Thailand   1,701        1,701     
Turkey   971        971     
United Kingdom   23,424    893    22,531     
United States   2,100    2,100         
Total   118,956    14,481    104,475     
Preferred Stocks   1,001        1,001     
Short-Term Investments   2,014        2,014     
Total  $121,971   $14,481   $107,490   $ 
Foreign Currency Contracts*   4        4     
Total  $4   $   $4   $ 
Liabilities:                    
Foreign Currency Contracts*                
Total  $   $   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

8

 

The Hartford International Growth Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $98,633)  $121,971 
Cash    
Foreign currency on deposit with custodian (cost $32)   32 
Unrealized appreciation on foreign currency contracts   4 
Receivables:     
Investment securities sold   1,403 
Fund shares sold   56 
Dividends and interest   445 
Other assets   103 
Total assets   124,014 
Liabilities:     
Unrealized depreciation on foreign currency contracts    
Payables:     
Investment securities purchased   1,681 
Fund shares redeemed   169 
Investment management fees   17 
Administrative fees    
Distribution fees   7 
Accrued expenses   66 
Total liabilities   1,940 
Net assets  $122,074 
Summary of Net Assets:     
Capital stock and paid-in-capital  $363,399 
Undistributed net investment income   433 
Accumulated net realized loss   (265,100)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   23,342 
Net assets  $122,074 
      
Shares authorized   500,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $11.31/$11.97 
Shares outstanding   7,960 
Net assets  $90,042 
Class B: Net asset value per share  $10.54 
Shares outstanding   766 
Net assets  $8,065 
Class C: Net asset value per share  $10.52 
Shares outstanding   1,253 
Net assets  $13,185 
Class I: Net asset value per share  $11.24 
Shares outstanding   540 
Net assets  $6,063 
Class R3: Net asset value per share  $11.40 
Shares outstanding   56 
Net assets  $643 
Class R4: Net asset value per share  $11.63 
Shares outstanding   68 
Net assets  $796 
Class R5: Net asset value per share  $11.68 
Shares outstanding   12 
Net assets  $139 
Class Y: Net asset value per share  $11.72 
Shares outstanding   268 
Net assets  $3,141 

 

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

 

9

 

The Hartford International Growth Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $1,645 
Interest   1 
Less: Foreign tax withheld   (153)
Total investment income   1,493 
      
Expenses:     
Investment management fees   495 
Administrative services fees    
Class R3   1 
Class R4    
Class R5    
Transfer agent fees    
Class A   170 
Class B   28 
Class C   22 
Class I   7 
Class R3    
Class R4    
Class R5    
Class Y    
Distribution fees     
Class A   106 
Class B   42 
Class C   63 
Class R3   2 
Class R4   1 
Custodian fees   13 
Accounting services fees   12 
Registration and filing fees   35 
Board of Directors' fees   2 
Audit fees   7 
Other expenses   23 
Total expenses (before waivers and fees paid indirectly)   1,029 
Expense waivers   (34)
Transfer agent fee waivers   (60)
Commission recapture    
Total waivers and fees paid indirectly   (94)
Total expenses, net   935 
Net Investment Income   558 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   6,795 
Net realized loss on foreign currency contracts   (41)
Net realized gain on other foreign currency transactions   5 
Net Realized Gain on Investments and Foreign Currency Transactions   6,759 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   11,033 
Net unrealized appreciation of foreign currency contracts   4 
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   11,040 
Net Gain on Investments and Foreign Currency Transactions   17,799 
Net Increase in Net Assets Resulting from Operations  $18,357 

 

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 Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $558   $747 
Net realized gain (loss) on investments and foreign currency transactions   6,759    (675)
Net unrealized appreciation of investments and foreign currency transactions   11,040    6,803 
Net Increase in Net Assets Resulting from Operations   18,357    6,875 
Distributions to Shareholders:          
From net investment income          
Class A   (712)   (800)
Class B   (3)    
Class C   (20)   (1)
Class I   (66)   (59)
Class R3   (5)   (7)
Class R4   (7)   (2)
Class R5   (2)   (2)
Class Y   (40)   (39)
Total distributions   (855)   (910)
Capital Share Transactions:          
Class A   (6,045)   (22,472)
Class B   (2,207)   (3,521)
Class C   (1,210)   (3,007)
Class I   (366)   5 
Class R3   (162)   (119)
Class R4   (29)   (650)
Class R5   3    (25)
Class Y   (129)   (520)
Net decrease from capital share transactions   (10,145)   (30,309)
Net Increase (Decrease) in Net Assets   7,357    (24,344)
Net Assets:          
Beginning of period   114,717    139,061 
End of period  $122,074   $114,717 
Undistributed (distribution in excess of) net investment income (loss)  $433   $730 

 

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

 

11

 

The Hartford International Growth Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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’s portfolio managers are John A. Boselli (49.75%) and Jean-Marc Berteaux (50.25%). 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

  a) Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

  b) Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent

 

12

 

 

pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

  · Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

 

13

 

The Hartford International Growth Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

  · Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

  c) Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

14

 

 

  d) 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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

  e) Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

  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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

  a) Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments that serve

 

15

 

The Hartford International Growth Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

  b) Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund had no illiquid or restricted investments as of April 30, 2013.

 

  c) Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

  a) Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

16

 

 

  b) Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $4   $   $   $   $   $4 
Total  $   $4   $   $   $   $   $4 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $   $   $   $   $   $ 
Total  $   $   $   $   $   $   $ 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Loss on Derivatives Recognized as a Result of Operations:           
Net realized loss on foreign currency contracts  $   $(41)  $   $   $   $   $(41)
Total  $   $(41)  $   $   $   $   $(41)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:    
Net change in unrealized appreciation of foreign currency contracts  $   $4   $   $   $   $   $4 
Total  $   $4   $   $   $   $   $4 

 

5.Principal Risks:

 

  a) Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

  b) Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages

 

17

 

The Hartford International Growth Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $910   $ 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $730 
Accumulated Capital Losses *   (271,602)
Unrealized Appreciation †   12,045 
Total Accumulated Deficit  $(258,827)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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.

 

18

 

 

  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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(12)
Accumulated Net Realized Gain (Loss)   12 

 

  e) Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

   Amount 
Short Term Capital Loss Carryforward  $628 
Total  $628 

 

Capital loss carryforwards with expiration:

 

Year of Expiration  Amount 
2016  $160,429 
2017   110,545 
Total  $270,974 

 

  f) Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

19

 

The Hartford International Growth Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

7.Expenses:

 

  a) Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets   Annual Fee  
On first $500 million   0.8500%  
On next $500 million   0.8000%  
On next $4 billion   0.7500%  
On next $5 billion   0.7475%  
Over $10 billion   0.7450%  

 

  b) Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets   Annual Fee 
On first $5 billion   0.020% 
On next $5 billion   0.018% 
Over $10 billion   0.016% 

 

  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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.55%       2.30%       2.30%       1.30%       1.60%       1.30%       1.00%       0.95%    

 

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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.50%
Class B   2.26 
Class C   2.24 
Class I   1.19 
Class R3   1.60 
Class R4   1.30 
Class R5   1.00 
Class Y   0.95 

 

  e) Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $66 and contingent deferred sales charges of $3 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

  f) Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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

 

21

 

The Hartford International Growth Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R5   92%
Class Y   4 

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $47,174 
Sales Proceeds Excluding U.S. Government Obligations   58,215 

 

22

 

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   436    69    (1,090)       (585)   571    91    (3,078)       (2,416)
Amount  $4,612   $704   $(11,361)  $   $(6,045)  $5,285   $778   $(28,535)  $   $(22,472)
Class B                                                  
Shares   8        (234)       (226)   9        (419)       (410)
Amount  $76   $3   $(2,286)  $   $(2,207)  $83   $   $(3,604)  $   $(3,521)
Class C                                                  
Shares   31    2    (159)       (126)   75        (424)       (349)
Amount  $301   $20   $(1,531)  $   $(1,210)  $640   $1   $(3,648)  $   $(3,007)
Class I                                                  
Shares   29    6    (71)       (36)   296    6    (307)       (5)
Amount  $299   $60   $(725)  $   $(366)  $2,805   $48   $(2,848)  $   $5 
Class R3                                                  
Shares   7    1    (23)       (15)   22    1    (35)       (12)
Amount  $74   $5   $(241)  $   $(162)  $199   $7   $(325)  $   $(119)
Class R4                                                  
Shares   10    1    (15)       (4)   27    1    (97)       (69)
Amount  $107   $7   $(143)  $   $(29)  $264   $2   $(916)  $   $(650)
Class R5                                                  
Shares                       1        (3)       (2)
Amount  $1   $2   $   $   $3   $2   $2   $(29)  $   $(25)
Class Y                                                  
Shares   14    4    (30)       (12)   64    4    (125)       (57)
Amount  $151   $40   $(320)  $   $(129)  $609   $39   $(1,168)  $   $(520)
Total                                                  
Shares   535    83    (1,622)       (1,004)   1,065    103    (4,488)       (3,320)
Amount  $5,621   $841   $(16,607)  $   $(10,145)  $9,887   $877   $(41,073)  $   $(30,309)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

    Shares    Dollars 
For the Six-Month Period Ended April 30, 2013   50   $527 
For the Year Ended October 31, 2012   68   $629 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

23

 

The Hartford International Growth Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

24

 

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25

 

The Hartford International Growth Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited)               
A  $9.75   $0.06   $1.59   $1.65   $(0.09)  $   $   $(0.09)  $11.31 
B   9.04    0.01    1.49    1.50                    10.54 
C   9.04    0.01    1.49    1.50    (0.02)           (0.02)   10.52 
I   9.70    0.08    1.58    1.66    (0.12)           (0.12)   11.24 
R3   9.82    0.06    1.60    1.66    (0.08)           (0.08)   11.40 
R4   10.03    0.08    1.63    1.71    (0.11)           (0.11)   11.63 
R5   10.09    0.08    1.65    1.73    (0.14)           (0.14)   11.68 
Y   10.12    0.09    1.66    1.75    (0.15)           (0.15)   11.72 
                                              
For the Year Ended October 31, 2012 (G)               
A   9.25    0.07    0.51    0.58    (0.08)           (0.08)   9.75 
B   8.57        0.47    0.47                    9.04 
C   8.57        0.47    0.47                    9.04 
I   9.21    0.10    0.50    0.60    (0.11)           (0.11)   9.70 
R3   9.33    0.06    0.51    0.57    (0.08)           (0.08)   9.82 
R4   9.45    0.09    0.53    0.62    (0.04)           (0.04)   10.03 
R5   9.58    0.12    0.52    0.64    (0.13)           (0.13)   10.09 
Y   9.61    0.12    0.53    0.65    (0.14)           (0.14)   10.12 
                                              
For the Year Ended October 31, 2011 (G)                
A   9.61    0.06    (0.42)   (0.36)                   9.25 
B   8.96    (0.02)   (0.37)   (0.39)                   8.57 
C   8.97    (0.02)   (0.38)   (0.40)                   8.57 
I   9.53    0.11    (0.43)   (0.32)                   9.21 
R3   9.70    0.05    (0.42)   (0.37)                   9.33 
R4   9.79    0.09    (0.43)   (0.34)                   9.45 
R5   9.90    0.12    (0.44)   (0.32)                   9.58 
Y   9.93    0.12    (0.44)   (0.32)                   9.61 
                                              
For the Year Ended October 31, 2010 (G)               
A   8.00    0.05    1.71    1.76    (0.15)           (0.15)   9.61 
B   7.50    (0.01)   1.59    1.58    (0.12)           (0.12)   8.96 
C   7.48    (0.01)   1.60    1.59    (0.10)           (0.10)   8.97 
I   7.95    0.08    1.69    1.77    (0.19)           (0.19)   9.53 
R3   8.08    0.03    1.73    1.76    (0.14)           (0.14)   9.70 
R4   8.14    0.06    1.75    1.81    (0.16)           (0.16)   9.79 
R5   8.21    0.09    1.77    1.86    (0.17)           (0.17)   9.90 
Y   8.24    0.12    1.76    1.88    (0.19)           (0.19)   9.93 
                                              
For the Year Ended October 31, 2009 (G)                
A   7.07    0.08    0.85    0.93                    8.00 
B   6.65    0.05    0.80    0.85                    7.50 
C   6.66    0.02    0.80    0.82                    7.48 
I   7.04    0.13    0.82    0.95    (0.04)           (0.04)   7.95 
R3   7.18    0.04    0.86    0.90                    8.08 
R4   7.23    0.07    0.86    0.93    (0.02)           (0.02)   8.14 
R5   7.28    0.09    0.87    0.96    (0.03)           (0.03)   8.21 
Y   7.30    0.10    0.88    0.98    (0.04)           (0.04)   8.24 
                                              
For the Year Ended October 31, 2008 (G)               
A   18.93    0.05    (9.50)   (9.45)       (2.41)       (2.41)   7.07 
B   18.08    (0.05)   (8.97)   (9.02)       (2.41)       (2.41)   6.65 
C   18.10    (0.05)   (8.98)   (9.03)       (2.41)       (2.41)   6.66 
I   18.79    0.01    (9.35)   (9.34)       (2.41)       (2.41)   7.04 
R3   19.24    0.01    (9.66)   (9.65)       (2.41)       (2.41)   7.18 
R4   19.30    0.02    (9.68)   (9.66)       (2.41)       (2.41)   7.23 
R5   19.35    0.10    (9.76)   (9.66)       (2.41)       (2.41)   7.28 
Y   19.38    0.12    (9.79)   (9.67)       (2.41)       (2.41)   7.30 

 

26

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
                            
 16.98%(E)  $90,042    1.66%(F)   1.50%(F)   1.07%(F)   41%
 16.63(E)   8,065    2.66(F)   2.26(F)   0.27(F)    
 16.56(E)   13,185    2.35(F)   2.24(F)   0.32(F)    
 17.23(E)   6,063    1.25(F)   1.19(F)   1.38(F)    
 16.93(E)   643    1.81(F)   1.60(F)   0.94(F)    
 17.16(E)   796    1.44(F)   1.30(F)   1.33(F)    
 17.29(E)   139    1.14(F)   1.00(F)   1.58(F)    
 17.39(E)   3,141    1.01(F)   0.95(F)   1.61(F)    
                            
                            
 6.33    83,324    1.68    1.50    0.72    106 
 5.48    8,974    2.67    2.25    (0.03)    
 5.50    12,465    2.39    2.25    (0.02)    
 6.63    5,585    1.28    1.21    1.08     
 6.23    700    1.83    1.60    0.65     
 6.61    718    1.46    1.30    0.98     
 6.87    117    1.16    1.00    1.21     
 6.93    2,834    1.02    0.95    1.29     
                            
                            
 (3.75)   101,400    1.58    1.50    0.58    88 
 (4.35)   12,013    2.54    2.25    (0.17)    
 (4.46)   14,806    2.31    2.25    (0.17)    
 (3.36)   5,354    1.21    1.17    1.06     
 (3.81)   777    1.79    1.60    0.47     
 (3.47)   1,335    1.39    1.30    0.88     
 (3.23)   139    1.09    1.00    1.14     
 (3.22)   3,237    0.98    0.95    1.13     
                            
                            
 22.29    134,685    1.67    1.55    0.58    110 
 21.30    16,390    2.63    2.30    (0.17)    
 21.41    19,892    2.38    2.30    (0.17)    
 22.65    6,674    1.21    1.21    0.88     
 22.05    583    1.84    1.76    0.40     
 22.52    400    1.46    1.44    0.67     
 22.99    110    1.08    1.08    1.08     
 23.17    3,491    1.05    1.05    1.36     
                            
                            
 13.15    141,506    1.83    1.39    1.20    392 
 12.78    17,558    2.89    1.82    0.74     
 12.31    20,105    2.54    2.17    0.38     
 13.59    13,136    1.75    0.95    1.95     
 12.53    395    2.06    1.85    0.57     
 12.96    305    1.51    1.40    1.00     
 13.29    7    1.44    1.25    1.31     
 13.52    6,357    1.05    0.96    1.35     
                            
                            
 (56.94)   181,826    1.48    1.48    0.36    359 
 (57.28)   19,208    2.39    2.25    (0.40)    
 (57.27)   24,658    2.21    2.21    (0.37)    
 (56.75)   86,331    1.03    1.03    0.13     
 (57.08)   293    1.89    1.85    0.09     
 (56.94)   139    1.47    1.47    0.15     
 (56.77)   6    1.08    1.08    0.76     
 (56.72)   54,257    0.99    0.99    0.92     

 

27

 

The Hartford International Growth Fund

Financial Highlights – (continued)

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Not annualized.
(F)Annualized.
(G)Per share amounts have been calculated using average shares outstanding method.

 

28

 

The Hartford International Growth Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

29

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

30

 

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,169.80   $8.07   $1,000.00   $1,017.35   $7.51    1.50%  181  365
Class B  $1,000.00   $1,166.30   $12.13   $1,000.00   $1,013.59   $11.28    2.26   181  365
Class C  $1,000.00   $1,165.60   $12.02   $1,000.00   $1,013.69   $11.18    2.24   181  365
Class I  $1,000.00   $1,172.30   $6.43   $1,000.00   $1,018.88   $5.97    1.19   181  365
Class R3  $1,000.00   $1,169.30   $8.62   $1,000.00   $1,016.85   $8.01    1.60   181  365
Class R4  $1,000.00   $1,171.60   $7.01   $1,000.00   $1,018.34   $6.52    1.30   181  365
Class R5  $1,000.00   $1,172.90   $5.40   $1,000.00   $1,019.83   $5.02    1.00   181  365
Class Y  $1,000.00   $1,173.90   $5.13   $1,000.00   $1,020.08   $4.77    0.95   181  365

 

32

 

The Hartford International Growth Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford International Growth Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

33

 

The Hartford International Growth Fund

Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

34

 

The Hartford International Growth Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Growth Investing Risk: Growth investments can be volatile, and may fail to increase earnings or grow as quickly as anticipated. Growth-style investing falls in and out of favor, which may result in periods of underperformance.

 

Mid-cap Stock Risk: Mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

35
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-IG13 4/13 113987 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

27

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD INTERNATIONAL OPPORTUNITIES FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford International Opportunities Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 9
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 10
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 11
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 12
Notes to Financial Statements (Unaudited) 13
Financial Highlights (Unaudited) 26
Directors and Officers (Unaudited) 29
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 31
Quarterly Portfolio Holdings Information (Unaudited) 31
Expense Example (Unaudited) 32
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 33
Principal Risks (Unaudited) 35

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford International Opportunities Fund inception 07/22/1996
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks long-term growth of capital.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
International Opportunities A#   12.10%       12.96%       0.07%       10.15%    
International Opportunities A##        6.75%       -1.05%       9.53%    
International Opportunities B#   11.69%       12.11%       -0.59%       9.71%*    
International Opportunities B##        7.11%       -0.98%       9.71%*    
International Opportunities C#   11.70%       12.13%       -0.68%       9.32%    
International Opportunities C##        11.13%       -0.68%       9.32%    
International Opportunities I#   12.32%       13.42%       0.44%       10.35%    
International Opportunities R3#   12.00%       12.69%       -0.18%       10.18%    
International Opportunities R4#   12.22%       13.13%       0.18%       10.44%    
International Opportunities R5#   12.34%       13.40%       0.45%       10.62%    
International Opportunities Y#   12.38%       13.51%       0.57%       10.71%    
MSCI All Country World ex USA Index   13.03%       14.69%       -0.38%       10.80%    

 

Not Annualized
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 5/30/08. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses.

 

MSCI All Country World ex USA 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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford International Opportunities Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
International Opportunities Class A   1.30%       1.36%    
International Opportunities Class B   2.05%       2.44%    
International Opportunities Class C   2.05%       2.06%    
International Opportunities Class I   0.97%       0.97%    
International Opportunities Class R3   1.50%       1.52%    
International Opportunities Class R4   1.20%       1.20%    
International Opportunities Class R5   0.90%       0.91%    
International Opportunities Class Y   0.79%       0.79%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Nicolas M. Choumenkovitch Tara C. Stilwell, CFA
Senior Vice President and Equity Portfolio Manager Vice President and Equity Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford International Opportunities Fund returned 12.10%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmark, the MSCI All Country World ex USA Index, which returned 13.03% for the same period. The Fund outperformed the 12.03% average return of 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?

International equities rose during the period. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

Within the MSCI All Country World ex USA Index, Heath Care (+21.0%), Consumer Discretionary (+20.4%), and Financials (+19.6%) gained the most during the period. Materials (-4.2%) and Energy (-0.3%) declined during the period.

 

The Fund’s underperformance versus its benchmark was due to weak stock selection. Negative stock selection within Financials, Consumer Staples and Energy more than offset strong selection within the Materials, Industrials, and Information Technology sectors. Allocation among sectors, a result of the bottom-up stock selection process, contributed positively to relative returns, largely due to underweight positions (i.e. the Fund’s sector position was less than the benchmark position) in Materials and Energy.

 

The largest detractors from relative returns were Daito Trust (Financials), BG Group (Energy), and ArcelorMittal (Materials). Shares of Daito Trust, a Japan-based developer of condominiums and apartment buildings, lagged as the market became concerned that margins were coming in lower than expected. Shares of BG Group, a natural gas-focused oil and gas exploration company, declined as the company reduced guidance on volume production growth in 2013. Shares of ArcelorMittal, a multinational steel manufacturing corporation based in France, moved lower as a result of weaker than expected global economic activity coupled with excess capacity in the steel sector. Suncor Energy (Energy) also detracted from absolute performance.

 

Top contributors to relative performance during the period included Roche Holding (Health Care), MUFG (Financials) and Toshiba (Information Technology). Roche Holding, a Swiss-based global health care company, outperformed as investors became positive on the company's near-term product roll out and future drug pipeline as 11 of 14 Phase III trials delivered positive results in 2012. Shares of MUFG, a Japan-based bank, rose as the market appreciated the benefits to the company from a rising equity market and the potential for policy reforms following government elections in December 2012. Shares of Toshiba, a Japan-based manufacturer of advanced electronic products, outperformed due to the recent

 

3

 

The Hartford International Opportunities Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

yen depreciation to which Toshiba is highly leveraged given their large export business (particularly NAND flash memory). Rolls Royce (Industrials) was also a top contributor to absolute performance.

 

What is the outlook?

At a macro level, we continue to see signs of economic improvement in the developed world, which we expect to remain in a low growth environment and with low interest rates. We believe this low growth environment could drive consolidation, and we are working to identify companies with the potential to surprise on the upside and where we see the potential for better capital discipline and improved industry structure.

 

As is consistent with the investment approach, we continue to look for opportunities at a company-by-company level, focusing on those companies that can deliver improvements in return on investment capital (ROIC) or sustain ROIC for longer than the market anticipates.

 

At the end of the period, relative to the benchmark we were most overweight Industrials, Utilities, and Health Care and most underweight Energy, Materials, and Telecommunication Services. On a country basis, we ended the period with an overweight to France, Japan, and Switzerland, and underweight positions in Australia, Germany, and South Korea.

 

Diversification by Industry

as of April 30, 2013

Industry (Sector)  Percentage of
Net Assets
 
Automobiles and Components (Consumer Discretionary)   2.7%
Banks (Financials)   8.8 
Capital Goods (Industrials)   9.6 
Commercial and Professional Services (Industrials)   0.6 
Consumer Durables and Apparel (Consumer Discretionary)   1.0 
Consumer Services (Consumer Discretionary)   3.6 
Diversified Financials (Financials)   4.1 
Energy (Energy)   5.5 
Food and Staples Retailing (Consumer Staples)   1.9 
Food, Beverage and Tobacco (Consumer Staples)   9.8 
Health Care Equipment and Services (Health Care)   1.6 
Insurance (Financials)   8.7 
Materials (Materials)   5.9 
Media (Consumer Discretionary)   1.0 
Other Investment Pools and Funds (Financials)   0.3 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   8.0 
Real Estate (Financials)   6.0 
Retailing (Consumer Discretionary)   1.0 
Semiconductors and Semiconductor Equipment (Information Technology)   2.9 
Technology Hardware and Equipment (Information Technology)   2.5 
Telecommunication Services (Services)   2.7 
Transportation (Industrials)   4.1 
Utilities (Utilities)   6.5 
Short-Term Investments   1.3 
Other Assets and Liabilities   (0.1)
Total   100.0%

 

4

 

The Hartford International Opportunities Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 97.3%     
     Australia - 2.0%     
 1,580   Transurban Group   $11,180 
 1,189   Westfield Group REIT    14,385 
         25,565 
     Austria - 0.5%     
 225   Erste Group Bank AG    7,038 
           
     Belgium - 3.7%     
 415   Anheuser-Busch InBev N.V. ☼   39,872 
 152   Umicore S.A. ☼   7,049 
         46,921 
     Brazil - 1.6%     
 532   Banco Santander Brasil S.A.    3,950 
 125   BR Properties S.A.    1,390 
 800   Cia de Saneamento Basico do Estado de Sao Paulo ADR    11,441 
 230   Mills Estruturas e Servicos de Engenharia S.A.    3,777 
         20,558 
     Canada - 5.0%     
 326   Canadian National Railway Co.    31,935 
 150   MEG Energy Corp. ●   4,297 
 284   Suncor Energy, Inc.    8,864 
 345   Tim Hortons, Inc.    18,696 
         63,792 
     China - 2.8%     
 15,096   China Construction Bank    12,670 
 5,528   China Pacific Insurance Co., Ltd.    19,924 
 1,540   Shandong Weigao Group Medical Polymer Co., Ltd.    1,483 
 652   Sinopharm Medicine Holding Co., Ltd.    1,943 
         36,020 
     Finland - 1.1%     
 149   Kone Oyj Class B    13,187 
 8   Nokian Rendaat Oyj    333 
         13,520 
     France - 14.5%     
 344   Accor S.A.    11,399 
 246   Air Liquide    31,187 
 1,479   AXA S.A.    27,691 
 421   BNP Paribas ☼   23,448 
 62   Bureau Veritas S.A.    7,583 
 121   Cie Generale d'Optique Essilor International S.A.    13,581 
 113   Pernod-Ricard S.A.    13,973 
 64   Renault S.A.    4,417 
 676   Rexel S.A.    14,884 
 235   Safran S.A.    11,557 
 102   Unibail Rodamco REIT ☼   26,607 
         186,327 
     Germany - 1.2%     
 46   Brenntag AG    7,863 
 21   Continental AG ●   2,493 
 268   Deutsche Wohnen A.G.    4,725 
         15,081 
     Hong Kong - 5.2%     
 4,787   AIA Group Ltd.    21,295 
 1,344   ENN Energy Holdings Ltd.    7,781 
 14,066   Lenovo Group Ltd.    12,867 
 1,078   Link (The) REIT    6,111 
 374   MGM China Holdings Ltd.    884 
 963   Shanghai Fosun Pharmaceutical Co., Ltd.    1,738 
 3,551   Shangri-La Asia Ltd.    6,879 
 6,290   Skyworth Digital Holdings Ltd.    5,196 
 145   Sun Hung Kai Properties Ltd.    2,100 
 1,731   Zhongsheng Group Holdings Ltd.    2,409 
         67,260 
     India - 1.5%     
 580   Bharti Infratel Ltd.    1,913 
 1,262   ITC Ltd.    7,710 
 530   Reliance Industries Ltd.    7,766 
 60   United Spirits Ltd.    2,452 
         19,841 
     Ireland - 1.1%     
 685   CRH plc ‡   14,741 
           
     Israel - 0.6%     
 201   Teva Pharmaceutical Industries Ltd. ADR    7,712 
           
     Italy - 3.9%     
 4,669   Intesa Sanpaolo    8,480 
 2,273   Mediaset S.p.A.    5,885 
 7,139   Snam S.p.A.    35,132 
         49,497 
     Japan - 18.8%     
 622   AEON Co., Ltd.    8,807 
 347   Aisin Seiki Co., Ltd.    12,540 
 253   Daiichi Sankyo Co., Ltd.    4,954 
 58   Daito Trust Construction Co., Ltd.    5,668 
 310   Eisai Co., Ltd.    14,138 
 345   FamilyMart Co., Ltd.    15,744 
 29   Fanuc Corp.    4,332 
 252   Honda Motor Co., Ltd.    10,036 
 596   Japan Tobacco, Inc.    22,526 
 1,510   Mitsubishi Electric Corp.    14,395 
 3,933   Mitsubishi UFJ Financial Group, Inc.    26,686 
 250   Mitsui Fudosan Co., Ltd.    8,508 
 1,437   Nomura Holdings, Inc.    11,743 
 143   Omron Corp.    4,530 
 1,006   Rakuten, Inc.    10,734 
 725   Shizuoka Bank Ltd.    8,874 
 184   SoftBank Corp.    9,115 
 810   T&D Holdings, Inc. ☼   9,439 
 280   THK Co., Ltd.    5,891 
 548   Tokio Marine Holdings, Inc.    17,399 
 2,678   Toshiba Corp.    14,767 
         240,826 
     Malaysia - 0.2%     
 2,942   AirAsia Berhad    2,836 
           
     Mexico - 0.6%     
 1,478   Fibra Uno Administracion S.A. REIT    5,679 
 800   Macquarie Mexico Real Estate Management S.A. de C.V. REIT ●   1,935 
         7,614 
     Netherlands - 0.8%     
 61   ASML Holding N.V.    4,526 
 232   NXP Semiconductors N.V. ●   6,403 
         10,929 

 

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

 

5

 

The Hartford International Opportunities Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 97.3% - (continued)     
     Norway - 0.4%     
 165   Algeta ASA ●  $5,609 
           
     Panama - 0.5%     
 53   Copa Holdings S.A. Class A    6,593 
           
     Poland - 0.2%     
 125   Alior Bank S.A. ●   2,804 
           
     Portugal - 1.5%     
 1,964   Banco Espirito Santo S.A. ●   2,250 
 643   Galp Energia SGPS S.A.    10,303 
 1,266   Portugal Telecom SGPS S.A.    6,607 
         19,160 
     Russia - 0.3%     
 275   Sberbank ADR    3,533 
           
     South Korea - 0.6%     
 5   Samsung Electronics Co., Ltd.    7,298 
           
     Spain - 1.3%     
 5   Banco Bilbao Vizcaya Argentaria S.A.    45 
 1,137   Telefonica S.A. ●   16,651 
         16,696 
     Sweden - 1.5%     
 483   Assa Abloy Ab    19,323 
           
     Switzerland - 9.2%     
 102   Cie Financiere Richemont S.A.    8,223 
 9   Givaudan    11,317 
 553   Julius Baer Group Ltd.    22,035 
 11   Partners Group    2,706 
 210   Roche Holding AG    52,583 
 120   Swiss Re Ltd.    9,578 
 649   UBS AG    11,581 
         118,023 
     Taiwan - 1.5%     
 5,081   Taiwan Semiconductor Manufacturing Co., Ltd.    18,858 
           
     United Kingdom - 14.5%     
 639   Aberdeen Asset Management plc    4,461 
 313   AstraZeneca plc    16,275 
 790   BG Group plc    13,334 
 3,683   BP plc    26,687 
 659   Diageo Capital plc    20,112 
 1,983   Direct Line Insurance Group plc    6,237 
 547   Imperial Tobacco Group plc    19,564 
 15,223   Lloyds Banking Group plc ●   12,931 
 2,237   National Grid plc    28,515 
 688   NMC Health plc ●   3,313 
 1,409   Rexam plc    11,313 
 1,353   Rolls-Royce Holdings plc    23,776 
         186,518 
     United States - 0.7%     
 262   Carnival Corp.    9,052 
           
     Total common stocks     
     (cost $1,118,053)  $1,249,545 
           
PREFERRED STOCKS - 0.9%     
     Germany - 0.9%     
 169   ProSieben Sat.1 Media AG   $6,467 
 25   Volkswagen AG N.V.    5,124 
         11,591 
     Total preferred stocks     
     (cost $12,346)  $11,591 
           
WARRANTS - 0.3%     
     Colombia - 0.3%     
 538   Cemex AP Generis ⌂■  $3,774 
           
     Total warrants     
     (cost $3,634)  $3,774 
           
EXCHANGE TRADED FUNDS - 0.3%     
     United States - 0.3%     
 42   iShares MSCI EAFE   $2,589 
 111   iShares MSCI Japan    1,294 
         3,883 
     Total exchange traded funds     
     (cost $3,652)  $3,883 
           
     Total long-term investments  $1,268,793 
     (cost $1,137,685)     
           
SHORT-TERM INVESTMENTS - 1.3%     
     Repurchase Agreements - 1.3%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $654,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $667)
     
$654   0.17%, 4/30/2013  $654 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,782, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $1,818)
     
 1,782   0.15%, 4/30/2013   1,782 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $3,433, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $3,501)
     
 3,433   0.15%, 4/30/2013   3,433 

 

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

 

6

 

 

 

Shares or Principal Amount  Market Value ╪ 
SHORT-TERM INVESTMENTS - 1.3% - (continued)    
     Repurchase Agreements - 1.3% - (continued)          
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $4,767,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $4,863)
          
$4,767   0.14%, 4/30/2013       $4,767 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $857,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value of
$874)
          
 857   0.17%, 4/30/2013        857 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $2,905, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $2,963)
          
 2,905   0.14%, 4/30/2013        2,905 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$2,042, collateralized by U.S. Treasury
Note 0.25% - 1.88%, 2014 - 2019, value of
$2,083)
          
 2,042   0.17%, 4/30/2013        2,042 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$37, collateralized by U.S. Treasury Note
3.88%, 2018, value of $37)
          
 37   0.13%, 4/30/2013        37 
              16,477 
     Total short-term investments          
     (cost $16,477)       $16,477 
                
     Total investments          
     (cost $1,154,162) ▲   100.1%  $1,285,270 
     Other assets and liabilities   (0.1)%   (1,637)
     Total net assets   100.0%  $1,283,633 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $1,162,160 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $144,148 
Unrealized Depreciation   (21,038)
Net Unrealized Appreciation  $123,110 

 

Non-income producing.

 

This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

 

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

 

7

 

The Hartford International Opportunities Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $3,774, which represents 0.3% 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 Acquired  Shares/ Par  Security  Cost Basis 
11/2012  538  Cemex AP Generis Warrants - 144A  $3,634 

 

At April 30, 2013, the aggregate value of these securities was $3,774, which represents 0.3% of total net assets.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $7,617 at April 30, 2013.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
CAD  Sell  05/03/2013  BCLY  $1,266   $1,266   $ 
EUR  Buy  05/02/2013  BCLY   1,923    1,940    17 
EUR  Buy  05/03/2013  BCLY   639    643    4 
EUR  Buy  05/03/2013  JPM   1,200    1,200     
EUR  Buy  05/06/2013  JPM   3,197    3,196    (1)
GBP  Buy  05/03/2013  BCLY   2,331    2,331     
HKD  Buy  05/03/2013  BCLY   878    878     
JPY  Buy  05/02/2013  SSG   1,650    1,670    20 
JPY  Sell  05/07/2013  CSFB   77    77     
                      $40 

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)

 

Counterparty Abbreviations:
BCLY Barclays
CSFB Credit Suisse First Boston Corp.
JPM JP Morgan Chase & Co.
SSG State Street Global Markets LLC
   
Currency Abbreviations:
CAD Canadian Dollar
EUR EURO
GBP British Pound
HKD Hong Kong Dollar
JPY Japanese Yen
   
Index Abbreviations:
EAFE Europe, Australasia and Far East
 
Other Abbreviations:
ADR American Depositary Receipt
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
MSCI Morgan Stanley Capital International
REIT Real Estate Investment Trust

 

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

 

8

 

The Hartford International Opportunities Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Australia  $25,565   $   $25,565   $ 
Austria   7,038        7,038     
Belgium   46,921        46,921     
Brazil   20,558    20,558         
Canada   63,792    63,792         
China   36,020        36,020     
Finland   13,520        13,520     
France   186,327    26,607    159,720     
Germany   15,081        15,081     
Hong Kong   67,260        67,260     
India   19,841    4,365    15,476     
Ireland   14,741        14,741     
Israel   7,712    7,712         
Italy   49,497        49,497     
Japan   240,826        240,826     
Malaysia   2,836        2,836     
Mexico   7,614    7,614         
Netherlands   10,929    10,929         
Norway   5,609        5,609     
Panama   6,593    6,593         
Poland   2,804        2,804     
Portugal   19,160        19,160     
Russia   3,533    3,533         
South Korea   7,298        7,298     
Spain   16,696        16,696     
Sweden   19,323        19,323     
Switzerland   118,023        118,023     
Taiwan   18,858        18,858     
United Kingdom   186,518    9,550    176,968     
United States   9,052    9,052         
Total   1,249,545    170,305    1,079,240     
Exchange Traded Funds   3,883    3,883         
Preferred Stocks   11,591        11,591     
Warrants   3,774        3,774     
Short-Term Investments   16,477        16,477     
Total  $1,285,270   $174,188   $1,111,082   $ 
Foreign Currency Contracts*   41        41     
Total  $41   $   $41   $ 
Liabilities:                    
Foreign Currency Contracts*   1        1     
Total  $1   $   $1   $ 

 

For the six-month period ended April 30, 2013, investments valued at $6,202 were transferred from Level 1 to Level 2, and investments valued at $23,693 were transferred from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:

1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).

*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

9

 

The Hartford International Opportunities Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $1,154,162)  $1,285,270 
Cash   1,500 
Foreign currency on deposit with custodian (cost $1,267)   1,267 
Unrealized appreciation on foreign currency contracts   41 
Receivables:     
Investment securities sold   11,263 
Fund shares sold   1,494 
Dividends and interest   4,308 
Other assets   82 
Total assets   1,305,225 
Liabilities:     
Unrealized depreciation on foreign currency contracts   1 
Payables:     
Investment securities purchased   19,038 
Fund shares redeemed   2,260 
Investment management fees   143 
Administrative fees   3 
Distribution fees   26 
Accrued expenses   121 
Total liabilities   21,592 
Net assets  $1,283,633 
Summary of Net Assets:     
Capital stock and paid-in-capital  $1,152,638 
Undistributed net investment income   1,494 
Accumulated net realized loss   (1,602)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   131,103 
Net assets  $1,283,633 
      
Shares authorized   550,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $16.06/$16.99 
Shares outstanding   19,908 
Net assets  $319,727 
Class B: Net asset value per share  $14.82 
Shares outstanding   611 
Net assets  $9,058 
Class C: Net asset value per share  $14.55 
Shares outstanding   2,598 
Net assets  $37,810 
Class I: Net asset value per share  $15.99 
Shares outstanding   2,930 
Net assets  $46,839 
Class R3: Net asset value per share  $16.29 
Shares outstanding   1,673 
Net assets  $27,258 
Class R4: Net asset value per share  $16.49 
Shares outstanding   4,254 
Net assets  $70,130 
Class R5: Net asset value per share  $16.58 
Shares outstanding   3,117 
Net assets  $51,684 
Class Y: Net asset value per share  $16.64 
Shares outstanding   43,329 
Net assets  $721,127 

 

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

 

10

 

The Hartford International Opportunities Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $13,554 
Interest   26 
Less: Foreign tax withheld   (1,118)
Total investment income   12,462 
      
Expenses:     
Investment management fees   3,712 
Administrative services fees    
Class R3   23 
Class R4   42 
Class R5   23 
Transfer agent fees    
Class A   393 
Class B   29 
Class C   40 
Class I   31 
Class R3   1 
Class R4   1 
Class R5   1 
Class Y   5 
Distribution fees     
Class A   354 
Class B   46 
Class C   170 
Class R3   56 
Class R4   70 
Custodian fees   51 
Accounting services fees   96 
Registration and filing fees   51 
Board of Directors' fees   9 
Audit fees   14 
Other expenses   62 
Total expenses (before waivers and fees paid indirectly)   5,280 
Transfer agent fee waivers   (15)
Commission recapture   (15)
Total waivers and fees paid indirectly   (30)
Total expenses, net   5,250 
Net Investment Income   7,212 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   42,205 
Net realized gain on foreign currency contracts   804 
Net realized loss on other foreign currency transactions   (1,168)
Net Realized Gain on Investments and Foreign Currency Transactions   41,841 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   73,841 
Net unrealized appreciation of foreign currency contracts   43 
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies   (24)
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   73,860 
Net Gain on Investments and Foreign Currency Transactions   115,701 
Net Increase in Net Assets Resulting from Operations  $122,913 

 

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

 

11

 

The Hartford International Opportunities Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
  

For the

Year Ended
October 31, 2012

 
Operations:          
Net investment income  $7,212   $8,342 
Net realized gain (loss) on investments and foreign currency transactions   41,841    (4,057)
Net unrealized appreciation of investments and foreign currency transactions   73,860    64,016 
Net Increase in Net Assets Resulting from Operations   122,913    68,301 
Distributions to Shareholders:          
From net investment income          
Class A   (3,139)   (2,860)
Class B   (36)   (41)
Class C   (189)   (167)
Class I   (521)   (364)
Class R3   (221)   (127)
Class R4   (651)   (207)
Class R5   (673)   (354)
Class Y   (7,618)   (1,880)
Total distributions   (13,048)   (6,000)
Capital Share Transactions:          
Class A   25,092    (11,685)
Class B   (1,278)   (3,095)
Class C   2,165    (3,328)
Class I   11,691    10,587 
Class R3   6,117    7,117 
Class R4   21,574    29,538 
Class R5   11,127    12,540 
Class Y   194,553    314,324 
Net increase from capital share transactions   271,041    355,998 
Net Increase in Net Assets   380,906    418,299 
Net Assets:          
Beginning of period   902,727    484,428 
End of period  $1,283,633   $902,727 
Undistributed (distribution in excess of) net investment income (loss)  $1,494   $7,330 

 

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

 

12

 

The Hartford International Opportunities Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent

 

13

 

The Hartford International Opportunities Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

 

14

 

 

 

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share,

 

15

 

The Hartford International Opportunities Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

16

 

 

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

17

 

The Hartford International Opportunities Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $41   $   $   $   $   $41 
Total  $   $41   $   $   $   $   $41 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $1   $   $   $   $   $1 
Total  $   $1   $   $   $   $   $1 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain on Derivatives Recognized as a Result of Operations:       
Net realized gain on foreign currency contracts  $   $804   $   $   $   $   $804 
Total  $   $804   $   $   $   $   $804 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:     
Net change in unrealized appreciation of foreign currency contracts  $   $43   $   $   $   $   $43 
Total  $   $43   $   $   $   $   $43 

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United

 

18

 

 

 

States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $6,000   $713 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $9,808 
Accumulated Capital Losses *   (37,923)
Unrealized Appreciation †   49,245 
Total Accumulated Earnings  $21,130 

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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.

 

19

 

The Hartford International Opportunities Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(648)
Accumulated Net Realized Gain (Loss)   648 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

   Amount 
Short Term Capital Loss Carryforward  $4,971 
Long Term Capital Loss Carryforward   517 
Total  $5,488 

 

Capital loss carryforwards with expiration:

 

Year of Expiration  Amount 
2017  $32,435 
Total  $32,435 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

20

 

 

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 $1.5 billion   0.6400%   
On next $2.5 billion   0.6350%   
On next $5 billion   0.6300%   
Over $10 billion   0.6250%   

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.30%      2.05%       2.05%       1.05%       1.50%       1.20%       0.90%       0.85%    

 

21

 

The Hartford International Opportunities Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

d)Fees Paid Indirectly The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.27%
Class B   2.04 
Class C   1.98 
Class I   0.90 
Class R3   1.45 
Class R4   1.15 
Class R5   0.85 
Class Y   0.75 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $1,063 and contingent deferred sales charges of $7 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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

 

22

 

 

 

to reimburse any portion of the transfer agency fees over 0.30% of average daily net assets per fiscal year for each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage
of Fund
 
Class Y   33%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $888,193 
Sales Proceeds Excluding U.S. Government Obligations   608,370 

 

23

 

The Hartford International Opportunities Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   3,418    206    (2,002)       1,622    3,673    221    (4,773)       (879)
Amount  $52,221   $3,108   $(30,237)  $   $25,092   $50,819   $2,814   $(65,318)  $   $(11,685)
Class B                                                  
Shares   24    2    (118)       (92)   55    3    (301)       (243)
Amount  $340   $35   $(1,653)  $   $(1,278)  $697   $40   $(3,832)  $   $(3,095)
Class C                                                  
Shares   380    13    (241)       152    360    13    (645)       (272)
Amount  $5,279   $177   $(3,291)  $   $2,165   $4,539   $153   $(8,020)  $   $(3,328)
Class I                                                  
Shares   1,407    27    (663)       771    1,418    24    (660)       782 
Amount  $21,431   $398   $(10,138)  $   $11,691   $19,351   $305   $(9,069)  $   $10,587 
Class R3                                                  
Shares   597    14    (216)       395    675    10    (179)       506 
Amount  $9,221   $212   $(3,316)  $   $6,117   $9,469   $127   $(2,479)  $   $7,117 
Class R4                                                  
Shares   1,901    35    (556)       1,380    2,597    16    (550)       2,063 
Amount  $29,709   $544   $(8,679)  $   $21,574   $37,052   $201   $(7,715)  $   $29,538 
Class R5                                                  
Shares   1,074    43    (390)       727    1,277    27    (418)       886 
Amount  $16,633   $673   $(6,179)  $   $11,127   $18,257   $354   $(6,071)  $   $12,540 
Class Y                                                  
Shares   16,788    487    (5,048)       12,227    28,236    143    (5,362)       23,017 
Amount  $266,612   $7,618   $(79,677)  $   $194,553   $390,431   $1,880   $(77,987)  $   $314,324 
Total                                                  
Shares   25,589    827    (9,234)       17,182    38,291    457    (12,888)       25,860 
Amount  $401,446   $12,765   $(143,170)  $   $271,041   $530,615   $5,874   $(180,491)  $   $355,998 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   33   $500 
For the Year Ended October 31, 2012   73   $1,011 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

24

 

 

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

25

 

The Hartford International Opportunities Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)                
A  $14.49   $0.07   $1.67   $1.74   $(0.17)  $   $   $(0.17)  $16.06 
B   13.32    0.01    1.54    1.55    (0.05)           (0.05)   14.82 
C   13.10    0.02    1.51    1.53    (0.08)           (0.08)   14.55 
I   14.45    0.11    1.66    1.77    (0.23)           (0.23)   15.99 
R3   14.70    0.07    1.68    1.75    (0.16)           (0.16)   16.29 
R4   14.89    0.09    1.72    1.81    (0.21)           (0.21)   16.49 
R5   14.98    0.11    1.72    1.83    (0.23)           (0.23)   16.58 
Y   15.04    0.13    1.72    1.85    (0.25)           (0.25)   16.64 
                                              
For the Year Ended October 31, 2012 (E)              
A   13.67    0.18    0.79    0.97    (0.15)           (0.15)   14.49 
B   12.56    0.07    0.74    0.81    (0.05)           (0.05)   13.32 
C   12.37    0.07    0.72    0.79    (0.06)           (0.06)   13.10 
I   13.65    0.22    0.80    1.02    (0.22)           (0.22)   14.45 
R3   13.90    0.15    0.81    0.96    (0.16)           (0.16)   14.70 
R4   14.07    0.21    0.80    1.01    (0.19)           (0.19)   14.89 
R5   14.16    0.25    0.80    1.05    (0.23)           (0.23)   14.98 
Y   14.20    0.19    0.89    1.08    (0.24)           (0.24)   15.04 
                                              
For the Year Ended October 31, 2011 (E)                     
A   14.68    0.14    (1.14)   (1.00)   (0.01)           (0.01)   13.67 
B   13.58    0.02    (1.04)   (1.02)                   12.56 
C   13.37    0.03    (1.03)   (1.00)                   12.37 
I   14.62    0.20    (1.15)   (0.95)   (0.02)           (0.02)   13.65 
R3   14.95    0.13    (1.17)   (1.04)   (0.01)           (0.01)   13.90 
R4   15.10    0.17    (1.18)   (1.01)   (0.02)           (0.02)   14.07 
R5   15.15    0.18    (1.15)   (0.97)   (0.02)           (0.02)   14.16 
Y   15.19    0.21    (1.17)   (0.96)   (0.03)           (0.03)   14.20 
                                              
For the Year Ended October 31, 2010 (E)                     
A   12.62    0.07    2.14    2.21    (0.15)           (0.15)   14.68 
B   11.65    (0.03)   1.97    1.94    (0.01)           (0.01)   13.58 
C   11.46    (0.02)   1.94    1.92    (0.01)           (0.01)   13.37 
I   12.59    0.13    2.12    2.25    (0.22)           (0.22)   14.62 
R3   12.88    0.05    2.17    2.22    (0.15)           (0.15)   14.95 
R4   12.98    0.08    2.22    2.30    (0.18)           (0.18)   15.10 
R5   13.04    0.14    2.21    2.35    (0.24)           (0.24)   15.15 
Y   13.07    0.14    2.22    2.36    (0.24)           (0.24)   15.19 
                                              
For the Year Ended October 31, 2009 (E)              
A   10.23    0.13    2.50    2.63    (0.24)           (0.24)   12.62 
B   9.40    0.08    2.31    2.39    (0.14)           (0.14)   11.65 
C   9.29    0.04    2.28    2.32    (0.15)           (0.15)   11.46 
I   10.25    0.05    2.60    2.65    (0.31)           (0.31)   12.59 
R3   10.51    0.08    2.56    2.64    (0.27)           (0.27)   12.88 
R4   10.58    0.14    2.56    2.70    (0.30)           (0.30)   12.98 
R5   10.60    0.08    2.66    2.74    (0.30)           (0.30)   13.04 
Y   10.62    0.19    2.57    2.76    (0.31)           (0.31)   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)   10.23 
B   20.34    0.07    (7.81)   (7.74)       (3.20)       (3.20)   9.40 
C   20.16    0.08    (7.75)   (7.67)       (3.20)       (3.20)   9.29 
I(H)   17.53    0.06    (7.34)   (7.28)                   10.25 
R3   22.33    0.18    (8.77)   (8.59)   (0.03)   (3.20)       (3.23)   10.51 
R4   22.39    0.05    (8.59)   (8.54)   (0.07)   (3.20)       (3.27)   10.58 
R5   22.45    0.25    (8.78)   (8.53)   (0.12)   (3.20)       (3.32)   10.60 
Y   22.48    0.29    (8.81)   (8.52)   (0.14)   (3.20)       (3.34)   10.62 

 

26

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
                            
 12.10%(F)  $319,727    1.28%(G)   1.28%(G)   0.99%(G)   58%
 11.69 (F)   9,058    2.37(G)   2.05(G)   0.16(G)    
 11.70(F)   37,810    1.98(G)   1.98(G)   0.27(G)    
 12.32(F)   46,839    0.91(G)   0.91(G)   1.42(G)    
 12.00(F)   27,258    1.46(G)   1.46(G)   0.85(G)    
 12.22(F)   70,130    1.15(G)   1.15(G)   1.17(G)    
 12.34(F)   51,684    0.85(G)   0.85(G)   1.40(G)    
 12.38(F)   721,127    0.75(G)   0.75(G)   1.64(G)    
                            
                            
 7.28    264,957    1.36    1.30    1.30    98 
 6.46    9,358    2.44    2.05    0.55     
 6.48    32,044    2.06    2.05    0.56     
 7.68    31,190    0.97    0.97    1.60     
 7.05    18,786    1.52    1.50    1.10     
 7.40    42,803    1.20    1.20    1.45     
 7.67    35,803    0.91    0.90    1.73     
 7.83    467,786    0.79    0.79    1.34     
                            
                            
 (6.80)   261,920    1.34    1.30    0.96    122 
 (7.51)   11,877    2.33    2.05    0.16     
 (7.48)   33,621    2.04    2.04    0.19     
 (6.49)   18,801    0.97    0.97    1.39     
 (6.97)   10,727    1.54    1.50    0.89     
 (6.73)   11,406    1.23    1.20    1.12     
 (6.40)   21,285    0.94    0.90    1.22     
 (6.37)   114,791    0.82    0.82    1.38     
                            
                            
 17.56    310,049    1.47    1.42    0.54    106 
 16.70    16,434    2.44    2.19    (0.24)    
 16.72    37,671    2.16    2.15    (0.19)    
 18.01    10,933    1.08    1.08    1.02     
 17.28    4,413    1.63    1.59    0.38     
 17.76    7,066    1.29    1.27    0.63     
 18.12    2,704    0.99    0.97    1.04     
 18.20    189,576    0.90    0.90    1.05     
                            
                            
 26.36    207,600    1.65    1.42    1.20    168 
 25.85    17,390    2.74    1.84    0.85     
 25.38    28,852    2.34    2.23    0.45     
 26.81    2,230    1.25    1.23    0.51     
 25.94    466    1.85    1.82    0.72     
 26.42    1,769    1.38    1.38    1.29     
 26.67    210    1.09    1.09    0.62     
 26.94    133,962    0.96    0.96    1.73     
                            
                            
 (44.50)   151,147    1.47    1.47    1.23    150 
 (44.86)   17,068    2.45    2.11    0.50     
 (44.92)   23,743    2.20    2.20    0.54     
 (41.53) (F)   143    1.00(G)   1.00(G)   1.19(G)    
 (44.70)   74    1.99    1.79    1.13     
 (44.39)   1,003    1.52    1.52    0.54     
 (44.32)   10    1.10    1.10    1.57     
 (44.22)   71,555    0.94    0.94    1.74     

 

27

 

The Hartford International Opportunities Fund
Financial Highlights – (continued)

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)Commenced operations on May 30, 2008.

 

28

 

The Hartford International Opportunities Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

29

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

30

 

 

  

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,121.00   $6.71   $1,000.00   $1,018.47   $6.38    1.28%   181    365 
Class B  $1,000.00   $1,116.90   $10.74   $1,000.00   $1,014.65   $10.22    2.05    181    365 
Class C  $1,000.00   $1,117.00   $10.40   $1,000.00   $1,014.97   $9.90    1.98    181    365 
Class I  $1,000.00   $1,123.20   $4.78   $1,000.00   $1,020.29   $4.55    0.91    181    365 
Class R3  $1,000.00   $1,120.00   $7.66   $1,000.00   $1,017.57   $7.29    1.46    181    365 
Class R4  $1,000.00   $1,122.20   $6.05   $1,000.00   $1,019.09   $5.76    1.15    181    365 
Class R5  $1,000.00   $1,123.40   $4.48   $1,000.00   $1,020.57   $4.27    0.85    181    365 
Class Y  $1,000.00   $1,123.80   $3.94   $1,000.00   $1,021.08   $3.75    0.75    181    365 

 

32

 

The Hartford International Opportunities Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford International Opportunities Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

33

 

The Hartford International Opportunities Fund
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

34

 

The Hartford International Opportunities Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Mid-cap Stock Risk: Mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

35
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-IO13 4/13 113988 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

28

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD INTERNATIONAL SMALL COMPANY FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford International Small Company Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   9
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   10
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   11
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   12
Notes to Financial Statements (Unaudited)   13
Financial Highlights (Unaudited)   26
Directors and Officers (Unaudited)   28
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   30
Quarterly Portfolio Holdings Information (Unaudited)   30
Expense Example (Unaudited)   31
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   32
Principal Risks (Unaudited)   34

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford International Small Company Fund inception 04/30/2001
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks capital appreciation.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investments in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
International Small Company A#   19.84%       21.41%       3.04%       11.68%    
International Small Company A##        14.73%       1.88%       11.05%    
International Small Company B#   19.39%       20.45%       2.38%       11.31%*    
International Small Company B##        15.45%       2.01%       11.31%*    
International Small Company C#   19.43%       20.51%       2.27%       10.83%    
International Small Company C##        19.51%       2.27%       10.83%    
International Small Company I#   20.06%       21.92%       3.46%       11.94%    
International Small Company R3#   19.81%       21.28%       3.20%       11.99%    
International Small Company R4#   19.94%       21.58%       3.36%       12.08%    
International Small Company R5#   20.11%       22.03%       3.55%       12.18%    
International Small Company Y#   20.16%       22.08%       3.58%       12.20%    
S&P EPAC SmallCap Index   17.52%       18.52%       1.66%       12.91%    

 

Not Annualized
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 5/31/07. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 5/28/10. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses.

 

S&P EPAC SmallCap Index is a global equity index comprised of the smallest 15% of each country’s market capitalization in the S&P BMI (Broad Market Index) World. (The S&P BMI World Index captures all companies in developed markets with free float market capitalization of at least $100 million as of the annual index reconstitution.) All developed market countries are included in the S&P EPAC SmallCap except the U.S. and Canada.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

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

 

2

 

The Hartford International Small Company Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
International Small Company Class A   1.56%       1.61%    
International Small Company Class B   2.31%       2.62%    
International Small Company Class C   2.31%       2.37%    
International Small Company Class I   1.06%       1.06%    
International Small Company Class R3   1.65%       1.71%    
International Small Company Class R4   1.35%       1.41%    
International Small Company Class R5   1.05%       1.15%    
International Small Company Class Y   1.00%       1.01%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Daniel Maguire, CFA Simon H. Thomas
Director and Equity Research Analyst Senior Vice President and Equity Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford International Small Company Fund returned 19.84%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the S&P EPAC SmallCap Index, which returned 17.52% for the same period. The Fund outperformed the 15.35% average return of the Lipper International Small/Mid Cap Growth peer group, a group of funds with investment strategies similar to those of the Fund.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing new all-time highs by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

Within the benchmark, Consumer Discretionary (+25%), Telecommunication Services (+23%), and Financials (+22%), gained the most during the period. Energy (-5%), Materials (+2%), and Consumer Staples (+17%) lagged on a relative basis.

 

The Fund’s stock selection contributed positively to benchmark-relative performance. Stock selection was strongest within Materials, Financials, and Industrials and was weakest within Consumer Discretionary and Information Technology. Sector allocation, a fall-out of the bottom-up stock selection process, detracted from the Fund’s relative performance, in part due to an overweight allocation (i.e. the Fund’s sector position was greater than the benchmark position) to Energy and an underweight to Financials. A modest cash position detracted from performance in an upward-trending market.

 

Top contributors to absolute and benchmark-relative returns were Safilo Group (Consumer Discretionary), Hino Motors (Industrials), and Shionogi (Health Care). Shares of Safilo Group, an Italian-based maker of premium sunglasses, rose after the company’s quarterly earnings results exceeded consensus expectations. Hino Motors, a Japanese-based small truck manufacturer, also outperformed as the company continued to gain market share, announced a mid-term dividend, and benefited from a weakening yen that supported exports. Shares of Shionogi, the largest Japanese-based pharmaceutical company, performed strongly over the period as a result of strong sales across several strategic products and the successful implementation of cost cutting programs that allowed the company to raise earnings guidance.

 

The largest detractors from absolute and relative performance during the period were Whitehaven Coal (Energy), Benesse Holdings (Consumer Discretionary), and Debenhams (Consumer Discretionary). Shares of Whitehaven Coal, a company engaged in the development and operations of coal mines in New South Wales, underperformed as continued weakness in coal prices and an unfavorable exchange rate put increasing pressure on operating cash margins. Shares of

 

3

 

The Hartford International Small Company Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

Benesse Holdings, a Japan-based holding company engaged in the provision of education services, underperformed due to weaker than expected sales in domestic education products. Debenhams is a U.K.-based holding company whose principal activities are the sale of fashion clothing and accessories, cosmetics and products for use in the home. The stock dropped over the period after the company provided a profit warning in February.

 

What is the outlook?

While the near term economic outlook remains clouded by uncertainty in Europe, U.S. employment and consumer spending appear steady, and there has been modestly positive news flow from U.S. housing data. We anticipate further moderation in the market if the eurozone reaches resolution of the banking and sovereign debt issues over the coming months. Japanese companies that export and are benefiting from a weakening yen have outperformed materially against their European peers.

 

We continue to focus our research at the individual company level where we seek good business models at attractive valuations which the market is ignoring or underestimates the ability to surprise positively. Fund holdings at period end represent a diversified mixture of relatively inexpensive companies with above average growth possessing strong market positions, skilled management teams, and solid balance sheets. Many of these stocks remain structural growth stories that are less correlated to one quarter or one year's Gross Domestic Product growth and are, we believe, well-positioned to perform across a number of different economic scenarios.

 

At the end of the period, we were most overweight the Health Care, Energy, and Consumer Discretionary sectors and most underweight the Financials, Information Technology, and Utilities sectors relative to the benchmark. On a regional basis, our greatest underweight position relative to the benchmark at the end of the period was to Europe. This was offset by overweight positions in Emerging Markets and Japan.

 

Diversification by Industry

as of April 30, 2013

 

Industry (Sector)  Percentage of
Net Assets
 
Automobiles and Components (Consumer Discretionary)   1.6%
Banks (Financials)   1.8 
Capital Goods (Industrials)   18.8 
Commercial and Professional Services (Industrials)   6.0 
Consumer Durables and Apparel (Consumer Discretionary)   7.0 
Consumer Services (Consumer Discretionary)   2.5 
Diversified Financials (Financials)   9.6 
Energy (Energy)   6.3 
Food and Staples Retailing (Consumer Staples)   1.5 
Food, Beverage and Tobacco (Consumer Staples)   1.5 
Health Care Equipment and Services (Health Care)   4.8 
Household and Personal Products (Consumer Staples)   1.8 
Insurance (Financials)   0.9 
Materials (Materials)   8.5 
Media (Consumer Discretionary)   1.5 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   5.6 
Real Estate (Financials)   4.3 
Retailing (Consumer Discretionary)   8.1 
Semiconductors and Semiconductor Equipment (Information Technology)   0.8 
Software and Services (Information Technology)   2.3 
Technology Hardware and Equipment (Information Technology)   2.0 
Transportation (Industrials)   1.1 
Utilities (Utilities)   0.5 
Short-Term Investments   0.1 
Other Assets and Liabilities   1.1 
Total   100.0%

 

Currency Concentration of Securities

as of April 30, 2013

 

   Percentage of 
Description  Net Assets 
Australian Dollar   6.2%
Brazilian Real   0.4 
British Pound   18.6 
Danish Kroner   2.2 
Euro   24.3 
Hong Kong Dollar   1.5 
Indonesian New Rupiah   0.4 
Japanese Yen   34.0 
Mexican New Peso   1.5 
Norwegian Krone   1.7 
Republic of Korea Won   1.9 
Singapore Dollar   0.6 
Swiss Franc   4.3 
United States Dollar   1.3 
Other Assets and Liabilities   1.1 
Total   100.0%

 

4

 

The Hartford International Small Company Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.3% 
     Australia - 6.2%     
 453   Boral Ltd.  $2,353 
 223   Domino's Pizza Enterprises Ltd.   3,033 
 352   Karoon Gas Australia Ltd. ●   1,528 
 313   NuFarm Ltd.   1,364 
 711   SAI Global Ltd.   2,597 
 81   Seek Ltd.   939 
 114   Sims Metal Management Ltd.   1,141 
 275   Tox Free Solutions Ltd.   935 
 1,247   Transpacific Industries Group Ltd. ●   1,253 
 470   Whitehaven Coal Ltd.   951 
 63   WorleyParsons Ltd.   1,494 
         17,588 
     Austria - 2.7%     
 40   Andritz AG   2,593 
 29   Schoeller-Bleckmann Oilfield Equipment AG   2,796 
 200   Zumbotel AG   2,239 
         7,628 
     Belgium - 2.4%     
 44   CFE NPV   2,706 
 91   D'ieteren S.A.   4,185 
         6,891 
     Brazil - 0.4%     
 53   Arezzo Industria e Comercio S.A.   1,117 
           
     China - 0.5%     
 70   WuXi PharmaTech Cayman, Inc. ●   1,337 
           
     Denmark - 2.2%     
 119   DSV A/S   2,997 
 71   H. Lundbeck A/S   1,425 
 15   Rockwool International A/S Class B   1,975 
         6,397 
     Finland - 0.8%     
 103   Tikkurila Oyj   2,205 
           
     France - 4.6%     
 27   AtoS   1,871 
 53   Eurazeo   2,831 
 56   Imerys S.A.   3,672 
 32   Vallourec S.A.   1,515 
 30   Wendel S.A.   3,301 
         13,190 
     Germany - 6.1%     
 42   ElringKlinger AG   1,363 
 77   Gildemeister   1,747 
 23   Grenke Leasing   1,850 
 27   KUKA AG ●   1,223 
 55   MTU Aero Engines Holdings AG   5,221 
 29   Rheinmetall AG   1,355 
 46   Rhoen-Klinikum AG   980 
 63   STRATEC Biomedical AG   2,824 
 12   Wacker Chemie AG   930 
         17,493 
     Hong Kong - 1.5%     
 138   ASM Pacific Technology Ltd.   1,421 
 1,767   Microport Scientific Corp.   1,126 
 620   Shanghai Fosun Pharmaceutical Co., Ltd.   1,120 
 1,642   Sitoy Group Holdings Ltd.   745 
         4,412 
     Indonesia - 0.4%     
 821   Matahari Department Store Tbk ●   1,021 
           
     Italy - 6.0%     
 133   Azimut Holding S.p.A.   2,470 
 2,355   Beni Stabili S.p.A.   1,659 
 100   Brunello Cucinelli S.p.A. ●   2,148 
 821   Immobiliare Grande Distribuzione REIT   888 
 175   Pirelli & Co. S.p.A.   1,822 
 231   Safilo Group S.p.A.   3,786 
 72   Salvatore Ferragamo Italia S.p.A.   2,137 
 115   Yoox S.p.A. ●   2,162 
         17,072 
     Japan - 34.0%     
 418   Amada Co., Ltd.   3,354 
 33   Benesse Holdings, Inc.   1,449 
 1   CyberAgent, Inc.   1,836 
 78   Denyo Co., Ltd. ☼   1,126 
 70   Don Quijote Co.   3,792 
 218   Hino Motors Ltd.   3,330 
 221   Hitachi Metals Ltd.   2,285 
 83   Hoshizaki Electric Co., Ltd.   2,771 
 191   Hulic Co., Ltd.   2,121 
 63   IBJ Leasing Co., Ltd.   2,201 
 1,319   Ihi Corp.   4,918 
 12   Japan Exchange Group, Inc.   1,448 
 60   Japan Petroleum Exploration Co., Ltd.   2,394 
 97   Kakaku.com, Inc.   2,515 
 63   Konami Corp.   1,432 
 324   Makino Milling Machine Co.   1,927 
 1   Message Co., Ltd.   2,742 
 314   Mitsubishi Gas Chemical Co.   2,401 
 670   Mitsubishi UFJ Lease & Finance Co., Ltd.   3,784 
 217   Mori Seiki Co., Ltd.   2,731 
 56   Musashi Seimitsu Industry Co., Ltd.   1,346 
 294   Nihon Nohyaku Co., Ltd.   2,797 
 416   Nikkiso Co., Ltd.   5,895 
 67   Nippon Shinyaku Co., Ltd.   1,041 
 45   Pigeon Corp.   3,897 
 28   Sanrio Co., Ltd.   1,421 
 89   Sega Sammy Holdings, Inc.   2,336 
 1,177   Shinsei Bank Ltd.   3,303 
 209   Shionogi & Co., Ltd.   5,151 
 193   Shizuoka Gas Co., Ltd.   1,526 
 62   Square Enix Holdings Co., Ltd.   756 
 80   Sumco Corp.   840 
 67   Tamron Co., Ltd.   1,474 
 80   Tenma Corp.   1,037 
 111   THK Co., Ltd.   2,340 
 138   Tokyo Tomin Bank Ltd.   1,920 
 16   Tsuruha Holdings, Inc.   1,540 
 75   Yamato Kogyo Co.   2,484 
 325   Yaskawa Electric Corp.   3,977 
 162   Yokogawa Electric Corp.   1,650 
         97,288 

 

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

 

5

 

The Hartford International Small Company Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.3% - (continued)     
     Luxembourg - 1.6%     
 163   AZ Electronic Materials S.A.  $722 
 188   Reinet Investments S.A. ●   3,785 
         4,507 
     Mexico - 1.0%     
 737   Fibra Uno Administracion S.A. REIT   2,832 
           
     Netherlands - 0.4%     
 166   USG People N.V.   1,296 
           
     Norway - 1.7%     
 174   Kongsberg Gruppen ASA   3,280 
 114   Petroleum Geo-Services ASA   1,682 
         4,962 
     Russia - 0.7%     
 156   O'Key Group S.A. GDR ■   1,871 
           
     Singapore - 0.6%     
 1,965   Indofood Agri Resources Ltd.   1,703 
           
     South Korea - 1.9%     
 2   Amorepacific Corp.   1,253 
 7   CJ O Shopping Co., Ltd.   2,139 
 15   Green Cross Corp.   2,000 
 1   Green Cross Corp. Rights   33 
         5,425 
     Switzerland - 4.3%     
 18   Actelion Ltd.   1,083 
 40   Aryzta AG   2,505 
 20   Dufry Group ●   2,687 
 13   Partners Group   3,237 
 32   Tecan Group AG   2,931 
         12,443 
     United Kingdom - 18.3%     
 294   Babcock International Group plc   4,892 
 82   Berkeley (The) Group Holdings plc   2,646 
 531   Booker Group plc   983 
 191   Chemring Group plc   804 
 150   De La Rue plc   2,175 
 1,337   Debenhams plc   1,730 
 816   Direct Line Insurance Group plc   2,566 
 270   Domino's Pizza Group plc   2,730 
 242   Elementis plc ‡   994 
 1,476   Hansteen Holdings plc REIT   1,960 
 801   Hays plc   1,164 
 128   Hunting plc   1,603 
 307   IG Group Holdings plc   2,571 
 329   Informa plc   2,446 
 157   Invensys plc   939 
 280   James Fisher & Sons plc   4,368 
 174   Kier Group plc   3,172 
 362   Mears Group plc   1,973 
 521   Mothercare plc   2,565 
 209   Ophilr Energy plc ●   1,321 
 216   Persimmon plc   3,630 
 309   Savills plc  2,790 
 311   Tyman plc   983 
 53   Ultra Electronics Holdings plc   1,357 
         52,362 
     Total common stocks     
     (cost $239,561)  $281,040 
           
PREFERRED STOCKS - 0.5%     
     Mexico - 0.5%     
 589   Grupo Sanborns S.A. de C.V.  $1,374 
           
     Total preferred stocks     
     (cost $1,296)  $1,374 
           
     Total long-term investments     
     (cost $240,857)  $282,414 
           
SHORT-TERM INVESTMENTS - 0.1%     
     Repurchase Agreements - 0.1%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $13,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $13)
     
$13   0.17%, 4/30/2013  $13 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $35, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -
2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$36)
     
 35   0.15%, 4/30/2013   35 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $68, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $69)
     
 68   0.15%, 4/30/2013   68 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $95,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $97)
     
 95   0.14%, 4/30/2013   95 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $17, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $17)
     
 17   0.17%, 4/30/2013   17 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $58, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $59)
     
 58   0.14%, 4/30/2013   58 

 

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

 

6

 

 

 

Shares or Principal Amount      Market Value ╪ 
SHORT-TERM INVESTMENTS - 0.1% - (continued)          
     Repurchase Agreements - 0.1% - (continued)          
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$40, collateralized by U.S. Treasury Note
0.25% - 1.88%, 2014 - 2019, value of $41)
          
$40   0.17%, 4/30/2013           $40 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$1, collateralized by U.S. Treasury Note
3.88%, 2018, value of $1)
          
 1   0.13%, 4/30/2013        1 
              327 
     Total short-term investments          
     (cost $327)       $327 
                
     Total investments          
     (cost $241,184) ▲   98.9%  $282,741 
     Other assets and liabilities   1.1%   3,076 
     Total net assets   100.0%  $285,817 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $244,254 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $49,906 
Unrealized Depreciation   (11,419)
Net Unrealized Appreciation  $38,487 

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $1,871, which represents 0.7% of total net assets.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $29 at April 30, 2013.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
CHF  Sell  05/02/2013  JPM  $53   $53   $ 
EUR  Sell  05/02/2013  BCLY   238    240    (2)
EUR  Sell  05/03/2013  BCLY   48    48     
EUR  Sell  05/06/2013  JPM   121    121     
GBP  Buy  05/01/2013  DEUT   987    990    3 
JPY  Buy  05/07/2013  CSFB   29    29     
JPY  Sell  05/01/2013  HSBC   1,987    2,026    (39)
JPY  Sell  05/02/2013  SSG   568    575    (7)
                      $(45)

 

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 International Small Company Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
BCLY Barclays
CSFB Credit Suisse First Boston Corp.
DEUT Deutsche Bank Securities, Inc.
HSBC HSBC Bank USA
JPM JP Morgan Chase & Co.
SSG State Street Global Markets LLC
   
Currency Abbreviations:
CHF Swiss Franc
EUR EURO
GBP British Pound
JPY Japanese Yen
   
Other Abbreviations:
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GDR Global Depositary Receipt
NPV No Par Value
REIT Real Estate Investment Trust

 

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

 

8

 

The Hartford International Small Company Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Australia  $17,588   $3,033   $13,620   $935 
Austria   7,628        7,628     
Belgium   6,891    6,891         
Brazil   1,117    1,117         
China   1,337    1,337         
Denmark   6,397    1,425    4,972     
Finland   2,205        2,205     
France   13,190        13,190     
Germany   17,493    2,824    14,669     
Hong Kong   4,412        4,412     
Indonesia   1,021    1,021         
Italy   17,072    1,659    15,413     
Japan   97,288    2,742    94,546     
Luxembourg   4,507    3,785    722     
Mexico   2,832    2,832         
Netherlands   1,296        1,296     
Norway   4,962    3,280    1,682     
Russia   1,871    1,871         
Singapore   1,703        1,703     
South Korea   5,425        5,425     
Switzerland   12,443    2,931    9,512     
United Kingdom   52,362    18,224    34,138     
Total   281,040    54,972    225,133    935 
Preferred Stocks   1,374    1,374         
Short-Term Investments   327        327     
Total  $282,741   $56,346   $225,460   $935 
Foreign Currency Contracts*   3        3     
Total  $3   $   $3   $ 
Liabilities:                    
Foreign Currency Contracts*   48        48     
Total  $48   $   $48   $ 

 

For the six-month period ended April 30, 2013, investments valued at $5,128 were transferred from Level 1 to Level 2, and investments valued at $10,766 were transferred from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:  
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).

 

*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3
   Transfers
Out of
Level 3
   Balance
as of
April 30,
2013
 
Assets:                                             
Common Stocks  $   $   $(37)*  $   $972   $   $   $   $935 
Total  $   $   $(37)  $   $972   $   $   $   $935 

 

*Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $(37).

 

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

 

9

 

The Hartford International Small Company Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $241,184)  $282,741 
Foreign currency on deposit with custodian (cost $19)   72 
Unrealized appreciation on foreign currency contracts   3 
Receivables:     
Investment securities sold   3,011 
Fund shares sold   116 
Dividends and interest   1,261 
Other assets   68 
Total assets   287,272 
Liabilities:     
Unrealized depreciation on foreign currency contracts   48 
Bank overdraft   30 
Payables:     
Investment securities purchased   1,019 
Fund shares redeemed   277 
Investment management fees   42 
Administrative fees    
Distribution fees   5 
Accrued expenses   34 
Total liabilities   1,455 
Net assets  $285,817 
Summary of Net Assets:     
Capital stock and paid-in-capital  $275,073 
Distributions in excess of net investment loss   (2,765)
Accumulated net realized loss   (28,049)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   41,558 
Net assets  $285,817 
      

Shares authorized   500,000 
Par value  $0 .001 
Class A: Net asset value per share/Maximum offering price per share   $15.48/$16.38 
Shares outstanding   3,486 
Net assets  $53,977 
Class B: Net asset value per share  $14.75 
Shares outstanding   319 
Net assets  $4,704 
Class C: Net asset value per share  $14.48 
Shares outstanding   713 
Net assets  $10,319 
Class I: Net asset value per share  $15.39 
Shares outstanding   199 
Net assets  $3,061 
Class R3: Net asset value per share  $15.60 
Shares outstanding   349 
Net assets  $5,449 
Class R4: Net asset value per share  $15.63 
Shares outstanding   150 
Net assets  $2,350 
Class R5: Net asset value per share  $15.68 
Shares outstanding   19 
Net assets  $298 
Class Y: Net asset value per share  $15.68 
Shares outstanding   13,117 
Net assets  $205,659 

 

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

 

10

 

The Hartford International Small Company Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $2,349 
Interest   2 
Less: Foreign tax withheld   (181)
Total investment income   2,170 
      
Expenses:     
Investment management fees   1,132 
Administrative services fees     
Class R3   5 
Class R4   1 
Class R5    
Transfer agent fees     
Class A   80 
Class B   14 
Class C   15 
Class I   2 
Class R3    
Class R4    
Class R5    
Class Y   2 
Distribution fees     
Class A   62 
Class B   24 
Class C   46 
Class R3   11 
Class R4   2 
Custodian fees   15 
Accounting services fees   23 
Registration and filing fees   40 
Board of Directors' fees   3 
Audit fees   7 
Other expenses   20 
Total expenses (before waivers and fees paid indirectly)   1,504 
Expense waivers   (1)
Transfer agent fee waivers   (16)
Commission recapture   (5)
Total waivers and fees paid indirectly   (22)
Total expenses, net   1,482 
Net Investment Income   688 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   21,288 
Net realized loss on foreign currency contracts   (110)
Net realized gain on other foreign currency transactions   85 
Net Realized Gain on Investments and Foreign Currency Transactions   21,263 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   24,371 
Net unrealized depreciation of foreign currency contracts   (47)
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   64 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   24,388 
Net Gain on Investments and Foreign Currency Transactions   45,651 
Net Increase in Net Assets Resulting from Operations  $46,339 

 

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

 

11

 

The Hartford International Small Company Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $688   $1,801 
Net realized gain on investments and foreign currency transactions   21,263    2,640 
Net unrealized appreciation of investments and foreign currency transactions   24,388    20,492 
Net Increase in Net Assets Resulting from Operations   46,339    24,933 
Distributions to Shareholders:          
From net investment income          
Class A   (847)   (135)
Class B   (45)    
Class C   (99)    
Class I   (57)   (68)
Class R3   (71)   (10)
Class R4   (37)   (4)
Class R5   (4)   (1)
Class Y   (3,585)   (977)
Total distributions   (4,745)   (1,195)
Capital Share Transactions:          
Class A   (1,403)   (7,675)
Class B   (1,068)   (1,628)
Class C   118    (1,454)
Class I   (6,034)   708 
Class R3   371    1,900 
Class R4   213    1,305 
Class R5   95    25 
Class Y   14,122    39,243 
Net increase from capital share transactions   6,414    32,424 
Net Increase in Net Assets   48,008    56,162 
Net Assets:          
Beginning of period   237,809    181,647 
End of period  $285,817   $237,809 
Undistributed (distribution in excess of) net investment income (loss)  $(2,765)  $1,292 

 

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

 

12

 

The Hartford International Small Company Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent

 

13

 

The Hartford International Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

 

14

 

 

 

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

15

 

The Hartford International Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments that serve

 

16

 

 

 

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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

17

 

The Hartford International Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $3   $   $   $   $   $3 
Total  $   $3   $   $   $   $   $3 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $48   $   $   $   $   $48 
Total  $   $48   $   $   $   $   $48 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Loss on Derivatives Recognized as a Result of Operations:    
Net realized loss on foreign currency contracts  $   $(110)  $   $   $   $   $(110)
Total  $   $(110)  $   $   $   $   $(110)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:    
Net change in unrealized depreciation of foreign currency contracts  $   $(47)  $   $   $   $   $(47)
Total  $   $(47)  $   $   $   $   $(47)

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages

 

18

 

 

 

or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $1,195   $2,422 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $2,791 
Accumulated Capital Losses *   (47,740)
Unrealized Appreciation †   14,099 
Total Accumulated Deficit  $(30,850)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.

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.

 

19

 

The Hartford International Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $273 
Accumulated Net Realized Gain (Loss)   (273)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2016  $936 
2017   46,804 
Total  $47,740 

 

During the year ended October 31, 2012, the Fund utilized $736 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of

 

20

 

 

 

HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 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%      1.65%      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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, are included in the Statement of Operations.

 

21

 

The Hartford International Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended 
April 30, 2013
 
Class A   1.52%
Class B   2.28 
Class C   2.27 
Class I   1.11 
Class R3   1.65 
Class R4   1.35 
Class R5   1.05 
Class Y   0.98 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $50 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with

 

22

 

 

 

respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R4   7%
Class R5   54 

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage
of Fund
 
Class Y   52%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $115,359 
Sales Proceeds Excluding U.S. Government Obligations   114,999 

 

23

 

The Hartford International Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease)
of Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of 
Shares
 
Class A                                                  
Shares   345    60    (504)       (99)   484    12    (1,137)       (641)
Amount  $4,851   $825   $(7,079)  $   $(1,403)  $5,821   $131   $(13,627)  $   $(7,675)
Class B                                                  
Shares   7    3    (90)       (80)   8        (149)       (141)
Amount  $91   $44   $(1,203)  $   $(1,068)  $93   $   $(1,721)  $   $(1,628)
Class C                                                  
Shares   68    7    (67)       8    60        (190)       (130)
Amount  $904   $91   $(877)  $   $118   $688   $   $(2,142)  $   $(1,454)
Class I                                                  
Shares   37    3    (512)       (472)   123    2    (63)       62 
Amount  $528   $47   $(6,609)  $   $(6,034)  $1,433   $18   $(743)  $   $708 
Class R3                                                  
Shares   84    5    (65)       24    218    1    (64)       155 
Amount  $1,207   $71   $(907)  $   $371   $2,671   $10   $(781)  $   $1,900 
Class R4                                                  
Shares   21    2    (9)       14    130        (23)       107 
Amount  $302   $38   $(127)  $   $213   $1,580   $4   $(279)  $   $1,305 
Class R5                                                  
Shares   9        (2)       7    2                2 
Amount  $120   $4   $(29)  $   $95   $24   $1   $   $   $25 
Class Y                                                  
Shares   2,552    259    (1,841)       970    6,223    88    (2,777)       3,534 
Amount  $36,909   $3,585   $(26,372)  $   $14,122   $73,002   $977   $(34,736)  $   $39,243 
Total                                                  
Shares   3,123    339    (3,090)       372    7,248    103    (4,403)       2,948 
Amount  $44,912   $4,705   $(43,203)  $   $6,414   $85,312   $1,141   $(54,029)  $   $32,424 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   27   $375 
For the Year Ended October 31, 2012   31   $380 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

24

 

 

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

25

 

The Hartford International Small Company Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $13.14   $0.01   $2.57   $2.58   $(0.24)  $   $   $(0.24)  $15.48 
B   12.47    (0.04)   2.44    2.40    (0.12)           (0.12)   14.75 
C   12.26    (0.04)   2.40    2.36    (0.14)           (0.14)   14.48 
I   13.09    0.02    2.57    2.59    (0.29)           (0.29)   15.39 
R3   13.24    0.01    2.58    2.59    (0.23)           (0.23)   15.60 
R4   13.29    0.03    2.58    2.61    (0.27)           (0.27)   15.63 
R5   13.34    0.06    2.58    2.64    (0.30)           (0.30)   15.68 
Y   13.34    0.05    2.60    2.65    (0.31)           (0.31)   15.68 
                                              
For the Year Ended October 31, 2012
A   12.03    0.08    1.06    1.14    (0.03)           (0.03)   13.14 
B   11.47    (0.03)   1.03    1.00                    12.47 
C   11.28    (0.02)   1.00    0.98                    12.26 
I   12.00    0.13    1.06    1.19    (0.10)           (0.10)   13.09 
R3   12.16    0.08    1.06    1.14    (0.06)           (0.06)   13.24 
R4   12.20    0.12    1.06    1.18    (0.09)           (0.09)   13.29 
R5   12.22    0.14    1.08    1.22    (0.10)           (0.10)   13.34 
Y   12.23    0.13    1.09    1.22    (0.11)           (0.11)   13.34 
                                              
For the Year Ended October 31, 2011 (E)
A   12.56    0.07    (0.47)   (0.40)   (0.13)           (0.13)   12.03 
B   11.97    (0.04)   (0.43)   (0.47)   (0.03)           (0.03)   11.47 
C   11.78    (0.03)   (0.43)   (0.46)   (0.04)           (0.04)   11.28 
I   12.53    0.12    (0.46)   (0.34)   (0.19)           (0.19)   12.00 
R3   12.72    0.09    (0.50)   (0.41)   (0.15)           (0.15)   12.16 
R4   12.74    0.12    (0.50)   (0.38)   (0.16)           (0.16)   12.20 
R5   12.75    0.13    (0.47)   (0.34)   (0.19)           (0.19)   12.22 
Y   12.76    0.14    (0.48)   (0.34)   (0.19)           (0.19)   12.23 
                                              
For the Year Ended October 31, 2010 (E)
A   10.74    0.02    1.92    1.94    (0.12)           (0.12)   12.56 
B   10.28    (0.07)   1.84    1.77    (0.08)           (0.08)   11.97 
C   10.10    (0.07)   1.80    1.73    (0.05)           (0.05)   11.78 
I   10.70    0.07    1.91    1.98    (0.15)           (0.15)   12.53 
R3(H)   10.20        2.52    2.52                    12.72 
R4(H)   10.20    0.02    2.52    2.54                    12.74 
R5(H)   10.20    0.04    2.51    2.55                    12.75 
Y   10.89    0.07    1.96    2.03    (0.16)           (0.16)   12.76 
                                              
For the Year Ended October 31, 2009
A   7.45    0.08    3.21    3.29                    10.74 
B   7.16    0.02    3.10    3.12                    10.28 
C   7.06    (0.01)   3.05    3.04                    10.10 
I   7.47    0.06    3.23    3.29    (0.06)           (0.06)   10.70 
Y   7.60    0.09    3.27    3.36    (0.07)           (0.07)   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)   7.45 
B   17.35    0.02    (8.20)   (8.18)   (0.06)   (1.95)       (2.01)   7.16 
C   17.16        (8.08)   (8.08)   (0.07)   (1.95)       (2.02)   7.06 
I   18.02    0.11    (8.48)   (8.37)   (0.23)   (1.95)       (2.18)   7.47 
Y   18.26    0.18    (8.66)   (8.48)   (0.23)   (1.95)       (2.18)   7.60 

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)Commenced operations on May 28, 2010.

 

26

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period 
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment 
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
  
 19.84%(F)  $53,977    1.56%(G)   1.53%(G)   0.14%(G)   46%
 19.39(F)   4,704    2.58(G)   2.28(G)   (0.67)(G)    
 19.43(F)   10,319    2.31(G)   2.27(G)   (0.57)(G)    
 20.06(F)   3,061    1.12(G)   1.12(G)   0.34(G)    
 19.81(F)   5,449    1.69(G)   1.65(G)   0.08(G)    
 19.94(F)   2,350    1.39(G)   1.35(G)   0.39(G)    
 20.11(F)   298    1.11(G)   1.05(G)   0.79(G)    
 20.16(F)   205,659    0.99(G)   0.99(G)   0.77(G)    
                            
                            
 9.56    47,109    1.61    1.55    0.59    61 
 8.72    4,973    2.62    2.30    (0.20)    
 8.69    8,647    2.37    2.30    (0.17)    
 10.08    8,781    1.06    1.05    1.12     
 9.44    4,297    1.71    1.65    0.62     
 9.81    1,802    1.41    1.35    0.95     
 10.17    164    1.15    1.05    1.15     
 10.14    162,036    1.01    1.00    1.11     
                            
                            
 (3.28)   50,854    1.59    1.55    0.51    69 
 (3.91)   6,188    2.55    2.30    (0.29)    
 (3.93)   9,420    2.34    2.30    (0.27)    
 (2.82)   7,309    1.09    1.07    0.94     
 (3.31)   2,065    1.71    1.65    0.73     
 (3.10)   356    1.44    1.35    0.90     
 (2.77)   126    1.12    1.05    0.99     
 (2.72)   105,329    1.02    1.00    1.03     
                            
                            
 18.22    53,514    1.63    1.57    0.14    97 
 17.28    7,850    2.60    2.32    (0.63)    
 17.23    11,103    2.37    2.32    (0.62)    
 18.76    7,698    1.08    1.08    0.63     
 24.71(F)   125    1.73(G)   1.65(G)   0.08(G)    
 24.90(F)   125    1.43(G)   1.36(G)   0.38(G)    
 25.00(F)   125    1.12(G)   1.06(G)   0.68(G)    
 18.83    111,493    1.02    1.02    0.68     
                            
                            
 44.16    53,517    1.81    1.39    0.64    151 
 43.58    8,798    2.89    1.80    0.25     
 43.06    11,713    2.55    2.14    (0.10)    
 44.32    7,255    1.09    1.09    0.59     
 44.48    85,937    1.05    1.05    1.06     
                            
                            
 (52.67)   48,739    1.52    1.52    0.79    121 
 (52.96)   7,392    2.53    2.13    0.18     
 (53.00)   10,563    2.28    2.28    0.02     
 (52.43)   1,497    1.16    1.16    1.23     
 (52.32)   55,020    1.01    1.01    1.36     

 

27

 

The Hartford International Small Company Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

28

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

29

 

The Hartford International Small Company Fund
Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

30

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,198.40   $8.32   $1,000.00   $1,017.22   $7.64    1.53%   181    365 
Class B  $1,000.00   $1,193.90   $12.40   $1,000.00   $1,013.49   $11.38    2.28    181    365 
Class C  $1,000.00   $1,194.30   $12.37   $1,000.00   $1,013.52   $11.35    2.27    181    365 
Class I  $1,000.00   $1,200.60   $6.10   $1,000.00   $1,019.25   $5.59    1.12    181    365 
Class R3  $1,000.00   $1,198.10   $9.01   $1,000.00   $1,016.60   $8.26    1.65    181    365 
Class R4  $1,000.00   $1,199.40   $7.38   $1,000.00   $1,018.09   $6.77    1.35    181    365 
Class R5  $1,000.00   $1,201.10   $5.74   $1,000.00   $1,019.58   $5.27    1.05    181    365 
Class Y  $1,000.00   $1,201.60   $5.39   $1,000.00   $1,019.89   $4.95    0.99    181    365 

 

31

 

The Hartford International Small Company Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford International Small Company Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

32

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

33

 

The Hartford International Small Company Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Small-cap Stock Risk: Small-cap stocks are generally more risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

34
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-ISC13 4/13 113989 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

29

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD INTERNATIONAL VALUE FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford International Value Fund

 

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   8
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   9
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   10
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   11
Notes to Financial Statements (Unaudited)   12
Financial Highlights (Unaudited)   24
Directors and Officers (Unaudited)   26
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   28
Quarterly Portfolio Holdings Information (Unaudited)   28
Expense Example (Unaudited)   29
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   30
Principal Risks (Unaudited)   32

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford International Value Fund inception 05/28/2010

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks long-term total return.

 

Performance Overview 5/28/10 - 4/30/13

 

Z:\Vineyard\Live jobs\2013\06 June\19 June\Shift III\v348149-Hartford Mutual Fund N-CSRS\Draft\03-Production

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

 

   6 Month†  1 Year  Since
Inception▲
International Value A#   19.17%       20.90%       13.63%    
International Value A##        14.25%       11.45%    
International Value C#   18.76%       20.09%       12.86%    
International Value C##        19.09%       12.86%    
International Value I#   19.32%       21.25%       14.03%    
International Value R3#   19.00%       20.63%       13.34%    
International Value R4#   19.21%       20.94%       13.70%    
International Value R5#   19.31%       21.35%       14.02%    
International Value Y#   20.58%       22.75%       14.58%    
MSCI EAFE Value Index   16.94%       22.45%       11.71%    

 

Not Annualized
Inception: 05/28/2010
# Without sales charge
## With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Class C reflect a contingent deferred sales charge of 1.00%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

MSCI EAFE Value Index is a free float-adjusted market capitalization-weighted 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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford International Value Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net  Gross
International Value Class A   1.40%     1.57%  
International Value Class C   2.15%     2.18%  
International Value Class I   1.09%     1.09%  
International Value Class R3   1.60%     1.80%  
International Value Class R4   1.30%     1.49%  
International Value Class R5   1.00%     1.19%  
International Value Class Y   0.95%     1.01%  

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Manager

Theodore B.P. Jayne, CFA

Director and Equity Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford International Value Fund returned 19.17%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the MSCI EAFE Value Index, which returned 16.94% for the same period. The Fund also outperformed the 14.10% average return of the Lipper International 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?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

All ten sectors in the MSCI EAFE Value Index rose during the period. Within the index, Consumer Discretionary (+28%), Information Technology (+27%), Health Care (+23%) gained the most during the period. Materials (+3%), Energy (+4%), and Utilities (+9%) lagged on a relative basis.

 

Security selection, which was strongest in Consumer Discretionary, Telecommunication Services, and Health Care, contributed positively to benchmark-relative performance during the period. This was partially offset by weaker stock selection in the Information Technology, Financials, and Materials sectors. Sector positioning, which is a result of bottom-up stock selection decisions, also contributed positively to benchmark-relative outperformance during the period, primarily due to the Fund’s overweights (i.e. the Fund’s sector position was greater than the benchmark position) to Information Technology and Consumer Discretionary as well as an underweight to Utilities.

 

Among the top contributors to benchmark-relative returns were Fuji Heavy Industries (Industrials), Softbank (Telecommunication Services), and Royal Dutch Shell (Energy). Maker of Subaru branded cars, Fuji Heavy Industries performed very strongly on the back of currency weakness in the Yen combined with strong execution on the product side. Shares of Japan-based telecommunication and internet provider Softbank rose on strong earnings and operating profit growth driven by mobile revenue growth and a profit-focused strategy offsetting increasing network costs. Global independent oil and gas company Royal Dutch Shell lagged after disappointing earnings due to soft North American demand and higher costs. Not owning this benchmark component contributed to benchmark-relative performance. Top absolute contributors for the period also included Roche Holding (Health Care).

 

Imperial Oil (Energy), Daito Trust Construction (Financials) and T&D Holdings (Financials) were the top detractors from benchmark-relative and absolute returns. Shares of Imperial Oil, a Canada-based integrated oil company, fell due to the drop in Canadian oil prices. Shares of Japan-based condominium and apartment developer Daito Trust

 

3

 

The Hartford International Value Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

Construction fell on the announcement of margins lower than market expectations. Japan-based insurance company T&D Holdings was held briefly in the fund; however, shares of Japanese life insurers have been negatively impacted by the fall in the Japanese Government Bond yield curve.

 

What is the outlook?

The world economy is slowly but steadily emerging from a post-bubble overhang. Looking into 2014, we expect all regions to strengthen economically while inflation should remain subdued in many parts of the world. Central banks are playing a key role in anchoring bond yields and helping the financial sector healing process. The U.S. Federal Reserve Board is likely to tighten monetary policy later next year, while the European Central Bank and Bank of Japan are expected to leave monetary conditions accommodative for longer. Overall, we expect a return of a world economy that is determined by regional macro fundamentals rather than by swings in global risk sentiment.

 

As a result of bottom-up stock selection, we ended the period most overweight the Information Technology, Consumer Staples, and Consumer Discretionary sectors and most underweight the Industrials, Energy, and Telecommunication Services sectors.

 

Diversification by Industry

as of April 30, 2013

 

Industry (Sector) 

Percentage of 
Net Assets

 
Automobiles and Components (Consumer Discretionary)   5.2%
Banks (Financials)   18.1 
Capital Goods (Industrials)   1.2 
Commercial and Professional Services (Industrials)   1.1 
Consumer Durables and Apparel (Consumer Discretionary)   5.9 
Diversified Financials (Financials)   3.3 
Energy (Energy)   6.0 
Food and Staples Retailing (Consumer Staples)   1.8 
Food, Beverage and Tobacco (Consumer Staples)   7.4 
Insurance (Financials)   8.1 
Materials (Materials)   2.0 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   9.4 
Real Estate (Financials)   3.8 
Semiconductors and Semiconductor Equipment (Information Technology)   7.1 
Software and Services (Information Technology)   3.4 
Telecommunication Services (Services)   4.4 
Transportation (Industrials)   2.4 
Utilities (Utilities)   3.8 
Short-Term Investments   2.6 
Other Assets and Liabilities   3.0 
Total   100.0%

 

4

 

The Hartford International Value Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪
COMMON STOCKS - 94.4%
     Australia - 4.2%     
 8   National Australia Bank Ltd.  $283 
 75   Westfield Retail Trust REIT   256 
         539 
     Belgium - 2.0%     
 3   Anheuser-Busch InBev N.V.   262 
           
     Brazil - 1.7%     
 16   Cia de Saneamento Basico do Estado de Sao Paulo ADR   222 
           
     Canada - 5.0%     
 3   Barrick Gold Corp.   63 
 1   Canadian National Railway Co.   140 
 7   CGI Group, Inc. Class A ●   219 
 6   Imperial Oil Ltd. ‡   223 
         645 
     France - 7.7%     
 5   BNP Paribas   265 
 1   Christian Dior   259 
 2   Lafarge S.A.   136 
 3   Sanofi-Aventis S.A.   336 
         996 
     Germany - 3.5%     
 1   Continental AG ●   120 
 29   Infineon Technologies AG   226 
 1   SAP AG   110 
         456 
     Hong Kong - 2.0%     
 270   Guangdong Investment Ltd.   261 
           
     Israel - 0.9%     
 2   Check Point Software Technologies Ltd. ADR ●   109 
           
     Japan - 18.5%     
 14   Fuji Heavy Industries Ltd.   270 
 42   Isuzu Motors Ltd.   280 
 12   Japan Tobacco, Inc.   438 
 43   Mitsubishi UFJ Financial Group, Inc.   291 
 36   Mitsubishi UFJ Lease & Finance Co., Ltd.   202 
 27   Nomura Holdings, Inc.   223 
 5   SoftBank Corp.   243 
 8   Sumitomo Mitsui Financial Group, Inc.   378 
 6   Zeon Corp.   65 
         2,390 
     Netherlands - 1.1%     
 2   ASML Holding N.V.   138 
           
     Norway - 1.1%     
 6   Telenor ASA   145 
           
     Panama - 1.3%     
 1   Copa Holdings S.A. Class A   171 
           
     Philippines - 1.8%     
 368   Robinsons Land Corp.   230 
           
     Singapore - 1.0%     
 9   DBS Group Holdings Ltd. ☼    123 
           
     South Africa - 1.1%     
 15   Discovery Ltd.   138 
           
     South Korea - 2.2%     
    Samsung Electronics Co., Ltd.   289 
           
     Spain - 2.4%     
 13   Repsol S.A. ●    308 
           
     Sweden - 2.3%     
 25   Nordea Bank Ab   300 
           
     Switzerland - 8.2%     
 4   Novartis AG   302 
 2   Roche Holding AG   430 
 4   Swiss Re Ltd.   321 
         1,053 
     Taiwan - 2.0%     
 14   Taiwan Semiconductor Manufacturing Co., Ltd. ADR   261 
           
     United Kingdom - 24.4%     
 44   Amlin plc   290 
 5   Aon plc   296 
 3   AstraZeneca plc   151 
 8   Babcock International Group plc   135 
 30   Barclays Bank plc ADR   133 
 4   Berkeley (The) Group Holdings plc   140 
 34   BP plc   245 
 8   Diageo Capital plc   255 
 41   HSBC Holdings plc   446 
 15   Persimmon plc   245 
 9   Rolls-Royce Holdings plc   156 
 5   Standard Chartered plc   118 
 85   Taylor Wimpey plc   123 
 40   Tesco plc   228 
 59   Vodafone Group plc   181 
         3,142 
     Total common stocks     
     (cost $10,922)  $12,178 
           
     Total long-term investments     
     (cost $10,922)  $12,178 
           
SHORT-TERM INVESTMENTS - 2.6%     
     Repurchase Agreements - 2.6%     
     Bank of America Merrill Lynch TriParty     
     Repurchase Agreement (maturing on     
     05/01/2013 in the amount of $13,     
     collateralized by FHLB 1.93%, 2021,     
     FHLMC 0.38%, 2013, FNMA 3.00%, 2028,     
     value of $14)     
$13    0.17%, 4/30/2013  $13 

 

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

 

5

 

The Hartford International Value Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount       Market Value ╪ 
SHORT-TERM INVESTMENTS - 2.6% - (continued)        
     Repurchase Agreements - 2.6% - (continued)         
     Bank of Montreal TriParty Repurchase         
     Agreement (maturing on 05/01/2013 in the          
     amount of $37, collateralized by FHLMC          
     3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -          
     2018, U.S. Treasury Bond 11.25%, 2015,          
     U.S. Treasury Note 0.75%, 2013, value of          
     $37)          
$37   0.15%, 4/30/2013       $37 
     Barclays Capital TriParty Repurchase          
     Agreement (maturing on 05/01/2013 in the          
     amount of $70, collateralized by U.S.          
     Treasury Note 0.88% - 3.13%, 2017 - 2021,          
     value of $72)          
 70   0.15%, 4/30/2013        70 
     Citigroup Global Markets, Inc. TriParty          
     Repurchase Agreement (maturing on          
     05/01/2013 in the amount of $98,          
     collateralized by U.S. Treasury Note 0.75%          
     - 2.13%, 2015 - 2019, value of $100)          
 98   0.14%, 4/30/2013        98 
     Deutsche Bank Securities TriParty Repurchase          
     Agreement (maturing on 05/01/2013 in the          
     amount of $18, collateralized by FHLMC          
     3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,          
     2043, value of $18)          
 18   0.17%, 4/30/2013        18 
     RBS Securities, Inc. TriParty Repurchase          
     Agreement (maturing on 05/01/2013 in the          
     amount of $60, collateralized by U.S.          
     Treasury Note 1.00% - 2.25%, 2016 - 2022,          
     value of $61)          
 60   0.14%, 4/30/2013        60 
     TD Securities TriParty Repurchase Agreement          
     (maturing on 05/01/2013 in the amount of          
     $42, collateralized by U.S. Treasury Note          
     0.25% - 1.88%, 2014 - 2019, value of $43)          
 42   0.17%, 4/30/2013        42 
     UBS Securities, Inc. Repurchase Agreement          
     (maturing on 05/01/2013 in the amount of          
     $1, collateralized by U.S. Treasury Note          
     3.88%, 2018, value of $1)          
 1   0.13%, 4/30/2013        1 
              339 
     Total short-term investments          
     (cost $339)       $339 
                
     Total investments          
     (cost $11,261) ▲   97.0%  $12,517 
     Other assets and liabilities   3.0%   389 
     Total net assets   100.0%  $12,906 

 

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

 

6

 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.
   
  Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $12,074 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $1,321 
Unrealized Depreciation   (878)
Net Unrealized Appreciation  $443 

 

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.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $122 at April 30, 2013.

 

Foreign Currency Contracts Outstanding at April 30, 2013
 
Currency  Buy / Sell  Delivery Date  Counterparty   Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
AUD  Buy  07/12/2013   NAB   $355   $349   $(6)
JPY  Sell  05/07/2013   CSFB    246    247    (1)
SGD  Buy  05/06/2013   BCLY    122    122     
                        $(7)

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)

 

Counterparty Abbreviations:
BCLY Barclays  
CSFB Credit Suisse First Boston Corp.
NAB National Australia Bank

 

Currency Abbreviations:
AUD Australian Dollar  
JPY Japanese Yen  
SGD Singapore Dollar  

 

Other Abbreviations:
ADR American Depositary Receipt
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
REIT Real Estate Investment Trust

 

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

 

7

 

The Hartford International Value Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks                    
Australia  $539   $   $539   $ 
Belgium   262        262     
Brazil   222    222         
Canada   645    645         
France   996        996     
Germany   456        456     
Hong Kong   261        261     
Israel   109    109         
Japan   2,390        2,390     
Netherlands   138        138     
Norway   145        145     
Panama   171    171         
Philippines   230    230         
Singapore   123        123     
South Africa   138        138     
South Korea   289        289     
Spain   308        308     
Sweden   300        300     
Switzerland   1,053        1,053     
Taiwan   261    261         
United Kingdom   3,142    296    2,846     
Total   12,178    1,934    10,244     
Short-Term Investments   339        339     
Total  $12,517   $1,934   $10,583   $ 
Foreign Currency Contracts*                
Total  $   $   $   $ 
Liabilities:                    
Foreign Currency Contracts*   7        7     
Total  $7   $   $7   $ 

 

For the six-month period ended April 30, 2013, investments valued at $405 were transferred from Level 2 to Level 1, and there were no transfers from Level 1 to Level 2. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:

1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).

*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

8

 

The Hartford International Value Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $11,261)  $12,517 
Cash    
Foreign currency on deposit with custodian (cost $41)   42 
Unrealized appreciation on foreign currency contracts    
Receivables:     
Investment securities sold   247 
Fund shares sold   118 
Dividends and interest   111 
Other assets   53 
Total assets   13,088 
Liabilities:     
Unrealized depreciation on foreign currency contracts   7 
Payables:     
Investment securities purchased   159 
Fund shares redeemed    
Investment management fees   2 
Administrative fees    
Distribution fees    
Accrued expenses   14 
Total liabilities   182 
Net assets  $12,906 
Summary of Net Assets:     
Capital stock and paid-in-capital  $25,601 
Distributions in excess of net investment loss   (633)
Accumulated net realized loss   (13,312)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   1,250 
Net assets  $12,906 
      
Shares authorized   450,000 
Par value  $   0.001 
Class A: Net asset value per share/Maximum offering price per share   

$12.94/$13.69

 
Shares outstanding   593 
Net assets  $7,679 
Class C: Net asset value per share  $12.89 
Shares outstanding   90 
Net assets  $1,154 
Class I: Net asset value per share  $12.98 
Shares outstanding   59 
Net assets  $767 
Class R3: Net asset value per share  $12.95 
Shares outstanding   57 
Net assets  $742 
Class R4: Net asset value per share  $12.97 
Shares outstanding   56 
Net assets  $728 
Class R5: Net asset value per share  $12.98 
Shares outstanding   57 
Net assets  $734 
Class Y: Net asset value per share  $13.13 
Shares outstanding   84 
Net assets  $1,102 

 

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

 

9

 

The Hartford International Value Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $459 
Interest   1 
Less: Foreign tax withheld   (27)
Total investment income   433 
      
Expenses:     
Investment management fees   108 
Administrative services fees     
Class R3   1 
Class R4    
Class R5    
Transfer agent fees     
Class A   6 
Class C    
Class I    
Class R3    
Class Y    
Distribution fees     
Class A   7 
Class C   5 
Class R3   2 
Class R4   1 
Custodian fees   4 
Accounting services fees   2 
Registration and filing fees   35 
Board of Directors' fees   2 
Audit fees   6 
Other expenses   9 
Total expenses (before waivers)   188 
Expense waivers   (55)
Total waivers   (55)
Total expenses, net   133 
Net Investment Income   300 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   5,970 
Net realized gain on foreign currency contracts   141 
Net realized loss on other foreign currency transactions   (106)
Net Realized Gain on Investments and Foreign Currency Transactions   6,005 
Net Changes in Unrealized Depreciation of Investments and Foreign Currency Transactions:     
Net unrealized depreciation of investments   (1,467)
Net unrealized depreciation of foreign currency contracts   (65)
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   3 
Net Changes in Unrealized Depreciation of Investments and Foreign Currency Transactions   (1,529)
Net Gain on Investments and Foreign Currency Transactions   4,476 
Net Increase in Net Assets Resulting from Operations  $4,776 

 

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

 

10

 

The Hartford International Value Fund

Statement of Changes in Net Assets 

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the 
Year Ended 
October 31, 2012
 
Operations:          
Net investment income  $300   $2,371 
Net realized gain (loss) on investments and foreign currency transactions   6,005    (8,456)
Net unrealized appreciation (depreciation) of investments and foreign currency transactions   (1,529)   2,966 
Net Increase (Decrease) in Net Assets Resulting from Operations   4,776    (3,119)
Distributions to Shareholders:          
From net investment income          
Class A   (384)   (26)
Class C   (75)    
Class I   (56)   (6)
Class R3   (54)   (2)
Class R4   (54)   (4)
Class R5   (56)   (6)
Class Y   (2,461)   (1,516)
Total distributions   (3,140)   (1,560)
Capital Share Transactions:          
Class A   2,949    294 
Class C   154    (4)
Class I   87    (35)
Class R3   36    12 
Class R4   54    4 
Class R5   56    6 
Class Y   (27,481)   (97,496)
Net decrease from capital share transactions   (24,145)   (97,219)
Net Decrease in Net Assets   (22,509)   (101,898)
Net Assets:          
Beginning of period   35,415    137,313 
End of period  $12,906   $35,415 
Undistributed (distribution in excess of) net investment income (loss)  $(633)  $2,207 

 

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

 

11

 

The Hartford International Value Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford International 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 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 primarily through advisory fee-based wrap programs. Class 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.

 

2.Significant Accounting Policies:

 

The following is a summary of significant accounting policies of the Fund in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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

 

12

 

 

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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or

 

13

 

The Hartford International Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

14

 

 

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

15

 

The Hartford International Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $   $   $   $   $   $ 
Total  $   $   $   $   $   $   $ 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts   $   $7   $   $   $   $   $7 
Total   $   $7   $   $   $   $   $7 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

16

 

 

 

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain on Derivatives Recognized as a Result of Operations:
Net realized gain on foreign currency contracts  $   $141 $   $   $   $   $141 
Total  $   $141  $   $   $   $   $141 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized depreciation of foreign currency contracts  $   $(65)  $   $   $   $   $(65)
Total  $   $(65)  $   $   $   $   $(65)

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

17

 

The Hartford International Value Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $1,560   $206 
Long-Term Capital Gains ‡       2 

 

  The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

   Amount 
Undistributed Ordinary Income  $2,265 
Accumulated Capital Losses *   (18,505)
Unrealized Appreciation †   1,909 
Total Accumulated Deficit  $(14,331)

 

*  The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
  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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $204 
Accumulated Net Realized Gain (Loss)   (204)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

18

 

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

   Amount 
Short Term Capital Loss Carryforward  $8,226 
Long Term Capital Loss Carryforward   1,610 
Total  $9,836 

 

Capital loss carryforwards with expiration:

 

Year of Expiration  Amount 
2019  $8,669 
Total  $8,669 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.8500%
On next $500 million   0.8000%
On next $4 billion   0.7500%
On next $5 billion   0.7475%
Over $10 billion   0.7450%

 

19

 

The Hartford International Value Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.40%      2.15%      1.15%      1.60%      1.30%      1.00%      0.95%   

 

d)Distribution and Service Plan for Class A, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $35 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class A, 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 0.25% of average daily net assets. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. These fees are accrued daily and paid monthly.

 

20

 

 

  

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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class A   19%
Class C   61 
Class I   97 
Class R3   98 
Class R4   100 
Class R5   100 
Class Y   100 

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $16,174 
Sales Proceeds Excluding U.S. Government Obligations   42,809 

 

21

 

The Hartford International Value Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   288    32    (76)       244    90    2    (65)       27 
Amount  $3,495   $382   $(928)  $   $2,949   $998   $26   $(730)  $   $294 
Class C                                                  
Shares   8    7    (2)       13    10        (10)        
Amount  $101   $75   $(22)  $   $154   $111   $   $(115)  $   $(4)
Class I                                                  
Shares   2    5            7        1    (4)       (3)
Amount  $31   $56   $   $   $87   $   $6   $(41)  $   $(35)
Class R3                                                  
Shares       5    (2)       3    1                1 
Amount  $2   $54   $(20)  $   $36   $10   $2   $   $   $12 
Class R4                                                  
Shares       5            5                     
Amount  $   $54   $   $   $54   $   $4   $   $   $4 
Class R5                                                  
Shares       5            5        1            1 
Amount  $   $56   $   $   $56   $   $6   $   $   $6 
Class Y                                                  
Shares   215    211    (2,684)       (2,258)   984    143    (10,285)       (9,158)
Amount  $2,595   $2,461   $(32,537)  $   $(27,481)  $10,846   $1,516   $(109,858)  $   $(97,496)
Total                                                  
Shares   513    270    (2,764)       (1,981)   1,085    147    (10,364)       (9,132)
Amount  $6,224   $3,138   $(33,507)  $   $(24,145)  $11,965   $1,560   $(110,744)  $   $(97,219)

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth

 

22

 

 

 

Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

23

 

The Hartford International Value Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                              
For the Six-Month Period Ended April 30, 2013 (Unaudited) (D)
A  $11.83   $0.19   $1.96   $2.15   $(1.04)  $   $   $(1.04)  $12.94 
C   11.75    0.14    1.96    2.10    (0.96)           (0.96)   12.89 
I   11.89    0.20    1.98    2.18    (1.09)           (1.09)   12.98 
R3   11.83    0.16    1.98    2.14    (1.02)           (1.02)   12.95 
R4   11.86    0.18    1.98    2.16    (1.05)           (1.05)   12.97 
R5   11.89    0.20    1.98    2.18    (1.09)           (1.09)   12.98 
Y   11.91    0.12    2.20    2.32    (1.10)           (1.10)   13.13 
                                              
For the Year Ended October 31, 2012 (D)
A   11.28    0.18    0.45    0.63    (0.08)           (0.08)   11.83 
C   11.19    0.10    0.46    0.56                    11.75 
I   11.32    0.23    0.45    0.68    (0.11)           (0.11)   11.89 
R3   11.26    0.16    0.45    0.61    (0.04)           (0.04)   11.83 
R4   11.29    0.19    0.46    0.65    (0.08)           (0.08)   11.86 
R5   11.32    0.23    0.45    0.68    (0.11)           (0.11)   11.89 
Y   11.34    0.28    0.42    0.70    (0.13)           (0.13)   11.91 
                                              
For the Year Ended October 31, 2011 (D)
A   11.82    0.18    (0.45)   (0.27)   (0.02)   (0.25)       (0.27)   11.28 
C   11.79    0.09    (0.44)   (0.35)       (0.25)       (0.25)   11.19 
I   11.84    0.22    (0.45)   (0.23)   (0.04)   (0.25)       (0.29)   11.32 
R3   11.81    0.15    (0.45)   (0.30)       (0.25)       (0.25)   11.26 
R4   11.82    0.18    (0.45)   (0.27)   (0.01)   (0.25)       (0.26)   11.29 
R5   11.84    0.22    (0.46)   (0.24)   (0.03)   (0.25)       (0.28)   11.32 
Y   11.84    0.20    (0.41)   (0.21)   (0.04)   (0.25)       (0.29)   11.34 
                                              
From May 28, 2010 (commencement of operations), through October 31, 2010
A(G)   10.00    0.02    1.80    1.82                    11.82 
C(G)   10.00    (0.01)   1.80    1.79                    11.79 
I(G)   10.00    0.03    1.81    1.84                    11.84 
R3(G)   10.00        1.81    1.81                    11.81 
R4(G)   10.00    0.01    1.81    1.82                    11.82 
R5(G)   10.00    0.03    1.81    1.84                    11.84 
Y(G)   10.00    0.03    1.81    1.84                    11.84 

 

(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)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(D)Per share amounts have been calculated using average shares outstanding method.
(E)Not annualized.
(F)Annualized.
(G)Commenced operations on May 28, 2010.

 

24

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(C)
 
                            
                            
 19.17%(E)  $7,679    1.89%(F)   1.40%(F)   3.19%(F)   64%
 18.76(E)   1,154    2.51(F)   2.10(F)   2.28(F)    
 19.32(E)   767    1.42(F)   1.01(F)   3.36(F)    
 19.00(E)   742    2.12(F)   1.60(F)   2.72(F)    
 19.21(E)   728    1.82(F)   1.30(F)   3.03(F)    
 19.31(E)   734    1.52(F)   1.00(F)   3.33(F)    
 20.58(E)   1,102    1.23(F)   0.82(F)   1.97(F)    
                            
                            
 5.68    4,126    1.57    1.40    1.64    137 
 5.00    901    2.18    2.09    0.94     
 6.14    615    1.09    1.00    2.02     
 5.47    641    1.80    1.60    1.41     
 5.80    611    1.49    1.30    1.72     
 6.15    615    1.19    1.00    2.02     
 6.32    27,906    1.01    0.92    2.50     
                            
                            
 (2.37)   3,629    1.69    1.34    1.50    112 
 (3.10)   859    2.37    2.02    0.74     
 (2.07)   621    1.34    1.00    1.85     
 (2.67)   597    2.05    1.60    1.22     
 (2.34)   577    1.74    1.30    1.52     
 (2.09)   580    1.44    1.00    1.82     
 (1.90)   130,450    1.10    0.76    1.70     
                            
                            
 18.20(E)   1,765    3.05(F)   1.27(F)   0.50(F)   47 
 17.90(E)   695    3.76(F)   1.98(F)   (0.28)(F)    
 18.40(E)   601    2.75(F)   0.97(F)   0.67(F)    
 18.10(E)   609    3.45(F)   1.62(F)   0.02(F)    
 18.20(E)   591    3.15(F)   1.32(F)   0.33(F)    
 18.40(E)   592    2.85(F)   1.02(F)   0.63(F)    
 18.40(E)   1,777    2.75(F)   0.97(F)   0.68(F)    

 

25

 

The Hartford International Value Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

26

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

27

 

The Hartford International Value Fund
Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

28

 

The Hartford International 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)    
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,191.70   $7.62   $1,000.00   $1,017.84   $7.01    1.40%  181  365
Class C  $1,000.00   $1,187.60   $11.37   $1,000.00   $1,014.40   $10.47    2.10   181  365
Class I  $1,000.00   $1,193.20   $5.50   $1,000.00   $1,019.78   $5.07    1.01   181  365
Class R3  $1,000.00   $1,190.00   $8.70   $1,000.00   $1,016.85   $8.01    1.60   181  365
Class R4  $1,000.00   $1,192.10   $7.08   $1,000.00   $1,018.34   $6.51    1.30   181  365
Class R5  $1,000.00   $1,193.10   $5.45   $1,000.00   $1,019.83   $5.01    1.00   181  365
Class Y  $1,000.00   $1,205.80   $4.50   $1,000.00   $1,020.72   $4.12    0.82   181  365

 

29

 

The Hartford International Value Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford International Value Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

30

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

31

 

The Hartford International Value Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

Value Investing Risk: Value investments are considered to be undervalued, but they may never attain their potential value. Value-style investing falls in and out of favor, which may result in periods of underperformance.

 

Mid-cap Stock Risk: Mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

32
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-IV13 4/13 113990 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

30

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD MIDCAP FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford MidCap Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 8
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 9
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 10
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 11
Notes to Financial Statements (Unaudited) 12
Financial Highlights (Unaudited) 22
Directors and Officers (Unaudited) 25
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 27
Quarterly Portfolio Holdings Information (Unaudited) 27
Expense Example (Unaudited) 28
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 29
Principal Risks (Unaudited) 31

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford MidCap Fund inception 12/31/1997

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks long-term growth of capital.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
MidCap A#   17.60%       18.01%       5.57%       10.89%    
MidCap A##        11.52%       4.39%       10.26%    
MidCap B#   17.08%       16.94%       4.71%       10.28%*    
MidCap B##        11.94%       4.38%       10.28%*    
MidCap C#   17.20%       17.14%       4.86%       10.14%    
MidCap C##        16.14%       4.86%       10.14%    
MidCap I#   17.74%       18.31%       5.84%       11.03%    
MidCap R3#   17.47%       17.68%       5.48%       11.11%    
MidCap R4#   17.64%       18.06%       5.73%       11.24%    
MidCap R5#   17.80%       18.43%       5.99%       11.37%    
MidCap Y#   17.87%       18.49%       6.07%       11.42%    
S&P MidCap 400 Index   19.23%       18.84%       8.37%       11.73%    

 

Not Annualized
# Without sales charge
## With sales charge
* Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 2/27/09. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 5/29/09. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses.

 

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 mid-cap U.S. equity market.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford MidCap Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
MidCap Class A   1.23%      1.23%   
MidCap Class B   2.08%      2.16%   
MidCap Class C   1.93%      1.93%   
MidCap Class I   0.99%      0.99%   
MidCap Class R3   1.49%      1.49%   
MidCap Class R4   1.18%      1.18%   
MidCap Class R5   0.88%      0.88%   
MidCap Class Y   0.78%      0.78%   

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Philip W. Ruedi, CFA Mark A. Whitaker, CFA
Senior Vice President and Equity Portfolio Manager Vice President and Equity Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford MidCap Fund returned 17.60%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmark, the S&P MidCap 400 Index, which returned 19.23% for the same period. The Fund outperformed the 16.98% average return 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?

U.S. equities surged during the period, ending at an all-time high. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. U.S. housing data continued to provide evidence that the sector at the epicenter of the financial crisis could be a key engine of economic recovery in 2013. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

Mid cap stocks (+19%) outperformed both large cap (+14%) and small cap stocks (+17%) during the period, as measured by the S&P MidCap 400, S&P 500, and Russell 2000 Indices, respectively. Within the S&P MidCap 400 Index, all ten sectors posted positive returns. The Consumer Staples (+39%), Health Care (+29%), and Industrials (+22%) sectors performed best. The Telecommunications Services (+0%), Materials (+12%), and Information Technology (+14%) sectors lagged the broader index.

 

Fund underperformance versus the benchmark was driven by unfavorable security selection, primarily within Consumer Staples, Industrials, and Financials. This was partially offset by strong stock selection within Consumer Discretionary and Materials. Sector allocation, driven by our bottom-up stock selection process, contributed modestly to relative returns during the period, primarily due to an overweight allocation (i.e. the Fund’s sector position was greater than the benchmark position) to Health Care and an underweight in Materials. A small cash position, also a result of our stock-by-stock selection process detracted from relative results in an upward-trending market.

 

Top relative detractors included M&T Bank (Financials), Newfield Exploration (Energy), and Weight Watchers (Consumer Discretionary). Shares of M&T Bank, a bank holding company, declined after it agreed to acquire Hudson City Bancorp. Shares of Newfield Exploration, a U.S.-based oil & gas exploration and production company, fell after the company released lower-than-expected production guidance and plans to divest international assets. Weight Watchers is a global-branded consumer company and provider of weight management services. Shares slipped after the company lowered its Earnings per Share (EPS) guidance to a range more in line with analysts’ estimates. In addition, Herbalife was among the Fund’s top absolute detractors for the period.

 

Top contributors to relative performance included Trip Advisor (Consumer Discretionary), Alkermes (Health Care)

 

3

 

The Hartford MidCap Fund

Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

and Actavis (Health Care). Internet travel site Trip Advisor’s shares rose on solid results and revenue guidance for the quarter as well as reduced investor concerns regarding changes in the company’s business model. Shares of Alkermes, a drug developer, rose after the company reported solid results and announced positive phase two test results for its depression drug. Actavis is a global, integrated specialty pharmaceutical company and the third largest generics producer. Shares moved higher after Valeant Pharmaceuticals initiated merger discussions with the company. Management rejected the offer. Vertex Pharmaceuticals and Manpower were among the Fund’s top absolute contributors for the period.

 

What is the outlook?

We remain cautiously optimistic looking ahead in 2013; we believe the Fund is balanced and positioned with high conviction names we believe should be resilient under a variety of economic circumstances.

 

We continue to identify emerging themes including non-residential construction. Trimble, which provides Global Positioning Services mapping services for farming and construction applications, and Autodesk, producer of building design software, are examples of fund holdings leveraged to non-residential construction.

 

At the end of the period, our largest overweights were in the Health Care, Energy, and Information Technology sectors, while our largest underweights were Financials, Materials, and Utilities, relative to the benchmark.

 

Diversification by Industry

as of April 30, 2013

 

Industry (Sector)  Percentage of
Net Assets
 
Automobiles and Components (Consumer Discretionary)   2.6%
Banks (Financials)   4.3 
Capital Goods (Industrials)   8.9 
Commercial and Professional Services (Industrials)   7.4 
Consumer Durables and Apparel (Consumer Discretionary)   2.2 
Consumer Services (Consumer Discretionary)   0.8 
Diversified Financials (Financials)   5.7 
Energy (Energy)   10.3 
Food and Staples Retailing (Consumer Staples)   0.6 
Food, Beverage and Tobacco (Consumer Staples)   1.1 
Health Care Equipment and Services (Health Care)   5.2 
Insurance (Financials)   3.3 
Materials (Materials)   2.6 
Media (Consumer Discretionary)   1.9 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   13.8 
Real Estate (Financials)   0.5 
Retailing (Consumer Discretionary)   6.7 
Semiconductors and Semiconductor Equipment (Information Technology)   1.5 
Software and Services (Information Technology)   11.6 
Technology Hardware and Equipment (Information Technology)   3.5 
Transportation (Industrials)   2.3 
Utilities (Utilities)   2.5 
Short-Term Investments   0.4 
Other Assets and Liabilities   0.3 
Total   100.0%

 

4

 

The Hartford MidCap Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

COMMON STOCKS - 99.3%

     
     Automobiles and Components - 2.6%     
 1,573   Allison Transmission Holdings, Inc.  $35,878 
 964   Harley-Davidson, Inc.   52,706 
         88,584 
     Banks - 4.3%     
 236   Cullen/Frost Bankers, Inc.   14,250 
 499   East West Bancorp, Inc.   12,147 
 2,372   First Niagara Financial Group, Inc.   22,557 
 801   First Republic Bank   30,433 
 606   M&T Bank Corp.   60,754 
 73   Signature Bank ●   5,206 
         145,347 
     Capital Goods - 8.9%     
 397   Carlisle Cos., Inc.   25,783 
 679   IDEX Corp.   35,351 
 1,063   Jacobs Engineering Group, Inc. ●   53,675 
 1,037   Lennox International, Inc.   64,278 
 491   MSC Industrial Direct Co., Inc.   38,669 
 1,033   PACCAR, Inc.   51,411 
 409   Pall Corp.   27,314 
         296,481 
     Commercial and Professional Services - 7.4%     
 1,021   Equifax, Inc. ●   62,509 
 135   IHS, Inc. ●   13,144 
 1,036   Manpower, Inc.   55,097 
 1,912   Robert Half International, Inc.   62,739 
 1,428   Waste Connections, Inc.   54,180 
         247,669 
     Consumer Durables and Apparel - 2.2%     
 57   NVR, Inc. ●   58,236 
 365   Ryland Group, Inc.   16,429 
         74,665 
     Consumer Services - 0.8%     
 621   Weight Watchers International, Inc.   26,180 
           
     Diversified Financials - 5.7%     
 391   Greenhill & Co., Inc.   18,077 
 930   Invesco Ltd.   29,510 
 640   LPL Financial Holdings, Inc.   22,107 
 482   Moody's Corp.   29,328 
 2,133   SEI Investments Co.   61,134 
 407   T. Rowe Price Group, Inc.   29,482 
         189,638 
     Energy - 10.3%     
 899   Atwood Oceanics, Inc. ●   44,105 
 269   Cabot Oil & Gas Corp.   18,311 
 1,607   Cobalt International Energy, Inc. ●   44,911 
 1,048   Consol Energy, Inc.   35,244 
 1,474   Denbury Resources, Inc. ●   26,366 
 484   Ensco plc   27,913 
 369   EQT Corp.   27,698 
 418   Oceaneering International, Inc.   29,342 
 268   Pioneer Natural Resources Co.   32,716 
 170   Range Resources Corp.   12,504 
 1,591   Superior Energy Services, Inc. ●   43,885 
         342,995 
     Food and Staples Retailing - 0.6%     
 245   PriceSmart, Inc.   21,834 
           
     Food, Beverage and Tobacco - 1.1%     
 709   Molson Coors Brewing Co.   36,589 
           
     Health Care Equipment and Services - 5.2%     
 2,361   Allscripts Healthcare Solutions, Inc. ●   32,674 
 599   AmerisourceBergen Corp.   32,443 
 727   Cardinal Health, Inc.   32,142 
 688   Catamaran Corp. ●   39,723 
 978   Patterson Cos., Inc.   37,103 
         174,085 
     Insurance - 3.3%     
 107   Alleghany Corp. ●   42,252 
 68   Markel Corp. ●   36,331 
 707   W.R. Berkley Corp.   30,687 
         109,270 
     Materials - 2.6%     
 254   FMC Corp.   15,434 
 566   Packaging Corp. of America   26,922 
 131   Sherwin-Williams Co.   23,991 
 412   Silgan Holdings, Inc.   19,715 
         86,062 
     Media - 1.9%     
 508   AMC Networks, Inc. Class A ●   32,009 
 1,692   DreamWorks Animation SKG, Inc. ●   32,631 
         64,640 
     Pharmaceuticals, Biotechnology and Life Sciences - 13.8%     
 704   Actavis, Inc. ●   74,409 
 1,421   Alkermes plc ●   43,486 
 635   Cubist Pharmaceuticals, Inc. ●   29,153 
 1,060   Elan Corp. plc ADR ●   12,400 
 288   Illumina, Inc. ●   18,639 
 1,180   Incyte Corp. ●   26,143 
 1,124   Ironwood Pharmaceuticals, Inc. ●   17,101 
 2,238   Mylan, Inc. ●   65,141 
 68   Onyx Pharmaceuticals, Inc. ●   6,481 
 218   Regeneron Pharmaceuticals, Inc. ●   46,865 
 400   Salix Pharmaceuticals Ltd. ●   20,937 
 872   Vertex Pharmaceuticals, Inc. ●   66,986 
 377   Waters Corp. ●   34,823 
         462,564 
     Real Estate - 0.5%     
 424   Corrections Corp. of America REIT   15,356 
           
     Retailing - 6.7%     
 756   Advance Automotive Parts, Inc.   63,411 
 1,176   CarMax, Inc. ●   54,165 
 105   HomeAway, Inc. ●   3,205 
 781   Joseph A. Bank Clothiers, Inc. ●   34,103 
 246   Tiffany & Co.   18,121 
 938   TripAdvisor, Inc. ●   49,316 
         222,321 
     Semiconductors and Semiconductor Equipment - 1.5%     
 956   Maxim Integrated Products, Inc.   29,583 
 700   NXP Semiconductors N.V. ●   19,273 
         48,856 
     Software and Services - 11.6%     
 400   ANSYS, Inc. ●   32,376 
 722   Autodesk, Inc. ●   28,424 
 486   Citrix Systems, Inc. ●   30,228 
 290   Factset Research Systems, Inc.   27,266 

 

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

 

5

 

The Hartford MidCap Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount          Market Value ╪  

COMMON STOCKS - 99.3% - (continued)

            
     Software and Services - 11.6% - (continued)             
 419   FleetCor Technologies, Inc. ●          $32,220 
 306   Gartner, Inc. Class A ●           17,694 
 4,420   Genpact Ltd.           82,217 
 837   Micros Systems, Inc. ●           35,503 
 2,032   Vantiv, Inc. ●           45,771 
 496   VeriSign, Inc. ●           22,858 
 419   WEX, Inc. ●           31,733 
                 386,290 
     Technology Hardware and Equipment - 3.5%             
 447   Amphenol Corp. Class A           33,767 
 186   FEI Co.           11,866 
 1,069   National Instruments Corp.           29,210 
 1,452   Trimble Navigation Ltd. ●           41,738 
                 116,581 
     Transportation - 2.3%             
 556   C.H. Robinson Worldwide, Inc.           33,013 
 754   Expeditors International of Washington, Inc.           27,108 
 220   J.B. Hunt Transport Services, Inc.           15,666 
                 75,787 
     Utilities - 2.5%             
 350   Northeast Utilities           15,860 
 1,210   UGI Corp.           49,585 
 434   Wisconsin Energy Corp.           19,523 
                 84,968 
     Total common stocks             
     (cost $2,607,881)          $3,316,762 
                   
     Total long-term investments             
     (cost $2,607,881)          $3,316,762 
                   
SHORT-TERM INVESTMENTS - 0.4%             
 Repurchase Agreements - 0.4%             
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $543,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $554)
            
$543    0.17%, 4/30/2013          $543 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,479, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $1,508)
            
 1,479    0.15%, 4/30/2013           1,479 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $2,848, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 -
2021, value of $2,905)
            
 2,848    0.15%, 4/30/2013           2,848 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $3,955,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $4,035)
            
 3,955    0.14%, 4/30/2013           3,955 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $711,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value of
$725)
            
711    0.17%, 4/30/2013          711 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $2,410, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 -
2022, value of $2,458)
            
 2,410    0.14%, 4/30/2013           2,410 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,695, collateralized by U.S.
Treasury Note 0.25% - 1.88%, 2014 -
2019, value of $1,728)
            
 1,695    0.17%, 4/30/2013           1,695 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$30, collateralized by U.S. Treasury Note
3.88%, 2018, value of $31)
            
 30    0.13%, 4/30/2013           30 
                 13,671 
     Total short-term investments             
     (cost $13,671)          $13,671 
                   
        Total investments          
        (cost $2,621,552) ▲   99.7%  $3,330,433 
        Other assets and liabilities   0.3%   9,265 
        Total net assets   100.0%  $3,339,698 

 

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

 

6

 

 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $2,634,521 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $763,325 
Unrealized Depreciation   (67,413)
Net Unrealized Appreciation  $695,912 

 

·Non-income producing.

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Other Abbreviations:
ADR American Depositary Receipt
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
REIT Real Estate Investment Trust

 

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

 

7

 

The Hartford MidCap Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks ‡  $3,316,762   $3,316,762   $   $ 
Short-Term Investments   13,671        13,671     
Total  $3,330,433   $3,316,762   $13,671   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  
The Fund has all or primarily all of the equity securities categorized in a particular level.  Refer to the Schedule of Investments for further industry breakout.

 

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

 

8

 

The Hartford MidCap Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $2,621,552)  $3,330,433 
Cash   1 
Receivables:     
Investment securities sold   14,106 
Fund shares sold   2,830 
Dividends and interest   2,983 
Other assets   87 
Total assets   3,350,440 
Liabilities:     
Payables:     
Investment securities purchased   6,154 
Fund shares redeemed   3,469 
Investment management fees   397 
Administrative fees   4 
Distribution fees   147 
Accrued expenses   571 
Total liabilities   10,742 
Net assets  $3,339,698 
Summary of Net Assets:     
Capital stock and paid-in-capital  $2,573,472 
Undistributed net investment income   2,302 
Accumulated net realized gain   55,043 
Unrealized appreciation of investments   708,881 
Net assets  $3,339,698 
      
Shares authorized   760,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   

$22.50/$23.81

 
Shares outstanding   74,025 
Net assets  $1,665,733 
Class B: Net asset value per share  $18.38 
Shares outstanding   1,755 
Net assets  $32,257 
Class C: Net asset value per share  $18.74 
Shares outstanding   22,354 
Net assets  $418,996 
Class I: Net asset value per share  $22.72 
Shares outstanding   10,340 
Net assets  $234,911 
Class R3: Net asset value per share  $24.61 
Shares outstanding   1,659 
Net assets  $40,817 
Class R4: Net asset value per share  $24.95 
Shares outstanding   2,658 
Net assets  $66,326 
Class R5: Net asset value per share  $25.11 
Shares outstanding   3,232 
Net assets  $81,160 
Class Y: Net asset value per share  $25.17 
Shares outstanding   31,762 
Net assets  $799,498 

 

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

 

9

 

The Hartford MidCap Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

Investment Income:     
Dividends  $20,588 
Interest   10 
Total investment income   20,598 
      
Expenses:     
Investment management fees   11,280 
Administrative services fees     
Class R3   39 
Class R4   44 
Class R5   36 
Transfer agent fees     
Class A   1,519 
Class B   57 
Class C   289 
Class I   228 
Class R3   3 
Class R4   2 
Class R5   1 
Class Y   7 
Distribution fees     
Class A   1,972 
Class B   155 
Class C   1,963 
Class R3   97 
Class R4   73 
Custodian fees   9 
Accounting services fees   185 
Registration and filing fees   95 
Board of Directors' fees   42 
Audit fees   20 
Other expenses   229 
Total expenses (before waivers and fees paid indirectly)   18,345 
Transfer agent fee waivers   (12)
Commission recapture   (38)
Total waivers and fees paid indirectly   (50)
Total expenses, net   18,295 
Net Investment Income   2,303 
Net Realized Gain on Investments:     
Net realized gain on investments in securities   68,019 
Net Realized Gain on Investments   68,019 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments   434,325 
Net Changes in Unrealized Appreciation of Investments   434,325 
Net Gain on Investments and Foreign Currency Transactions   502,344 
Net Increase in Net Assets Resulting from Operations  $504,647 

 

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

 

10

 

The Hartford MidCap Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $2,303   $8,471 
Net realized gain on investments and foreign currency transactions   68,019    197,478 
Net unrealized appreciation of investments   434,325    190,705 
Net Increase in Net Assets Resulting from Operations   504,647    396,654 
Distributions to Shareholders:          
From net investment income          
Class A   (608)    
Class I   (578)   (689)
Class R4   (2)    
Class R5   (235)   (251)
Class Y   (2,944)   (3,044)
Total from net investment income   (4,367)   (3,984)
From net realized gain on investments          
Class A   (96,210)   (206,662)
Class B   (2,311)   (5,982)
Class C   (28,184)   (57,289)
Class I   (13,170)   (36,775)
Class R3   (2,175)   (4,405)
Class R4   (3,216)   (7,343)
Class R5   (3,729)   (8,057)
Class Y   (36,780)   (73,685)
Total from net realized gain on investments   (185,775)   (400,198)
Total distributions   (190,142)   (404,182)
Capital Share Transactions:          
Class A   (31,667)   (217,181)
Class B   (1,179)   (11,908)
Class C   3,862    (31,941)
Class I   (1,311)   (105,004)
Class R3   (1,067)   (2,613)
Class R4   2,139    (8,387)
Class R5   7,072    (8,335)
Class Y   82,352    (44,541)
Net increase (decrease) from capital share transactions   60,201    (429,910)
Net Increase (Decrease) in Net Assets   374,706    (437,438)
Net Assets:          
Beginning of period   2,964,992    3,402,430 
End of period  $3,339,698   $2,964,992 
Undistributed (distribution in excess of) net investment income (loss)  $2,302   $4,366 

 

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

 

11

 

The Hartford MidCap Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current

 

12

 

 

or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

13

 

The Hartford MidCap Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class

 

14

 

 

specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

4.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

15

 

The Hartford MidCap Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

5.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $3,982   $ 
Long-Term Capital Gains ‡   400,200     

 

  The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis are as follows:

 

   Amount 
Undistributed Ordinary Income  $4,366 
Undistributed Long-Term Capital Gain   185,768 
Unrealized Appreciation *   261,587 
Total Accumulated Earnings  $451,721 

 

*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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(4,104)
Accumulated Net Realized Gain (Loss)   4,972 
Capital Stock and Paid-in-Capital   (868)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

6.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

17

 

The Hartford MidCap Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)
(000’s Omitted)

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B  Class C  Class I   Class R3   Class R4   Class R5   Class Y
 1.37%     NA  NA   1.12%       1.50%       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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.21%
Class B   2.06 
Class C   1.91 
Class I   0.98 
Class R3   1.48 
Class R4   1.17 
Class R5   0.87 
Class Y   0.77 

 

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 six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $1,178 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $476,669 
Sales Proceeds Excluding U.S. Government Obligations   613,673 

 

19

 

The Hartford MidCap Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease)
of Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   3,631    4,997    (9,757)       (1,129)   6,151    11,934    (27,775)       (9,690)
Amount  $76,035   $95,264   $(202,966)  $   $(31,667)  $118,891   $202,047   $(538,119)  $   $(217,181)
Class B                                                  
Shares   35    145    (237)       (57)   87    407    (1,173)       (679)
Amount  $597   $2,262   $(4,038)  $   $(1,179)  $1,408   $5,770   $(19,086)  $   $(11,908)
Class C                                                  
Shares   1,195    1,670    (2,509)       356    1,782    3,679    (6,926)       (1,465)
Amount  $20,745   $26,598   $(43,481)  $   $3,862   $29,021   $53,050   $(114,012)  $   $(31,941)
Class I                                                  
Shares   1,119    643    (1,781)       (19)   2,391    1,921    (9,489)       (5,177)
Amount  $23,608   $12,414   $(37,333)  $   $(1,311)  $46,791   $32,888   $(184,683)  $   $(105,004)
Class R3                                                  
Shares   284    102    (425)       (39)   514    235    (857)       (108)
Amount  $6,493   $2,140   $(9,700)  $   $(1,067)  $10,918   $4,346   $(17,877)  $   $(2,613)
Class R4                                                  
Shares   464    151    (524)       91    890    389    (1,627)       (348)
Amount  $10,742   $3,185   $(11,788)  $   $2,139   $19,030   $7,259   $(34,676)  $   $(8,387)
Class R5                                                  
Shares   483    177    (339)       321    762    425    (1,507)       (320)
Amount  $11,118   $3,778   $(7,824)  $   $7,072   $16,556   $7,997   $(32,888)  $   $(8,335)
Class Y                                                  
Shares   4,777    1,707    (2,943)       3,541    4,909    3,476    (10,038)       (1,653)
Amount  $114,004   $36,553   $(68,205)  $   $82,352   $105,591   $65,645   $(215,777)  $   $(44,541)
Total                                                  
Shares   11,988    9,592    (18,515)       3,065    17,486    22,466    (59,392)       (19,440)
Amount  $263,342   $182,194   $(385,335)  $   $60,201   $348,206   $379,002   $(1,157,118)  $   $(429,910)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   47   $988 
For the Year Ended October 31, 2012   242   $4,733 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

20

 

 

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.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act. HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

12.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

13.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

21

 

The Hartford MidCap Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class

 

Net Asset Value at
Beginning of
Period

  

Net Investment
Income (Loss)

  

Net Realized and
Unrealized Gain
(Loss) on
Investments

  

Total from
Investment
Operations

  

Dividends from Net
Investment Income

  

Distributions from
Realized Capital
Gains

  

Distributions from
Capital

  

Total Distributions

  

Net Asset Value at
End of Period

 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited)
A  $20.44   $0.01   $3.35   $3.36   $   $(1.30)  $   $(1.30)  $22.50 
B   17.00    (0.07)   2.75    2.68        (1.30)       (1.30)   18.38 
C   17.29    (0.05)   2.80    2.75        (1.30)       (1.30)   18.74 
I   20.65    0.04    3.38    3.42    (0.05)   (1.30)       (1.35)   22.72 
R3   22.25    (0.02)   3.68    3.66        (1.30)       (1.30)   24.61 
R4   22.51    0.02    3.72    3.74        (1.30)       (1.30)   24.95 
R5   22.69    0.05    3.74    3.79    (0.07)   (1.30)       (1.37)   25.11 
Y   22.75    0.06    3.75    3.81    (0.09)   (1.30)       (1.39)   25.17 
                                              
For the Year Ended October 31, 2012(G)
A   20.67    0.05    2.22    2.27        (2.50)       (2.50)   20.44 
B   17.77    (0.10)   1.83    1.73        (2.50)       (2.50)   17.00 
C   18.01    (0.08)   1.86    1.78        (2.50)       (2.50)   17.29 
I   20.85    0.09    2.25    2.34    (0.04)   (2.50)       (2.54)   20.65 
R3   22.32        2.43    2.43        (2.50)       (2.50)   22.25 
R4   22.49    0.06    2.46    2.52        (2.50)       (2.50)   22.51 
R5   22.66    0.13    2.47    2.60    (0.07)   (2.50)       (2.57)   22.69 
Y   22.71    0.15    2.48    2.63    (0.09)   (2.50)       (2.59)   22.75 
                                              
For the Year Ended October 31, 2011(G)
A   20.16    0.02    0.49    0.51                    20.67 
B   17.48    (0.14)   0.43    0.29                    17.77 
C   17.68    (0.12)   0.45    0.33                    18.01 
I   20.28    0.09    0.48    0.57                    20.85 
R3   21.82    (0.05)   0.55    0.50                    22.32 
R4   21.92    0.02    0.55    0.57                    22.49 
R5   22.02    0.09    0.55    0.64                    22.66 
Y   22.05    0.12    0.54    0.66                    22.71 
                                              
For the Year Ended October 31, 2010(G)
A   16.20    (0.04)   4.00    3.96                    20.16 
B   14.16    (0.17)   3.49    3.32                    17.48 
C   14.30    (0.15)   3.53    3.38                    17.68 
I   16.25        4.03    4.03                    20.28 
R3   17.58    (0.11)   4.35    4.24                    21.82 
R4   17.60    (0.04)   4.36    4.32                    21.92 
R5   17.62    0.01    4.39    4.40                    22.02 
Y   17.63    0.05    4.37    4.42                    22.05 
                                              
For the Year Ended October 31, 2009(G)
A   14.55    (0.02)   1.67    1.65                    16.20 
B   12.81    (0.11)   1.46    1.35                    14.16 
C   12.93    (0.10)   1.47    1.37                    14.30 
I(H)   12.12    (0.01)   4.14    4.13                    16.25 
R3(I)   15.90    (0.05)   1.73    1.68                    17.58 
R4(I)   15.90    (0.02)   1.72    1.70                    17.60 
R5(I)   15.90        1.72    1.72                    17.62 
Y   15.75    0.06    1.82    1.88                    17.63 
                                              
For the Year Ended October 31, 2008(G)
A   26.89    (0.02)   (8.25)   (8.27)   (0.11)   (3.96)       (4.07)   14.55 
B   24.23    (0.16)   (7.30)   (7.46)       (3.96)       (3.96)   12.81 
C   24.40    (0.14)   (7.37)   (7.51)       (3.96)       (3.96)   12.93 
Y   28.74    0.08    (8.91)   (8.83)   (0.20)   (3.96)       (4.16)   15.75 
                                              

22

 

- Ratios and Supplemental Data -

 

Total Return(B)

  

Net Assets at End of Period
(000's)

  

Ratio of Expenses to Average Net
Assets Before Waivers and
Reimbursements and Including
Expenses not Subject to Cap(C)

  

Ratio of Expenses to Average Net
Assets After Waivers and
Reimbursements and Including
Expenses not Subject to Cap(C)

  

Ratio of Net Investment
Income to Average Net Assets

  

Portfolio Turnover
Rate(D)

 
                      
                      
 17.60%(E)  $1,665,733    1.21%(F)   1.21%(F)   0.13%(F)   15%
 17.08(E)   32,257    2.14(F)   2.06(F)   (0.72)(F)    
 17.20(E)   418,996    1.92(F)   1.92(F)   (0.58)(F)    
 17.74(E)   234,911    0.98(F)   0.98(F)   0.36(F)    
 17.47(E)   40,817    1.48(F)   1.48(F)   (0.14)(F)    
 17.64(E)   66,326    1.17(F)   1.17(F)   0.16(F)    
 17.80(E)   81,160    0.87(F)   0.87(F)   0.45(F)    
 17.87(E)   799,498    0.77(F)   0.77(F)   0.56(F)    
                            
                            
 13.47    1,536,203    1.23    1.23    0.25    45 
 12.50    30,803    2.16    2.08    (0.62)    
 12.63    380,413    1.93    1.93    (0.45)    
 13.78    213,875    0.99    0.99    0.48     
 13.16    37,776    1.49    1.49    (0.01)    
 13.50    57,799    1.18    1.18    0.29     
 13.85    66,039    0.88    0.88    0.59     
 13.98    642,084    0.78    0.78    0.70     
                            
                            
 2.53    1,754,028    1.21    1.21    0.09    70 
 1.66    44,266    2.06    2.06    (0.72)    
 1.87    422,515    1.91    1.91    (0.63)    
 2.81    324,002    0.92    0.92    0.40     
 2.29    40,311    1.48    1.48    (0.23)    
 2.60    65,550    1.18    1.18    0.07     
 2.91    73,192    0.87    0.87    0.38     
 2.99    678,566    0.77    0.77    0.50     
                            
                            
 24.44    2,275,785    1.25    1.25    (0.24)   56 
 23.45    108,330    2.05    2.05    (1.03)    
 23.64    448,592    1.93    1.93    (0.92)    
 24.80    541,255    0.96    0.96    0.01     
 24.12    22,038    1.49    1.49    (0.57)    
 24.55    41,422    1.18    1.18    (0.23)    
 24.97    47,915    0.88    0.88    0.05     
 25.07    556,046    0.78    0.78    0.23     
                            
                            
 11.34    1,718,214    1.36    1.36    (0.14)   91 
 10.54    137,032    2.17    2.11    (0.85)    
 10.60    353,413    2.01    2.01    (0.80)    
 34.08(E)   111,661    1.03(F)   1.03(F)   (0.07)(F)    
 10.57(E)   638    1.50(F)   1.50(F)   (0.70)(F)    
 10.69(E)   3,354    1.18(F)   1.18(F)   (0.28)(F)    
 10.82(E)   693    0.88(F)   0.88(F)   (0.01)(F)    
 11.94    242,996    0.81    0.81    0.39     
                            
                            
 (35.56)   1,310,085    1.23    1.23    (0.09)   94 
 (36.07)   195,738    2.01    2.01    (0.86)    
 (36.01)   274,583    1.92    1.92    (0.77)    
 (35.28)   163,339    0.79    0.79    0.36     

 

23

 

The Hartford MidCap Fund

Financial Highlights – (continued)

 

(A) Information presented relates to a share outstanding throughout the indicated period.
(B) Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C) Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E) Not annualized.
(F) Annualized.
(G) Per share amounts have been calculated using average shares outstanding method.
(H) Commenced operations on February 27, 2009.
(I) Commenced operations on May 29, 2009.

 

24

 

The Hartford MidCap Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

26

 

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,176.00   $6.54   $1,000.00   $1,018.78   $6.07    1.21%   181    365 
Class B  $1,000.00   $1,170.80   $11.11   $1,000.00   $1,014.56   $10.31    2.06    181    365 
Class C  $1,000.00   $1,172.00   $10.32   $1,000.00   $1,015.29   $9.58    1.92    181    365 
Class I  $1,000.00   $1,177.40   $5.28   $1,000.00   $1,019.94   $4.90    0.98    181    365 
Class R3  $1,000.00   $1,174.70   $7.99   $1,000.00   $1,017.44   $7.42    1.48    181    365 
Class R4  $1,000.00   $1,176.40   $6.34   $1,000.00   $1,018.97   $5.88    1.17    181    365 
Class R5  $1,000.00   $1,178.00   $4.71   $1,000.00   $1,020.47   $4.37    0.87    181    365 
Class Y  $1,000.00   $1,178.70   $4.17   $1,000.00   $1,020.97   $3.86    0.77    181    365 

 

28

 

The Hartford MidCap Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford MidCap Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

29

 

The Hartford MidCap Fund

Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

30

 

The Hartford MidCap Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Mid-cap Stock Risk: Mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

31
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-MC13 4/13 113991 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

31

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD MIDCAP VALUE FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford MidCap Value Fund

 

Table of Contents

 

Fund Performance (Unaudited)  

2

Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   9
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   10
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   11
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   12
Notes to Financial Statements (Unaudited)   13
Financial Highlights (Unaudited)   26
Directors and Officers (Unaudited)   28
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   30
Quarterly Portfolio Holdings Information (Unaudited)   30
Expense Example (Unaudited)   31
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   32
Principal Risks (Unaudited)   34

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford MidCap Value Fund inception 04/30/2001

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks long-term capital appreciation.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
MidCap Value A#   16.35%       18.62%       8.11%       10.71%    
MidCap Value A##        12.09%       6.89%       10.09%    
MidCap Value B#   15.88%       17.74%       7.34%       10.20%*    
MidCap Value B##        12.74%       7.03%       10.20%*    
MidCap Value C#   15.89%       17.75%       7.30%       9.90%    
MidCap Value C##        16.75%       7.30%       9.90%    
MidCap Value I#   16.58%       19.03%       8.35%       10.84%    
MidCap Value R3#   16.15%       18.31%       8.15%       11.00%    
MidCap Value R4#   16.38%       18.72%       8.34%       11.10%    
MidCap Value R5#   16.53%       19.04%       8.53%       11.19%    
MidCap Value Y#   16.55%       19.16%       8.57%       11.21%    
Russell 2500 Value Index   18.83%       22.25%       7.90%       11.20%    
Russell Midcap Value Index   19.89%       23.66%       7.49%       11.88%    

 

Not Annualized
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 5/28/10. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 5/28/10. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses.

 

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. (The Russell 2500 Index is an unmanaged index that measures the performance of the 2,500 smallest U.S. companies based on total market capitalization.)

 

Russell Midcap Value Index measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap Index companies with lower price-to-book ratios and lower forecasted growth values.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford MidCap Value Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*        
   Net   Gross 
MidCap Value Class A   1.35%       1.38%    
MidCap Value Class B   2.10%       2.38%    
MidCap Value Class C   2.06%       2.06%    
MidCap Value Class I   1.00%       1.00%    
MidCap Value Class R3   1.55%       1.55%    
MidCap Value Class R4   1.25%       1.25%    
MidCap Value Class R5   0.95%       0.96%    
MidCap Value Class Y   0.84%       0.84%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Manager
James N. Mordy
Senior Vice President and Equity Portfolio Manager

 

How did the Fund perform?

The Class A shares of the Hartford MidCap Value Fund returned 16.35%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmark, the Russell 2500 Value Index, which returned 18.83% for the same period. The Fund also underperformed the 19.46% average return 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?

U.S. equities surged during the period, ending at an all-time high. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. U.S. housing data continued to provide evidence that the sector at the epicenter of the financial crisis could be a key engine of economic recovery in 2013. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the period, mid cap equities (+19%) outperformed small caps (+17%) and large caps (+14%) represented by the S&P 400 MidCap, Russell 2000, and S&P 500 indices respectively. All ten sectors in the Russell 2500 Value Index gained during the period, with Consumer Staples (+24%), Consumer Discretionary (+23%), and Health Care (+23%) performing the best. Materials (11%) and Telecommunication & Media (12%) lagged on a relative basis during the period.

 

The Fund’s relative underperformance versus the index was due primarily to weak stock selection within Information Technology, Consumer Discretionary, and Consumer Staples, which more than offset strong stock selection within Materials and Industrials. Overall sector allocation, a fallout of the investment decision process, also detracted from relative returns, in part due to our overweight positions (i.e. the Fund’s sector position was greater than the benchmark position) in the Materials and Industrials sectors. A modest cash position detracted in an upward trending environment.

 

The largest detractors from benchmark-relative returns included Impax Laboratories (Health Care), BR Properties (Financials), and Avago Technologies (Information Technology). Shares of Impax Laboratories, a specialty pharmaceutical company, fell after the company failed an inspection by the Food & Drug Administration (FDA) of its manufacturing facility in Hayward, California. This failure resulted in further delays to potential new drug approvals and sent the stock lower during the period. Shares of BR Properties, a Brazil-based company engaged in the real-estate sector, fell during the period due to weaker sentiment towards Brazilian equities ahead of a potential interest rate tightening cycle in Brazil, and on moderately higher office supply in Brazil. Shares of Avago Technologies, a designer, developer, and global supplier of a range of analog semiconductor devices, fell during the period almost exclusively on fear that one of the company’s largest customers, Apple, would deliver disappointing handset results and guidance, which it did. New Gold (Materials) also

 

3

 

The Hartford MidCap Value Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

detracted from the Fund’s absolute performance (i.e. total return).

 

The largest contributors to absolute and relative performance included Delta Air Lines (Industrials), Methanex (Materials), and Almirall (Health Care). Shares of Delta Air Lines, a US-based air line carrier, moved higher during the period as the company benefitted from continued capacity discipline and industry consolidation. Shares of Methanex, a Canada-based supplier of methanol to international markets in Asia Pacific, North America, Europe and Latin America, rose during the period as the stock benefited from higher forecasts for the price of methanol, and from improved demand and supply dynamics. Shares of Almirall, a Spain-based company principally engaged in the research, development, storage, and distribution of pharmaceutical products, also rose during the period as the company saw two of its main pipeline drugs get approved by the FDA.

 

What is the outlook?

U.S. indicators were stronger than expected in January and February, but softened in March. The sequester has created new near term uncertainty, but the consumer is benefitting from a surge in net worth. The global manufacturing PMI (Purchasing Manager’s Index) rose further in March despite disappointing progress in Europe. In our view, inflation is not yet problematic, allowing for continued central bank easing. We continue to view this as a supportive environment for equities. We are favoring companies that do not depend solely on Gross Domestic Product growth for earnings progress.

 

As of the end of the period, we were most overweight the Industrials, Information Technology, and Health Care sectors and most underweight the Financials, Consumer Discretionary, and Utilities sectors relative to the Fund’s benchmark.

 

Diversification by Industry

as of April 30, 2013

Industry (Sector)  Percentage of
Net Assets
 
Banks (Financials)   7.7%
Capital Goods (Industrials)   15.2 
Consumer Durables and Apparel (Consumer Discretionary)   6.9 
Diversified Financials (Financials)   1.7 
Energy (Energy)   7.2 
Food, Beverage and Tobacco (Consumer Staples)   3.6 
Health Care Equipment and Services (Health Care)   5.8 
Insurance (Financials)   9.9 
Materials (Materials)   8.0 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   3.0 
Real Estate (Financials)   5.4 
Retailing (Consumer Discretionary)   2.6 
Semiconductors and Semiconductor Equipment (Information Technology)   5.7 
Software and Services (Information Technology)   3.1 
Technology Hardware and Equipment (Information Technology)   3.9 
Transportation (Industrials)   1.6 
Utilities (Utilities)   6.8 
Short-Term Investments   1.9 
Other Assets and Liabilities   0.0 
Total   100.0%

 

4

 

The Hartford MidCap Value Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.1%     
     Banks - 7.7%     
 145   BankUnited, Inc.  $3,677 
 77   Beneficial Mutual Bancorp, Inc. ●   660 
 147   Comerica, Inc.   5,343 
 112   EverBank Financial Corp.   1,791 
 196   First Midwest Bancorp, Inc.   2,456 
 68   Iberiabank Corp.   3,089 
 116   Popular, Inc. ●   3,304 
 465   Regions Financial Corp.   3,950 
 173   Zions Bancorporation   4,259 
         28,529 
     Capital Goods - 15.2%     
 76   AGCO Corp.   4,036 
 208   Barnes Group, Inc.   5,768 
 73   Chicago Bridge & Iron Co. N.V.   3,905 
 47   Dover Corp.   3,215 
 78   Esterline Technologies Corp. ●   5,818 
 72   Hubbell, Inc. Class B   6,928 
 144   KBR, Inc.   4,332 
 89   Moog, Inc. Class A ●   4,131 
 132   Pentair Ltd.   7,196 
 96   Rexel S.A. ☼   2,111 
 21   Teledyne Technologies, Inc. ●   1,546 
 106   WESCO International, Inc. ●   7,563 
         56,549 
     Consumer Durables and Apparel - 6.9%     
 21   Harman International Industries, Inc.   948 
 88   Lennar Corp.   3,607 
 114   Mattel, Inc.   5,182 
 237   Newell Rubbermaid, Inc.   6,250 
 2,090   Samsonite International S.A.   5,154 
 136   Toll Brothers, Inc. ●   4,673 
         25,814 
     Diversified Financials - 1.7%     
 114   LPL Financial Holdings, Inc.   3,936 
 119   PHH Corp. ●   2,511 
 182   Solar Cayman Ltd. ⌂■●†   13 
         6,460 
     Energy - 7.2%     
 296   Cobalt International Energy, Inc. ●   8,283 
 50   Consol Energy, Inc.   1,685 
 44   Japan Petroleum Exploration Co., Ltd. ☼   1,763 
 122   Newfield Exploration Co. ●   2,663 
 282   Ocean Rig UDW, Inc. ●   4,618 
 131   QEP Resources, Inc.   3,761 
 296   Trican Well Service Ltd.   3,870 
         26,643 
     Food, Beverage and Tobacco - 3.6%     
 86   Bunge Ltd. Finance Corp.   6,189 
 50   Dr. Pepper Snapple Group   2,456 
 157   Ebro Foods S.A. ☼   3,219 
 20   Ingredion, Inc.   1,404 
         13,268 
     Health Care Equipment and Services - 5.8%     
 93   AmerisourceBergen Corp.   5,044 
 454   Boston Scientific Corp. ●   3,397 
 242   Brookdale Senior Living, Inc. ●   6,228 
 24   Universal Health Services, Inc. Class B   1,572 
 91   Wellcare Health Plans, Inc. ●   5,318 
         21,559 
     Insurance - 9.9%     
 31   Everest Re Group Ltd.   4,198 
 96   Hanover Insurance Group, Inc.   4,821 
 155   Principal Financial Group, Inc.   5,581 
 131   Reinsurance Group of America, Inc.   8,222 
 292   Unum Group   8,136 
 195   XL Group plc   6,063 
         37,021 
     Materials - 8.0%     
 83   Cabot Corp.   3,102 
 99   Celanese Corp.   4,867 
 84   Louisiana-Pacific Corp. ●   1,529 
 203   Methanex Corp. ADR   8,607 
 72   Owens-Illinois, Inc. ●   1,884 
 152   Packaging Corp. of America   7,220 
 226   Rexam plc   1,813 
 938   Yingde Gases   904 
         29,926 
     Pharmaceuticals, Biotechnology and Life Sciences - 3.0%     
 556   Almirall S.A. ☼   7,348 
 67   UCB S.A. ●☼   3,957 
         11,305 
     Real Estate - 5.4%     
 138   American Assets Trust, Inc. REIT ‡   4,669 
 198   BR Properties S.A.   2,191 
 64   Equity Lifestyle Properties, Inc. REIT   5,200 
 222   Forest City Enterprises, Inc. Class A ●   4,145 
 136   Hatteras Financial Corp. REIT   3,728 
         19,933 
     Retailing - 2.6%     
 2,375   Buck Holdings L.P. ⌂●†   1,173 
 89   GNC Holdings, Inc.   4,039 
 97   Men's Wearhouse, Inc.   3,233 
 18   Ross Stores, Inc.   1,182 
         9,627 
     Semiconductors and Semiconductor Equipment - 5.7%     
 188   Avago Technologies Ltd.   5,993 
 257   Microsemi Corp. ●   5,352 
 179   Skyworks Solutions, Inc. ●   3,946 
 356   Teradyne, Inc. ●   5,844 
         21,135 
     Software and Services - 3.1%     
 187   Booz Allen Hamilton Holding Corp.   2,842 
 100   Check Point Software Technologies Ltd. ADR ●   4,653 
 124   Verint Systems, Inc. ●   4,103 
         11,598 
     Technology Hardware and Equipment - 3.9%     
 205   Arrow Electronics, Inc. ●   8,038 
 120   SanDisk Corp. ●   6,283 
         14,321 
     Transportation - 1.6%     
 346   Delta Air Lines, Inc. ●   5,938 
           
     Utilities - 6.8%     
 82   Alliant Energy Corp.   4,382 
 99   Great Plains Energy, Inc.   2,382 
 272   N.V. Energy, Inc.   5,893 
 149   UGI Corp.   6,110 
 114   Westar Energy, Inc.   3,975 

 

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

 

5

 

The Hartford MidCap Value Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.1% - (continued)     
     Utilities - 6.8% - (continued)     
 60   Wisconsin Energy Corp.  $2,692 
         25,434 
     Total common stocks     
     (cost $301,260)  $365,060 
           
     Total long-term investments     
     (cost $301,260)  $365,060 
           
SHORT-TERM INVESTMENTS - 1.9%     
Repurchase Agreements - 1.9%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $287,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $293)
     
$287   0.17%, 4/30/2013  $287 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $783, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -
2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$798)
     
 783   0.15%, 4/30/2013   783 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,508, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $1,538)
     
 1,508   0.15%, 4/30/2013   1,508 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $2,094,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $2,136)
     
 2,094   0.14%, 4/30/2013   2,094 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $377, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $384)
     
 376   0.17%, 4/30/2013   376 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,276, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $1,301)
     
 1,276   0.14%, 4/30/2013   1,276 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$897, collateralized by U.S. Treasury Note
0.25% - 1.88%, 2014 - 2019, value of $915)
     
 897   0.17%, 4/30/2013   897 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$16, collateralized by U.S. Treasury Note
3.88%, 2018, value of $16)
     
16   0.13%, 4/30/2013  16 
         7,237 
     Total short-term investments     
     (cost $7,237)  $7,237 
           
     Total investments             
     (cost $308,497) ▲     100.0 %  $372,297 
     Other assets and liabilities     %   (127)
     Total net assets     100.0 %  $372,170 

 

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

 

6

 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.
   
  Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $311,468 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $68,823 
Unrealized Depreciation   (7,994)
Net Unrealized Appreciation  $60,829 

 

These securities were valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $1,186, which represents 0.3% 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.
   
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. Unless otherwise indicated, these issues are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $13, which rounds to zero percent 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 Acquired  Shares/ Par   Security  Cost Basis 
06/2007   2,375   Buck Holdings L.P.  $259 
03/2007   182   Solar Cayman Ltd.  - 144A   53 

 

At April 30, 2013, the aggregate value of these securities was $1,186, which represents 0.3% of total net assets.

 

   This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $253 at April 30, 2013.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
CAD  Buy  05/02/2013  BCLY  $12   $12   $ 
EUR  Buy  05/02/2013  BCLY   185    187    2 
EUR  Buy  05/03/2013  BCLY   53    54    1 
GBP  Buy  05/02/2013  DEUT   5    5     
JPY  Buy  05/07/2013  CSFB   4    4     
JPY  Buy  05/01/2013  HSBC   8    8     
                      $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.

 

7

 

The Hartford MidCap Value Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)  
   
Counterparty Abbreviations:  
BCLY Barclays  
CSFB Credit Suisse First Boston Corp.  
DEUT Deutsche Bank Securities, Inc.  
HSBC HSBC Bank USA  
   
Currency Abbreviations:  
CAD Canadian Dollar  
EUR EURO  
GBP British Pound  
JPY Japanese Yen  
   
Other Abbreviations:  
ADR American Depositary Receipt  
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.  
FNMA Federal National Mortgage Association  
REIT Real Estate Investment Trust  

 

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

 

8

 

The Hartford MidCap Value Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks ‡  $365,060   $337,605   $26,269   $1,186 
Short-Term Investments   7,237        7,237     
Total  $372,297   $337,605   $33,506   $1,186 
Foreign Currency Contracts *   3        3     
Total  $3   $   $3   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  
The Fund has all or primarily all of the equity securities categorized in a particular level.  Refer to the Schedule of Investments for further industry breakout.
* Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3
   Transfers
Out of
Level 3
   Balance
as of
April 30,
2013
 
Assets:                                             
Common Stocks  $3,624   $(1,116)  $1,545*  $   $   $(2,867)  $   $   $1,186 
Total  $3,624   $(1,116)  $1,545   $   $   $(2,867)  $   $   $1,186 

 

* Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $(1,878).

 

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

 

9

 

The Hartford MidCap Value Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $308,497)  $372,297 
Cash   1 
Unrealized appreciation on foreign currency contracts   3 
Receivables:     
Investment securities sold   3,513 
Fund shares sold   240 
Dividends and interest   164 
Other assets   68 
Total assets   376,286 
Liabilities:     
Payables:     
Investment securities purchased   3,630 
Fund shares redeemed   348 
Investment management fees   45 
Administrative fees    
Distribution fees   14 
Accrued expenses   79 
Total liabilities   4,116 
Net assets  $372,170 
Summary of Net Assets:     
Capital stock and paid-in-capital  $296,800 
Distributions in excess of net investment loss   (2,182)
Accumulated net realized gain   13,751 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   63,801 
Net assets  $372,170 
      
Shares authorized   500,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $14.49/$15.33 
Shares outstanding   12,563 
Net assets  $182,037 
Class B: Net asset value per share  $13.21 
Shares outstanding   211 
Net assets  $2,787 
Class C: Net asset value per share  $13.13 
Shares outstanding   2,442 
Net assets  $32,075 
Class I: Net asset value per share  $14.51 
Shares outstanding   832 
Net assets  $12,069 
Class R3: Net asset value per share  $15.10 
Shares outstanding   276 
Net assets  $4,161 
Class R4: Net asset value per share  $15.16 
Shares outstanding   207 
Net assets  $3,138 
Class R5: Net asset value per share  $15.21 
Shares outstanding   25 
Net assets  $382 
Class Y: Net asset value per share  $15.21 
Shares outstanding   8,907 
Net assets  $135,521 

 

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

 

10

 

The Hartford MidCap Value Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $2,451 
Interest   5 
Less: Foreign tax withheld   (24)
Total investment income   2,432 
      
Expenses:     
Investment management fees   1,325 
Administrative services fees    
Class R3   4 
Class R4   2 
Class R5    
Transfer agent fees    
Class A   222 
Class B   8 
Class C   31 
Class I   10 
Class R3    
Class R4    
Class R5    
Class Y   1 
Distribution fees     
Class A   211 
Class B   14 
Class C   149 
Class R3   10 
Class R4   4 
Custodian fees   9 
Accounting services fees   25 
Registration and filing fees   41 
Board of Directors' fees   4 
Audit fees   7 
Other expenses   30 
Total expenses (before waivers and fees paid indirectly)   2,107 
Expense waivers    
Transfer agent fee waivers   (4)
Commission recapture   (14)
Total waivers and fees paid indirectly   (18)
Total expenses, net   2,089 
Net Investment Income   343 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   26,376 
Net realized gain on foreign currency contracts   13 
Net realized loss on other foreign currency transactions   (12)
Net Realized Gain on Investments and Foreign Currency Transactions   26,377 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   27,474 
Net unrealized appreciation of foreign currency contracts   3 
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   27,475 
Net Gain on Investments and Foreign Currency Transactions   53,852 
Net Increase in Net Assets Resulting from Operations  $54,195 

 

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

 

11

 

The Hartford MidCap Value Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $343   $2,638 
Net realized gain on investments and foreign currency transactions   26,377    19,269 
Net unrealized appreciation of investments and foreign currency transactions   27,475    31,683 
Net Increase in Net Assets Resulting from Operations   54,195    53,590 
Distributions to Shareholders:          
From net investment income          
Class A   (1,652)   (645)
Class C   (126)    
Class I   (84)   (33)
Class R3   (32)   (8)
Class R4   (30)   (14)
Class R5   (5)   (2)
Class Y   (2,004)   (1,048)
Total distributions   (3,933)   (1,750)
Capital Share Transactions:          
Class A   (969)   (12,511)
Class B   (439)   (6,114)
Class C   (726)   (4,861)
Class I   5,586    1,161 
Class R3   102    1,585 
Class R4       869 
Class R5   21    146 
Class Y   (20,350)   5,661 
Net decrease from capital share transactions   (16,775)   (14,064)
Net Increase in Net Assets   33,487    37,776 
Net Assets:          
Beginning of period   338,683    300,907 
End of period  $372,170   $338,683 
Undistributed (distribution in excess of) net investment income (loss)  $(2,182)  $1,408 

 

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

 

12

 

The Hartford MidCap Value Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 I shares are sold without sales charges to certain eligible investors primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

  a) Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

  b) Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the

 

13

 

The Hartford MidCap Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

  · Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

  · Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along

 

14

 

 

with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

  c) Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

  d) 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 investments, income, and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions.

 

15

 

The Hartford MidCap Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

The Fund does not isolate that portion of portfolio investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

  e) Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

  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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

  a) Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

16

 

 

  b) Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

  c) Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

  a) Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

17

 

The Hartford MidCap Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

  b) Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                            
Unrealized appreciation on foreign currency contracts  $   $3   $   $   $   $   $3 
Total  $   $3   $   $   $   $   $3 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain on Derivatives Recognized as a Result of Operations:          
Net realized gain on foreign currency contracts  $   $13   $   $   $   $   $13 
Total  $   $13   $   $   $   $   $13 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:          
Net change in unrealized appreciation of foreign currency contracts  $   $3   $   $   $   $   $3 
Total  $   $3   $   $   $   $   $3 

 

5.Principal Risks:

 

  a) Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

  b) Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

18

 

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $1,750   $216 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $3,544 
Accumulated Capital Losses *   (11,791)
Unrealized Appreciation †   33,355 
Total Accumulated Earnings  $25,108 

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $173 
Accumulated Net Realized Gain (Loss)   (173)

 

19

 

The Hartford MidCap Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

  e) Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2015  $2,757 
2016   919 
2017   8,115 
Total  $11,791 

 

As a result of mergers in the Fund, certain provisions in the IRC may limit the future utilization of capital losses.  During the year ended October 31, 2012, the Fund utilized $15,813 of prior year capital loss carryforwards.

 

  f) Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

  a) Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

20

 

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 $1.5 billion   0.6000% 
On next $2.5 billion   0.5950% 
On next $5 billion   0.5900% 
Over $10 billion   0.5850% 

 

  b) Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 1.35%     2.10%     2.10%     1.10%     1.55%     1.25%     0.95%     0.90%  

 

  d) Fees Paid Indirectly The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, are included in the Statement of Operations.

 

21

 

The Hartford MidCap Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.32%
Class B   2.10 
Class C   2.01 
Class I   1.00 
Class R3   1.52 
Class R4   1.21 
Class R5   0.94 
Class Y   0.81 

 

  e) Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $200 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any

 

22

 

 

related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R5   40%
Class Y    

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage
of Fund
 
Class Y   21%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $108,007 
Sales Proceeds Excluding U.S. Government Obligations   130,242 

 

23

 

The Hartford MidCap Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   1,057    124    (1,261)       (80)   2,054    59    (3,170)       (1,057)
Amount  $14,408   $1,616   $(16,993)  $   $(969)  $24,003   $625   $(37,139)  $   $(12,511)
Class B                                                  
Shares   8        (44)       (36)   22        (604)       (582)
Amount  $106   $   $(545)  $   $(439)  $227   $   $(6,341)  $   $(6,114)
Class C                                                  
Shares   174    9    (247)       (64)   259        (723)       (464)
Amount  $2,150   $105   $(2,981)  $   $(726)  $2,754   $   $(7,615)  $   $(4,861)
Class I                                                  
Shares   857    4    (449)       412    210    2    (113)       99 
Amount  $11,749   $55   $(6,218)  $   $5,586   $2,448   $22   $(1,309)  $   $1,161 
Class R3                                                  
Shares   62    3    (57)       8    146    1    (20)       127 
Amount  $879   $32   $(809)  $   $102   $1,820   $8   $(243)  $   $1,585 
Class R4                                                  
Shares   24    2    (27)       (1)   108    1    (36)       73 
Amount  $345   $28   $(373)  $   $   $1,315   $14   $(460)  $   $869 
Class R5                                                  
Shares   5        (4)       1    12                12 
Amount  $65   $5   $(49)  $   $21   $145   $2   $(1)  $   $146 
Class Y                                                  
Shares   789    146    (2,332)       (1,397)   4,449    95    (3,964)       580 
Amount  $11,202   $2,004   $(33,556)  $   $(20,350)  $53,215   $1,048   $(48,602)  $   $5,661 
Total                                                  
Shares   2,976    288    (4,421)       (1,157)   7,260    158    (8,630)       (1,212)
Amount  $40,904   $3,845   $(61,524)  $   $(16,775)  $85,927   $1,719   $(101,710)  $   $(14,064)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   19   $263 
For the Year Ended October 31, 2012   214   $2,460 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

24

 

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

25

 

The Hartford MidCap Value Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)            
A  $12.58   $   $2.04   $2.04   $(0.13)  $   $   $(0.13)  $14.49 
B   11.40    (0.04)   1.85    1.81                    13.21 
C   11.38    (0.04)   1.84    1.80    (0.05)           (0.05)   13.13 
I   12.62    0.02    2.05    2.07    (0.18)           (0.18)   14.51 
R3   13.12    (0.01)   2.12    2.11    (0.13)           (0.13)   15.10 
R4   13.17    0.01    2.13    2.14    (0.15)           (0.15)   15.16 
R5   13.23    0.03    2.14    2.17    (0.19)           (0.19)   15.21 
Y   13.24    0.04    2.13    2.17    (0.20)           (0.20)   15.21 
                                              
For the Year Ended October 31, 2012 (E)                 
A   10.75    0.08    1.80    1.88    (0.05)           (0.05)   12.58 
B   9.77    (0.02)   1.65    1.63                    11.40 
C   9.74        1.64    1.64                    11.38 
I   10.79    0.12    1.81    1.93    (0.10)           (0.10)   12.62 
R3   11.23    0.06    1.88    1.94    (0.05)           (0.05)   13.12 
R4   11.28    0.10    1.88    1.98    (0.09)           (0.09)   13.17 
R5   11.31    0.14    1.88    2.02    (0.10)           (0.10)   13.23 
Y   11.31    0.15    1.89    2.04    (0.11)           (0.11)   13.24 
                                              
For the Year Ended October 31, 2011 (E)            
A   10.69    0.01    0.05    0.06                    10.75 
B   9.79    (0.07)   0.05    (0.02)                   9.77 
C   9.77    (0.07)   0.04    (0.03)                   9.74 
I   10.72    0.04    0.05    0.09    (0.02)           (0.02)   10.79 
R3   11.20    (0.03)   0.06    0.03                    11.23 
R4   11.21    (0.01)   0.08    0.07                    11.28 
R5   11.22    0.05    0.06    0.11    (0.02)           (0.02)   11.31 
Y   11.22    0.06    0.06    0.12    (0.03)           (0.03)   11.31 
                                              
For the Year Ended October 31, 2010 (E)            
A   8.37        2.33    2.33    (0.01)           (0.01)   10.69 
B   7.72    (0.06)   2.13    2.07                    9.79 
C   7.70    (0.07)   2.14    2.07                    9.77 
I(I)   9.71        1.01    1.01                    10.72 
R3(I)   10.17    (0.02)   1.05    1.03                    11.20 
R4(I)   10.17        1.04    1.04                    11.21 
R5(I)   10.17    0.01    1.04    1.05                    11.22 
Y   8.77    0.04    2.44    2.48    (0.03)           (0.03)   11.22 
                                              
For the Year Ended October 31, 2009          
A   6.53    0.04    1.82    1.86    (0.02)           (0.02)   8.37 
B   6.03    0.01    1.68    1.69                    7.72 
C   6.03    (0.01)   1.68    1.67                    7.70 
Y   6.88    0.05    1.91    1.96    (0.07)           (0.07)   8.77 
                                              
For the Year Ended October 31, 2008           
A   14.80    0.02    (5.81)   (5.79)       (2.48)       (2.48)   6.53 
B   13.95    (0.05)   (5.39)   (5.44)       (2.48)       (2.48)   6.03 
C   13.96    (0.06)   (5.39)   (5.45)       (2.48)       (2.48)   6.03 
Y   15.39    0.05    (6.08)   (6.03)       (2.48)       (2.48)   6.88 

 

(A) Information presented relates to a share outstanding throughout the indicated period.
(B) Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C) Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E) Per share amounts have been calculated using average shares outstanding method.
(F) Not annualized.
(G) Annualized.
(H) During the year ended October 31, 2010, the Fund incurred $22.1 million in sales associated with the transition of assets from The Hartford Select SmallCap Value Fund, which merged into the Fund on July 31, 2010.  These sales are excluded from the portfolio turnover calculation.
(I) Commenced operations on May 28, 2010.

 

26

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
                            
 16.35%(F)  $182,037    1.33%(G)   1.33%(G)   0.06%(G)   31%
 15.88(F)   2,787    2.38(G)   2.10(G)   (0.71)(G)    
 15.89(F)   32,075    2.02(G)   2.02(G)   (0.63)(G)    
 16.58(F)   12,069    1.01(G)   1.01(G)   0.31(G)    
 16.15(F)   4,161    1.53(G)   1.53(G)   (0.15)(G)    
 16.38(F)   3,138    1.22(G)   1.22(G)   0.16(G)    
 16.53(F)   382    0.95(G)   0.95(G)   0.42(G)    
 16.55(F)   135,521    0.82(G)   0.82(G)   0.57(G)    
                            
                            
 17.55    159,104    1.38    1.35    0.67    59 
 16.68    2,813    2.38    2.10    (0.21)    
 16.84    28,522    2.06    2.06    (0.05)    
 18.02    5,296    1.00    1.00    1.06     
 17.41    3,514    1.55    1.55    0.50     
 17.70    2,735    1.25    1.25    0.79     
 18.07    311    0.96    0.95    1.14     
 18.22    136,388    0.84    0.84    1.24     
                            
                            
 0.56    147,222    1.38    1.35    0.05    54 
 (0.20)   8,100    2.32    2.10    (0.69)    
 (0.31)   28,939    2.09    2.09    (0.70)    
 0.81    3,459    1.04    1.04    0.34     
 0.27    1,584    1.60    1.55    (0.23)    
 0.62    1,523    1.29    1.25    (0.05)    
 0.96    136    0.99    0.95    0.43     
 1.01    109,944    0.88    0.88    0.51     
                            
                            
 27.83    176,359    1.44    1.35    0.01    48(H)
 26.81    14,305    2.32    2.10    (0.70)    
 26.88    30,467    2.13    2.10    (0.74)    
 10.40(F)   254    0.95(G)   0.95(G)   0.06(G)    
 10.13(F)   110    1.60(G)   1.55(G)   (0.40)(G)    
 10.23(F)   110    1.30(G)   1.25(G)   (0.10)(G)    
 10.32(F)   111    1.00(G)   0.96(G)   0.20(G)    
 28.39    96,621    0.90    0.90    0.39     
                            
                            
 28.63    127,459    1.60    1.21    0.65    52 
 28.03    21,782    2.53    1.78    0.09     
 27.69    23,058    2.28    2.02    (0.16)    
 28.89    8,798    0.90    0.90    0.93     
                            
                            
 (46.26)   127,999    1.44    1.40    0.15    52 
 (46.64)   24,329    2.31    2.06    (0.50)    
 (46.68)   24,418    2.15    2.15    (0.59)    
 (46.00)   7,983    0.92    0.92    0.64     

 

27

 

The Hartford MidCap Value Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

28

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

29

 

The Hartford MidCap Value Fund

Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

30

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,163.50   $7.12   $1,000.00   $1,018.21   $6.65    1.33%  181  365
Class B  $1,000.00   $1,158.80   $11.26   $1,000.00   $1,014.36   $10.51    2.10   181  365
Class C  $1,000.00   $1,158.90   $10.83   $1,000.00   $1,014.76   $10.11    2.02   181  365
Class I  $1,000.00   $1,165.80   $5.43   $1,000.00   $1,019.78   $5.06    1.01   181  365
Class R3  $1,000.00   $1,161.50   $8.19   $1,000.00   $1,017.21   $7.65    1.53   181  365
Class R4  $1,000.00   $1,163.80   $6.56   $1,000.00   $1,018.73   $6.12    1.22   181  365
Class R5  $1,000.00   $1,165.30   $5.08   $1,000.00   $1,020.10   $4.74    0.95   181  365
Class Y  $1,000.00   $1,165.50   $4.39   $1,000.00   $1,020.74   $4.09    0.82   181  365

 

31

 

The Hartford MidCap Value Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford MidCap Value Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

32

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

33

 

The Hartford MidCap Value Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Mid-cap Stock Risk: Mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Value Investing Risk: Value investments are considered to be undervalued, but they may never attain their potential value. Value-style investing falls in and out of favor, which may result in periods of underperformance.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

34
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-MCV13 4/13 113992 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

32

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD MONEY MARKET FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Money Market Fund

 

Table of Contents

 

Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 2
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 5
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 6
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 7
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 8
Notes to Financial Statements (Unaudited) 9
Financial Highlights (Unaudited) 18
Directors and Officers (Unaudited) 21
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 23
Quarterly Portfolio Holdings Information (Unaudited) 23
Expense Example (Unaudited) 24
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 25
Principal Risks (Unaudited) 27

 

 

 

The Hartford Money Market Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
CERTIFICATES OF DEPOSIT - 14.3%    
Finance and Insurance - 14.3%    
     Commercial Banking - 8.5%     
     Bank of Tokyo Mitsubishi     
$5,600   0.24%, 09/04/2013  $5,600 
     Bank of Tokyo Mitsubishi UFJ Ltd. of New York     
 5,500   0.24%, 07/08/2013   5,500 
 5,750   0.28%, 07/23/2013   5,750 
     Sumitomo Mitsui Banking Corp.     
 7,000   0.23%, 05/07/2013   7,000 
 7,000   0.24%, 07/09/2013   7,000 
     Svenska Handelsbanken     
 6,500   0.21%, 06/05/2013   6,500 
 6,500   0.24%, 08/22/2013   6,500 
         43,850 
     Depository Credit Banking - 3.9%     
     Toronto-Dominion Bank New York     
 3,500   0.19%, 05/08/2013   3,500 
 11,000   0.28%, 07/26/2013 - 09/13/2013 Δ   11,000 
     Wells Fargo Bank NA     
 5,750   0.17%, 06/05/2013   5,750 
         20,250 
     International Trade Financing (Foreign Banks) - 1.9%     
     Royal Bank of Canada     
 10,000   0.33%, 07/30/2013 - 05/02/2014 Δ   10,000 
           
     Total certificates of deposit     
     (cost $74,100)  $74,100 
           
COMMERCIAL PAPER - 21.4%    
Beverage and Tobacco Product Manufacturing - 1.0%     
     Beverage Manufacturing - 1.0%     
     Coca Cola Co.     
$5,000   0.15%, 07/15/2013  $4,999 
           
Finance and Insurance - 18.4%     
     Captive Auto Finance - 2.2%     
     Toyota Motor Credit Corp.     
 5,500   0.21%, 07/26/2013   5,497 
 6,000   0.23%, 08/16/2013   5,996 
         11,493 
     Commercial Banking - 9.7%     
     Commonwealth Bank of Australia     
 6,000   0.24%, 05/08/2013   6,000 
     Nordea North America, Inc.     
 4,500   0.18%, 06/13/2013   4,499 
 4,250   0.22%, 05/15/2013   4,250 
 4,500   0.23%, 08/13/2013   4,497 
     Old Line Funding LLC     
 4,500   0.16%, 05/20/2013 ■   4,499 
 4,750   0.20%, 05/21/2013 ■   4,749 
 5,750   0.20%, 08/19/2013   5,747 
     State Street Corp.     
 4,500   0.18%, 05/10/2013   4,500 
     U.S. Bank     
 11,500   0.17%, 05/09/2013   11,499 
         50,240 
     Consumer Lending - 1.2%     
     Straight-A Funding LLC     
 6,250   0.17%, 06/17/2013   6,248 
           
     Depository Credit Banking - 1.0%     
     Bank of Nova Scotia     
 5,250   0.23%, 10/02/2013   5,245 
           
     International Trade Financing (Foreign Banks) - 1.5%     
     International Bank for Reconstruction & Development     
 8,000   0.12%, 05/13/2013   8,000 
           
     Nondepository Credit Banking - 2.8%     
     Caterpillar Financial Services Corp.     
 5,250   0.10%, 05/09/2013   5,250 
     General Electric Capital Corp.     
 4,500   0.19%, 06/11/2013   4,499 
 4,500   0.20%, 08/30/2013   4,497 
         14,246 
         95,472 
Health Care and Social Assistance - 0.9%     
     Pharmaceutical and Medicine Manufacturing - 0.9%     
     Abbott Laboratories     
 3,300   0.13%, 07/23/2013   3,299 
 1,200   0.14%, 07/16/2013   1,200 
         4,499 
Soap, Cleaning Compound and Toilet Manufacturing - 1.1%     
     Soap, Cleaning Compound and Toilet Manufacturing - 1.1%     
     Procter & Gamble Co.     
 5,500   0.15%, 05/28/2013    5,499 
           
     Total commercial paper     
     (cost $110,469)  $110,469 
           
CORPORATE NOTES - 6.7%     
Finance and Insurance - 6.7%     
     Depository Credit Banking - 1.2%     
     Wells Fargo Bank NA     
$3,000   0.33%, 05/20/2014 Δ  $3,000 
 3,000   0.35%, 05/23/2014 Δ   3,000 
         6,000 
     Insurance Carriers - 1.1%     
     MetLife Global Funding I     
 5,500   0.48%, 10/10/2013 ■ Δ   5,500 
           
     Nondepository Credit Banking - 0.8%     
     General Electric Capital Corp.     
 4,500   4.80%, 05/01/2013   4,500 
           
     Securities and Commodity Contracts and Brokerage - 3.6%     
     JP Morgan Chase & Co.     
 9,965   4.75%, 05/01/2013   9,965 
     JP Morgan Chase Bank     
 4,250   0.35%, 06/18/2013 Δ   4,250 

 

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

2

 

 

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE NOTES - 6.7% - (continued)     
Finance and Insurance - 6.7% - (continued)     
     Securities and Commodity Contracts and Brokerage - 3.6% - (continued)     
     JP Morgan Chase Bank - (continued)     
$4,500   0.36%, 04/07/2014 Δ  $4,500 
         18,715 
         34,715 
     Total corporate notes     
     (cost $34,715)  $34,715 
           
FOREIGN GOVERNMENT OBLIGATIONS - 6.1%     
     Canada - 6.1%     
     Ontario (Province of)     
$17,500   0.15%, 05/31/2013 - 09/20/2013  $17,494 
     Quebec (Province of)     
 7,000   0.13%, 06/10/2013   6,999 
 7,000   0.16%, 09/16/2013   6,995 
         31,488 
     Total foreign government obligations     
     (cost $31,488)  $31,488 
           
OTHER POOLS AND FUNDS - 0.0%     
 5   JP Morgan U.S. Government Money Market Fund  $5 
           
     Total other pools and funds     
     (cost $5)  $5 
           
REPURCHASE AGREEMENTS - 29.5%     
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $23,000,
collateralized by U.S. Treasury Note
0.75%, 2018, value of $23,460)
     
$23,000   0.14% dated 04/30/2013  $23,000 
     RBS Greenwich TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $35,346, collateralized by U.S.
Treasury Note 2.63%, 2018, value of
$36,058)
     
 35,346   0.12% dated 04/30/2013   35,346 
     Royal Bank of Canada TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $49,000, collateralized by U.S.
Treasury Note 0.25% - 1.38%, 2013 -
2015, value of $49,980)
     
 49,000   0.13% dated 04/30/2013   49,000 
     UBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $45,000, collateralized by U.S.
Treasury Bill 0.05%, 2013, U.S. Treasury
Bond 8.13%, 2021, U.S. Treasury Note
1.25%, 2020, value of $45,900)
     
 45,000   0.13% dated 04/30/2013   45,000 
           
     Total repurchase agreements     
     (cost $152,346)  $152,346 
                   
U.S. GOVERNMENT AGENCIES - 7.3%          
     FHLMC - 3.3%          
$17,250   0.13%, 05/28/2013 - 08/05/2013      $17,247 
                
     FNMA - 4.0%          
 9,000   0.13%, 07/31/2013        8,997 
 11,500   0.14%, 05/29/2013        11,499 
              20,496 
                
     Total U.S. government agencies          
     (cost $37,743)       $37,743 
                
U.S. GOVERNMENT SECURITIES - 14.8%          
     Other Direct Federal Obligations - 6.1%          
     FHLB          
$9,720   0.08%, 05/10/2013       $9,720 
 4,500   0.12%, 05/15/2013        4,499 
 6,000   0.13%, 08/07/2013        5,998 
 11,500   0.14%, 06/12/2013        11,498 
              31,715 
     U.S. Treasury Bills - 8.7%          
 30,000   0.09%, 05/16/2013 - 06/13/2013        29,998 
 15,000   0.12%, 06/27/2013        14,997 
              44,995 
     Total U.S. government securities          
     (cost $76,710)       $76,710 
                
     Total investments          
     (cost $517,576) ▲   100.1%  $517,576 
     Other assets and liabilities   (0.1)%   (449)
     Total net assets   100.0%  $517,127 

 

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

3

 

The Hartford Money Market Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Note:Percentage of investments as shown is 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 17.1% of total net assets at April 30, 2013.

 

Also represents cost for tax purposes.

 

ΔVariable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $20,247, which represents 3.9% of total net assets.

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Other Abbreviations:
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association

 

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

4

 

The Hartford Money Market Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Certificates of Deposit  $74,100   $   $74,100   $ 
Commercial Paper   110,469        110,469     
Corporate Notes   34,715        34,715     
Foreign Government Obligations   31,488        31,488     
Other Pools and Funds   5    5         
Repurchase Agreements   152,346        152,346     
U.S. Government Agencies   37,743        37,743     
U.S. Government Securities   76,710        76,710     
Total  $517,576   $5   $517,571   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.

 

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

5

 

The Hartford Money Market Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $365,230)  $365,230 
Investments in repurchase agreements, at market value (cost $152,346)   152,346 
Cash    
Receivables:     
Fund shares sold   1,242 
Dividends and interest   376 
Other assets   158 
Total assets   519,352 
Liabilities:     
Payables:     
Fund shares redeemed   2,062 
Investment management fees   38 
Administrative fees   3 
Accrued expenses   122 
Total liabilities   2,225 
Net assets  $517,127 
Summary of Net Assets:     
Capital stock and paid-in-capital  $517,127 
Undistributed net investment income    
Accumulated net realized gain    
Unrealized appreciation of investments    
Net assets  $517,127 
      
Shares authorized   5,100,000 
Par value  $0.001 
Class A: Net asset value per share  $1.00 
Shares outstanding   315,957 
Net assets  $315,957 
Class B: Net asset value per share  $1.00 
Shares outstanding   15,699 
Net assets  $15,699 
Class C: Net asset value per share  $1.00 
Shares outstanding   48,864 
Net assets  $48,864 
Class R3: Net asset value per share  $1.00 
Shares outstanding   15,674 
Net assets  $15,674 
Class R4: Net asset value per share  $1.00 
Shares outstanding   104,927 
Net assets  $104,927 
Class R5: Net asset value per share  $1.00 
Shares outstanding   4,177 
Net assets  $4,177 
Class Y: Net asset value per share  $1.00 
Shares outstanding   11,829 
Net assets  $11,829 

 

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

6

 

The Hartford Money Market Fund
Statement of Operations
For the Six Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:    
Interest  $506 
Total investment income   506 
      
Expenses:     
Investment management fees   1,225 
Administrative services fees     
Class R3   18 
Class R4   87 
Class R5   2 
Transfer agent fees     
Class A   413 
Class B   21 
Class C   34 
Class R3    
Class R4    
Class R5    
Class Y    
Custodian fees   3 
Accounting services fees   38 
Registration and filing fees   70 
Board of Directors' fees   8 
Audit fees   8 
Other expenses   32 
Total expenses (before waivers)   1,959 
Expense waivers   (1,268)
Transfer agent fee waivers   (185)
Total waivers   (1,453)
Total expenses, net   506 
Net Investment Income    
Net Increase in Net Assets Resulting from Operations  $ 

 

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 Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net Increase in Net Assets Resulting from Operations        
Capital Share Transactions:          
Class A   9,011    (51,379)
Class B   (3,349)   (9,364)
Class C   (7,335)   (20,716)
Class R3   (6,913)   (1,646)
Class R4   (29,996)   (59,831)
Class R5   (551)   31 
Class Y   4,594    (943)
Net decrease from capital share transactions   (34,539)   (143,848)
Net Decrease in Net Assets   (34,539)   (143,848)
Net Assets:          
Beginning of period   551,666    695,514 
End of period  $517,127   $551,666 
Undistributed (distribution in excess of) net investment income (loss)  $   $ 

 

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

8

 

The Hartford Money Market Fund
Notes to Financial Statements
April 30, 2013  (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment 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 on the Valuation Date.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of

 

9

 

The Hartford Money Market Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

10

 

 

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income – Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized 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.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Normally, dividends from net investment income are declared daily and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 5% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price

 

11

 

The Hartford Money Market Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a value at least equal to the amount of the commitment. As of April 30, 2013, the Fund had no outstanding when-issued or delayed-delivery investments.

 

4.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate risk. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the value of certain fixed income securities held by the Fund is likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate.

 

5.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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)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

 

12

 

 

 

differences between U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund had no reclassifications.

 

d)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

e)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

6.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Hartford Investment Management Company (“Hartford Investment Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Hartford Investment Management.

 

13

 

The Hartford Money Market Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first  $1 billion   0.45% 
On next $4 billion   0.40% 
On next $5 billion   0.38% 
Over $10 billion   0.37% 

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class R3   Class R4   Class R5   Class Y 
 0.85%       1.60%      1.60%      1.15%      0.85%      0.60%      0.55%   

 

The Investment Manager has agreed to reimburse expenses or waive fees to the extent necessary to prevent earnings from falling below the level of expenses. Any such expense reimbursement or waiver is voluntary and can be changed or terminated at any time without notice. There is no guarantee that the Fund will maintain a $1.00 net asset value per share or any particular level of yield.

 

d)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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

 

14

 

 

 

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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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.

 

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. The Board of Directors has extended the reduction of payment of distribution and service fees through August 31, 2013. The Fund’s action results 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 Directors’ action can be changed at any time.

 

The Hartford may be required to pay, out of its own resources, the equivalent of 12b-1 fees to financial intermediaries notwithstanding the reduction of 12b-1 fees. Since October 2008, the Fund’s distributor has made payments out of its own resources to financial intermediaries equal to the amount of 12b-1 fees that would have been paid notwithstanding waivers of 12b-1 fees.

 

e)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

15

 

The Hartford Money Market Fund
Notes to Financial Statements – (continued)
April 30, 2013  (Unaudited)
(000’s Omitted)

 

7.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class A   1%
Class R5   2 
Class Y   1 

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage
of Fund
 
Class Y   0%

 

8.Investment Transactions:

 

For the six-month period ended April 30, 2013, the costs of purchases and sales of securities (including U.S. Government Obligations) for the Fund were $17,942,152 and $17,928,093, respectively.

 

9.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   178,536        (169,525)       9,011    271,848        (323,227)       (51,379)
Amount  $178,536   $   $(169,525)  $   $9,011   $271,848   $   $(323,227)  $   $(51,379)
Class B                                                  
Shares   3,497        (6,846)       (3,349)   7,012        (16,376)       (9,364)
Amount  $3,497   $   $(6,846)  $   $(3,349)  $7,012   $   $(16,376)  $   $(9,364)
Class C                                                  
Shares   20,850        (28,185)       (7,335)   92,645        (113,361)       (20,716)
Amount  $20,850   $   $(28,185)  $   $(7,335)  $92,645   $   $(113,361)  $   $(20,716)
Class R3                                                  
Shares   4,203        (11,116)       (6,913)   8,601        (10,247)       (1,646)
Amount  $4,203   $   $(11,116)  $   $(6,913)  $8,601   $   $(10,247)  $   $(1,646)
Class R4                                                  
Shares   14,719        (44,715)       (29,996)   22,474        (82,305)       (59,831)
Amount  $14,719   $   $(44,715)  $   $(29,996)  $22,474   $   $(82,305)  $   $(59,831)
Class R5                                                  
Shares   748        (1,299)       (551)   1,911        (1,880)       31 
Amount  $748   $   $(1,299)  $   $(551)  $1,911   $   $(1,880)  $   $31 
Class Y                                                  
Shares   5,687        (1,093)       4,594    5,907        (6,850)       (943)
Amount  $5,687   $   $(1,093)  $   $4,594   $5,907   $   $(6,850)  $   $(943)
Total                                                  
Shares   228,240        (262,779)       (34,539)   410,398        (554,246)       (143,848)
Amount  $228,240   $   $(262,779)  $   $(34,539)  $410,398   $   $(554,246)  $   $(143,848)

 

16

 

 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   759   $759 
For the Year Ended October 31, 2012   1,710   $1,710 

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

17

 

The Hartford Money Market Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) 
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, 2012 
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, 2011 
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, 2010 
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, 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 

 

18

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover Rate
 
                      
                            
 %(C)  $315,957    0.76%(D)   0.19%(D)   %(D)   N/A 
 (C)   15,699    0.74(D)   0.19(D)   (D)    
 (C)   48,864    0.63(D)   0.19(D)   (D)    
 (C)   15,674    0.71(D)   0.19(D)   (D)    
 (C)   104,927    0.66(D)   0.19(D)   (D)    
 (C)   4,177    0.61(D)   0.19(D)   (D)    
 (C)   11,829    0.51(D)   0.19(D)   (D)    
                            
                            
     306,946    0.76    0.16        N/A 
     19,048    0.71    0.16         
     56,199    0.62    0.16         
     22,587    0.72    0.16         
     134,923    0.67    0.16         
     4,728    0.62    0.16         
     7,235    0.52    0.16         
                            
                            
     358,325    0.73    0.18        N/A 
     28,412    0.70    0.18         
     76,915    0.61    0.18         
     24,233    0.70    0.18         
     194,754    0.65    0.18         
     4,697    0.60    0.18         
     8,178    0.50    0.18         
                            
                            
     342,239    0.72    0.21        N/A 
     33,548    0.70    0.21         
     61,864    0.62    0.21         
     20,411    0.71    0.21         
     221,211    0.66    0.21         
     9,201    0.61    0.21         
     2,996    0.51    0.21         
                            
                            
 0.05    386,036    0.88    0.45(E)   0.03    N/A 
 0.03    51,225    1.11    0.48(E)        
 0.03    76,846    1.06    0.50(E)        
 0.04    11,621    0.79    0.28(E)        
 0.06    250,995    0.78    0.40(E)   0.02     
 0.09    69,464    0.66    0.29(E)   0.02     
 0.11    1,596    0.58    0.38(E)   0.09     
                            
                            
 2.31    486,596    0.99    0.90(F)   2.23    N/A 
 1.54    66,581    1.71    1.65(F)   1.40     
 1.60    140,174    1.60    1.60(F)   1.49     
 2.07    529    1.35    1.15(F)   1.33     
 2.37    148,465    0.94    0.85(F)   1.91     
 2.60    8,826    0.63    0.63(F)   2.09     
 2.69    1,595    0.52    0.52(F)   2.77     

 

19

 

The Hartford Money Market Fund
Financial Highlights – (continued)

 

(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)Not annualized.
(D)Annualized.
(E)Excluding the expenses not subject to cap, the ratio would have been 0.41%, 0.44%, 0.46%, 0.24%, 0.36%, 0.25% and 0.34% for Class A, Class B, Class C, Class R3, Class R4, Class R5 and Class Y, respectively.
(F)Excluding the expenses not subject to cap, the ratio would have been 0.90%, 1.65%, 1.60%, 1.15%, 0.85%, 0.63% and 0.52% for Class A, Class B, Class C, Class R3, Class R4, Class R5 and Class Y, respectively.

 

20

 

The Hartford Money Market Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

21

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

22

 

 

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,000.00   $0.92   $1,000.00   $1,023.87   $0.93    0.19%  181   365 
Class B  $1,000.00   $1,000.00   $0.92   $1,000.00   $1,023.87   $0.93    0.19   181   365 
Class C  $1,000.00   $1,000.00   $0.92   $1,000.00   $1,023.87   $0.93    0.19   181   365 
Class R3  $1,000.00   $1,000.00   $0.92   $1,000.00   $1,023.87   $0.93    0.19   181   365 
Class R4  $1,000.00   $1,000.00   $0.93   $1,000.00   $1,023.87   $0.94    0.19   181   365 
Class R5  $1,000.00   $1,000.00   $0.92   $1,000.00   $1,023.87   $0.93    0.19   181   365 
Class Y  $1,000.00   $1,000.00   $0.94   $1,000.00   $1,023.85   $0.95    0.19   181   365 

 

24

 

The Hartford Money Market Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Money Market Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Hartford Investment Management Company (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

25

 

The Hartford Money Market Fund
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

26

 

The Hartford Money Market Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

FDIC Disclosure: Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

 

NAV and Yield Risk: Although the Fund seeks to preserve the value of the investment at $1.00 per share, it is possible to lose money by investing in the Fund. There can be no guarantee that the Fund will achieve or maintain any particular level of yield.

 

Market and Selection Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform compared to the market or relevant benchmarks.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due). These risks also apply to the Fund’s investments in U.S. government securities, which may not be guaranteed by the U.S. government.

 

Foreign Debt Risk (Money Market): Investments in foreign money market securities may be riskier than investments in U.S. securities.

 

27
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-MM13 4/13 113993 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

33

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD MUNICIPAL OPPORTUNITIES FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Municipal Opportunities Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 11
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 12
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 13
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 14
Notes to Financial Statements (Unaudited) 15
Financial Highlights (Unaudited) 26
Directors and Officers (Unaudited) 28
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 30
Quarterly Portfolio Holdings Information (Unaudited) 30
Expense Example (Unaudited) 31
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 32
Principal Risks (Unaudited) 34

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Municipal Opportunities Fund inception 05/31/2007

(sub-advised by Wellington Management Company LLP)

 

Investment objective – Seeks to provide current income that is generally exempt from federal income taxes and long-term total return.

 

Performance Overview 5/31/07 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)
 

 

   6 Month†   1 Year   5 year   Since
Inception▲
 
Municipal Opportunities A#   2.68%       7.17%       5.21%       2.92%    
Municipal Opportunities A##        2.34%       4.25%       2.12%    
Municipal Opportunities B#   2.17%       6.24%       4.37%       2.11%    
Municipal Opportunities B##        1.24%       4.03%       1.97%    
Municipal Opportunities C#   2.17%       6.24%       4.39%       2.14%    
Municipal Opportunities C##        5.24%       4.39%       2.14%    
Municipal Opportunities I#   2.68%       7.29%       5.45%       3.18%    
Barclays Municipal Bond Index   1.78%       5.19%       6.09%       5.49%    

 

Not Annualized
Inception: 05/31/2007
#Without sales charge
##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 4.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company, which used a modified investment strategy. As of March 5, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays Municipal Bond Index is an unmanaged index of municipal bonds with maturities greater than two years.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Municipal Opportunities Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Municipal Opportunities Class A   0.92%      0.92%   
Municipal Opportunities Class B   1.67%      1.73%   
Municipal Opportunities Class C   1.67%      1.68%   
Municipal Opportunities Class I   0.67%      0.68%   

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

  

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Timothy D. Haney, CFA Brad W. Libby
Vice President and Fixed Income Portfolio Manager Vice President and Fixed Income Credit Analyst

 

How did the Fund perform?

The Class A shares of The Hartford Municipal Opportunities Fund returned 2.68%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the Barclays Municipal Bond Index, which returned 1.78% for the same period. The Fund also outperformed the 2.03% average return of the Lipper General & Insured Municipal Debt 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 semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02%-0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

Municipal bonds outperformed duration-equivalent Treasuries over the most recent quarter, despite continued concerns over municipal bankruptcies and downgrades. Michigan’s governor declared a fiscal state of emergency in Detroit and appointed an emergency manager tasked with bringing financial stability to the city. Spreads on Puerto Rican bonds widened following a series of downgrades on its General Obligation (GO) debt, which highlighted the Commonwealth’s fiscal instability and high level of unfunded pension liabilities. Most recently, a court determined that the city of Stockton, California was indeed insolvent and could have protection from creditors via a Chapter 9 bankruptcy. Despite these headlines, we continue to believe that widespread defaults are unlikely and that research will remain key to differentiating between winners and losers.

 

The Fund’s allocation to High Yield Revenue Bonds, in particular the health care and lease sectors, was a key driver of outperformance versus the benchmark. An overweight allocation (i.e. the Fund’s sector position was greater than the

 

3

 

The Hartford Municipal Opportunities Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

benchmark position) to the health care sector of Investment Grade Revenue Bonds was also additive. Security selection within the health care, education and industrial development sectors of Investment Grade Revenue Bonds was also a positive contributor to relative returns. Finally, yield curve positioning over the period was a positive contributor to relative results.

 

What is the outlook?

We expect the U.S. economic momentum to remain positive, although ongoing U.S. fiscal issues continue to create uncertainty. We ended the period with a moderately procyclical risk posture. The municipal yield curve was somewhat flat relative to the United States Treasury curve, owing to strong demand on the long end during the period. Net new municipal bond supply is expected to remain subdued versus historic levels; meanwhile fund flows have continued to be strong. At the end of the period we favored a neutral to slightly long duration posture.

 

Our outlook for state GO bonds remains cautiously optimistic. Many states, though continuing to struggle with such issues as underfunded pension liabilities and rising Medicaid costs, have seen some improvement in their fiscal situations. We are slightly more negative on GOs of local issuers, which are likely to remain under stress. Budget sequestrations at the federal level are not expected to have a material impact on state and local municipalities in the near term; the spending cuts will take place gradually, and municipalities should have ample time to make modifications to their budgets. Revenue bond fundamentals have strengthened recently, and we expect this trend to continue, especially in the special-tax, toll-road, airport, and health care sectors.

 

We ended the period underweight GOs, especially at the local municipality level. We ended the period overweight health care, toll roads, and airports.

 

Distribution by Credit Quality

as of April 30, 2013

 

Credit Rating *  Percentage of
Net Assets
 
Aaa / AAA   2.6%
Aa / AA   22.5 
A   34.9 
Baa / BBB   11.1 
Ba / BB   4.4 
B   5.0 
Unrated   13.6 
Non-Debt Securities and Other Short-Term Instruments   5.1 
Other Assets & Liabilities   0.8 
Total   100.0%

 

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

  

Diversification by Industry

as of April 30, 2013

 

Industry  Percentage of
Net Assets
 
Airport Revenues   9.4%
General Obligations   14.6 
Health Care/Services   23.7 
Higher Education (Univ., Dorms, etc.)   9.4 
Housing (HFA'S, etc.)   2.0 
Industrial   2.8 
Land Development   0.6 
Miscellaneous   8.2 
Pollution Control   0.7 
Public Facilities   1.1 
Refunded   0.5 
Special Tax Assessment   2.3 
Tax Allocation   6.5 
Transportation   4.7 
Utilities - Combined   0.5 
Utilities - Electric   5.9 
Utilities - Gas   0.7 
Utilities - Water and Sewer   0.3 
Waste Disposal   0.2 
Short-Term Investments   5.1 
Other Assets and Liabilities   0.8 
Total   100.0%

 

4

 

The Hartford Municipal Opportunities Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

MUNICIPAL BONDS - 94.1%

 
     Alabama - 0.7%     
     Mobile, AL, Industrial Development Board Pollution Obligor: Alabama Power Co     
$2,540   1.65%, 06/01/2034  $2,588 
           
     Alaska - 0.1%     
     Alaska State Municipal Bond Bank Auth     
 375   5.75%, 09/01/2033   449 
           
     Arizona - 2.0%     
     Estrella Mountain Ranch, AZ, Community Fac Dist GO     
 265   6.20%, 07/15/2032   271 
     Phoenix, AZ, Improvement Corp     
 1,700   5.00%, 07/01/2032   1,938 
     Pima County, AZ, Industrial DA Education Rev Obligor: Legacy Traditional Charter School     
 1,485   8.50%, 07/01/2039   1,702 
     Salt River, AZ, Agricultural Improvement     
 3,000   5.00%, 12/01/2027   3,622 
         7,533 
     California - 11.5%     
     California State Communities DA Rev     
 955   0.97%, 04/01/2036 Δ    750 
 1,000   5.63%, 10/01/2032   1,066 
 2,250   6.00%, 08/15/2042   2,744 
     California State GO     
 4,985   6.50%, 04/01/2033   6,189 
     California State Public Works Board Lease Rev     
 1,000   5.00%, 04/01/2034   1,125 
 2,000   5.25%, 10/01/2023   2,432 
     California State Public Works Board, Correctional Facilities Improvement     
 1,000   6.00%, 03/01/2035   1,216 
     California State Public Works Board, State University Trustees     
 2,000   6.25%, 04/01/2034   2,394 
     Imperial, CA, Irrigation Dist Elec Rev     
 2,000   5.25%, 11/01/2031   2,284 
     Los Angeles County, CA, Public Works FA Lease Rev     
 1,000   5.00%, 08/01/2037   1,119 
     Los Angeles, CA, Airport Rev     
 1,500   5.00%, 01/01/2032   1,663 
     M-S-R, CA, Energy Auth Gas Rev     
 2,000   6.50%, 11/01/2039   2,735 
     Oakland, CA, Airport Rev     
 1,000   5.00%, 05/01/2026   1,138 
     Port of Oakland, CA, GO     
 500   5.00%, 05/01/2023   592 
     San Buenaventura, CA, Obligor: Community Memorial Health System     
 1,000   7.50%, 12/01/2041   1,224 
     San Diego, CA, Redev Agency Tax Allocation     
 3,000   7.00%, 11/01/2039   3,557 
     San Jose, CA, Redev Agency     
 2,575   5.00%, 08/01/2022   2,686 
 500   6.50%, 08/01/2023   539 
     Santa Cruz County, CA, Redev Agency     
 1,335   6.63%, 09/01/2029  1,568 
     Southern California State Public Power Auth     
 2,000   5.25%, 07/01/2031   2,355 
     Turlock, CA, Irrigation Dist     
 3,000   5.50%, 01/01/2041   3,463 
     Ventura County, CA, Public Auth Lease Rev     
 1,000   5.00%, 11/01/2038   1,117 
         43,956 
     Colorado - 1.4%     
     Adams County School Dist No 14, GO     
 1,000   5.00%, 12/01/2023   1,270 
     Baptist Road Rural Transportation Auth, Sales & Use Tax Rev     
 630   5.00%, 12/01/2026   510 
     Colorado State Health Fac Auth Rev     
 1,500   5.25%, 11/15/2035   1,668 
     Denver, CO, City & County Special Fac Airport Rev     
 2,000   5.25%, 10/01/2032   2,046 
         5,494 
     Connecticut - 2.4%     
     Bridgeport, CT, GO     
 860   4.00%, 08/15/2014   899 
     Connecticut State DA Pollution Control Rev     
 2,315   1.55%, 05/01/2031   2,330 
     Hamden, CT, Facilities Rev, Whitney Center Proj Ser A     
 1,250   7.63%, 01/01/2030   1,388 
 2,250   7.75%, 01/01/2043   2,438 
     Hartford, CT, GO     
 1,850   5.00%, 04/01/2026   2,181 
         9,236 
     District of Columbia - 0.5%     
     Metropolitan Washington, DC, Airport Auth System Rev     
 1,450   5.00%, 10/01/2022   1,777 
           
     Florida - 7.7%     
     Colonial Country Club Community Development Dist, Capital Improvement Rev     
 1,955   6.40%, 05/01/2033   1,974 
     Florida Village Community Development Dist No 8     
 2,405   6.38%, 05/01/2038   2,878 
     Greater Orlando, FL, Aviation Auth     
 3,340   5.00%, 10/01/2021 - 10/01/2024   3,995 
     Highlands County, FL, Adventist Health (Prerefunded with US Gov't Securities)     
 125   5.25%, 11/15/2036   144 
     Highlands County, FL, Health Fac Auth     
 1,905   5.25%, 11/15/2036   2,116 
     Hillsborough Country, Florida School Board     
 630   5.00%, 07/01/2031   699 
     Jacksonville, FL, Econ Development Commission Obligor: Florida Proton Therapy Institute, Inc     
 2,000   6.25%, 09/01/2027   2,243 

 

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

 

5

 

The Hartford Municipal Opportunities Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

MUNICIPAL BONDS - 94.1% - (continued)

 
     Florida - 7.7% - (continued)     
     Jacksonville, FL, Sales Tax Rev     
$2,700   5.00%, 10/01/2021  $3,284 
     Lakeland, FL, Retirement Community Rev     
 1,750   6.38%, 01/01/2043   1,930 
     Lee County, FL, School Board     
 1,000   4.00%, 08/01/2016   1,097 
     Magnolia Creek, FL, Community Development Dist Capital Improvement     
 500   0.00%, 05/01/2039 ●    175 
     Miami-Dade County, FL, Aviation Rev     
 3,500   5.00%, 10/01/2022 - 10/01/2026   4,031 
     Miami-Dade County, FL, Health Fac Auth     
 1,000   6.00%, 08/01/2030   1,176 
     Orange County, FL, School Board     
 2,130   5.00%, 08/01/2026   2,485 
     River Bend Community Development Dist, Capital Improvement Rev     
 1,755   0.00%, 11/01/2015 ●    404 
     Village, FL Community Development Dist #5     
 760   6.50%, 05/01/2033   768 
         29,399 
     Georgia - 1.4%     
     Clayton County, GA, DA     
 2,000   9.00%, 06/01/2035   2,216 
     Dekalb Newton & Gwinnett Counties, GA, Joint DA     
 1,500   6.00%, 07/01/2034   1,736 
     Marietta, GA, DA Life University Inc Proj     
 1,500   7.00%, 06/15/2030   1,622 
         5,574 
     Illinois - 7.6%     
     Aurora, IL, Tax Increment Rev     
 905   6.75%, 12/30/2027   951 
     Chicago, IL, O'Hare International Airport Rev     
 835   5.00%, 01/01/2014 - 01/01/2015   875 
 1,000   5.25%, 01/01/2027   1,028 
 2,210   6.00%, 01/01/2017   2,291 
     Hampshire, IL, Special Service Area #13, Tuscany Woods Proj     
 192   0.00%, 03/01/2037 ●    86 
     Illinois FA Rev, Art Institute of Chicago Ser A     
 1,400   6.00%, 03/01/2038   1,588 
     Illinois FA Rev, Silver Cross Hospital & Medicine     
 3,000   5.50%, 08/15/2030   3,260 
     Illinois State FA Rev     
 4,010   4.00%, 06/01/2047   3,981 
 1,000   5.00%, 08/15/2043   1,127 
     Illinois State FA Rev Obligor: The Admiral at the Lake     
 1,950   6.00%, 05/15/2017   1,955 
     Illinois State GO     
 1,085   4.00%, 08/01/2014   1,126 
 1,500   5.00%, 01/01/2022   1,684 
 1,500   5.25%, 01/01/2021   1,782 
     Illinois State Sales Tax Rev     
 2,000   6.50%, 06/15/2022   2,461 
     Illinois State Unemployment Insurance Fund Rev     
 2,500   5.00%, 06/15/2019 - 12/15/2019  2,740 
     Metropolitan Pier & Exposition Auth, IL     
 5,000   5.90%, 12/15/2032 ○    2,154 
         29,089 
     Indiana - 0.5%     
     Vigo County, IN, Hospital Auth     
 2,000   5.75%, 09/01/2042 ■    2,088 
           
     Kentucky - 1.2%     
     Louisville & Jefferson County, KY Metropolitan Government Rev     
 1,710   1.65%, 10/01/2033 Δ    1,746 
 1,515   5.00%, 12/01/2023   1,824 
     Warren County, KY, Hospital Rev     
 1,000   5.00%, 10/01/2037   1,118 
         4,688 
     Louisiana - 2.0%     
     Louisiana State Office Fac Corp Lease Rev     
 3,925   5.00%, 11/01/2021   4,749 
     New Orleans, LA, Aviation Board     
 2,500   6.00%, 01/01/2023   2,937 
         7,686 
     Massachusetts - 2.9%     
     Massachusetts State Development Fin Agency Rev     
 1,200   8.00%, 04/15/2031   1,476 
     Massachusetts State GO     
 3,335   14.68%, 04/01/2019 ■λ    5,157 
     Massachusetts State Health & Education FA Rev, Simmons College Ser I     
 2,355   8.00%, 10/01/2039   2,669 
     Massachusetts State PA     
 455   4.00%, 07/01/2022   511 
 1,035   5.00%, 07/01/2021 - 07/01/2023   1,249 
         11,062 
     Michigan - 2.7%     
     Kent, MI, Hospital FA     
 4,000   6.00%, 07/01/2035   4,261 
     Michigan State Public Educational FA Rev, Limited Obligation Chandler Park Academy     
 2,025   6.35%, 11/01/2028   2,083 
     Royal Oak, MI, Hospital FA     
 2,000   8.25%, 09/01/2039   2,551 
     Wayne County, MI, Airport Auth Rev     
 1,275   5.00%, 12/01/2015   1,411 
         10,306 
     Mississippi - 0.8%     
     Mississippi State Business Fin Corp     
 3,000   1.63%, 12/01/2040   3,016 
           
     Missouri - 1.1%     
     Branson Hills, MO, Infrastructure Fac     
 100   5.50%, 04/01/2027   77 
     Kirkwood, MO, Industrial DA Retirement Community     
 3,500   8.25%, 05/15/2045   4,108 
         4,185 

  

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

 

6

 


 

Shares or Principal Amount  Market Value ╪ 

MUNICIPAL BONDS - 94.1% - (continued)

 
     Nebraska - 0.3%     
     Washington County NE Wastewater Solid Waste Disposal Facilities Rev     
$1,245   1.38%, 09/01/2030  $1,246 
           
     Nevada - 2.6%     
     Clark County, NV, School Dist GO     
 1,625   5.00%, 06/15/2020   1,775 
     Mesquite, NV, Special Improvement Dist 07-01     
 455   6.00%, 08/01/2027   449 
     Nevada St Natural Resources, GO     
 1,110   5.00%, 03/01/2026   1,351 
     Nevada St Open Space Parks & Cultural Res, GO     
 2,860   5.00%, 06/01/2026   3,493 
     Nevada State GO     
 2,500   5.00%, 08/01/2019   3,058 
         10,126 
     New Jersey - 3.6%     
     New Jersey Health Care Facilities FA, Hospital Asset Transformation     
 2,855   5.75%, 10/01/2031   3,390 
     New Jersey State Econ DA     
 2,000   4.88%, 09/15/2019   2,055 
     New Jersey State Educational FA Rev, University of Medicine & Dentistry     
 2,000   7.50%, 12/01/2032   2,489 
     New Jersey State Housing & Mortgage FA     
 1,945   4.50%, 10/01/2030   2,114 
     New Jersey State Int Turnpike Auth Rev     
 3,000   5.00%, 01/01/2025   3,589 
         13,637 
     New Mexico - 1.2%     
     Los Alamos County, NM, Tax Improvement Rev     
 3,000   5.88%, 06/01/2027   3,564 
     Montecito Estates, NM, Public Improvement Dist     
 950   7.00%, 10/01/2037   980 
         4,544 
     New York - 7.4%     
     Erie County, NY, IDA Global Concepts Charter School Proj     
 1,485   6.25%, 10/01/2037   1,574 
     New York & New Jersey PA     
 2,000   5.00%, 12/01/2023   2,141 
     New York State Dormitory Auth Non State Supported Debt, Orange Regional Med Center     
 1,500   6.13%, 12/01/2029   1,675 
     New York State Dormitory Auth Rev     
 3,570   5.00%, 03/15/2022 - 12/15/2029   4,343 
     New York State Thruway Auth     
 1,000   5.00%, 01/01/2019   1,193 
     New York State Urban Development Corp Rev     
 1,000   5.00%, 03/15/2026   1,226 
     New York, NY, GO     
 4,000   6.25%, 10/15/2028   4,967 
     Newburth, NY, GO     
 1,145   5.00%, 06/15/2019  1,279 
     Triborough, NY,  Bridge & Tunnel Auth Rev     
 2,000   4.00%, 11/15/2027   2,185 
     TSASC, Inc NY     
 2,500   5.00%, 06/01/2034   2,275 
     Ulster County, NY, IDA     
 1,750   6.00%, 09/15/2037   1,231 
     Ulster County, NY, IDA Kingston Regional Senior Living Proj     
 3,000   6.00%, 09/15/2027   2,109 
     Ulster County, NY, Industrial Development Agency Obligor: Kingston Regional Senior Living Corp     
 2,000   6.00%, 09/15/2042   1,406 
     Yonkers, NY, GO     
 885   3.00%, 08/15/2019   940 
         28,544 
     North Carolina - 0.7%     
     North Carolina Medical Care Commission Retirement FA Rev, First Mortgage Galloway Ridge     
 1,555   5.88%, 01/01/2031   1,658 
     North Carolina State Medical Care Commission Obligor: Galloway Ridge, Inc     
 1,000   6.00%, 01/01/2039   1,065 
         2,723 
     Ohio - 4.5%     
     Allen County, OH, Hospital Fac Rev     
 2,000   5.00%, 05/01/2023   2,404 
     Buckeye, OH, Tobacco Settlement FA     
 4,580   6.00%, 06/01/2042   4,107 
 5,795   6.50%, 06/01/2047   5,595 
     Cultural Sports Fac Building Projects     
 2,115   5.00%, 04/01/2023   2,638 
     Ohio State Cultural Sports Fac Building Projects     
 1,235   5.00%, 04/01/2020   1,503 
     Ohio State Hospital Fac Rev     
 880   5.50%, 01/01/2039   1,001 
         17,248 
     Oregon - 0.8%     
     Oregon State Health & Science University Rev     
 2,500   5.00%, 07/01/2020 - 07/01/2022   3,064 
           
     Other U.S. Territories - 0.6%     
     Guam Government Power Auth Rev     
 1,000   5.00%, 10/01/2030   1,150 
     Guam Government, Limited Obligation Rev Section 30 Ser A     
 935   5.75%, 12/01/2034   1,042 
         2,192 
     Pennsylvania - 4.6%     
     Allegheny County, PA, Industrial DA Charter School     
 1,190   6.75%, 08/15/2035   1,318 
     Allegheny County, PA, Public Imps GO     
 2,500   5.00%, 12/01/2034   2,779 

 

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

 

7

 

The Hartford Municipal Opportunities Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 

MUNICIPAL BONDS - 94.1% - (continued)

 
     Pennsylvania - 4.6% - (continued)     
     Harrisburg, PA, Commonwealth Financing Auth     
$2,000   5.00%, 06/01/2030  $2,317 
     Pennsylvania State GO     
 1,000   7.00%, 07/15/2028   1,175 
     Pennsylvania State IDA     
 2,250   5.00%, 07/01/2021   2,762 
     Pennsylvania State Turnpike Commission Rev     
 1,335   6.00%, 06/01/2028   1,588 
     Philadelphia, PA, Municipal Auth     
 750   6.38%, 04/01/2029   869 
 800   6.50%, 04/01/2034   924 
     Pittsburgh, PA, School Dist GO     
 2,325   5.00%, 09/01/2021 - 09/01/2023   2,807 
     Susquehanna, PA, Regional Airport Auth System Rev     
 1,000   5.00%, 01/01/2019   1,108 
         17,647 
     Rhode Island - 0.9%     
     Cranston, RI GO     
 1,415   5.00%, 07/01/2019   1,650 
     Rhode Island ST & Providence Plantations     
 1,500   4.00%, 10/01/2018 ☼    1,698 
         3,348 
     South Carolina - 0.2%     
     Lancaster County, SC, Sun City Assessment     
 1,987   0.00%, 11/01/2017 ●    934 
           
     South Dakota - 0.4%     
     South Dakota State Education Enhancement     
 1,000   5.00%, 06/01/2026   1,183 
     South Dakota State Housing DA     
 185   6.13%, 05/01/2033   187 
         1,370 
     Tennessee - 0.1%     
     Johnson City, TN, Health & Educational Fac Board Hospital Rev     
 500   6.50%, 07/01/2038   601 
           
     Texas - 9.3%     
     Brazos Harbor, TX, Industrial Development Corp     
 1,500   5.90%, 05/01/2038   1,695 
     Clifton, TX, Higher Education Fin Corp     
 2,000   8.75%, 02/15/2028   2,280 
     Dallas Fort Worth, TX, Int'l Airport Auth Rev     
 1,430   5.00%, 11/01/2030   1,579 
     Dallas-Fort Worth, TX, International Airport Fac Improvement Corp     
 2,000   6.15%, 01/01/2016   2,003 
     Dallas-Fort Worth, TX, International Airport Rev     
 2,000   5.00%, 11/01/2038   2,125 
     Harris County, TX, Cultural Education Fin Corp Rev     
 1,625   5.00%, 12/01/2026   1,895 
     Houston, TX, Higher Education Fin Corp     
 465   5.88%, 05/15/2021   544 
     Lewisville, TX, Combination Contract Rev (Prerefunded with US Gov't Securities)     
 60   6.13%, 09/01/2029  64 
     Lower Colorado River, TX, Auth Rev     
 55   7.25%, 05/15/2037   60 
     Midland TX ISD, GO     
 1,000   5.00%, 02/15/2025   1,225 
     North, TX, Tollway Auth Rev     
 2,995   5.00%, 01/01/2022   3,634 
     San Antonio, TX, Airport System Rev     
 1,985   5.00%, 07/01/2023   2,364 
     Texas Private Activity Surface Transportation, LBJ Infrastructure Group     
 1,000   7.00%, 06/30/2040   1,224 
     Texas State Private Activity Surface Transportation     
 3,000   6.88%, 12/31/2039   3,609 
     Texas State Public FA Charter School     
 3,555   5.38%, 02/15/2037   3,705 
 1,000   6.20%, 02/15/2040   1,198 
     Travis County, TX, Health Fac Development     
 2,000   7.13%, 11/01/2040   2,383 
     Travis County, TX, Health Fac, Querencia Barton Creek Project     
 600   5.65%, 11/15/2035   620 
     Wylie TX ISD, GO     
 3,500   1.55%, 08/15/2018 ○    3,305 
         35,512 
     Vermont - 0.2%     
     Vermont State Econ DA Waste     
 900   4.75%, 04/01/2036 ■    902 
           
     Virginia - 1.7%     
     Fairfax County, VA, Econ DA     
 1,000   5.00%, 12/01/2032   1,041 
     Norfolk, VA, Redev & Housing Auth Rev Obligor: Fort Norfolk Retirement Community, Inc     
 1,005   6.13%, 01/01/2035   1,010 
     Virginia State Small Business FA Rev Obligor: Hamptons Road Pronton Beam Therapy     
 2,000   9.00%, 07/01/2039   2,152 
     Washington County, VA, Industrial DA Hospital     
 1,750   7.75%, 07/01/2038   2,169 
         6,372 
     Washington - 4.1%     
     Grant County, WA, Utility Dist #2     
 3,730   5.00%, 01/01/2022 - 01/01/2023   4,435 
     King County, WA, Public Hospital GO     
 3,000   7.25%, 12/01/2038   3,131 
     King County, WA, School Dist 405, GO     
 1,950   5.00%, 12/01/2017 ‡    2,316 
     Washington State Health Care Facilities Auth, VA Mason Medical     
 3,600   6.13%, 08/15/2037   3,952 

  

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

 

8

  


 

Shares or Principal Amount  Market Value ╪ 
MUNICIPAL BONDS - 94.1% - (continued)         
     Washington - 4.1% - (continued)         
     Washington State, Health Care Fac Auth         
$1,650   5.00%, 10/01/2042      $1,972 
              15,806 
               
     West Virginia - 0.7%        
     West Virginia State Hospital FA         
 2,000   9.13%, 10/01/2041        2,567 
                
     Wisconsin - 3.7%         
     Wisconsin State GO         
 2,685   5.75%, 05/01/2033        3,233 
 1,295   6.00%, 05/01/2036        1,569 
                
     Wisconsin State Health & Educational Fac Auth Rev         
 6,000   5.00%, 02/15/2040 - 04/01/2042        6,636 
 2,465   5.25%, 08/15/2024        2,696 
              14,134 
                
     Total municipal bonds         
     (cost $332,032)       $360,643 
                
     Total long-term investments        
     (cost $332,032)       $360,643 
                
SHORT-TERM INVESTMENTS - 5.1%         
     Investment Pools and Funds - 5.1%         
$19,407   JP Morgan Tax Free Money Market Fund       $19,407 
                
     Total short-term investments         
     (cost $19,407)       $19,407 
                
     Total investments         
     (cost $351,439) ▲   99.2%  $380,050 
     Other assets and liabilities   0.8%   3,217 
     Total net assets   100.0%  $383,267 

  

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Also represents cost for tax purposes.
   
Non-income producing.  For long-term debt securities, items identified are in default as to payment of interest and/or principal.
   
This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.
   
Δ Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.
   
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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $8,147, which represents 2.1% of total net assets.  
   
The interest rate disclosed for these securities represents the effective yield on the date of the acquisition.
   
λ Inverse floating rate certificate issued by a third party securitization trust and purchased directly through a cash transaction; rate varies inversely to short-term interest rates and the rate presented is the effective rate at April 30, 2013.
   

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $1,698 at April 30, 2013.

 

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

 

9

 

The Hartford Municipal Opportunities Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Municipal Bond Abbreviations:
DA Development Authority  
FA Finance Authority  
GO General Obligation  
IDA Industrial Development Authority
ISD Independent School District  
PA Port Authority  
Rev Revenue  
VA Veterans Administration  

 

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

 

10

 

The Hartford Municipal Opportunities Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Municipal Bonds   360,643        360,643     
Short-Term Investments   19,407    19,407         
Total  $380,050   $19,407   $360,643   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  

 

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

 

11

 

The Hartford Municipal Opportunities Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $351,439)  $380,050 
Receivables:     
Investment securities sold   2,314 
Fund shares sold   507 
Dividends and interest   5,188 
Other assets   25 
Total assets   388,084 
Liabilities:     
Payables:     
Investment securities purchased   3,994 
Fund shares redeemed   560 
Investment management fees   35 
Dividends   144 
Distribution fees   27 
Accrued expenses   57 
Total liabilities   4,817 
Net assets  $383,267 
Summary of Net Assets:     
Capital stock and paid-in-capital  $384,427 
Undistributed net investment income   35 
Accumulated net realized loss   (29,806)
Unrealized appreciation of investments   28,611 
Net assets  $383,267 
      
Shares authorized   650,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   

$8.74/$9.15

Shares outstanding   22,231 
Net assets  $194,263 
Class B: Net asset value per share  $8.73 
Shares outstanding   619 
Net assets  $5,405 
Class C: Net asset value per share  $8.74 
Shares outstanding   12,974 
Net assets  $113,449 
Class I: Net asset value per share  $8.75 
Shares outstanding   8,013 
Net assets  $70,150 

 

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

 

12

 

The Hartford Municipal Opportunities Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Interest  $8,488 
Total investment income   8,488 
      
Expenses:     
Investment management fees   1,074 
Transfer agent fees     
Class A   40 
Class B   3 
Class C   29 
Class I   16 
Distribution fees     
Class A   246 
Class B   27 
Class C   580 
Custodian fees   3 
Accounting services fees   35 
Registration and filing fees   32 
Board of Directors' fees   6 
Audit fees   7 
Other expenses   38 
Total expenses (before waivers and fees paid indirectly)   2,136 
Expense waivers   (3)
Custodian fee offset    
Total waivers and fees paid indirectly   (3)
Total expenses, net   2,133 
Net Investment Income   6,355 
Net Realized Gain on Investments:     
Net realized gain on investments in securities   6,368 
Net Realized Gain on Investments   6,368 
Net Changes in Unrealized Depreciation of Investments:     
Net unrealized depreciation of investments   (3,024)
Net Changes in Unrealized Depreciation of Investments   (3,024)
Net Gain on Investments   3,344 
Net Increase in Net Assets Resulting from Operations  $9,699 

  

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

 

13

 

The Hartford Municipal Opportunities Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $6,355   $15,038 
Net realized gain on investments   6,368    9,342 
Net unrealized appreciation (depreciation) of investments   (3,024)   20,398 
Net Increase in Net Assets Resulting from Operations   9,699    44,778 
Distributions to Shareholders:          
From net investment income          
Class A   (3,415)   (7,812)
Class B   (75)   (192)
Class C   (1,577)   (3,698)
Class I   (1,355)   (3,292)
Total distributions   (6,422)   (14,994)
Capital Share Transactions:          
Class A   (10,350)   10,611 
Class B   (237)   (591)
Class C   (5,197)   5,629 
Class I   (8,636)   2,655 
Net increase (decrease) from capital share transactions   (24,420)   18,304 
Net Increase (Decrease) in Net Assets   (21,143)   48,088 
Net Assets:          
Beginning of period   404,410    356,322 
End of period  $383,267   $404,410 
Undistributed (distribution in excess of) net investment income (loss)  $35   $102 

 

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

 

14

 

The Hartford Municipal Opportunities Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Municipal 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 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 primarily 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company's Board of Directors. Market quotes are considered not readily available where there is an absence of current

 

15

 

The Hartford Municipal Opportunities Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund's portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

16

 


 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received after the close of the

 

17

 

The Hartford Municipal Opportunities Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Normally, dividends from net investment income are declared daily and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

b)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

c)Inverse Floating Rate Securities – The Fund may invest in inverse floating rate certificates (“inverse floater”). The inverse floaters purchased by the Fund are created by the deposit of municipal bonds into a special purpose trust created by an unaffiliated broker-dealer. The trust issues floating rate certificates with par equal to some fraction of the deposited bonds’ par amount or market value. The floating rate certificates pay short-term tax-exempt interest to the holder(s) of the floating rate certificate(s). The trust also issues an inverse floater that receives all remaining or residual interest in the trust after payment of amounts due to the floating rate bondholder and trust-related fees. The income received by the inverse floater holder varies inversely with the short-term rate paid to the floating rate certificates’ holders. The inverse floater holder bears substantially all of the underlying municipal bonds’ investment risk and also benefits disproportionately from any potential appreciation of the underlying bond. The price of an inverse floater will be more volatile than that of the underlying municipal bond(s) because the interest rate is dependent on both the fixed coupon rate of the underlying municipal bond(s) and also the short-term interest paid on the floating rate certificates and because the inverse floater bears the risk of loss of the underlying bond(s).

 

18

 


 

The Fund may purchase an inverse floater in a secondary market transaction or enter into a tender option bond program by negotiating the terms of the program and subsequently purchasing the resulting inverse floater without first owning the underlying municipal bond(s) (“externally deposited inverse floater”). The Fund may also sell a fixed rate municipal bond to a broker-dealer for deposit into a special purpose trust and receive the residual interest in the trust (“self deposited inverse floater”). The inverse floaters held by the Fund can only be sold to qualified institutional buyers and entitle the Fund to collapse the trust causing the holders of the floating rate certificates to tender their notes at par and, at the Fund’s discretion, to have the broker transfer the underlying municipal bond(s) held by the trust to the Fund. The sale of inverse floaters may involve delay or additional costs. The Fund, as shown on the Schedule of Investments, had outstanding externally deposited inverse floaters as of April 30, 2013.

 

4.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment and extension risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e. yield) movements. In addition, securities are subject to extension risk. 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.

 

5.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

19

 

The Hartford Municipal Opportunities Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Tax Exempt Income †  $14,989   $19,507 
Ordinary Income   122    181 

 

The Fund designates these distributions as exempt interest pursuant to IRC Sec. 852(b)(5).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $310 
Accumulated Capital Losses *   (36,174)
Unrealized Appreciation †   31,635 
Total Accumulated Deficit  $(4,229)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund had no reclassifications.

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

20

 


 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2016  $3,863 
2017   15,644 
2018   6,121 
2019   10,546 
Total  $36,174 

 

During the year ended October 31, 2012, the Fund utilized $9,343 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

6.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 $1.5 billion   0.4750%  
On next $2.5 billion   0.4650%  
On next $5 billion   0.4550%  
Over $10 billion   0.4450%  

 

21

 

The Hartford Municipal Opportunities Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I 
 0.90%     1.65%     1.65%     0.65%  

 

d)Fees Paid Indirectly The Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, this amount, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A    0.90%
Class B    1.66 
Class C    1.66 
Class I    0.66 

 

e)Distribution and Service Plan for Class A, B and C Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $274 and contingent deferred sales charges of $10 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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

 

22

 


 

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.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. These fees are accrued daily and paid monthly.

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, the Fund's aggregate purchases and sales of investment securities (excluding short-term investments) were as follows:

 

   Amount 
Cost of Purchases Excluding U.S. Government Obligations  $80,417 
Sales Proceeds Excluding U.S. Government Obligations   116,296 

 

23

 

The Hartford Municipal Opportunities Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   3,303    349    (4,841)       (1,189)   7,638    773    (7,151)       1,260 
Amount  $28,732   $3,033   $(42,115)  $   $(10,350)  $64,324   $6,520   $(60,233)  $   $10,611 
Class B                                                  
Shares   18    7    (52)       (27)   36    17    (123)       (70)
Amount  $160   $58   $(455)  $   $(237)  $304   $145   $(1,040)  $   $(591)
Class C                                                  
Shares   950    144    (1,694)       (600)   2,569    333    (2,228)       674 
Amount  $8,279   $1,251   $(14,727)  $   $(5,197)  $21,567   $2,801   $(18,739)  $   $5,629 
Class I                                                  
Shares   1,145    113    (2,251)       (993)   3,308    275    (3,245)       338 
Amount  $9,996   $985   $(19,617)  $   $(8,636)  $27,598   $2,321   $(27,264)  $   $2,655 
Total                                                  
Shares   5,416    613    (8,838)       (2,809)   13,551    1,398    (12,747)       2,202 
Amount  $47,167   $5,327   $(76,914)  $   $(24,420)  $113,793   $11,787   $(107,276)  $   $18,304 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   2   $14 
For the Year Ended October 31, 2012   2   $20 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees

 

24

 


 

and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

12.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

25

 

The Hartford Municipal Opportunities Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited)                                
A  $8.66   $0.15   $0.08   $0.23   $(0.15)  $   $   $(0.15)  $8.74 
B   8.66    0.12    0.07    0.19    (0.12)           (0.12)   8.73 
C   8.67    0.12    0.07    0.19    (0.12)           (0.12)   8.74 
I   8.68    0.16    0.07    0.23    (0.16)           (0.16)   8.75 
                                              
For the Year Ended October 31, 2012                                
A   8.01    0.34    0.65    0.99    (0.34)           (0.34)   8.66 
B   8.01    0.28    0.65    0.93    (0.28)           (0.28)   8.66 
C   8.02    0.28    0.65    0.93    (0.28)           (0.28)   8.67 
I   8.03    0.36    0.65    1.01    (0.36)           (0.36)   8.68 
                                              
For the Year Ended October 31, 2011                                
A   8.47    0.44    (0.46)   (0.02)   (0.44)           (0.44)   8.01 
B   8.47    0.38    (0.46)   (0.08)   (0.38)           (0.38)   8.01 
C   8.48    0.38    (0.46)   (0.08)   (0.38)           (0.38)   8.02 
I   8.49    0.46    (0.46)       (0.46)           (0.46)   8.03 
                                              
For the Year Ended October 31, 2010                                
A   8.02    0.45    0.45    0.90    (0.45)           (0.45)   8.47 
B   8.01    0.38    0.47    0.85    (0.39)           (0.39)   8.47 
C   8.02    0.39    0.46    0.85    (0.39)           (0.39)   8.48 
I   8.03    0.47    0.46    0.93    (0.47)           (0.47)   8.49 
                                              
For the Year Ended October 31, 2009                                
A   7.27    0.42    0.76    1.18    (0.43)           (0.43)   8.02 
B   7.26    0.36    0.76    1.12    (0.37)           (0.37)   8.01 
C   7.27    0.37    0.75    1.12    (0.37)           (0.37)   8.02 
I   7.27    0.44    0.76    1.20    (0.44)           (0.44)   8.03 
                                              
For the Year Ended October 31, 2008                                
A   9.46    0.49    (2.19)   (1.70)   (0.49)           (0.49)   7.27 
B   9.46    0.42    (2.19)   (1.77)   (0.43)           (0.43)   7.26 
C   9.46    0.42    (2.18)   (1.76)   (0.43)           (0.43)   7.27 
I   9.47    0.51    (2.19)   (1.68)   (0.52)           (0.52)   7.27 

  

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Not annualized.
(F)Annualized.
(G)Excluding the expenses not subject to cap, the ratio would have been 0.89%, 1.65%, 1.65% and 0.65% for Class A, Class B, Class C and Class I, respectively.
(H)Excluding the expenses not subject to cap, the ratio would have been 0.90%, 1.65%, 1.65% and 0.65% for Class A, Class B, Class C and Class I, respectively.
(I)Excluding the expenses not subject to cap, the ratio would have been 0.90%, 1.70%, 1.66% and 0.66% for Class A, Class B, Class C and Class I, respectively.

 

26

 

- Ratios and Supplemental Data -

 

Total Return(B)     Net Assets at End of
Period (000's)
    Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements
and Including Expenses not Subject to
Cap(C)
    Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to
Cap(C)
    Ratio of Net Investment
Income to Average Net Assets
    Portfolio Turnover
Rate(D)
 
                                 
                                 
  2.68 %(E)   $ 194,263       0.90 %(F)     0.90 %(F),(G)     3.44 %(F)     22 %
   2.17 (E)     5,405        1.72 (F)      1.66  (F),(G)      2.68 (F)      
   2.17 (E)     113,449        1.66 (F)      1.66 (F),(G)      2.68 (F)      
   2.68 (E)     70,150        0.66 (F)      0.66 (F),(G)      3.69 (F)      
                                             
                                             
  12.58       202,931       0.91        0.91 (H)     4.05       51  
  11.75       5,597       1.72        1.66 (H)     3.32        
  11.73       117,699       1.67        1.66 (H)     3.31        
  12.83       78,183       0.67        0.66 (H)     4.31        
                                             
                                             
  0.03       177,569       0.94        0.93 (H)     5.58       41  
  (0.72 )     5,739       1.75        1.68 (H)     4.84        
  (0.72 )     103,439       1.70        1.68 (H)     4.83        
  0.28       69,575       0.70        0.68 (H)     5.82        
                                             
                                             
  11.56       238,332       0.92        0.92 (I)     5.49       15  
  10.82       7,475       1.72        1.72 (I)     4.68        
  10.85       128,723       1.68        1.68 (I)     4.72        
  11.93       81,795       0.68        0.68 (I)     5.72        
                                             
                                             
  16.93       222,328       0.92       0.85       5.81       26  
  16.00       7,523       1.75       1.68       4.97        
  16.04       111,097       1.69       1.62       5.04        
  17.30       70,162       0.69       0.62       6.04        
                                             
                                             
  (18.60 )     171,281       0.92       0.40       5.61       65  
  (19.36 )     4,664       1.73       1.19       4.81        
  (19.24 )     76,650       1.70       1.17       4.86        
  (18.50 )     54,029       0.69       0.17       5.84        

 

 

27

 

The Hartford Municipal Opportunities Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

28

 


 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

29

 

The Hartford Municipal Opportunities Fund
Directors and Officers (Unaudited) – (continued)

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc. 

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

30

 

The Hartford Municipal 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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, including expenses not subject to cap, multiplied by average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
  

Ending Account
Value
April 30, 2013

   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A   $1,000.00   $1,026.80   $4.54   $1,000.00   $1,020.32   $4.52    0.90%   181    365 
Class B   $1,000.00   $1,021.70   $8.32   $1,000.00   $1,016.56   $8.30    1.66    181    365 
Class C   $1,000.00   $1,021.70   $8.32   $1,000.00   $1,016.56   $8.30    1.66    181    365 
Class I   $1,000.00   $1,026.80   $3.29   $1,000.00   $1,021.55   $3.28    0.66    181    365 

 

31

 

The Hartford Municipal Opportunities Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Municipal Opportunities Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the

 

32

 


 

following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

33

 

The Hartford Municipal Opportunities Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Muni Bond Risk: Municipal securities are subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise), credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due), call risk (the risk that an investment may be redeemed early), and risks related to changes in the tax-exempt status of the securities.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

AMT Risk: Income from the Fund may be subject to income tax, including the Alternative Minimum Tax.

 

34
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-MO13 4/13 113994 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

34

 

 

 
 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD QUALITY BOND FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Quality Bond Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 8
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 9
Statement of Operations for the Period November 30, 2012, (commencement of operations) through April 30, 2013 (Unaudited) 10
Statement of Changes in Net Assets for the Period November 30, 2012, (commencement of operations) through April 30, 2013 (Unaudited) 11
Notes to Financial Statements (Unaudited) 12
Financial Highlights (Unaudited) 24
Directors and Officers (Unaudited) 26
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 28
Quarterly Portfolio Holdings Information (Unaudited) 28
Expense Example (Unaudited) 29
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) 30
Principal Risks (Unaudited) 35

  

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Quality Bond Fund inception 11/30/2012

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks to maximize total return while providing a high level of current income consistent with prudent investment risk.

 

Performance Overview 11/30/12 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Cumulative Returns (as of 4/30/13)

 

   Since
Inception▲
 
Quality Bond  A#   1.35%   
Quality Bond  A##   -3.21%   
Quality Bond  C#   1.01%   
Quality Bond  C##   0.01%   
Quality Bond  I#   1.36%   
Quality Bond  R3#   1.14%   
Quality Bond  R4#   1.25%   
Quality Bond  R5#   1.37%   
Quality Bond  Y#   1.37%   
Barclays U.S. Aggregate Bond Index   0.75%   

 

Inception: 11/30/2012
#Without sales charge
##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 4.50% and returns for Class C reflect a contingent deferred sales charge of 1.00%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays 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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Quality Bond Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Quality Bond  Class A   0.90%       1.00%   
Quality Bond  Class C   1.65%       1.75%   
Quality Bond  Class I   0.65%       0.75%   
Quality Bond  Class R3   1.20%       1.30%   
Quality Bond  Class R4   0.90%       1.00%   
Quality Bond  Class R5   0.60%       0.70%   
Quality Bond  Class Y   0.55%       0.60%   

 

*As of the Fund's current prospectus dated November 30, 2012. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the period November 30, 2012, (commencement of operations) through April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses as of the date of the Fund's most recent prospectus and reflect contractual expense waivers/reimbursements in instances when these reductions reduce the Fund's gross expenses. Certain contractual waivers/reimbursements remain in effect until February 28, 2014. Other contractual waivers/reimbursements remain in effect until February 28, 2014, and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

  

Portfolio Manager  
Michael F. Garrett  

Senior Vice President and Fixed Income

Portfolio Manager

 

 

How did the Fund perform?

The Class A shares of The Hartford Quality Bond Fund returned 1.35%, before sales charge, for the period from November 30, 2012, (commencement of operations) to April 30, 2013, outperforming its benchmark, the Barclays U.S. Aggregate Bond Index, which returned 0.75% for the same period. The Fund also outperformed the average return of the Lipper U.S. Mortgage Funds peer group 1.11%, a group of funds with investment strategies similar to those of the Fund.

 

Why did the Fund perform this way?

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02% to 0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

Our exposure to mortgage credit, including non-agency residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS), was the primary driver of benchmark-relative outperformance during the period. Negative security selection in conventionals was more than offset by positive security selection in Government National Mortgage Association (GNMA) securities. The Fund was tactically positioned in agency MBS, implemented through the use of forward settling to-be-announced (TBA) securities and cash bonds, taking advantage of short-term volatilities. The Fund was overweight to GNMA 30-year mortgages relative to the benchmark, given GNMAs contained prepayment risk and limited production pressure. Moreover, we believe that the zero percent risk weighting of GNMAs under Basel III should continue to attract investor demand in a capital constrained world. Our overweight allocation to GNMA detracted from benchmark-relative

 

3

 

The Hartford Quality Bond Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

performance as the sector underperformed during the period. Finally, our duration and yield curve positioning, implemented through the use of exchange-traded government bond futures and cash bonds, modestly contributed to benchmark-relative performance during the period.

 

What is the outlook?

We believe agency MBS will continue to attract investors seeking higher quality assets with excellent liquidity. Our outlook remains constructive on agency MBS, driven by strong technicals, mortgage capacity constraints, tighter underwriting standards, and increased guarantee fees. We believe these factors will continue to keep rates relatively stable and prepayments low in the near term.

 

We continue to like non-agency RMBS. We remain constructive on the sector and believe it will provide attractive loss-adjusted yield compared with other fixed income sectors.

 

We like the valuations and fundamentals associated with U.S. CMBS, but are cautious on the technical factors and macro concerns surrounding this sector.

 

We believe the fundamentals for consumer ABS remain positive. We remain constructive to the sector and continue to favor high-quality autos, select credit tranches, and certain niche subsectors based on improving fundamentals.

 

Distribution by Credit Quality 

as of April 30, 2013

Credit Rating *  Percentage of
Net Assets
 
Aaa / AAA   7.4%
Aa / AA   3.2 
A   2.3 
Baa / BBB   3.6 
B   0.8 
Caa / CCC or Lower   8.6 
Unrated   0.7 
U.S. Government Agencies and Securities   72.5 
Non-Debt Securities and Other Short-Term Instruments   59.3 
Other Assets & Liabilities   (58.4)
Total   100.0%

 

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

  

4

 

The Hartford Quality Bond Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 26.6%     
Finance and Insurance - 25.7%     
     Captive Auto Finance - 5.6%     
     Ally Master Owner Trust     
$250   1.72%, 07/15/2019  $255 
     AmeriCredit Automobile Receivables Trust     
 60   2.76%, 05/09/2016 ‡   61 
 250   3.38%, 04/09/2018 ‡   261 
 250   4.98%, 01/08/2018 ‡   266 
     Residential Funding Mortgage Securities     
 218   5.75%, 01/25/2036   188 
     Santander Drive Automotive Receivables Trust     
 150   2.50%, 12/15/2015 ‡   152 
 153   2.90%, 05/16/2016 ‡   156 
 100   3.82%, 08/15/2017 ‡   104 
         1,443 
     Real Estate Credit (Mortgage Banking) - 20.1%     
     Bear Stearns Commercial Mortgage Securities, Inc.     
 205   4.67%, 06/11/2041 ‡   219 
     Commercial Mortgage Pass-Through Certificates     
 230   5.12%, 06/10/2044 ‡   250 
     FHLMC Multifamily Structured Pass-Through     
 2,250   1.75%, 11/25/2040 ‡Δ   292 
 3,700   5.48%, 08/25/2040 ►   320 
     First Horizon Mortgage Pass-Through Trust     
 284   2.52%, 08/25/2037 Δ   237 
     FREMF Mortgage Trust     
 153   3.49%, 11/25/2046 ■‡Δ   157 
     Goldman Sachs Mortgage Securities Corp. II     
 230   3.38%, 05/10/2045 ‡   247 
 450   5.79%, 08/10/2045 ‡Δ   518 
     Greenwich Capital Commercial Funding Corp.     
 241   5.44%, 03/10/2039 ‡Δ   275 
     GSR Mortgage Loan Trust     
 236   2.77%, 04/25/2036 Δ   202 
     Indymac Index Mortgage Loan Trust     
 123   3.18%, 06/25/2036 ‡Δ   94 
 97   5.36%, 08/25/2036 ‡Δ   96 
     JP Morgan Chase Commercial Mortgage Security     
 210   4.07%, 11/15/2043 ■   237 
     LB-UBS Commerical Mortgage Trust     
 90   5.37%, 09/15/2039 ‡Δ   102 
     Morgan Stanley Dean Witter Capital I     
 114   1.85%, 03/25/2033 ‡Δ   105 
     Residential Accredit Loans, Inc.     
 300   3.77%, 09/25/2035 Δ   255 
     RFMSI Trust     
 247   3.19%, 09/25/2035 ‡Δ   230 
 298   3.40%, 02/25/2036 ‡Δ   263 
     Springleaf Mortgage Loan Trust     
 200   2.31%, 06/25/2058 ■   201 
     Washington Mutual Mortgage Pass-Through     
 51   0.36%, 02/25/2037 ‡Δ   38 
 228   5.50%, 03/25/2035   216 
     Wells Fargo Mortgage Backed Securities Trust     
 196   2.63%, 10/25/2036 Δ   182 
 283   2.64%, 10/25/2036 ‡Δ   253 
 270   3.10%, 10/25/2036 ‡Δ   249 
         5,238 
         6,681 
Transportation Equipment Manufacturing - 0.9%     
     Other Transportation Equipment Manufacturing - 0.9%     
     TAL Advantage LLC     
 221   2.83%, 02/22/2038 ■   222 
           
     Total asset & commercial mortgage backed securities     
     (cost $6,710)  $6,903 
           
U.S. GOVERNMENT AGENCIES - 72.5%     
     FHLMC - 9.2%     
$210   3.50%, 05/15/2043 ☼  $223 
 1,350   4.00%, 05/15/2043 ☼   1,441 
 670   4.50%, 05/15/2043 ☼   718 
         2,382 
     FNMA - 34.5%     
 700   2.50%, 05/12/2028 ☼   732 
 497   2.71%, 12/01/2027 ‡   496 
 374   2.95%, 01/01/2028 ‡   382 
 2,580   3.00%, 05/15/2027 - 05/15/2043 □☼   2,723 
 510   3.50%, 05/15/2028 ☼   542 
 2,267   4.00%, 05/15/2028 - 05/15/2043 ‡☼   2,425 
 934   4.50%, 05/15/2041 - 08/01/2041 ‡☼   1,014 
 270   5.50%, 05/15/2043 ☼   293 
 340   6.00%, 05/15/2043 ☼   371 
         8,978 
     GNMA - 28.8%     
 500   3.00%, 05/15/2043 ☼   532 
 3,600   3.50%, 05/15/2043 ☼   3,913 
 200   4.00%, 05/15/2043 ☼   218 
 870   4.50%, 05/15/2043 ☼   949 
 178   5.50%, 04/15/2039 - 08/15/2039 ‡   195 
 1,500   6.00%, 07/15/2037 - 09/15/2040 ‡   1,696 
         7,503 
     Total U.S. government agencies     
     (cost $18,821)  $18,863 
           
     Total long-term investments   
     (cost $25,531)  $25,766 
           
SHORT-TERM INVESTMENTS - 59.3%     
Repurchase Agreements - 59.3%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $612,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $625)
     
$612    0.17%, 4/30/2013  $612 

 

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

 

5

 

The Hartford Quality Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount      Market Value ╪ 
SHORT-TERM INVESTMENTS - 59.3% - (continued)          
Repurchase Agreements - 59.3% - (continued)          
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,669, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $1,702)
          
$1,669    0.15%, 4/30/2013       $1,669 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $3,214, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $3,278)
          
 3,214    0.15%, 4/30/2013‡        3,214 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $4,464,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $4,553)
          
 4,464    0.14%, 4/30/2013‡        4,464 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $803, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA
3.00%, 2043, value of $819)
          
 803    0.17%, 4/30/2013        803 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $2,720, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $2,774)
          
 2,720    0.14%, 4/30/2013        2,720 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$1,912, collateralized by U.S. Treasury
Note 0.25% - 1.88%, 2014 - 2019, value of
$1,951)
          
 1,912    0.17%, 4/30/2013        1,912 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$34, collateralized by U.S. Treasury Note
3.88%, 2018, value of $35)
          
 34    0.13%, 4/30/2013        34 
              15,428 
     Total short-term investments          
     (cost $15,428)       $15,428 
                
     Total investments          
     (cost $40,959) ▲   158.4%  $41,194 
     Other assets and liabilities   (58.4)%   (15,187)
     Total net assets   100.0%  $26,007 

 

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

 

6

 


 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Also represents cost for tax purposes.

 

This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

 

ΔVariable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $817, which represents 3.1% of total net assets.

 

Securities disclosed are interest-only strips.  The interest rates represent effective yields based upon estimated future cash flows at April 30, 2013.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $15,350 at April 30, 2013.

 

This security, or a portion of this security, is pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts held at April 30, 2013 as listed in the table below:

  

Description  Number of
Contracts*
   Expiration
Date
  Notional Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
Long position contracts:                       
U.S. Treasury 10-Year Note Future   7   06/19/2013  $930   $933   $3 
U.S. Treasury 5-Year Note Future   4   06/28/2013   496    499    3 
U.S. Treasury CME Ultra Long Term Bond Future   5   06/19/2013   791    822    31 
                     $37 

 

*The number of contracts does not omit 000's.

 

Cash of $27 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Other Abbreviations:
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association

 

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

 

7

 

The Hartford Quality Bond Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Asset & Commercial Mortgage Backed Securities  $6,903   $   $6,394   $509 
U.S. Government Agencies   18,863        18,863     
Short-Term Investments   15,428        15,428     
Total  $41,194   $   $40,685   $509 
Futures *   37    37         
Total  $37   $37   $   $ 

 

For the period ended April 30, 2013, there were no transfers between Level 1 and Level 2.
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance as
of
November
30, 2012*
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3
   Transfers
Out of
Level 3
   Balance
as of
April 30,
2013
 
Assets:                                             
Asset & Commercial Mortgage Backed Securities  $   $1   $23  $   $488   $(3)  $   $   $509 
Total  $   $1   $23   $   $488   $(3)  $   $   $509 

 

*Commenced operations on November 30, 2012.
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $23.

 

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

 

8

 

The Hartford Quality Bond Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $25,531)  $25,766 
Investments in repurchase agreements, at market value (cost $15,428)   15,428 
Cash   27*
Receivables:     
Investment securities sold   5,874 
Fund shares sold   23 
Dividends and interest   39 
Variation margin    
Other assets   84 
Total assets   47,241 
Liabilities:     
Payables:     
Investment securities purchased   21,222 
Investment management fees   2 
Administrative fees    
Distribution fees   1 
Variation margin   3 
Accrued expenses   6 
Total liabilities   21,234 
Net assets  $26,007 
Summary of Net Assets:     
Capital stock and paid-in-capital  $25,687 
Undistributed net investment income   24 
Accumulated net realized gain   24 
Unrealized appreciation of investments   272 
Net assets  $26,007 
      
Shares authorized   450,000 
Class A: Net asset value per share/Maximum offering price per share   $10.13/$10.61 
Shares outstanding   637 
Net assets  $6,452 
Class C: Net asset value per share  $10.10 
Shares outstanding   228 
Net assets  $2,301 
Class I: Net asset value per share  $10.13 
Shares outstanding   202 
Net assets  $2,051 
Class R3: Net asset value per share  $10.11 
Shares outstanding   200 
Net assets  $2,023 
Class R4: Net asset value per share  $10.12 
Shares outstanding   200 
Net assets  $2,025 
Class R5: Net asset value per share  $10.13 
Shares outstanding   200 
Net assets  $2,028 
Class Y: Net asset value per share  $10.13 
Shares outstanding   901 
Net assets  $9,127 

 

*Cash of $27 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

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

 

9

 

The Hartford Quality Bond Fund
Statement of Operations
For the Period November 30, 2012, (commencement of operations) through April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Interest  $118 
Total investment income   118 
      
Expenses:     
Investment management fees   52 
Administrative services fees     
Class R3   2 
Class R4   1 
Class R5   1 
Transfer agent fees     
Class A    
Class C    
Class I    
Class Y    
Distribution fees     
Class A   6 
Class C   9 
Class R3   4 
Class R4   2 
Custodian fees   1 
Accounting services fees   1 
Registration and filing fees   43 
Board of Directors' fees   1 
Audit fees   5 
Other expenses   4 
Total expenses (before waivers)   132 
Expense waivers   (52)
Total waivers   (52)
Total expenses, net   80 
Net Investment Income   38 
Net Realized Gain on Investments and Other Financial Instruments:     
Net realized gain on investments in securities   48 
Net realized gain on securities sold short    
Net realized loss on futures   (24)
Net Realized Gain on Investments and Other Financial Instruments   24 
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments:     
Net unrealized appreciation of investments   235 
Net unrealized appreciation of futures   37 
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments   272 
Net Gain on Investments and Other Financial Instruments   296 
Net Increase in Net Assets Resulting from Operations  $334 

 

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

 

10

 

The Hartford Quality Bond Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Period
November 30,
2012*
through
April 30, 2013
(Unaudited)
 
Operations:     
Net investment income  $38 
Net realized gain on investments and other financial instruments   24 
Net unrealized appreciation of investments and other financial instruments   272 
Net Increase in Net Assets Resulting from Operations   334 
Distributions to Shareholders:     
From net investment income     
Class A   (3)
Class C    
Class I   (1)
Class R3   (1)
Class R4   (1)
Class R5   (2)
Class Y   (6)
Total distributions   (14)
Capital Share Transactions:     
Class A   6,375 
Class C   2,280 
Class I   2,023 
Class R3   2,001 
Class R4   2,001 
Class R5   2,001 
Class Y   9,006 
Net increase from capital share transactions   25,687 
Net Increase in Net Assets   26,007 
Net Assets:     
Beginning of period    
End of period  $26,007 
Undistributed (distribution in excess of) net investment income (loss)  $24 

 

* Commencement of operations.

 

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

 

11

 

The Hartford Quality Bond Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Quality 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 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 primarily through advisory fee-based wrap programs. Class 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.

 

2.Significant Accounting Policies:

 

The following is a summary of significant accounting policies of the Fund in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

12

 


 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure,

 

13

 

The Hartford Quality Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Trade date for senior floating rate interests purchased in the primary loan market is considered the date on which the loan allocations are determined. Trade date for senior floating rate interests purchased in the secondary loan market is the date on which the transaction is entered into.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. Paydown gains and losses on mortgage-related and other asset-backed securities are included in interest income in the Statement of Operations, as applicable.

 

14

 


 

d)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Normally, dividends from net investment income are declared daily and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

15

 

The Hartford Quality Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

In connection with the Fund’s ability to purchase investments on a when-issued or forward commitment basis, the Fund may enter into to-be announced (“TBA”) commitments. TBA commitments are forward agreements for the purchase or sale of mortgage-backed securities for a fixed price, with payment and delivery on an agreed-upon future settlement date. The specific securities to be delivered are not identified at the trade date; however, delivered securities must meet specified terms, including issuer, rate and mortgage terms. Although the Fund may enter into TBA commitments with the intention of acquiring or delivering securities for its portfolio, the Fund can extend the settlement date, roll the transaction, or dispose of a commitment prior to settlement if deemed appropriate to do so. If the TBA commitment is closed through the acquisition of an offsetting TBA commitment, the Fund realizes a gain or loss. In a TBA roll transaction, the Fund generally purchases or sells the initial TBA commitment prior to the agreed upon settlement date and enters into a new TBA commitment for future delivery or receipt of the mortgage-backed securities. TBA commitments involve a risk of loss if the value of the security to be purchased or sold declines or increases, respectively, prior to settlement date.

 

The Fund may enter into “dollar rolls” in which the Fund sells securities and contracts with the same counterparty to repurchase substantially similar securities (for example, same issuer, coupon and maturity) on a specified future date at an agreed upon price. The Fund gives up the right to receive interest paid on the investments sold. The Fund would benefit to the extent of any differences between the price received for the security and the lower forward price for the future purchase. Dollar rolls involve the risk that the market value of the securities that the Fund is required to purchase may decline below the agreed upon repurchase price of those securities. The Fund records dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions are excluded from the Fund’s portfolio turnover rate. The Fund had no open dollar roll transactions as of April 30, 2013.

 

d)Mortgage Related and Other Asset Backed Securities The Fund may invest in mortgage related and other asset backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations, commercial mortgage backed securities, stripped mortgage backed securities, asset backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. Mortgage related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. These securities provide a monthly payment that consists of both interest and principal payments. Interest payments may be determined by fixed or adjustable rates. The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. The timely payment of principal and interest of certain mortgage related securities is guaranteed by the full faith and credit of the United States Government. Mortgage related and other asset backed securities created and guaranteed by non-governmental issuers, including government-sponsored corporations, may be supported by various forms of insurance or guarantees, but there can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund, as shown on the  Schedule of Investments, had mortgage related and other asset backed securities as of April 30, 2013.

 

16

 


 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. The Fund, as shown on the  Schedule of Investments, had outstanding futures contracts as of April 30, 2013.

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Variation margin receivable *  $   $   $   $   $   $   $ 
Total  $   $   $   $   $   $   $ 
                                    
Liabilities:                                   
Variation margin payable *  $3   $   $   $   $   $   $3 
Total  $3   $   $   $   $   $   $3 

 

*Only current day's variation margin is reported within the Statement of Assets and Liabilities. The variation margin is included in the open futures cumulative appreciation of $37 as reported in the Schedule of Investments.

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the period November 30, 2012, (commencement of operations) through April 30, 2013.

 

17

 

The Hartford Quality Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

The Effect of Derivative Instruments on the Statement of Operations for the period November 30, 2012, (commencement of operations) through April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Loss on Derivatives Recognized as a Result of Operations:      
Net realized loss on futures  $(24)  $   $   $   $   $   $(24)
Total  $(24)  $   $   $   $   $   $(24)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation of futures  $37   $   $   $   $   $   $37 
Total  $37   $   $   $   $   $   $37 

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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.

 

18

 


 

b)Net Investment Income (Loss), Net Realized Gains (Losses), and Distributions 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 net 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)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions expected to be taken on the tax return for the fiscal year ended November 30, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.500%  
On next $500 million   0.450%  
On next $1.5 billion   0.445%  
On next $2.5 billion   0.440%  
On next $5 billion   0.430%  
Over $10 billion   0.420%  

 

HFMC has contractually agreed to waive management fees of 0.05% of average daily net assets until February 28, 2014.

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services

 

19

 

The Hartford Quality Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC in connection with the 0.05% management fee waiver has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 0.90%     1.65%     0.65%     1.20%     0.90%     0.60%     0.55%  

 

d)Distribution and Service Plan for Class A, 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 period November 30, 2012 (commencement of operations) through April 30, 2013, HIFSCO received front-end load sales charges of $3 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class A, 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 0.25% of average daily net assets. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the period November 30, 2012 (commencement of operations) through April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of the investment companies in the Hartford fund complex. No amount was allocated to the Fund during the period November 30, 2012, (commencement of operations) through April 30, 2013. 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

20

 


  

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class A   94%
Class C   88 
Class I   99 
Class R3   100 
Class R4   100 
Class R5   100 
Class Y   100 

 

9.Investment Transactions:

 

For the period November 30, 2012, (commencement of operations) through April 30, 2013, 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  $138,861 
Sales Proceeds Excluding U.S. Government Obligations   113,378 

 

10.Capital Share Transactions:

 

The following information is for the period November 30, 2012, (commencement of operations) through April 30, 2013:

 

   For the Period Ended April 30, 2013 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                         
Shares   639        (2)       637 
Amount  $6,389   $3   $(17)  $   $6,375 
Class C                         
Shares   228                228 
Amount  $2,280   $   $   $   $2,280 
Class I                         
Shares   202                202 
Amount  $2,022   $1   $   $   $2,023 
Class R3                         
Shares   200                200 
Amount  $2,000   $1   $   $   $2,001 
Class R4                         
Shares   200                200 
Amount  $2,000   $1   $   $   $2,001 
Class R5                         
Shares   200                200 
Amount  $2,000   $1   $   $   $2,001 
Class Y                         
Shares   900    1            901 
Amount  $9,000   $6   $   $   $9,006 
Total                         
Shares   2,569    1    (2)       2,568 
Amount  $25,691   $13   $(17)  $   $25,687 

 

21

 

The Hartford Quality Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the period November 30, 2012, (commencement of operations) through April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

22

 


 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

23

 

The Hartford Quality Bond Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class   

Net Asset Value at
Beginning of
Period

    

Net Investment
Income (Loss)

    

Net Realized and
Unrealized Gain
(Loss) on
Investments

    

Total from
Investment
Operations

    

Dividends from Net
Investment Income

    

Distributions from
Realized Capital
Gains

    

Distributions from
Capital

    

Total Distributions

    

Net Asset Value at
End of Period

 
                                              
From November 30, 2012 (commencement of operations), through April 30, 2013 (Unaudited)      
A(D)  10.00   0.01   0.13   0.14   (0.01  $   $   (0.01  10.13 
C(D)   10.00      (0.02   0.12    0.10                    10.10 
I(D)   10.00      0.02    0.12    0.14    (0.01)           (0.01)   10.13 
R3(D)   10.00        0.11    0.11                    10.11 
R4(D)   10.00      0.01    0.12    0.13    (0.01)           (0.01)   10.12 
R5(D)   10.00      0.02    0.12    0.14    (0.01)           (0.01)   10.13 
Y(D)   10.00      0.02    0.12    0.14    (0.01)           (0.01)   10.13 

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(D)Commenced operations on November 30, 2012.
(E)Not annualized.
(F)Annualized.

 

24

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(C)
 
                            
                            
 1.35%(E)   $6,452    1.29%(F)    0.80%(F)    0.34%(F)    2%
 1.01(E)     2,301    2.04(F)    1.56(F)   (0.39)(F)    
 1.36(E)     2,051    1.04 (F)   0.55 (F)   0.58 (F)    
 1.14(E)     2,023    1.74 (F)   1.20 (F)   (0.05) (F)    
 1.25(E)     2,025    1.44 (F)   0.90 (F)   0.24 (F)    
 1.37(E)     2,028    1.14 (F)   0.60 (F)   0.53 (F)    
 1.37(E)     9,127    1.04(F)   0.55 (F)   0.58 (F)    

 

25

 

The Hartford Quality Bond Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

26

 


 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

27

 

The Hartford Quality Bond Fund
Directors and Officers (Unaudited) – (continued)

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 will be available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

  

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

28

 

The Hartford Quality 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs including investment management fees, distribution fees, if any, 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 November 30, 2012, (commencement of operations) through April 30, 2013.

 

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 151/365 (to reflect the period of operations).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
November 30,
2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
November 30, 2012
through
April 30, 2013
   Beginning
Account Value
November 30,
2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
November 30,
2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A*  $1,000.00   $1,013.50   $3.35   $1,000.00   $1,017.36   $3.36    0.80%  151  365
Class C*  $1,000.00   $1,010.10   $6.48   $1,000.00   $1,014.24   $6.49    1.56   151  365
Class I*  $1,000.00   $1,013.60   $2.31   $1,000.00   $1,018.39   $2.31    0.55   151  365
Class R3*  $1,000.00   $1,011.40   $5.00   $1,000.00   $1,015.72   $5.01    1.20   151  365
Class R4*  $1,000.00   $1,012.50   $3.75   $1,000.00   $1,016.96   $3.76    0.90   151  365
Class R5*  $1,000.00   $1,013.70   $2.50   $1,000.00   $1,018.20   $2.51    0.60   151  365
Class Y*  $1,000.00   $1,013.70   $2.29   $1,000.00   $1,018.41   $2.30    0.55   151  365

 

*Commenced operations on November 30, 2012.

 

29

 

The Hartford Quality 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”), initially approve, and annually review and consider the continuation of, the mutual fund’s investment advisory and sub-advisory agreements. At its meeting held on July 31 – August 1, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to approve an investment management agreement for The Hartford Quality Bond Fund (the “Fund”) with Hartford Investment Financial Services, LLC (“HIFSCO”) and an investment sub-advisory agreement between HIFSCO and the Fund’s sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HIFSCO, the “Advisers”) (collectively, the “Agreements”).

 

Prior to approving the Agreements, 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 “Adviser Materials”). In addition, the Board’s Investment Committee received in-person presentations from representatives of the Advisers regarding the Fund and the proposed investment strategy.

 

In determining whether to approve 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the Agreements was based on a comprehensive consideration of all information provided to the Board with respect to the approval 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 to be Provided by the Advisers

 

The Board requested and considered information concerning the nature, extent, and quality of the services to be provided to the Fund by the Advisers. The Board considered, among other things, the terms of the Agreements, the range of services to be provided, and HIFSCO’s and the Sub-adviser’s organizational structure, systems and personnel. The Board also considered HIFSCO’s and the Sub-adviser’s reputation and overall financial strength, and the Board’s past experience with the Sub-adviser as sub-adviser for other Hartford-sponsored funds.

 

With respect to HIFSCO, the Board noted that under the Agreements, HIFSCO would be responsible for the management of the Fund, including overseeing fund operations and service providers. The Board also noted that HIFSCO would provide administrative services to the Fund as well as investment advisory services in connection with selecting, monitoring and supervising the Fund’s sub-adviser, and that HIFSCO had recommended to the Board that the Sub-adviser be appointed as the sub-adviser to the Fund. The Board considered HIFSCO’s ongoing monitoring of people, process and performance, including its quarterly reviews of each of the Hartford Mutual Funds, semi-annual meetings with the leaders of each Fund’s portfolio management team, and oversight of the Funds’ approximately 61 portfolio managers. The Board recognized that HIFSCO has demonstrated a record of making changes to the management and/or strategies of the Funds when warranted. The Board considered that HIFSCO would oversee the Sub-adviser’s investment approach and results and considered HIFSCO’s process for monitoring best execution of portfolio trades by the Sub-adviser and approach to risk management with respect to the Fund and the service providers to the Fund. The Board also considered that HIFSCO would oversee compliance with the Fund’s objective and policies as well as with applicable laws and regulations. In addition, the Board considered that HIFSCO or its affiliates would be responsible for providing the Fund’s officers.

 

With respect to the day-to-day portfolio management services to be provided by the Sub-adviser, the Investment Committee met with members of the proposed portfolio management team. The Board considered the Sub-adviser’s investment philosophy and process, investment research capabilities and resources, performance record, trade execution capabilities and experience.

 

The Board also considered information previously provided by the Advisers regarding their compliance policies and procedures and compliance history, and received a representation from HIFSCO that the written compliance policies and procedures of HIFSCO and the Sub-adviser are reasonably designed to prevent violations of the federal securities laws. In addition, the Board considered HIFSCO’s representation that it did not anticipate making any material changes to HIFSCO’s and the Hartford-sponsored funds’ compliance program as a result of the addition of the Fund.

 

30

 


 

In considering this information, the Board evaluated not only the information presented to the Board and the Investment Committee in connection with its consideration of the Agreements, but also the Board’s experience through past interactions with HIFSCO and the Sub-adviser. Based on these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services to be provided to the Fund by HIFSCO and the Sub-adviser.

 

Performance of the Sub-adviser

 

The Board considered the investment performance of the Sub-adviser and its portfolio management team, including, for purposes of considering the investment skill and experience of the Fund’s portfolio managers, composite performance data showing the portfolio management team’s capabilities within a relevant asset class. HIFSCO and the Sub-adviser also provided additional information about the broad range of the portfolio management team’s investment experience and their investment philosophy and process.

 

Based on these considerations, the Board concluded that it was satisfied that HIFSCO and the Sub-adviser have the capability of providing satisfactory investment performance for the Fund.

 

Costs of the Services and Profitability of the Advisers

 

In considering the proposed advisory and sub-advisory fee schedules for the Fund, the Board reviewed information regarding HIFSCO’s estimated costs to provide investment management and related services to the Fund and the estimated profitability to HIFSCO and its affiliates from all services to be provided to the Fund and all aspects of their relationships with the Fund. In evaluating HIFSCO’s estimated profitability, the Board considered HIFSCO’s representation that the level of estimated profitability was fair and appropriate based on the nature and quality of the services to be provided to shareholders. The Board also noted that the actual profitability of the Fund to HIFSCO would depend on the growth of assets under management. The Board also requested and received information relating to the operations and profitability of the Sub-adviser.

 

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 to be Provided by the Advisers

 

The Board considered comparative information with respect to the management fees to be paid by the Fund to HIFSCO and the expected total expense ratios of the Fund. The Board also considered comparative information with respect to the sub-advisory fees to be paid by HIFSCO to the Sub-adviser, to the extent applicable. In this regard, the Board requested and reviewed information from HIFSCO and the Sub-adviser relating to the proposed management and sub-advisory fees and total operating expenses for the Fund. With respect to the sub-advisory fee schedule, the Board considered representations from HIFSCO and the Sub-adviser that the Sub-adviser’s fees were negotiated at arm’s length. The Board also reviewed information comparing the Fund’s proposed management fees and total expenses to those of a peer universe of funds derived from information provided by Lipper Inc., an independent provider of investment company data (“Lipper”), in conjunction with input from an independent financial services consulting firm engaged by the Board. The Board considered that HIFSCO had contractually agreed to waive 0.05% of its management fee and to limit the expenses for the Fund’s Class A, Class C, Class I, Class R3, Class R4, Class R5 and Class Y shares to 0.90%, 1.65%, 0.65%, 1.20%, 0.90%, 0.60% and 0.55%, respectively, through February 28, 2014. The Board noted that, after February 28, 2014, HIFSCO will be contractually obligated to limit the expenses for the Fund’s Class A, Class C, Class I, Class R3, Class R4, Class R5 and Class Y shares to 0.95%, 1.70%, 0.70%, 1.25%, 0.95%, 0.65% and 0.60%, respectively, with such arrangement automatically renewing on an annual basis unless HIFSCO provides written notice of termination prior to the start of the next term or upon approval of the Board.

 

In considering the reasonableness of the Fund’s management and sub-advisory fees and total expense ratios, the Board considered that, according to the information provided by Lipper, while the Fund’s proposed weighted management fees were above the Lipper peer group average for all asset levels and above the Lipper peer group median for most asset levels, the proposed weighted management fees fell within the third quintile for all asset levels. The Board also considered that the Fund’s proposed weighted management fee for assets of $1 billion was below the Lipper peer group median. The Board also considered that the

  

31

 

The Hartford Quality Bond Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

Fund’s estimated total expenses, less Rule 12b-1 fees, while above the Lipper peer group average and median, fell within the third quintile.

 

Based on these considerations, the Board concluded that the Fund’s proposed 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 to be provided.

 

Economies of Scale

 

The Board considered the extent to which economies of scale would be realized as the Fund grows and whether the fee levels reflect these economies of scale for the benefit of the Fund’s future shareholders. The Board reviewed the breakpoints in the proposed management fee schedule for the Fund, which would reduce fee rates as Fund assets grow over time. The Board considered HIFSCO’s representation that the Fund could be expected to achieve some economies of scale as assets in the Fund grow. The Board recognized that a fund with assets beyond the last breakpoint level would 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 provide protection from an increase in expenses if Fund assets decline. The Board recognized that a fee schedule that reaches a lower breakpoint quickly provides shareholders with the benefit of anticipated or potential economies of scale. The Board also considered that HIFSCO has been active in managing expenses for the Hartford Mutual Funds.

 

The Board also considered how any benefits from economies of scale would be realized by the various parties. The Board reviewed relevant information included in the Adviser Materials regarding comparative breakpoint information for other funds in the Fund’s Lipper peer group. Based on these considerations, 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 future shareholders. The Board noted, however, that it would review future growth in Fund assets and the appropriateness of the breakpoints as part of its future annual review of the Agreements.

 

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., an affiliate of HIFSCO, would receive fees for fund accounting and related services from the Fund. The Board also considered that Hartford Administrative Services Company, the Fund’s transfer agent and an affiliate of HIFSCO, would receive transfer agency compensation from the Fund.

 

The Board also considered that, as principal underwriter of the Fund, HIFSCO would receive 12b-1 fees from the Fund and would receive 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 would distribute shares of the Fund and would receive compensation in that connection.

 

The Board considered the benefits to the Fund’s future 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. 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 with independent legal counsel to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

32

 


 

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Quality Bond Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. Information provided to the Board at its meetings throughout the year with respect to the Hartford Mutual Funds, included, among other things, reports on performance, legal and compliance matters, sales and marketing activity, shareholder services, and the other services provided by HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangements for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangements approved by the Board at its July – August 2012 meeting, when it initially

 

33

 

The Hartford Quality Bond Fund
Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

considered the Fund’s existing investment management agreement and existing investment sub-advisory agreement. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the initial approval process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the initial approval process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services to be provided by HIFSCO and the Sub-adviser; (ii) performance of the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the extent to which economies of scale would be realized as the Fund grows and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the initial approval process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

34

 

The Hartford Quality Bond Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early). These risks also apply to the Fund’s investments in U.S. government securities, which may not be guaranteed by the U.S. government.

 

Mortgage-Backed Securities Risk: Mortgage-backed securities are subject to interest rate risk, credit risk, prepayment risk, extension risk, and the risk that an investment’s value may be reduced or become worthless if it receives interest or income payments only after other investments in the same pool.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Reverse Repurchase Agreements and Dollar Rolls Risk: Reverse repurchase agreements and dollar rolls involve the risk that the market value of the securities that the Fund is committed to buy may decline below the repurchase price. These investments may also subject the Fund to the risk that the counterparty will not fulfill its obligations.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

35
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-QB13 4/13 113996 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

36

 

 

 
 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD SHORT DURATION FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Short Duration Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 18
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 19
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 20
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 21
Notes to Financial Statements (Unaudited) 22
Financial Highlights (Unaudited) 38
Directors and Officers (Unaudited) 40
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 42
Quarterly Portfolio Holdings Information (Unaudited) 42
Expense Example (Unaudited) 43
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 44
Principal Risks (Unaudited) 46

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Short Duration Fund inception 10/31/2002

(sub-advised by Wellington Management Company LLP)

 

Investment objective – Seeks to provide current income and long-term total return.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
Short Duration A#   1.26%       3.54%       3.76%       3.02%    
Short Duration A##        1.47%       3.13%       2.71%    
Short Duration B#   1.56%       3.95%       3.40%       2.46%*    
Short Duration B##        -1.05%       3.05%       2.46%*    
Short Duration C#   0.78%       2.67%       2.95%       2.25%    
Short Duration C##        1.67%       2.95%       2.25%    
Short Duration I#   1.29%       3.81%       3.96%       3.12%    
Short Duration R3#   1.01%       3.14%       3.87%       3.28%‡    
Short Duration R4#   1.16%       3.65%       3.99%       3.34%‡    
Short Duration R5#   1.31%       3.86%       4.07%       3.38%‡    
Short Duration Y#   1.33%       3.90%       4.08%       3.39%‡    
Barclays 1-3 Year U.S. Government/Credit Index   0.48%       1.04%       2.52%       3.03%    

 

Not Annualized
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.
Rates shown are since inception date of Class Y shares.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 2.00% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 2/26/10.  Performance prior to that date is that of the Fund's Class A shares (excluding sales charges), which had different operating expenses.   Class R3, R4 and R5 shares commenced operations on 9/30/11.  Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.  Class Y shares commenced operations on 11/28/03.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of March 5, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays 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 U.S. Government/Credit Index includes securities in the 1-3 year maturity range in the U.S. Government/Credit Index.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Short Duration Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Short Duration Class A   0.85%       0.86%    
Short Duration Class B   1.60%       1.72%    
Short Duration Class C   1.60%       1.60%    
Short Duration Class I   0.58%       0.58%    
Short Duration Class R3   1.15%       1.23%    
Short Duration Class R4   0.85%       0.93%    
Short Duration Class R5   0.55%       0.62%    
Short Duration Class Y   0.50%       0.50%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Manager
Timothy E. Smith
Senior Vice President and Fixed Income Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Short Duration Fund returned 1.26%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the Barclays 1-3 Year U.S. Government/Credit Index, which returned 0.48% for the same period. The Fund also outperformed the 0.87% average return of the Lipper Short Investment Grade Debt 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 semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02%-0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

Our overweight to investment grade corporates, especially financials, and out-of-benchmark allocation to bank loans were the top contributors to outperformance. An overweight allocation to high yield was also a strong positive for relative performance. Our allocation to the agency MBS sector was additive, as the Fed’s continued support boosted performance in this sector. Exposures to both Commercial Mortgage Backed Securities (CMBS) and Asset Backed Securities (ABS) were also favorable for relative results. There were no material detractors from performance over the period.

 

What is the outlook?

We believe that the U.S. economy's moderate growth continues, buoyed by the strengthening housing sector. The employment situation apprears to be improving, although we do not believe it will be enough to trigger a change in Fed policy just yet. However, we believe that challenges remain as higher taxes continue to have an impact on consumers, while we are likely to see more headwinds from the sequestration. Further, the banking crisis in Cyprus and political situation in Italy are, in our view, reminders that global growth is still fragile. Therefore, at the end of the period we maintained a modest pro-cyclical risk posture. The Fed continues to indicate

 

3

 

The Hartford Short Duration Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

that it will maintain easy policy with low interest rates and asset purchases until employment improves. At the end of the period we had a neutral duration and yield curve posture.

 

As of the end of the period, we continued to be positioned with an underweight to the U.S. government sector, as we believe that there are more compelling opportunities in other sectors. As of April 30, 2013, we were overweight the investment grade credit sector due to strong credit fundamentals. Within investment grade corporates, we continued to favor U.S. financial companies which have de-levered significantly. We continued to maintain our allocation to agency MBS based on its strong liquidity and income advantage over U.S. Treasuries. We held a modest position in prime, non-agency MBS. The recovery in housing and improvement in home prices bode well for the non-agency MBS sector while valuations remained attractive for select deals. In the CMBS market, we continued to believe that there is strong collateralization in senior CMBS tranches while valuations and long-term fundamentals remained attractive. We held senior tranches of CMBS deals. We expect steady collateral performance in the consumer ABS sectors. Within ABS, we favored short, high quality auto, credit card, and equipment securities. Lastly, we held a modest position in high yield corporate bonds and a significant allocation to bank loans based on strong fundamentals and attractive valuations.

 

Distribution by Credit Quality

as of April 30, 2013

 

Credit Rating *  Percentage of
Net Assets
 
Aaa / AAA   17.4%
Aa / AA   7.8 
A   18.6 
Baa / BBB   28.9 
Ba / BB   13.3 
B   8.5 
Caa / CCC or Lower   0.2 
Unrated   0.3 
U.S. Government Agencies and Securities   11.3 
Non-Debt Securities and Other Short-Term Instruments   1.6 
Other Assets & Liabilities   (7.9)
Total   100.0%

 

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

Diversification by Industry

as of April 30, 2013

 

Industry  Percentage of
Net Assets
 
Fixed Income Securities     
Accommodation and Food Services   0.2%
Administrative Waste Management and Remediation   0.3 
Air Transportation   0.5 
Apparel Manufacturing   0.1 
Arts, Entertainment and Recreation   3.0 
Beverage and Tobacco Product Manufacturing   1.7 
Chemical Manufacturing   1.6 
Computer and Electronic Product Manufacturing   1.3 
Construction   0.2 
Educational Services   0.1 
Finance and Insurance   54.6 
Food Manufacturing   0.6 
Food Services   0.4 
Furniture and Related Product Manufacturing   0.7 
General Obligations   0.4 
Health Care and Social Assistance   5.0 
Information   6.5 
Machinery Manufacturing   0.8 
Media   0.4 
Mining   1.7 
Miscellaneous   0.5 
Miscellaneous Manufacturing   0.7 
Motor Vehicle and Parts Manufacturing   0.9 
Other Services   0.2 
Petroleum and Coal Products Manufacturing   2.3 
Pipeline Transportation   0.3 
Plastics and Rubber Products Manufacturing   0.8 
Primary Metal Manufacturing   1.2 
Professional, Scientific and Technical Services   0.2 
Real Estate, Rental and Leasing   1.7 
Retail Trade   2.7 
Soap, Cleaning Compound and Toilet Manufacturing   0.1 
Transportation Equipment Manufacturing   0.5 
Truck Transportation   0.4 
Utilities   1.6 
Wholesale Trade   0.8 
Total   95.0%
U.S. Government Agencies   11.3 
Short-Term Investments   1.6 
Other Assets and Liabilities   (7.9)
Total   100.0%

 

The above table represents investments by industry, rather than industry sub-classification. Each industry combines multiple sub-classifications into one industry category.  Detailed information on sub-classifications breakdowns is available in the Schedule of Investments.

 

4

 

The Hartford Short Duration Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 20.4%     
Finance and Insurance - 19.2%     
     Captive Auto Finance - 5.3%     
     Ally Automotive Receivables Trust     
$1,700   0.70%, 12/21/2015  $1,702 
 1,000   2.29%, 11/16/2015 ■   1,017 
 1,500   3.29%, 03/15/2015 ■   1,528 
     Ally Master Owner Trust     
 1,280   1.00%, 02/15/2018   1,284 
 1,975   1.21%, 06/15/2017   1,992 
 2,695   1.54%, 09/15/2019   2,717 
     AmeriCredit Automobile Receivables Trust     
 2,775   0.62%, 06/08/2017   2,777 
     Carmax Automotive Owner Trust     
 395   1.50%, 08/15/2018   396 
     Credit Acceptance Automotive Loan Trust     
 1,115   2.20%, 09/16/2019 ■   1,132 
     Ford Credit Automotive Owner Trust     
 2,500   2.62%, 10/15/2016   2,586 
     Ford Credit Floorplan Master Owner Trust     
 2,300   0.74%, 09/15/2016   2,306 
     Harley-Davidson Motorcycle Trust     
 500   1.99%, 01/15/2016   503 
     Hyundai Automotive Receivables Trust     
 650   1.65%, 02/15/2017   661 
 2,100   2.27%, 02/15/2017 ‡   2,158 
     Mercedes-Benz Master Owner Trust     
 1,560   0.79%, 11/15/2017 ■   1,563 
     Motor plc     
 345   1.29%, 02/25/2020 ■   346 
     Prestige Automotive Receivables Trust     
 876   1.23%, 12/15/2015 ■   879 
     SNAAC Automotive Receivables Trust     
 725   1.14%, 07/16/2018 ■   725 
     Volvo Financial Equipment LLC     
 1,836   0.91%, 08/17/2015 ■   1,842 
     World Omni Automotive Receivables Trust     
 1,500   2.33%, 09/15/2016 ‡   1,530 
         29,644 
     Credit Card Issuing - 0.6%     
     American Express Credit Account Master Trust     
 2,072   0.77%, 05/15/2018   2,078 
     Master Credit Card Trust     
 1,365   0.78%, 04/21/2017 ■   1,370 
         3,448 
     Other Financial Investment Activities - 0.6%     
     Apidos CDO     
 2,250   1.38%, 04/15/2025 ■Δ   2,250 
     Carlyle Global Market Strategies     
 870   1.46%, 04/18/2025 ■Δ   870 
         3,120 
     Real Estate Credit (Mortgage Banking) - 12.7%     
     Atrium CDO Corp.     
 1,860   1.40%, 07/16/2025 ■☼Δ   1,857 
     Avis Budget Rental Car Funding AESOP LLC     
 1,800   1.85%, 11/20/2013 ■   1,811 
     Bayview Commercial Asset Trust     
 6,450   3.00%, 01/25/2037 ■►   229 
 6,736   7.37%, 09/25/2037 ■►   620 
     CBA Commercial Small Balance Commercial Mortgage     
 5,818   8.52%, 01/25/2039 ■►   29 
     CFCRE Commercial Mortgage Trust     
 1,500   3.76%, 04/15/2044 ■   1,604 
     Chesapeake Funding LLC     
 1,185   0.95%, 11/07/2023 ■Δ   1,190 
     CIFC Funding Ltd.     
 2,125   1.44%, 04/16/2025 ■Δ   2,125 
     Citigroup Commercial Mortgage Trust     
 2,115   0.69%, 09/10/2045   2,114 
     Commercial Mortgage Pass-Through Certificates     
 1,120   0.67%, 11/15/2045   1,121 
 1,503   0.70%, 10/15/2045   1,505 
 1,148   0.82%, 08/15/2045   1,152 
 2,454   3.16%, 11/01/2015 ■   2,576 
     DBUBS Mortgage Trust     
 3,056   2.05%, 01/01/2021 ■►   139 
 1,345   3.64%, 08/10/2044   1,455 
 2,500   3.74%, 11/10/2046 ■   2,682 
     Equity One ABS, Inc.     
 20   2.70%, 07/25/2034 Δ    
     GE Dealer Floorplan Master Note Trust     
 2,000   0.64%, 10/20/2017 Δ   2,004 
     GMAC Commercial Mortgage Securities, Inc.     
 519   6.50%, 05/15/2035 ■   518 
     Goldman Sachs Mortgage Securities Corp. II     
 886   5.28%, 08/10/2038   893 
 145   5.48%, 11/10/2039   147 
 1,500   5.55%, 04/10/2038   1,665 
     Goldman Sachs Mortgage Securities Trust     
 1,521   0.66%, 11/10/2045   1,520 
     Hasco HIM Trust     
 46   0.00%, 12/26/2035 ■●    
     HLSS Servicer Advance Receivables Backed Notes     
 695   1.99%, 10/15/2015 ■   708 
 885   2.29%, 01/15/2048 ■   911 
     JP Morgan Chase Commercial Mortgage Securities Corp.     
 902   0.71%, 10/15/2045 Δ   902 
 950   3.36%, 11/13/2044 ■   1,019 
 2,819   3.85%, 06/15/2043 ■   2,978 
 33   4.30%, 01/15/2038   33 
 427   4.93%, 09/12/2037   429 
 51   4.96%, 08/15/2042   51 
 1,442   5.59%, 06/12/2041 Δ   1,510 
     LB-UBS Commercial Mortgage Trust     
 106   5.30%, 02/15/2040   106 
     Long Beach Asset Holdings Corp.     
 180   0.00%, 04/25/2046 ■●    
     Merrill Lynch Mortgage Trust     
 1,000   5.85%, 06/12/2050 Δ   1,055 
     Merrill Lynch/Countrywide Commercial Mortgage Trust     
 129   5.11%, 12/12/2049   129 

 

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

 

5

 

The Hartford Short Duration Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 20.4% - (continued)     
Finance and Insurance - 19.2% - (continued)     
     Real Estate Credit (Mortgage Banking) - 12.7% - (continued)     
     Morgan Stanley BAML Trust     
$722   0.66%, 11/15/2045  $721 
     Morgan Stanley Capital I     
 1,400   3.22%, 07/15/2049   1,500 
 1,500   3.88%, 09/15/2047 ■   1,613 
 2,500   4.97%, 04/14/2040   2,587 
 2,328   5.11%, 06/15/2040   2,409 
     Morgan Stanley Re-Remic Trust     
 2,513   1.00%, 03/27/2051 ■   2,482 
     National Credit Union Administration     
 724   1.60%, 10/29/2020   736 
     OHA Intrepid Leveraged Loan Fund Ltd.     
 2,000   1.18%, 04/20/2021 ■†Δ   2,000 
     Renaissance Home Equity Loan Trust     
 108   0.00%, 04/25/2037 ■●    
     SBA Tower Trust     
 1,310   2.93%, 12/15/2017 ■   1,357 
     Silverstone Master Issuer plc     
 415   1.83%, 01/21/2055 ■Δ   425 
     Springleaf Mortgage Loan Trust     
 870   1.27%, 06/25/2058 ■   872 
     UBS Commercial Mortgage Trust     
 1,874   1.03%, 05/10/2045 ‡   1,885 
     UBS-Barclays Commercial Mortgage Trust     
 2,472   0.73%, 08/10/2049 ‡   2,476 
     Voyager Countrywide Delaware Trust     
 317   66.14%, 11/26/2035 ■Δ   282 
     Wachovia Bank Commercial Mortgage Trust     
 275   4.50%, 10/15/2041   278 
 2,000   4.80%, 10/15/2041 ‡   2,100 
 1,105   4.94%, 04/15/2042   1,181 
 2,575   5.28%, 12/15/2044 ‡Δ   2,827 
 1,500   5.48%, 04/15/2047 ‡   1,574 
     WF-RBS Commercial Mortgage Trust     
 2,526   0.67%, 11/15/2045 ‡   2,526 
         70,618 
         106,830 
Real Estate, Rental and Leasing - 0.7%     
     Automotive Equipment Rental and Leasing - 0.7%     
     ARI Fleet Lease Trust     
 1,102   0.50%, 01/15/2021 ■Δ   1,099 
     Enterprise Fleet Financing LLC     
 725   0.72%, 04/20/2018 ■   726 
 1,894   1.90%, 10/20/2016 ■   1,912 
         3,737 
Transportation Equipment Manufacturing - 0.5%     
     Railroad Rolling Stock Manufacturing - 0.5%     
     GE Equipment Transportation LLC     
 2,051   0.62%, 07/25/2016   2,051 
 730   0.99%, 11/23/2015   733 
         2,784 
     Total asset & commercial mortgage backed securities     
     (cost $113,220)  $113,351 
           
CORPORATE BONDS - 55.1%     
Arts, Entertainment and Recreation - 1.8%     
     Cable and Other Subscription Programming - 1.3%     
     Comcast Corp.     
$1,000   5.85%, 11/15/2015   $1,128 
     DirecTV Holdings LLC     
 915   1.75%, 01/15/2018    916 
 1,681   2.40%, 03/15/2017    1,740 
 1,100   3.50%, 03/01/2016    1,171 
     Echostar DBS Corp.     
 725   7.13%, 02/01/2016    801 
     Viacom, Inc.     
 1,650   1.25%, 02/27/2015    1,662 
         7,418 
     Data Processing, Hosting and Related Services - 0.5%     
     Fidelity National Information Services, Inc.     
 2,500   7.63%, 07/15/2017    2,672 
           
         10,090 
Beverage and Tobacco Product Manufacturing - 1.6%     
     Beverage Manufacturing - 1.2%     
     Anheuser-Busch InBev Worldwide, Inc.     
 1,730   1.38%, 07/15/2017    1,753 
     Constellation Brands, Inc.     
 1,210   7.25%, 09/01/2016    1,392 
     Diageo Capital plc     
 2,275   1.50%, 05/11/2017    2,319 
     Molson Coors Brewing Co.     
 311   2.00%, 05/01/2017    320 
     Pernod-Ricard S.A.     
 1,000   2.95%, 01/15/2017 ■   1,052 
         6,836 
     Tobacco Manufacturing - 0.4%     
     Altria Group, Inc.     
 500   7.75%, 02/06/2014    527 
     Lorillard Tobacco Co.     
 180   2.30%, 08/21/2017    182 
     Reynolds American, Inc.     
 1,300   1.05%, 10/30/2015    1,302 
         2,011 
         8,847 
Chemical Manufacturing - 0.9%     
     Agricultural Chemical Manufacturing - 0.3%     
     Yara International ASA     
 1,750   5.25%, 12/15/2014 ■   1,862 
           
     Basic Chemical Manufacturing - 0.5%     
     Airgas, Inc.     
 1,000   2.85%, 10/01/2013    1,009 
     PPG Industries, Inc.     
 1,500   1.90%, 01/15/2016    1,540 
         2,549 
     Other Chemical and Preparation Manufacturing - 0.1%     
     Ecolab, Inc.     
 375   1.45%, 12/08/2017    374 
           
         4,785 

 

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

 

6

 

 

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE BONDS - 55.1% - (continued)     
Computer and Electronic Product Manufacturing - 0.9%     
     Computer and Peripheral Equipment Manufacturing - 0.9%     
     Hewlett-Packard Co.     
$4,000   2.60%, 09/15/2017  $4,070 
     Seagate Technology plc     
 1,140   10.00%, 05/01/2014 ■   1,197 
         5,267 
Construction - 0.2%     
     Residential Building Construction - 0.2%     
     CRH America, Inc.     
 1,340   5.30%, 10/15/2013   1,366 
           
Finance and Insurance - 34.2%     
     Activities Related To Credit Banking - 0.1%     
     Western Union Co     
 430   2.38%, 12/10/2015   438 
           
     Captive Auto Finance - 2.0%     
     American Honda Finance Corp.     
 675   1.60%, 02/16/2018 ■   683 
     Ford Motor Credit Co. LLC     
 1,500   2.38%, 01/16/2018   1,507 
 1,700   2.75%, 05/15/2015   1,742 
     Harley-Davidson Financial Services, Inc.     
 1,385   1.15%, 09/15/2015 ■   1,391 
 810   3.88%, 03/15/2016 ■   869 
     Hyundai Capital America     
 2,500   2.13%, 10/02/2017 ■   2,506 
     Nissan Motor Co., Ltd.     
 2,695   1.95%, 09/12/2017 ■   2,754 
         11,452 
     Commercial Banking - 5.3%     
     Banco Santander Brasil S.A.     
 980   4.25%, 01/14/2016 ■   1,028 
     Barclays Bank plc     
 2,500   6.05%, 12/04/2017 ■   2,830 
     BNP Paribas     
 1,650   2.38%, 09/14/2017   1,692 
     Commonwealth Bank of Australia     
 1,500   2.13%, 03/17/2014 ■   1,521 
     Credit Suisse New York     
 1,000   1.24%, 01/14/2014 Δ   1,006 
 630   2.20%, 01/14/2014   637 
     DNB ASA     
 2,000   3.20%, 04/03/2017 ■   2,135 
     ING Bank N.V.     
 1,500   2.00%, 09/25/2015 ■   1,525 
     Intesa Sanpaolo     
 1,500   3.13%, 01/15/2016   1,499 
     Key Bank NA     
 1,000   1.65%, 02/01/2018   1,016 
 2,000   4.95%, 09/15/2015   2,174 
     Manufacturers & Traders Trust Co.     
 1,045   5.59%, 12/28/2020   1,051 
     National Australia Bank Ltd.     
 1,000   1.00%, 04/11/2014 ■Δ   1,007 
     Nordea Bank AB     
 833   1.18%, 01/14/2014 ■Δ   838 
 1,420   2.25%, 03/20/2015 ■   1,459 
     State Street Bank & Trust Co.     
 800   0.48%, 12/08/2015 Δ   794 
     Svenska Handelsbanken AB     
 1,000   3.13%, 07/12/2016    1,067 
 1,000   4.88%, 06/10/2014 ■   1,049 
     Swedbank AB     
 1,800   1.75%, 03/12/2018 ■   1,815 
     Union Bank NA     
 2,000   5.95%, 05/11/2016 ‡   2,274 
     Westpac Banking Corp.     
 1,000   1.01%, 03/31/2014 ■Δ   1,006 
         29,423 
     Depository Credit Banking - 7.5%     
     Bank of America Corp.     
 5,000   1.50%, 10/09/2015    5,030 
 3,000   2.00%, 01/11/2018    3,009 
     Bank of Montreal     
 1,500   0.88%, 04/09/2018 Δ   1,504 
     Bank of New York Mellon Corp.     
 1,500   1.97%, 06/20/2017 ‡Δ   1,552 
     Bank of Nova Scotia     
 1,500   1.38%, 12/18/2017    1,509 
     BB&T Corp.     
 815   1.60%, 08/15/2017    826 
     Citigroup, Inc.     
 1,250   1.25%, 01/15/2016    1,254 
 2,479   3.95%, 06/15/2016    2,684 
 2,000   4.59%, 12/15/2015    2,179 
 2,000   5.50%, 02/15/2017    2,243 
     Fifth Third Bancorp     
 636   3.63%, 01/25/2016    680 
 1,000   4.75%, 02/01/2015    1,066 
     HSBC Bank plc     
 950   0.94%, 08/12/2013 ■Δ   952 
     HSBC USA, Inc.     
 3,590   1.63%, 01/16/2018 ‡   3,614 
     PNC Funding Corp.     
 907   2.70%, 09/19/2016    958 
     Santander Holdings USA, Inc.     
 715   3.00%, 09/24/2015    740 
 738   4.63%, 04/19/2016    792 
     SunTrust Banks, Inc.     
 2,500   0.58%, 04/01/2015 Δ   2,474 
     Toronto-Dominion Bank     
 2,000   2.50%, 07/14/2016 ‡   2,103 
     U.S. Bancorp     
 2,250   1.65%, 05/15/2017 ‡   2,304 
     Wells Fargo & Co.     
 2,035   1.50%, 01/16/2018    2,042 
 1,000   2.10%, 05/08/2017    1,037 
     Wells Fargo Bank NA     
 1,000   0.50%, 05/16/2016 Δ   988 
         41,540 
     Insurance Carriers - 4.0%     
     Aetna, Inc.     
 635   1.50%, 11/15/2017    640 
     American International Group, Inc.     
 1,500   3.65%, 01/15/2014    1,532 

 

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

 

7

 

The Hartford Short Duration Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE BONDS - 55.1% - (continued) 
Finance and Insurance - 34.2% - (continued)     
     Insurance Carriers - 4.0% - (continued)     
     Cigna Corp.     
$503   2.75%, 11/15/2016  $533 
     CNA Financial Corp.     
 2,000   6.50%, 08/15/2016   2,301 
     ING US, Inc.     
 2,250   2.90%, 02/15/2018 ■   2,303 
     Jackson National Life Global Funding     
 2,500   5.38%, 05/08/2013 ■‡   2,502 
     MetLife Global Funding I     
 1,480   1.50%, 01/10/2018 ■   1,492 
     MetLife Institutional Funding II     
 3,500   1.63%, 04/02/2015 ■   3,561 
     New York Life Global Funding     
 2,000   2.45%, 07/14/2016 ■   2,101 
     Principal Financial Group, Inc.     
 365   1.85%, 11/15/2017   371 
     Principal Life Global Funding II     
 1,390   1.00%, 12/11/2015 ■   1,395 
     Prudential Financial, Inc.     
 2,000   6.20%, 01/15/2015   2,174 
     QBE Insurance Group Ltd.     
 390   2.40%, 05/01/2018 ■☼   392 
     Wellpoint, Inc.     
 1,000   2.38%, 02/15/2017   1,040 
         22,337 
     International Trade Financing (Foreign Banks) - 2.4%     
     Corpoacion Andina De Fomento     
 1,500   3.75%, 01/15/2016   1,593 
 1,000   5.20%, 05/21/2013   1,002 
     Royal Bank of Canada     
 1,500   1.50%, 01/16/2018   1,519 
     Royal Bank of Scotland plc     
 1,260   2.55%, 09/18/2015   1,298 
     Skandinaviska Enskilda Banken AB     
 1,250   1.75%, 03/19/2018 ■   1,262 
     Standard Chartered plc     
 3,570   3.20%, 05/12/2016 ■   3,790 
     TSMC Global LTD     
 2,800   1.63%, 04/03/2018 ■   2,821 
         13,285 
     Monetary Authorities - Central Bank - 1.0%     
     ABN Amro Bank N.V.     
 1,500   1.38%, 01/22/2016 ■   1,503 
 1,429   4.25%, 02/02/2017 ■   1,570 
     Lloyds Banking Group plc     
 1,500   4.38%, 01/12/2015 ■   1,584 
     Lloyds TSB Bank plc     
 820   4.20%, 03/28/2017   907 
         5,564 
     Nondepository Credit Banking - 4.1%     
     American Express Credit Corp.     
 2,000   2.80%, 09/19/2016   2,121 
     Capital One Bank     
 2,441   6.50%, 06/13/2013   2,458 
     Capital One Financial Corp.     
 1,455   2.15%, 03/23/2015   1,486 
 750   6.25%, 11/15/2013   773 
     CIT Group, Inc.     
 1,000   4.75%, 02/15/2015 ■   1,052 
     General Electric Capital Corp.     
 3,000   0.99%, 04/02/2018 Δ   3,007 
 2,000   1.00%, 01/08/2016    2,010 
 1,250   1.60%, 11/20/2017    1,266 
 3,000   2.30%, 04/27/2017    3,121 
     General Motors Financial Co., Inc.     
 1,500   4.75%, 08/15/2017 ■   1,582 
     SLM Corp.     
 750   3.88%, 09/10/2015    779 
 610   6.00%, 01/25/2017    660 
     Toyota Motor Credit Corp.     
 900   1.25%, 10/05/2017    903 
 1,750   1.75%, 05/22/2017    1,799 
         23,017 
     Other Financial Investment Activities - 1.1%     
     BP Capital Markets plc     
 2,250   1.85%, 05/05/2017 ‡   2,319 
     Xstrata Canada Finance Corp.     
 2,000   2.85%, 11/10/2014 ■   2,049 
     Xstrata Finance (Canada) Ltd.     
 2,000   1.80%, 10/23/2015 ■   2,025 
         6,393 
     Real Estate Credit (Mortgage Banking) - 0.2%     
     SBA Tower Trust     
 1,300   2.24%, 04/16/2043 ■   1,300 
           
     Real Estate Investment Trust (REIT) - 1.6%     
     Health Care, Inc.     
 1,010   2.25%, 03/15/2018   1,030 
 688   3.63%, 03/15/2016   732 
     Host Hotels & Resorts L.P.     
 1,250   6.00%, 11/01/2020   1,398 
     Host Marriott L.P.     
 501   6.75%, 06/01/2016   509 
     Simon Property Group, Inc.     
 1,965   1.50%, 02/01/2018 ■   1,972 
     Ventas Realty L.P.     
 3,000   2.00%, 02/15/2018   3,034 
         8,675 
     Sales Financing - 0.4%     
     Imperial Tobacco Finance plc     
 2,000   2.05%, 02/11/2018 ■   2,027 
           
     Securities and Commodity Contracts and Brokerage - 4.5%     
     Goldman Sachs Group, Inc.     
 2,250   1.60%, 11/23/2015 ‡   2,280 
 2,500   2.38%, 01/22/2018 ‡   2,548 
 1,279   3.63%, 02/07/2016   1,362 
     JP Morgan Chase & Co.     
 3,000   0.61%, 06/13/2016 ‡Δ   2,948 
 1,100   1.13%, 02/26/2016   1,105 
 3,000   1.80%, 01/25/2018   3,038 
 1,500   2.00%, 08/15/2017 ‡   1,539 
     Merrill Lynch & Co., Inc.     
 2,000   6.05%, 05/16/2016   2,225 

 

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

 

8

 

 

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE BONDS - 55.1% - (continued)     
Finance and Insurance - 34.2% - (continued)     
     Securities and Commodity Contracts and Brokerage - 4.5% - (continued)     
     Morgan Stanley     
$1,000   1.60%, 04/25/2018 Δ  $1,000 
 1,935   1.75%, 02/25/2016    1,949 
 2,000   3.80%, 04/29/2016    2,128 
     UBS AG Stamford CT     
 2,500   5.88%, 07/15/2016    2,807 
         24,929 
         190,380 
Food Manufacturing - 0.3%     
     Animal Slaughtering and Processing - 0.1%     
     ConAgra Foods, Inc.     
 345   1.90%, 01/25/2018    352 
     JBS USA LLC     
 483   11.63%, 05/01/2014    527 
         879 
     Sugar and Confectionery Product Manufacturing - 0.2%     
     Wrigley Jr., William Co.     
 1,000   3.05%, 06/28/2013 ■   1,003 
           
         1,882 
Furniture and Related Product Manufacturing - 0.7%     
     Household, Institution Furniture, Kitchen Cabinet - 0.7%     
     Masco Corp.     
 1,450   4.80%, 06/15/2015    1,524 
     Newell Rubbermaid, Inc.     
 2,000   2.00%, 06/15/2015    2,033 
 355   2.05%, 12/01/2017    358 
         3,915 
Health Care and Social Assistance - 2.5%     
     Drugs and Druggists' Sundries Merchant Wholesalers - 0.1%     
     Cardinal Health Inc.     
 370   1.70%, 03/15/2018    371 
           
     General Medical and Surgical Hospitals - 0.0%     
     Catholic Health Initiatives     
 195   1.60%, 11/01/2017    198 
           
     Medical Equipment and Supplies Manufacturing - 0.3%     
     Covidien International Finance S.A.     
 1,500   1.88%, 06/15/2013    1,503 
           
     Pharmaceutical and Medicine Manufacturing - 1.9%     
     AbbVie, Inc.     
 2,500   1.20%, 11/06/2015 ■   2,520 
     Express Scripts, Inc.     
 4,000   2.10%, 02/12/2015    4,085 
     GlaxoSmithKline Capital, Inc.     
 1,000   1.50%, 05/08/2017    1,020 
     Mylan, Inc.     
 2,000   6.00%, 11/15/2018 ■   2,193 
     Valeant Pharmaceuticals International     
 790   6.50%, 07/15/2016 ■   823 
         10,641 
     Scientific Research and Development Services - 0.2%     
     Laboratory Corp. of America Holdings     
 1,411   2.20%, 08/23/2017    1,431 
           
         14,144 
Information - 2.1%     
     Data Processing Services - 0.2%     
     Affiliated Computer Services, Inc.     
 1,000   5.20%, 06/01/2015    1,071 
           
     Satellite Telecommunications - 0.0%     
     Inmarsat Finance plc     
 210   7.38%, 12/01/2017 ■   223 
           
     Telecommunications - Other - 0.4%     
     Vivendi S.A.     
 2,005   2.40%, 04/10/2015 ■   2,043 
           
     Telecommunications - Wired Carriers - 1.0%     
     AT&T, Inc.     
 1,500   2.40%, 08/15/2016    1,565 
     British Telecommunications plc     
 505   2.00%, 06/22/2015    519 
     Deutsche Telekom International Finance B.V.     
 2,000   3.13%, 04/11/2016 ■   2,120 
     Videotron Ltee     
 1,195   9.13%, 04/15/2018    1,257 
         5,461 
     Telecommunications - Wireless Carriers - 0.2%     
     America Movil S.A.B. de C.V.     
 1,200   2.38%, 09/08/2016    1,247 
           
     Wireless Communications Services - 0.3%     
     Verizon Communications, Inc.     
 1,500   0.89%, 03/28/2014 ‡Δ   1,506 
           
         11,551 
Machinery Manufacturing - 0.8%     
     Agriculture, Construction, Mining and Machinery - 0.5%     
     Case New Holland, Inc.     
 1,240   7.75%, 09/01/2013    1,263 
     Ingersoll-Rand Global Holding Co.     
 1,385   6.00%, 08/15/2013    1,407 
         2,670 
     Commercial and Service Industry Machinery Manufacturing - 0.3%     
     Xerox Corp.     
 1,960   1.68%, 09/13/2013 Δ   1,966 
           
         4,636 
Mining - 1.3%     
     Metal Ore Mining - 1.0%     
     Barrick Gold Corp.     
 835   2.50%, 05/01/2018 ■   839 
     Freeport-McMoRan Copper & Gold, Inc.     
 1,015   2.38%, 03/15/2018 ■   1,022 
     Rio Tinto Finance USA Ltd.     
 2,050   2.00%, 03/22/2017    2,104 

 

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

 

9

 

The Hartford Short Duration Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE BONDS - 55.1% - (continued)     
Mining - 1.3% - (continued)     
     Metal Ore Mining - 1.0% - (continued)     
     Teck Resources Ltd.     
$1,500   2.50%, 02/01/2018   $1,524 
         5,489 
     Nonmetallic Mineral Mining and Quarrying - 0.3%     
     Vale Overseas Ltd.     
 1,720   6.25%, 01/23/2017    1,986 
           
         7,475 
Miscellaneous Manufacturing - 0.3%     
     Aerospace Product and Parts Manufacturing - 0.3%     
     Textron, Inc.     
 1,500   4.63%, 09/21/2016    1,638 
           
Motor Vehicle and Parts Manufacturing - 0.7%     
     Motor Vehicle Manufacturing - 0.7%     
     Daimler Finance NA LLC     
 3,800   1.88%, 09/15/2014 - 01/11/2018 ■   3,848 
           
Petroleum and Coal Products Manufacturing - 1.8%     
     Oil and Gas Extraction - 0.9%     
     Chesapeake Energy Corp.     
 660   9.50%, 02/15/2015   746 
     Petrobras International Finance Co.     
 1,100   3.88%, 01/27/2016   1,155 
 1,000   6.13%, 10/06/2016    1,122 
     Total Capital Canada Ltd.     
 685   1.45%, 01/15/2018    694 
     Total Capital International S.A.     
 1,155   1.55%, 06/28/2017    1,178 
         4,895 
     Petroleum and Coal Products Manufacturing - 0.8%     
     Hess Corp.     
 500   7.00%, 02/15/2014    523 
     Schlumberger Norge AS     
 925   1.25%, 08/01/2017 ■   930 
 1,400   1.95%, 09/14/2016 ■   1,451 
     Valero Energy Corp.     
 1,500   4.75%, 06/15/2013    1,508 
         4,412 
     Support Activities For Mining - 0.1%     
     Transocean, Inc.     
 565   2.50%, 10/15/2017    576 
           
         9,883 
Pipeline Transportation - 0.2%     
     Pipeline Transportation of Natural Gas - 0.2%     
     Enterprise Products Operating LLC     
 235   1.25%, 08/13/2015    237 
     Kinder Morgan Energy Partners L.P.     
 790   3.50%, 03/01/2016    844 
         1,081 
Primary Metal Manufacturing - 0.7%     
     Iron and Steel Mills and Ferroalloy Manufacturing - 0.7%     
     ArcelorMittal     
 1,380   4.25%, 02/25/2015 - 03/01/2016    1,429 
 1,228   5.38%, 06/01/2013    1,232 
 1,000   9.50%, 02/15/2015    1,129 
         3,790 
Real Estate, Rental and Leasing - 0.9%     
     Automotive Equipment Rental and Leasing - 0.4%     
     Enterprise Rent-a-Car Finance Corp.     
 1,050   1.40%, 04/15/2016 ■   1,057 
     Ryder System, Inc.     
 1,070   3.15%, 03/02/2015    1,110 
         2,167 
     General Rental Centers - 0.1%     
     ERAC USA Finance Co.     
 564   2.75%, 07/01/2013 ■   566 
           
     Industrial Machinery and Equipment Rental and Leasing - 0.4%     
     International Lease Finance Corp.     
 1,750   6.75%, 09/01/2016 ■   1,990 
           
         4,723 
 Retail Trade - 1.3%     
     Automotive Parts, Accessories and Tire Stores - 0.4%     
     Turlock Corp.     
 2,000   1.50%, 11/02/2017 ■   2,012 
           
     Grocery Stores - 0.3%     
     Kroger (The) Co.     
 1,250   7.00%, 05/01/2018    1,534 
           
     Other General Merchandise Stores - 0.4%     
     Dollar General Corp.     
 2,000   1.88%, 04/15/2018    2,011 
           
     Other Miscellaneous Store Retailers - 0.2%     
     Amazon.com, Inc.     
 1,385   1.20%, 11/29/2017    1,383 
           
         6,940 
 Truck Transportation - 0.4%     
     Specialized Freight Trucking - 0.4%     
     Penske Truck Leasing Co.     
 2,000   2.50%, 03/15/2016 ■   2,070 
 45   2.88%, 07/17/2018 ■   47 
         2,117 
 Utilities - 0.7%     
     Electric Generation, Transmission and Distribution - 0.7%     
     American Electric Power Co., Inc.     
 500   1.65%, 12/15/2017    505 
     Duke Energy Corp.     
 790   1.63%, 08/15/2017    801 
     Pacific Gas & Electric Co.     
 2,295   6.25%, 12/01/2013 ‡   2,371 
         3,677 
 Wholesale Trade - 0.8%     
     Beer, Wine, Distilled Alcoholic Beverage Wholesalers - 0.3%     
     SABMiller Holdings, Inc.     
 1,500   1.85%, 01/15/2015 ■   1,529 
           
     Electrical Goods Wholesalers - 0.1%     
     Arrow Electronics, Inc.     
 630   3.00%, 03/01/2018    645 

 

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

 

10

 

 

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE BONDS - 55.1% - (continued) 
Wholesale Trade - 0.8% - (continued) 
     Machinery, Equipment and Supplies Wholesalers - 0.4%     
     Pentair Finance S.A.     
$2,265   1.35%, 12/01/2015   $2,273 
           
         4,447 
     Total corporate bonds     
     (cost $298,862)  $306,482 
           
MUNICIPAL BONDS - 0.9%     
     General Obligations - 0.4%     
     Illinois State GO     
$2,200   4.96%, 03/01/2016   $2,399 
           
     Miscellaneous - 0.5%     
     Florida Hurricane Catastrophe Fund     
 2,775   1.30%, 07/01/2016    2,790 
           
     Total municipal bonds     
     (cost $5,146)  $5,189 
           
SENIOR FLOATING RATE INTERESTS♦ - 18.6%  
Accommodation and Food Services - 0.2%     
     Traveler Accommodation - 0.2%     
     Las Vegas Sands LLC, Extended Delayed Draw Term Loan     
$209   2.70%, 11/23/2016   $209 
     Las Vegas Sands LLC, Extended Term Loan     
 1,041   2.70%, 11/23/2016    1,042 
         1,251 
Administrative Waste Management and Remediation - 0.3%     
     Business Support Services - 0.2%     
     Trans Union LLC     
 1,221   4.25%, 02/08/2019    1,236 
           
     Waste Treatment and Disposal - 0.1%     
     ADS Waste Holdings, Inc.     
 559   4.25%, 10/09/2019    565 
           
         1,801 
Air Transportation - 0.5%     
     Scheduled Air Transportation - 0.5%     
     AWAS Finance Luxembourg S.A.     
 310   3.50%, 06/10/2016    312 
     Delta Air Lines, Inc.     
 289   4.00%, 10/18/2018    292 
     Delta Air Lines, Inc., Term Loan     
 1,538   4.25%, 04/20/2017    1,558 
     United Airlines, Inc.     
 495   4.00%, 04/01/2019    500 
         2,662 
Apparel Manufacturing - 0.1%     
     Apparel Knitting Mills - 0.1%     
     PVH Corp.     
 515   3.25%, 02/13/2020    519 
           
Arts, Entertainment and Recreation - 1.2% 
     Amusement Parks and Arcades - 0.1%     
     Cedar Fair L.P.     
520   3.25%, 03/06/2020   525 
           
     Cable and Other Subscription Programming - 0.0%     
     CSC Holdings, Inc.     
 215   2.70%, 04/15/2020    215 
           
     Gambling Industries - 0.3%     
     Seminole (The) Tribe of Florida, Inc.     
 545   04/11/2020 ◊☼   548 
     Station Casinos LLC     
 940   5.00%, 03/02/2020    951 
         1,499 
     Other Amusement and Recreation Industries - 0.3%     
     ClubCorp Club Operations, Inc.     
 1,871   5.00%, 11/30/2016    1,904 
           
     Radio and Television Broadcasting - 0.4%     
     Cumulus Media, Inc.     
 2,057   4.50%, 09/17/2018    2,092 
     Sinclair Television Group, Inc.     
 185   4.00%, 10/28/2016    186 
         2,278 
     Spectator Sports - 0.1%     
     Penn National Gaming, Inc.     
 375   3.75%, 07/16/2018    379 
           
         6,800 
Beverage and Tobacco Product Manufacturing - 0.1%     
     Beverage Manufacturing - 0.1%     
     Constellation Brands, Inc.     
 470   04/25/2020 ◊☼   470 
           
Chemical Manufacturing - 0.7%
     Basic Chemical Manufacturing - 0.5%     
     Huntsman International LLC, Term Loan C     
 1,769   2.47%, 06/30/2016    1,774 
     Pinnacle Operating Corp.     
 830   04/29/2020 ◊☼   833 
         2,607 
     Other Chemical and Preparations Manufacturing - 0.2%     
     Cytec Industries, Inc.     
 38   09/20/2019 ◊   38 
     DuPont Performance Coatings, Inc.     
 105   4.75%, 02/01/2020    107 
     Ineos US Finance LLC     
 1,087   6.50%, 05/04/2018    1,099 
     Monarch, Inc.     
 72   6.00%, 09/12/2019    73 
         1,317 
         3,924 
Computer and Electronic Product Manufacturing - 0.4%     
     Computer and Peripheral Equipment Manufacturing - 0.1%     
     CDW LLC     
 475   04/30/2020 ◊☼   476 

 

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

 

11

 

The Hartford Short Duration Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS♦ - 18.6% - (continued) 
Computer and Electronic Product Manufacturing - 0.4% - (continued) 
     Semiconductor, Electronic Components - 0.3%     
     Freescale Semiconductor, Inc.     
$1,750   5.00%, 03/01/2020   $1,774 
     Spectrum Brands Holdings, Inc.     
 140   4.50%, 12/17/2019    142 
         1,916 
         2,392 
Educational Services - 0.1%     
     Educational Support Services - 0.1%     
     Bright Horizons Family Solutions, Inc.     
 514   4.00%, 01/30/2020    518 
           
Finance and Insurance - 1.2%     
     Captive Auto Finance - 0.4%     
     Chrysler Group LLC     
 2,208   6.00%, 05/24/2017    2,236 
           
     Insurance Carriers - 0.4%     
     Asurion LLC     
 2,105   4.50%, 05/24/2019    2,128 
           
     Other Financial Investment Activities - 0.1%     
     Nuveen Investments, Inc.     
 500   4.20%, 05/13/2017    506 
     Ocwen Financial Corp.     
 350   5.00%, 02/15/2018    355 
         861 
     Securities, Commodities and Brokerage - 0.3%     
     RPI Finance Trust     
 1,582   4.00%, 11/09/2018    1,592 
           
         6,817 
Food Manufacturing - 0.3%     
     Fruits, Vegetable Preserving, Specialty Foods - 0.1%     
     Dole Food Co., Inc.     
 490   04/25/2020 ◊☼   493 
           
     Other Food Manufacturing - 0.2%     
     H. J. Heinz Co.     
 1,380   03/27/2020 ◊☼   1,392 
           
         1,885 
Food Services - 0.4%     
     Full-Service Restaurants - 0.2%     
     ARAMARK Corp.     
 1,000   3.46%, 07/26/2016   1,011 
           
     Limited-Service Eating Places - 0.2%     
     Wendy's International, Inc.     
 871   4.51%, 05/15/2019   875 
           
         1,886 
Health Care and Social Assistance - 2.5%    
     General Medical and Surgical Hospitals - 0.3%     
     HCA, Inc., Tranche B-2 Term Loan     
 1,006   3.53%, 03/31/2017   1,006 
     HCA, Inc., Tranche B-3 Term Loan     
 294   2.95%, 05/01/2018   294 
     Health Management Associates, Inc.     
 194   3.50%, 11/16/2018   196 
         1,496 
     Health Care Services - 0.1%     
     InVentiv Health, Inc., 1st Lien Consolidated Term Loan     
 150   7.50%, 08/04/2016   149 
     InVentiv Health, Inc., Term Loan B2     
 465   7.75%, 05/15/2018   460 
         609 
     Medical and Diagnostic Laboratories - 0.2%     
     American Renal Holdings, Inc.     
 1,280   4.50%, 08/20/2019   1,283 
           
     Medical Equipment and Supplies Manufacturing - 0.4%     
     Bausch & Lomb, Inc.     
 988   5.25%, 05/17/2019   998 
     DJO Finance LLC     
 384   4.75%, 09/15/2017   390 
     Hologic, Inc.     
 610   4.50%, 08/01/2019   619 
         2,007 
     Outpatient Care Centers - 0.0%     
     DaVita, Inc.     
 304   4.00%, 11/01/2019   307 
           
     Pharmaceutical and Medicine Manufacturing - 1.4%     
     Alere, Inc.     
 1,729   4.25%, 06/30/2017   1,752 
     Alkermes, Inc.     
 2,992   3.50%, 09/25/2019   2,996 
     Immucor, Inc.     
 1,622   5.00%, 08/19/2018   1,644 
     NBTY, Inc.     
 974   3.50%, 10/01/2017   984 
     Warner Chilcott Corp., Term Loan B-1     
 218   4.25%, 03/15/2018   221 
     Warner Chilcott Corp., Term Loan B-2     
 77   4.25%, 03/15/2018   78 
     Warner Chilcott Corp., Term Loan B-3     
 171   4.25%, 03/15/2018   174 
     Warner Chilcott plc     
 95   4.25%, 03/15/2018   96 
         7,945 
     Scientific Research and Development Services - 0.1%     
     IMS Health, Inc.     
 242   3.75%, 09/01/2017   244 
     Jazz Pharmaceuticals, Inc.     
 193   5.25%, 06/12/2018   195 
         439 
         14,086 
Information - 4.4%     
     Cable and Other Program Distribution - 1.5%     
     Charter Communications Operating LLC     
 415   04/10/2020 ◊☼   414 
 1,416   4.00%, 05/15/2019   1,419 

 

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

 

12

 

 

 

Shares or Principal Amount  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS♦ - 18.6% - (continued) 
Information - 4.4% - (continued) 
     Cable and Other Program Distribution - 1.5% - (continued)     
     Mediacom Broadband LLC, Tranche F Term Loan     
$1,305   4.50%, 10/23/2017  $1,312 
     TWCC Holding, Corp.     
 1,356   3.50%, 02/13/2017   1,375 
     UPC Financing Partnership     
 155   06/10/2021 ◊☼   155 
     Virgin Media Finance plc     
 3,525   02/15/2020 ◊☼   3,527 
         8,202 
     Data Processing Services - 0.1%     
     First Data Corp.     
 515   4.20%, 09/30/2018    513 
           
     Satellite Telecommunications - 0.3%     
     Telesat Canada     
 1,629   4.25%, 03/28/2019    1,641 
           
     Software Publishers - 0.9%     
     Emdeon, Inc.     
 1,587   3.75%, 11/02/2018    1,600 
     Kronos, Inc.     
 1,047   4.50%, 10/30/2019    1,060 
     Lawson Software, Inc.     
 898   5.25%, 04/05/2018    912 
     MISYS plc     
 1,746   7.25%, 12/12/2018    1,775 
         5,347 
     Telecommunications - Other - 0.7%     
     Integra Telecom, Inc.     
 220   6.00%, 02/22/2019    224 
     Intelsat Jackson Holdings S.A.     
 2,208   4.50%, 04/02/2018    2,236 
     Level 3 Financing, Inc.     
 402   4.75%, 08/01/2019    406 
 510   5.25%, 08/01/2019    517 
     Nine Entertainment Group Ltd     
 385   3.50%, 02/05/2020    386 
         3,769 
     Telecommunications - Wireless Carriers - 0.7%     
     Metro PCS Wireless, Inc., Tranche B-2 Term Loan     
 2,180   4.73%, 11/03/2016    2,180 
     Syniverse Holdings, Inc.     
 1,520   4.51%, 04/23/2019    1,531 
         3,711 
     Wireless Communications Services - 0.2%     
     Leap Wireless International, Inc.     
 865   4.75%, 03/01/2020    869 
     Windstream Corp.     
 140   3.50%, 01/23/2020    140 
         1,009 
         24,192 
Media - 0.4%     
     Broadcasting - 0.4%     
     Gray Television, Inc.     
 366   4.75%, 10/12/2019    371 
     Univision Communications, Inc.     
 2,000   4.75%, 03/01/2020    2,019 
         2,390 
Mining - 0.4%     
     Metal Ore Mining - 0.2%     
     Fortescue Metals Group Ltd.     
 1,025   5.25%, 10/18/2017    1,043 
           
     Mining and Quarrying Nonmetallic Mineral - 0.2%     
     Arch Coal, Inc.     
 1,102   5.75%, 05/16/2018    1,116 
           
         2,159 
Miscellaneous Manufacturing - 0.4%    
     Aerospace Product and Parts Manufacturing - 0.3%     
     DigitalGlobe, Inc.     
 1,040   3.75%, 01/31/2020    1,051 
     TransDigm Group, Inc.     
 453   3.75%, 02/28/2020    459 
         1,510 
     Miscellaneous Manufacturing - 0.1%     
     Reynolds Group Holdings, Inc.     
 910   4.75%, 09/28/2018    925 
           
         2,435 
Motor Vehicle and Parts Manufacturing - 0.2%    
     Motor Vehicle Parts Manufacturing - 0.2%     
     Allison Transmission, Inc.     
 289   4.25%, 08/23/2019    292 
     Tomkins LLC     
 995   3.75%, 09/29/2016    1,008 
         1,300 
Other Services - 0.2%    
     Commercial/Industrial Machine and Equipment - 0.2%     
     Rexnord LLC     
 884   4.50%, 04/01/2018    892 
           
Petroleum and Coal Products Manufacturing - 0.5%     
     Oil and Gas Extraction - 0.5%     
     MEG Energy Corp.     
 1,746   3.75%, 03/31/2020    1,763 
     Plains Exploration & Production Co.     
 481   3.91%, 11/30/2019    481 
     Ruby Western Pipeline Holdings LLC     
 275   3.50%, 03/31/2020    278 
     Samson Investment Co.     
 410   6.00%, 09/25/2018    415 
         2,937 
Pipeline Transportation - 0.1%     
     Pipeline Transportation of Natural Gas - 0.1%     
     EP Energy LLC     
 625   5.00%, 05/24/2018    628 
           
Plastics and Rubber Products Manufacturing - 0.8%     
     Plastics Product Manufacturing - 0.6%     
     Berry Plastics Group, Inc.     
 3,150   3.50%, 02/10/2020    3,145 

 

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

 

13

 

The Hartford Short Duration Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS♦ - 18.6% - (continued) 
Plastics and Rubber Products Manufacturing - 0.8% - (continued) 
     Rubber Manufacturing - 0.2%     
     Goodyear (The) Tire & Rubber Co.     
$1,000   4.75%, 04/30/2019  $1,007 
           
         4,152 
Primary Metal Manufacturing - 0.5%     
     Alumina and Aluminum Production and Processing - 0.5%     
     Novelis, Inc.     
 2,885   3.75%, 03/10/2017   2,932 
           
Professional, Scientific and Technical Services - 0.2%     
     Professional, Scientific and Technical Service Other - 0.2%     
     Getty Images, Inc.     
 938   4.75%, 10/18/2019   951 
           
Real Estate, Rental and Leasing - 0.1%     
     Activities Related To Real Estate - 0.0%     
     Realogy Corp., Extended 1st Lien Term Loan B     
 170   4.56%, 03/05/2020   172 
           
     Industrial Machinery, Equipment Rental and Leasing - 0.1%     
     Delos Aircraft, Inc.     
 400   4.75%, 04/12/2016   402 
           
         574 
Retail Trade - 1.4%     
     Building Material and Supplies Dealers - 0.1%     
     American Builders & Contractors Supply Co.     
 235   3.50%, 04/05/2020   237 
           
     Department Stores - 0.4%     
     Neiman (The) Marcus Group, Inc.     
 2,425   4.00%, 05/16/2018   2,442 
           
     Grocery Stores - 0.1%     
     Supervalu, Inc.     
 375   6.25%, 03/21/2019   380 
           
     Home Furnishing Stores - 0.3%     
     Armstrong World Industries, Inc.     
 1,450   3.50%, 02/26/2020   1,458 
           
     Other Miscellaneous Store Retailers - 0.3%     
     Aramark Corp.     
 610   4.00%, 08/22/2019   617 
     KAR Auction Services, Inc.     
 303   3.75%, 05/19/2017   307 
     Rite Aid Corp.     
 845   4.00%, 02/21/2020   855 
         1,779 
     Specialty Food Stores - 0.1%     
     Weight Watchers International, Inc.     
 715   3.75%, 04/02/2020   713 
           
     Sporting Goods, Hobby and Musical Instrument Store - 0.1%     
     Michaels Stores, Inc.     
 440   3.75%, 01/28/2020   444 
           
         7,453 
Soap, Cleaning Compound and Toilet Manufacturing - 0.1%     
     Soap, Cleaning Compound and Toilet Manufacturing - 0.1%     
     Yankee (The) Candle Co., Inc.     
 569   5.25%, 04/02/2019   571 
           
Utilities - 0.9%     
     Electric Generation, Transmission and Distribution - 0.9%     
     AES Corp.     
 1,522   3.75%, 06/01/2018   1,545 
     Calpine Corp.     
 1,219   4.00%, 10/09/2019   1,234 
     Energy Transfer Equity L.P.     
 576   3.75%, 03/24/2017   578 
     NRG Energy, Inc.     
 957   3.25%, 07/01/2018   968 
     Star West Generation LLC     
 430   5.00%, 03/13/2020   438 
     TPF Generation Holdings LLC, Letter of Credit     
 174   7.25%, 12/15/2013   174 
         4,937 
     Total senior floating rate interests     
     (cost $102,270)  $103,514 
           
U.S. GOVERNMENT AGENCIES - 11.3%     
     FHLMC - 2.4%     
$7,700   0.50%, 08/28/2015  $7,729 
 14,257   2.23%, 08/25/2018 ►   1,309 
 12,744   2.78%, 07/25/2021 ►   1,422 
 2,914   3.50%, 04/01/2027   3,110 
         13,570 
     FNMA - 8.5%     
 12,600   2.50%, 05/12/2028 ☼   13,175 
 16,000   3.00%, 05/15/2027 ☼   16,897 
 16,486   3.50%, 12/01/2026 - 05/15/2041 ☼   17,539 
         47,611 
     GNMA - 0.4%     
 1,157   5.00%, 08/20/2039   1,278 
 687   6.50%, 05/16/2031╦   788 
         2,066 
     Total U.S. government agencies     
     (cost $62,374)  $63,247 
           
     Total long-term investments     
     (cost $581,872)  $591,783 

 

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

 

14

 

 

 

Shares or Principal Amount  Market Value ╪ 
SHORT-TERM INVESTMENTS - 1.6% 
Repurchase Agreements - 1.6%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $345,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $351)
   
$344   0.17%, 4/30/2013  $344 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $939, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015
- 2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$958)
     
 939   0.15%, 4/30/2013   939 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,808, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $1,844)
     
 1,808   0.15%, 4/30/2013   1,808 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $2,511,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $2,561)
     
 2,511   0.14%, 4/30/2013   2,511 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $452,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value of
$461)
     
 452   0.17%, 4/30/2013   452 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,530, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $1,561)
     
 1,530   0.14%, 4/30/2013   1,530 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$1,076, collateralized by U.S. Treasury
Note 0.25% - 1.88%, 2014 - 2019, value of
$1,097)
     
 1,076   0.17%, 4/30/2013   1,076 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$19, collateralized by U.S. Treasury Note
3.88%, 2018, value of $20)
     
 19   0.13%, 4/30/2013   19 
         8,679 
     Total short-term investments     
     (cost $8,679)  $8,679 
           
     Total investments     
     (cost $590,551) ▲ 107.9 %  $600,462 
     Other assets and liabilities (7.9 )%   (43,946)
     Total net assets 100.0 %  $556,516 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $590,625 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $11,363 
Unrealized Depreciation   (1,526)
Net Unrealized Appreciation  $9,837 

 

These securities were valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $2,000, which represents 0.4% of total net assets.

 

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.

 

ΔVariable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $143,334, which represents 25.8% of total net assets.

 

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

 

15

 

The Hartford Short Duration Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Securities disclosed are interest-only strips.  The interest rates represent effective yields based upon estimated future cash flows at April 30, 2013.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $46,842 at April 30, 2013.

 

All or a portion of this position represents unsettled loan commitment.  The coupon rate will be determined at time of settlement.

 

Senior floating rate interests 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 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.  Unless otherwise noted, the interest rate disclosed for these securities represents the average coupon as of April 30, 2013.

 

This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.

 

Futures Contracts Outstanding at April 30, 2013

 

Description  Number of
Contracts*
  Expiration
Date
  Notional Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
Long position contracts:                     
U.S. Treasury 10-Year Note Future  21  06/19/2013  $2,768   $2,801   $33 
Short position contracts:                     
Euro-BUND Future  37  06/06/2013  $7,011   $7,143   $(132)
U.S. Treasury 5-Year Note Future  208  06/28/2013   25,772    25,925    (153)
                   $(285)
                   $(252)

 

* The number of contracts does not omit 000's.

 

Cash of $198 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013. 

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
EUR  Sell  05/01/2013  JPM  $4   $4   $ 

 

Interest Rate Swap Contracts Outstanding at April 30, 2013

 

Counterparty  Payments made by Fund  Payments received by Fund 

Notional
Amount *

   Expiration
Date
 

Upfront
Premiums
Paid/
(Received)

  

Market
Value ╪

  

Unrealized
Appreciation/
(Depreciation)

 
BOA  3M CAD BA CDOR  1.58% Fixed  CAD  6,000    04/29/18  $   $   $ 
JPM  0.90% Fixed  6M LIBOR GBP  GBP  4,000    04/29/18            
                 $   $   $ 

 

* Notional shown in U.S. dollars unless otherwise noted.

 

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

 

 

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)

 

Counterparty Abbreviations:
BOA Banc of America Securities LLC  
JPM JP Morgan Chase & Co.  

 

Currency Abbreviations:
CAD Canadian Dollar  
EUR EURO  
GBP British Pound  

 

Municipal Bond Abbreviations:
GO General Obligation  

 

Other Abbreviations:
CAD BA CDOR Canadian Bankers Acceptance Dealer Offered Rate
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
LIBOR London Interbank Offered Rate

 

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

 

17

 

The Hartford Short Duration Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Asset & Commercial Mortgage Backed Securities  $113,351   $   $99,735   $13,616 
Corporate Bonds   306,482        306,482     
Municipal Bonds   5,189        5,189     
Senior Floating Rate Interests   103,514        103,514     
U.S. Government Agencies   63,247        63,247     
Short-Term Investments   8,679        8,679     
Total  $600,462   $   $586,846   $13,616 
Foreign Currency Contracts *                
Futures *   33    33         
Interest Rate Swaps *                
Total  $33   $33   $   $ 
Liabilities:                    
Futures *   285    285         
Total  $285   $285   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.

*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance as
of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3 *
   Transfers
Out of
Level 3 *
   Balance as
of April
30, 2013
 
Assets:                                             
Asset & Commercial Mortgage Backed Securities  $10,929   $(24)  $(464)†  $(166)  $12,675   $(232)  $   $(9,102)  $13,616 
Total  $10,929   $(24)  $(464)  $(166)  $12,675   $(232)  $   $(9,102)  $13,616 

 

*Investments are transferred into and out of Level 3 for a variety of reasons including, but not limited to:

   1) Investments where trading has been halted (transfer into Level 3) or investments where trading has resumed (transfer out of Level 3).

   2) Broker quoted investments (transfer into Level 3) or quoted prices in active markets (transfer out of Level 3).

   3) Investments that have certain restrictions on trading (transfer into Level 3) or investments where trading restrictions have expired (transfer out of Level 3).

Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $(464).

 

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

 

18

 

The Hartford Short Duration Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $590,551)  $600,462 
Cash   1,874*
Unrealized appreciation on foreign currency contracts    
Unrealized appreciation on swap contracts    
Receivables:     
Investment securities sold   1,053 
Fund shares sold   3,874 
Dividends and interest   2,962 
Variation margin   6 
Other assets   91 
Total assets   610,322 
Liabilities:     
Payables:     
Investment securities purchased   50,252 
Fund shares redeemed   3,325 
Investment management fees   41 
Dividends   66 
Administrative fees    
Distribution fees   35 
Variation margin   2 
Accrued expenses   85 
Total liabilities   53,806 
Net assets  $556,516 
Summary of Net Assets:     
Capital stock and paid-in-capital  $544,018 
Distributions in excess of net investment loss   (40)
Accumulated net realized gain   2,879 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   9,659 
Net assets  $556,516 
      
Shares authorized   650,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $10.07/$10.28 
Shares outstanding   28,710 
Net assets  $288,991 
Class B: Net asset value per share  $10.10 
Shares outstanding   691 
Net assets  $6,978 
Class C: Net asset value per share  $10.06 
Shares outstanding   13,361 
Net assets  $134,467 
Class I: Net asset value per share  $10.08 
Shares outstanding   11,651 
Net assets  $117,495 
Class R3: Net asset value per share  $10.04 
Shares outstanding   25 
Net assets  $249 
Class R4: Net asset value per share  $10.05 
Shares outstanding   122 
Net assets  $1,227 
Class R5: Net asset value per share  $10.04 
Shares outstanding   11 
Net assets  $107 
Class Y: Net asset value per share  $10.04 
Shares outstanding   697 
Net assets  $7,002 

 

*Cash of $198 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

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

 

19

 

The Hartford Short Duration Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:    
Interest  $7,146 
Total investment income   7,146 
      
Expenses:     
Investment management fees   1,239 
Administrative services fees     
Class R3    
Class R4   1 
Class R5    
Transfer agent fees     
Class A   139 
Class B   8 
Class C   63 
Class I   38 
Class R3    
Class R4    
Class Y    
Distribution fees     
Class A   356 
Class B   9 
Class C   676 
Class R3   1 
Class R4   1 
Custodian fees   5 
Accounting services fees   56 
Registration and filing fees   64 
Board of Directors' fees   9 
Audit fees   8 
Other expenses   42 
Total expenses (before waivers and fees paid indirectly)   2,715 
Expense waivers   (17)
Custodian fee offset    
Total waivers and fees paid indirectly   (17)
Total expenses, net   2,698 
Net Investment Income   4,448 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities   2,970 
Net realized loss on futures   (48)
Net realized gain on swap contracts    
Net realized gain on foreign currency contracts    
Net realized gain on other foreign currency transactions    
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   2,922 
Net Changes in Unrealized Depreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized depreciation of investments   (819)
Net unrealized depreciation of futures   (220)
Net unrealized appreciation of swap contracts    
Net unrealized appreciation of foreign currency contracts    
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies    
Net Changes in Unrealized Depreciation of Investments, Other Financial Instruments and Foreign Currency Transactions   (1,039)
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   1,883 
Net Increase in Net Assets Resulting from Operations  $6,331 

 

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

 

20

 

The Hartford Short Duration Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $4,448   $13,183 
Net realized gain on investments, other financial instruments and foreign currency transactions   2,922    6,883 
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions   (1,039)   6,958 
Net Increase in Net Assets Resulting from Operations   6,331    27,024 
Distributions to Shareholders:          
From net investment income          
Class A   (2,492)   (5,525)
Class B   (66)   (177)
Class C   (675)   (1,834)
Class I   (1,241)   (2,486)
Class R3   (2)   (2)
Class R4   (7)   (4)
Class R5   (1)   (3)
Class Y   (62)   (3,408)
Total from net investment income   (4,546)   (13,439)
From net realized gain on investments          
Class A   (517)    
Class B   (15)    
Class C   (252)    
Class I   (228)    
Class R3   (1)    
Class R4   (1)    
Class R5        
Class Y   (9)    
Total from net realized gain on investments   (1,023)    
Total distributions   (5,569)   (13,439)
Capital Share Transactions:          
Class A   8,640    (5,384)
Class B   (989)   (1,788)
Class C   (2,222)   (7,563)
Class I   (122)   26,577 
Class R3   (8)   154 
Class R4   441    679 
Class R5   1    2 
Class Y   2,024    (226,795)
Net increase (decrease) from capital share transactions   7,765    (214,118)
Net Increase (Decrease) in Net Assets   8,527    (200,533)
Net Assets:          
Beginning of period   547,989    748,522 
End of period  $556,516   $547,989 
Undistributed (distribution in excess of) net investment income (loss)  $(40)  $58 

 

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

 

21

 

The Hartford Short Duration Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 2.00%. 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of

 

22

 

 

the investment as determined in good faith under policies and procedures established by and under the supervision of the Company's Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund's portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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:

 

23

 

The Hartford Short Duration Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

·Level 1 – Quoted prices in active markets for identical investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price. For more information on specific valuation techniques and unobservable inputs, please see table below titled "Quantitative Information about Level 3 Fair Value Measurements".

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

24

 

 

 

Quantitative Information about Level 3 Fair Value Measurements:

 

Security Type / Valuation Technique  Unobservable Input(1)  Range
(Weighted Average(2) )
  Fair Value at
April 30, 2013
 
Asset & Commercial Mortgage Backed Securities:           
Cost  Recent trade price  03/15/2013-04/25/2013  $6,107 
Discounted cash flow  Internal rate of return  1.0% - 50.4%  (12.8%)   1,154 
   Life expectancy (in months)  2 - 407 (31)     
Indicitave market quotes(3)  Third party indicative quote methodologies        
   can vary significantly  Not Applicable   6,355 
Total        $13,616 

 

(1)Significant increases and decreases in these inputs may result in a significant change to fair value.
(2)Inputs were weighted based on the fair value of the investments included in the range.
(3)For investments priced using indicative market quotes, these quotes represent the best available estimate of fair value as of April 30, 2013.

 

c)Investment Transactions and Investment Income – Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Trade date for senior floating rate interests purchased in the primary loan market is considered the date on which the loan allocations are determined. Trade date for senior floating rate interests purchased in the secondary loan market is the date on which the transaction is entered into.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. Paydown gains and losses on mortgage-related and other asset-backed securities are included in interest income in the Statement of Operations, as applicable.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of

 

25

 

The Hartford Short Duration Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Normally, dividends from net investment income are declared daily and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During

 

26

 

 

 

this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

d)Senior Floating Rate Interests – The Fund, as shown on the Schedule of Investments, invests 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. The Fund may invest in multiple series or tranches of a senior floating rate interest, which may have varying terms and carry different associated risks. The Fund may also enter into unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. In certain circumstances, the Fund may receive various fees upon the restructure of a senior floating rate interest by a borrower. Fees earned/paid may be recorded as a component of income or realized gain/loss in the Statement of Operations.

 

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.

 

e)Mortgage Related and Other Asset Backed Securities The Fund may invest in mortgage related and other asset backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations, commercial mortgage backed securities, stripped mortgage backed securities, asset backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. Mortgage related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. These securities provide a monthly payment that consists of both interest and principal payments. Interest payments may be determined by fixed or adjustable rates. The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. The timely payment of principal and interest of certain mortgage related securities is guaranteed by the full faith and credit of the United States Government. Mortgage related and other asset backed securities created and guaranteed by non-governmental issuers, including government-sponsored corporations, may be supported by various forms of insurance or guarantees, but there can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund, as shown on the  Schedule of Investments, had mortgage related and other asset backed securities as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and

 

27

 

The Hartford Short Duration Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. The Fund, as shown on the  Schedule of Investments, had outstanding futures contracts as of April 30, 2013.

 

c)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the

 

28

 

 

 

netting of payments made or received (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

Interest Rate Swap Contracts 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 or inflation benchmark (e.g. London Interbank Offered Rate (“LIBOR”)), 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 contracts is recorded as a realized gain or loss. 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 contract 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 contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The Fund, as shown on the Schedule of Investments, had outstanding interest rate swaps as of April 30, 2013.

 

d)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $   $   $   $   $   $ 
Unrealized appreciation on swap contracts                            
Variation margin receivable *   6                        6 
Total  $6   $   $   $   $   $   $6 
                                    
Liabilities:                                   
Variation margin payable *  $2   $   $   $   $   $   $2 
Total  $2   $   $   $   $   $   $2 

 

*Only current day's variation margin is reported within the Statement of Assets and Liabilities. The variation margin is included in the open futures cumulative depreciation of $(252) as reported in the Schedule of Investments.

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

29

 

The Hartford Short Duration Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Loss on Derivatives Recognized as a Result of Operations:
Net realized loss on futures  $(48)  $   $   $   $   $   $(48)
Net realized gain on swap contracts                            
Net realized gain on foreign currency contracts                            
Total  $(48)  $   $   $   $   $   $(48)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized depreciation of futures  $(220)  $   $   $   $   $   $(220)
Net change in unrealized appreciation of swap contracts                            
Net change in unrealized appreciation of foreign currency contracts                            
Total  $(220)  $   $   $   $   $   $(220)

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. Senior floating rate interests and securities subject to prepayment and extension risk generally offer less potential for gains when interest rates decline. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities, senior floating rate interests, and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or

 

30

 

 

 

perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $13,461   $12,927 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $160 
Undistributed Long-Term Capital Gain   1,022 
Unrealized Appreciation *   10,655 
Total Accumulated Earnings  $11,837 

 

*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.

 

31

 

The Hartford Short Duration Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $192 
Accumulated Net Realized Gain (Loss)   (192)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

During the year ended October 31, 2012, the Fund utilized $5,666 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment

 

32

 

 

 

objective and policies. The Fund pays a fee to the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets   Annual Fee 
On first $500 million   0.450% 
On next $500 million   0.400% 
On next $1.5 billion   0.395% 
On next $2.5 billion   0.390% 
On next $5 billion   0.380% 
Over $10 billion   0.370% 

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets   Annual Fee 
On first $5 billion   0.020% 
On next $5 billion   0.018% 
Over $10 billion   0.016% 

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 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%      1.15%      0.85%      0.55%      0.55%   

 

*Due to the reduced Class B Distribution and Service Plan (12b-1) fees effective January 1, 2011, the limit on net operating expenses attributable to Class B shares is 0.85%.

 

33

 

The Hartford Short Duration Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

d)Fees Paid Indirectly The Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, this amount, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

  

Annualized Six-
Month Period
Ended
April 30, 2013

 
Class A   0.85%
Class B   0.85 
Class C   1.60 
Class I   0.57 
Class R3   1.15 
Class R4   0.85 
Class R5   0.55 
Class Y   0.51 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $291 and contingent deferred sales charges of $32 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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. Effective January 1, 2011, Class B shares’ Rule 12b-1 fee was reduced from 1.00% to 0.25% in accordance with FINRA rules, although it is possible that such fees may be charged in the future. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class.

 

34

 

 

 

For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R3   44%
Class R4   9 
Class R5   100 
Class Y   3 
      

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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   $450,480 
Sales Proceeds Excluding U.S. Government Obligations    442,334 

 

35

 

The Hartford Short Duration Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   8,023    283    (7,445)       861    14,140    515    (15,224)       (569)
Amount  $80,538   $2,839   $(74,737)  $   $8,640   $140,249   $5,107   $(150,740)  $   $(5,384)
Class B                                                  
Shares   100    7    (208)       (101)   195    16    (392)       (181)
Amount  $997   $71   $(2,057)  $   $(989)  $1,929   $155   $(3,872)  $   $(1,788)
Class C                                                  
Shares   2,956    83    (3,260)       (221)   6,124    159    (7,045)       (762)
Amount  $29,667   $835   $(32,724)  $   $(2,222)  $60,664   $1,580   $(69,807)  $   $(7,563)
Class I                                                  
Shares   7,022    120    (7,154)       (12)   14,240    195    (11,745)       2,690 
Amount  $70,611   $1,203   $(71,936)  $   $(122)  $141,118   $1,942   $(116,483)  $   $26,577 
Class R3                                                  
Shares   2        (3)       (1)   15    1            16 
Amount  $20   $2   $(30)  $   $(8)  $152   $2   $   $   $154 
Class R4                                                  
Shares   46    1    (3)       44    68                68 
Amount  $458   $7   $(24)  $   $441   $675   $4   $   $   $679 
Class R5                                                  
Shares                           1            1 
Amount  $   $1   $   $   $1   $   $2   $   $   $2 
Class Y                                                  
Shares   236    7    (41)       202    2,573    333    (25,889)       (22,983)
Amount  $2,367   $71   $(414)  $   $2,024   $25,376   $3,277   $(255,448)  $   $(226,795)
Total                                                  
Shares   18,385    501    (18,114)       772    37,355    1,220    (60,295)       (21,720)
Amount  $184,658   $5,029   $(181,922)  $   $7,765   $370,163   $12,069   $(596,350)  $   $(214,118)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   24   $239 
For the Year Ended October 31, 2012   47   $463 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

36

 

 

 

12.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

13.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

14.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

37

 

The Hartford Short Duration Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
 
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $10.05   $0.09   $0.04   $0.13   $(0.09)  $(0.02)  $   $(0.11)  $10.07 
B   10.05    0.09    0.07    0.16    (0.09)   (0.02)       (0.11)   10.10 
C   10.05    0.05    0.03    0.08    (0.05)   (0.02)       (0.07)   10.06 
I   10.07    0.10    0.03    0.13    (0.10)   (0.02)       (0.12)   10.08 
R3   10.03    0.07    0.03    0.10    (0.07)   (0.02)       (0.09)   10.04 
R4   10.04    0.09    0.03    0.12    (0.09)   (0.02)       (0.11)   10.05 
R5   10.03    0.10    0.03    0.13    (0.10)   (0.02)       (0.12)   10.04 
Y   10.03    0.10    0.03    0.13    (0.10)   (0.02)       (0.12)   10.04 
                                              
For the Year Ended October 31, 2012 (E)
A   9.83    0.20    0.23    0.43    (0.21)           (0.21)   10.05 
B   9.82    0.20    0.24    0.44    (0.21)           (0.21)   10.05 
C   9.83    0.13    0.22    0.35    (0.13)           (0.13)   10.05 
I   9.84    0.23    0.23    0.46    (0.23)           (0.23)   10.07 
R3   9.81    0.17    0.23    0.40    (0.18)           (0.18)   10.03 
R4   9.81    0.20    0.24    0.44    (0.21)           (0.21)   10.04 
R5   9.81    0.23    0.23    0.46    (0.24)           (0.24)   10.03 
Y   9.80    0.23    0.24    0.47    (0.24)           (0.24)   10.03 
                                              
For the Year Ended October 31, 2011
A   9.87    0.21    (0.04)   0.17    (0.21)           (0.21)   9.83 
B   9.87    0.20    (0.05)   0.15    (0.20)           (0.20)   9.82 
C   9.87    0.14    (0.04)   0.10    (0.14)           (0.14)   9.83 
I   9.89    0.24    (0.05)   0.19    (0.24)           (0.24)   9.84 
R3(H)   9.73    0.01    0.08    0.09    (0.01)           (0.01)   9.81 
R4(H)   9.73    0.02    0.08    0.10    (0.02)           (0.02)   9.81 
R5(H)   9.73    0.02    0.08    0.10    (0.02)           (0.02)   9.81 
Y   9.85    0.24    (0.04)   0.20    (0.25)           (0.25)   9.80 
                                              
For the Year Ended October 31, 2010
A   9.62    0.25    0.26    0.51    (0.26)           (0.26)   9.87 
B   9.62    0.18    0.25    0.43    (0.18)           (0.18)   9.87 
C   9.62    0.18    0.26    0.44    (0.19)           (0.19)   9.87 
I(I)   9.74    0.18    0.15    0.33    (0.18)           (0.18)   9.89 
Y   9.60    0.29    0.25    0.54    (0.29)           (0.29)   9.85 
                                              
For the Year Ended October 31, 2009
A   9.21    0.33    0.41    0.74    (0.33)           (0.33)   9.62 
B   9.21    0.26    0.41    0.67    (0.26)           (0.26)   9.62 
C   9.21    0.26    0.41    0.67    (0.26)           (0.26)   9.62 
Y   9.19    0.36    0.41    0.77    (0.36)           (0.36)   9.60 
                                              
For the Year Ended October 31, 2008
A   9.82    0.37    (0.62)   (0.25)   (0.36)           (0.36)   9.21 
B   9.82    0.29    (0.61)   (0.32)   (0.29)           (0.29)   9.21 
C   9.82    0.29    (0.61)   (0.32)   (0.29)           (0.29)   9.21 
Y   9.81    0.40    (0.63)   (0.23)   (0.39)           (0.39)   9.19 

 

(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)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)Commenced operations on September 30, 2011.
(I)Commenced operations on February 26, 2010.    

 

38

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
  
                      
 1.26%(F)  $288,991    0.86%(G)   0.85%(G)   1.71%(G)   31%
 1.56(F)   6,978    0.98(G)   0.85(G)   1.71(G)    
 0.78(F)   134,467    1.60(G)   1.60(G)   0.96(G)    
 1.29(F)   117,495    0.57(G)   0.57(G)   1.99(G)    
 1.01(F)   249    1.23(G)   1.15(G)   1.41(G)    
 1.16(F)   1,227    0.92(G)   0.85(G)   1.72(G)    
 1.31(F)   107    0.61(G)   0.55(G)   2.01(G)    
 1.33(F)   7,002    0.51(G)   0.51(G)   2.06(G)    
                            
                            
 4.37    279,952    0.86    0.85    2.03    61 
 4.48    7,959    0.97    0.85    2.04     
 3.60    136,515    1.60    1.60    1.28     
 4.75    117,449    0.58    0.58    2.30     
 4.07    258    1.23    1.15    1.72     
 4.48    783    0.93    0.85    2.02     
 4.69    106    0.62    0.55    2.33     
 4.84    4,967    0.50    0.50    2.34     
                            
                            
 1.77    279,232    0.86    0.85    2.13    55 
 1.54    9,558    1.09    0.98    2.01     
 1.02    140,933    1.59    1.59    1.39     
 1.97    88,321    0.56    0.56    2.41     
 0.96(F)   101    1.27(G)   1.15(G)   1.70(G)    
 0.98(F)   101    0.97(G)   0.85(G)   1.99(G)    
 1.01(F)   101    0.67(G)   0.55(G)   2.28(G)    
 2.02    230,175    0.51    0.51    2.48     
                            
                            
 5.33    208,313    0.87    0.87    2.55    66 
 4.51    10,799    1.73    1.65    1.80     
 4.56    105,060    1.60    1.60    1.79     
 3.42(F)   26,765    0.58(G)   0.58(G)   2.49(G)    
 5.71    139,394    0.52    0.52    2.90     
                            
 8.23    125,549    0.91    0.90    3.50    56 
 7.42    9,322    1.80    1.65    2.78     
 7.42    52,909    1.65    1.65    2.78     
 8.62    93,804    0.53    0.53    3.92     
                            
                            
 (2.60)   46,620    0.95    0.90    3.78    73 
 (3.33)   5,846    1.84    1.65    3.06     
 (3.33)   26,738    1.69    1.65    3.03     
 (2.40)   107,669    0.58    0.58    4.11     

 

39

 

The Hartford Short Duration Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

40

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

41

 

The Hartford Short Duration Fund
Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

42

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,012.60   $4.25   $1,000.00   $1,020.58   $4.26    0.85%  181  365
Class B  $1,000.00   $1,015.60   $4.25   $1,000.00   $1,020.58   $4.26    0.85   181  365
Class C  $1,000.00   $1,007.80   $7.97   $1,000.00   $1,016.85   $8.01    1.60   181  365
Class I  $1,000.00   $1,012.90   $2.86   $1,000.00   $1,021.96   $2.87    0.57   181  365
Class R3  $1,000.00   $1,010.10   $5.74   $1,000.00   $1,019.09   $5.76    1.15   181  365
Class R4  $1,000.00   $1,011.60   $4.24   $1,000.00   $1,020.58   $4.26    0.85   181  365
Class R5  $1,000.00   $1,013.10   $2.75   $1,000.00   $1,022.06   $2.76    0.55   181  365
Class Y  $1,000.00   $1,013.30   $2.55   $1,000.00   $1,022.26   $2.56    0.51   181  365

 

43

 

The Hartford Short Duration Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Short Duration Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

44

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

45

 

The Hartford Short Duration Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early). These risks also apply to the Fund’s investments in U.S. government securities, which may not be guaranteed by the U.S. government.

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

Loan Risk: The Fund’s investments in loans may at times become difficult to value and highly illiquid; they are subject to credit risk such as nonpayment of principal or interest, and risks of bankruptcy and insolvency.

 

Mortgage-Backed Securities Risk: Mortgage-backed securities are subject to interest rate risk, credit risk, prepayment risk, extension risk, and the risk that an investment’s value may be reduced or become worthless if it receives interest or income payments only after other investments in the same pool.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

46
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-SD13 4/13 113997 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

37

 

 

 
 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD SMALL COMPANY FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford Small Company Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 10
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 11
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 12
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 13
Notes to Financial Statements (Unaudited) 14
Financial Highlights (Unaudited) 28
Directors and Officers (Unaudited) 31
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 33
Quarterly Portfolio Holdings Information (Unaudited) 33
Expense Example (Unaudited) 34
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 35
Principal Risks (Unaudited) 37

  

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Small Company Fund inception 07/22/1996
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks growth of capital.

 

Performance Overview 4/30/03 - 4/30/13

 

Z:\Vineyard\Live jobs\2013\06 June\19 June\Shift III\v348149-Hartford Mutual Fund N-CSRS\Draft\03-Production

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
Small Company A#   15.82%       11.71%       5.03%       10.89%    
Small Company A##        5.57%       3.85%       10.26%    
Small Company B#   15.37%       10.91%       4.33%       10.35%*    
Small Company B##        5.91%       3.99%       10.35%*    
Small Company C#   15.36%       10.89%       4.27%       10.07%    
Small Company C##        9.89%       4.27%       10.07%    
Small Company I#   15.95%       11.96%       5.29%       11.08%    
Small Company R3#   15.71%       11.55%       4.83%       10.92%    
Small Company R4#   15.88%       11.90%       5.16%       11.15%    
Small Company R5#   16.09%       12.22%       5.45%       11.35%    
Small Company Y#   16.10%       12.31%       5.57%       11.43%    
Russell 2000 Growth Index   16.60%       15.67%       7.81%       10.53%    

 

Not Annualized
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses.

 

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. (The Russell 2000 Index is a broad-based unmanaged index comprised of 2,000 of the smallest U.S.-domiciled company common stocks (on the basis of capitalization) that are traded in the United States on the New York Stock Exchange, American Stock Exchange and Nasdaq.)

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Small Company Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Small Company Class A   1.40%       1.41%    
Small Company Class B   2.15%       2.37%    
Small Company Class C   2.12%       2.12%    
Small Company Class I   1.14%       1.14%    
Small Company Class R3   1.55%       1.58%    
Small Company Class R4   1.25%       1.27%    
Small Company Class R5   0.95%       1.00%    
Small Company Class Y   0.87%       0.87%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers    
Steven C. Angeli, CFA Stephen C. Mortimer Jamie A. Rome, CFA
Senior Vice President and Equity Portfolio Manager Senior Vice President and Equity Portfolio Manager Senior Vice President and Equity Portfolio Manager
     
Mario E. Abularach, CFA Mammen Chally, CFA  
Senior Vice President and Equity Research Analyst Vice President and Equity Portfolio Manager  

 

How did the Fund perform?

The Class A shares of The Hartford Small Company Fund returned 15.82%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmark, the Russell 2000 Growth Index which returned 16.60% for the same period. The Fund outperformed the 13.64% average return 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?

U.S. equities surged during the period, ending at an all-time high. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. U.S. housing data continued to provide evidence that the sector at the epicenter of the financial crisis could be a key engine of economic recovery in 2013. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

Small cap stocks (+16.6%) underperformed mid cap stocks (+19.2%) and outperformed large cap stocks (+14.4%) during the period, as measured by the Russell 2000, S&P MidCap 400, and S&P 500 indices, respectively. Small Cap Growth (+16.6%) stocks performed inline with Small Cap Value (+16.6%) stocks during the period, as measured by the Russell 2000 Growth and Russell 2000 Value indices, respectively. All ten sectors in the Russell 2000 Growth Index had positive returns during the period. The Financials (+21.9%), Health Care (+18.8%), and Industrials (+18.8%) sectors performed best, while Utilities (+3.0%) and Energy (+9.5%) lagged on a relative basis.

 

During the period, the Fund benefited from strong stock selection in the Materials, Consumer Discretionary, Industrials, and Health Care sectors; this was partially offset by weaker selection in the Information Technology, Consumer Staples, and Financials sectors. Sector allocation, which is the result of bottom-up stock selection, detracted from relative returns, primarily due to an underweight (i.e. the Fund’s sector position was less than the benchmark position) to Health Care and Industrials. A modest cash position also detracted in an upward trending market.

 

Stocks that detracted the most from relative returns during the period were VeriFone Systems (Information Technology), BroadSoft (Information Technology), and Elizabeth Arden (Consumer Staples). Shares of electronic payment solution provider VeriFone fell due to weak macroeconomic conditions in Europe, lower revenue from Brazil-based

 

3

 

The Hartford Small Company Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

business, decreased merger synergies, and delays in customer projects which caused the company to lower earnings estimates. Shares of communications software and services company BroadSoft detracted after the company lowered earnings guidance due to a decline in professional services revenue. Shares of Elizabeth Arden, a beauty products company, declined after the company lowered revenue and earnings guidance. Abiomed (Health Care) also detracted from absolute returns during the period.

 

Top contributors to relative performance during the period included Spirit Airlines (Industrials), Cirrus Logic (Information Technology), and KapStone (Materials). Spirit Airlines, an alternative U.S. passenger airline focused on the low cost leisure travel segment saw improved execution and solid passenger trends during the period, which prompted gains in the share price. Shares of Cirrus Logic, a designer and manufacturer of integrated circuits, declined after the company posted disappointing results and issued lower-than-expected earnings guidance. Not owning this benchmark component contributed to relative performance. Shares of paper product manufacturer KapStone increased after the company reported record results for the first quarter. Top absolute contributors for the period also included Medicines (Health Care).

 

What is the outlook?

Facing a backdrop of strong gains in equity markets tempered by lack of resolution of major macroeconomic issues, we focused on company-specific fundamentals during the period. We view a balanced portfolio as a means to hedge against risk associated with unpredictable events and economic outcomes. Although equity markets have been driven by macro economic trends in recent years, we believe the significance of macroeconomic factors may be diminishing and consider our strength to be in fundamental analysis of small cap growth stocks.

 

As a residual of our bottom-up, stock-by-stock investment decisions, the Fund ended the period overweight in Information Technology, Consumer Discretionary, and Industrials sectors relative to the Russell 2000 Growth Index. The Fund ended the period most underweight Health Care, Consumer Staples, and Financials.

 

Diversification by Industry

as of April 30, 2013

 

Industry (Sector)  Percentage of
Net Assets
 
Automobiles and Components (Consumer Discretionary)   2.2%
Banks (Financials)   1.1 
Capital Goods (Industrials)   11.6 
Commercial and Professional Services (Industrials)   3.3 
Consumer Durables and Apparel (Consumer Discretionary)   5.2 
Consumer Services (Consumer Discretionary)   3.3 
Diversified Financials (Financials)   1.6 
Energy (Energy)   5.7 
Food and Staples Retailing (Consumer Staples)   0.9 
Food, Beverage and Tobacco (Consumer Staples)   0.4 
Health Care Equipment and Services (Health Care)   3.9 
Household and Personal Products (Consumer Staples)   1.6 
Insurance (Financials)   0.2 
Materials (Materials)   5.0 
Media (Consumer Discretionary)   1.5 
Other Investment Pools and Funds (Financials)   1.9 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   9.2 
Real Estate (Financials)   3.2 
Retailing (Consumer Discretionary)   7.4 
Semiconductors and Semiconductor Equipment (Information Technology)   1.4 
Software and Services (Information Technology)   18.6 
Technology Hardware and Equipment (Information Technology)   4.7 
Telecommunication Services (Services)   0.0 
Transportation (Industrials)   3.8 
Utilities (Utilities)   0.2 
Short-Term Investments   2.6 
Other Assets and Liabilities   (0.5)
Total   100.0%

 

4

 

The Hartford Small Company Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 96.0% 
     Automobiles and Components - 2.2%     
 242   Allison Transmission Holdings, Inc.   $5,525 
 10   Standard Motor Products, Inc.    294 
 261   Tenneco Automotive, Inc. ●    10,086 
 8   Tesla Motors, Inc. ●    432 
         16,337 
     Banks - 1.1%     
 61   Boston Private Financial Holdings, Inc.    590 
 32   EverBank Financial Corp.    517 
 24   First Merchants Corp.    391 
 47   Flushing Financial Corp.    720 
 16   Home Loan Servicing Solutions Ltd.    371 
 26   Hudson Valley Holding Corp.    407 
 121   Ocwen Financial Corp. ●    4,428 
 47   Umpqua Holdings Corp.    562 
 9   Wintrust Financial Corp.    334 
         8,320 
     Capital Goods - 11.6%     
 12   A.O. Smith Corp.    890 
 14   AAON, Inc.    384 
 80   Acuity Brands, Inc.    5,811 
 6   AGCO Corp.    335 
 171   Altra Holdings, Inc.    4,568 
 154   Apogee Enterprises, Inc.    3,917 
 123   Applied Industrial Technologies, Inc.    5,195 
 102   Armstrong World Industries, Inc. ●    5,199 
 36   Astronics Corp. ●    1,009 
 6   Astronics Corp. Class B ●    172 
 19   AZZ, Inc.    801 
 16   Belden, Inc.    810 
 269   Briggs & Stratton Corp.    6,039 
 13   CAI International, Inc. ●    319 
 5   Carlisle Cos., Inc.    321 
 14   Chart Industries, Inc. ●    1,227 
 6   Crane Co.    315 
 223   DigitalGlobe, Inc. ●    6,516 
 31   DXP Enterprises, Inc. ●    2,084 
 8   EMCOR Group, Inc.    308 
 10   Esterline Technologies Corp. ●    724 
 23   Franklin Electric Co., Inc.    739 
 34   GrafTech International Ltd. ●    248 
 20   H & E Equipment Services, Inc.    399 
 20   Heico Corp.    863 
 13   John Bean Technologies Corp.    272 
 15   Lennox International, Inc.    939 
 9   Lindsay Corp.    655 
 20   Luxfer Holdings plc    350 
 138   Moog, Inc. Class A ●    6,386 
 14   Nordson Corp.    948 
 137   Owens Corning, Inc. ●    5,755 
 153   Polypore International, Inc. ●    6,412 
 16   Sun Hydraulics Corp.    534 
 9   TAL International Group, Inc.    373 
 82   Teledyne Technologies, Inc. ●    6,159 
 10   Textainer Group Holdings Ltd.    367 
 18   Titan International, Inc.    393 
 28   Trimas Corp. ●    863 
 96   WESCO International, Inc. ●    6,879 
         86,478 
     Commercial and Professional Services - 3.3%     
 22   Deluxe Corp.   850 
 19   Exponent, Inc.    1,009 
 28   GP Strategies Corp. ●    622 
 217   On Assignment, Inc. ●    5,267 
 463   Performant Financial Corp. ●    4,502 
 230   TrueBlue, Inc. ●    4,757 
 310   Wageworks, Inc. ●    7,942 
         24,949 
     Consumer Durables and Apparel - 5.2%     
 24   Arctic Cat, Inc. ●    1,071 
 50   Fifth & Pacific Cos., Inc. ●    1,023 
 149   iRobot Corp. ●    4,322 
 97   Leapfrog Enterprises, Inc. ●    872 
 7   Oxford Industries, Inc.    415 
 500   Quiksilver, Inc. ●    3,364 
 3,354   Samsonite International S.A.    8,271 
 15   Skechers USA, Inc. Class A ●    314 
 513   Standard-Pacific Corp. ●    4,642 
 176   Steven Madden Ltd. ●    8,570 
 219   Taylor Morrison Home Corp. ●    5,653 
         38,517 
     Consumer Services - 3.3%     
 394   Bloomin' Brands, Inc. ●    8,564 
 26   Brinker International, Inc.    995 
 84   Buffalo Wild Wings, Inc. ●    7,545 
 104   Cheesecake Factory, Inc.    4,146 
 26   Del Frisco's Restaurant Group, Inc. ●    438 
 58   Ignite Restaurant Group, Inc. ●    1,006 
 18   Marriott Vacations Worldwide Corp. ●    810 
 20   Sotheby's Holdings    720 
 7   Steiner Leisure Ltd. ●    349 
 22   Whistler Blackcomb Holdings, Inc.    291 
         24,864 
     Diversified Financials - 1.6%     
    Artisan Partners Asset Management, Inc. ●    4 
 62   DFC Global Corp. ●    835 
 30   Fifth Street Finance Corp.    329 
 120   Financial Engines, Inc.    4,348 
 9   Portfolio Recovery Associates, Inc. ●    1,078 
 13   Virtus Investment Partners, Inc. ●    2,501 
 244   Wisdomtree Investment, Inc. ●    2,826 
         11,921 
     Energy - 5.7%     
 179   BPZ Resources, Inc. ●    384 
 22   C&J Energy Services, Inc. ■●    426 
 13   CVR Energy, Inc. ●    653 
 13   Diamondback Energy, Inc. ●    344 
 31   Energy XXI (Bermuda) Ltd.    709 
 31   EPL Oil & Gas, Inc. ●    1,000 
 106   Gulfport Energy Corp. ●    5,515 
 74   ION Geophysical Corp. ●    462 
 53   Karoon Gas Australia Ltd. ●    228 
 427   Painted Pony Petroleum Ltd. ●    4,142 
 175   Patterson-UTI Energy, Inc.    3,697 
 20   PBF Energy, Inc.    618 
 284   Rex Energy Corp. ●    4,558 
 122   Rosetta Resources, Inc. ●    5,249 
 143   SemGroup Corp. ●    7,438 
 977   Sunshine Oilsands Ltd. ●    239 

 

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

 

5

 

The Hartford Small Company Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 96.0% - (continued) 
     Energy - 5.7% - (continued)     
 503   Trican Well Service Ltd.   $6,572 
         42,234 
     Food and Staples Retailing - 0.9%     
 104   Casey's General Stores, Inc.    6,021 
 28   Natural Grocers by Vitamin Cottage, Inc. ●    706 
         6,727 
     Food, Beverage and Tobacco - 0.4%     
 44   Darling International, Inc. ●    820 
 30   Sanderson Farms, Inc.    1,844 
         2,664 
     Health Care Equipment and Services - 3.9%     
 9   AmSurg Corp. ●    305 
 2   Atrion Corp.    407 
 11   Corvel Corp. ●    514 
 14   Cyberonics, Inc. ●    600 
 57   Dexcom, Inc. ●    940 
 12   Ensign Group, Inc.    401 
 65   Globus Medical, Inc. ●    989 
 13   Greatbatch, Inc. ●    349 
 36   HealthSouth Corp. ●    996 
 48   Heartware International, Inc. ●    4,680 
 22   ICU Medical, Inc. ●    1,345 
 179   Insulet Corp. ●    4,530 
 9   LHC Group, Inc. ●    200 
 4   MEDNAX, Inc. ●    319 
 87   Merge Healthcare, Inc. ●    272 
 9   Merit Medical Systems, Inc. ●    86 
 10   Orthofix International N.V. ●    327 
 16   Owens & Minor, Inc.    508 
 104   Team Health Holdings ●    3,885 
 27   U.S. Physical Therapy, Inc.    638 
 36   Vascular Solutions, Inc. ●    568 
 22   Volcano Corp. ●    446 
 101   Wellcare Health Plans, Inc. ●    5,891 
         29,196 
     Household and Personal Products - 1.6%     
 132   Elizabeth Arden, Inc. ●    5,404 
 9   Nu Skin Enterprises, Inc. Class A    455 
 18   Prestige Brands Holdings, Inc. ●    474 
 99   Spectrum Brands Holdings, Inc.    5,561 
         11,894 
     Insurance - 0.2%     
 20   Amerisafe, Inc.    661 
 17   Protective Life Corp.    650 
         1,311 
     Materials - 5.0%     
 15   ADA-ES, Inc. ●    414 
 27   Allied Nevada Gold Corp. ●    288 
 38   Aurcana Corp. ●    151 
 84   Graphic Packaging Holding Co. ●    632 
 676   Headwaters, Inc. ●    7,346 
 8   Innospec, Inc.    357 
 332   KapStone Paper & Packaging Corp.    9,823 
 281   Louisiana-Pacific Corp. ●    5,095 
 9   LSB Industries, Inc. ●    294 
 105   Methanex Corp. ADR    4,460 
 36   New Gold, Inc. ●    290 
 29   Olin Corp.    691 
 48   Omnova Solutions, Inc. ●    318 
 107   Packaging Corp. of America   5,098 
 43   PolyOne Corp.    973 
 244   Romarco Minerals, Inc. ●    106 
 19   Silgan Holdings, Inc.    914 
 7   Universal Stainless & Alloy Products, Inc. ●    227 
         37,477 
     Media - 1.5%     
 4   Imax Corp. ●    92 
 454   Pandora Media, Inc. ●    6,327 
 119   Shutterstock, Inc. ●    4,947 
         11,366 
     Pharmaceuticals, Biotechnology and Life Sciences - 9.2%     
 22   Acorda Therapeutics, Inc. ●    873 
 85   Algeta ASA ●    2,874 
 49   Alkermes plc ●    1,494 
 364   Arena Pharmaceuticals, Inc. ●    2,996 
 48   Aveo Pharmaceuticals, Inc. ●    247 
 46   Bruker Corp. ●    824 
 73   Cadence Pharmaceuticals, Inc. ●    514 
 86   Covance, Inc. ●    6,431 
 114   Cubist Pharmaceuticals, Inc. ●    5,220 
 598   Exelixis, Inc. ●    3,106 
 247   Immunogen, Inc. ●    3,962 
 136   Incyte Corp. ●    3,014 
 281   Ironwood Pharmaceuticals, Inc. ●    4,269 
 243   Medicines Co. ●    8,215 
 41   Neurocrine Biosciences, Inc. ●    468 
 393   NPS Pharmaceuticals, Inc. ●    5,271 
 31   Onyx Pharmaceuticals, Inc. ●    2,909 
 44   Optimer Pharmaceuticals, Inc. ●    682 
 25   PAREXEL International Corp. ●    1,009 
 14   Puma Biotechnology, Inc. ●    444 
 370   Rigel Pharmaceuticals, Inc. ●    1,772 
 114   Salix Pharmaceuticals Ltd. ●    5,967 
 126   Seattle Genetics, Inc. ●    4,659 
 23   Tesaro, Inc. ●    634 
 46   Trius Therapeutics, Inc. ●    319 
         68,173 
     Real Estate - 3.2%     
 183   Altisource Residential Corp. ●    3,475 
 21   Capstead Mortgage Corp. REIT    279 
 22   Colonial Properties Trust REIT    518 
 21   Coresite Realty Corp. REIT    762 
 70   Countrywide plc ●    506 
 53   Glimcher Realty Trust REIT    670 
 10   Hatteras Financial Corp. REIT    260 
 25   Medical Properties Trust, Inc. REIT    409 
 248   Pebblebrook Hotel Trust REIT    6,722 
 179   Potlatch Corp. REIT    8,458 
 35   Summit Hotel Properties, Inc. REIT    350 
 62   Sunstone Hotel Investors, Inc. REIT ●    774 
 20   Whitestone REIT    322 
         23,505 
     Retailing - 7.4%     
 3,137   Allstar Co. ⌂●†    5,623 
 50   Ascena Retail Group, Inc. ●    924 
 17   Cato Corp.    416 
 19   Core-Mark Holding Co., Inc.    987 
 228   Debenhams plc    295 

 

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

 

6

 

 

  

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 96.0% - (continued) 
     Retailing - 7.4% - (continued)     
 99   DSW, Inc.   $6,530 
 91   Five Below, Inc. ●    3,286 
 208   Francescas Holding Corp. ●    5,941 
 13   Group 1 Automotive, Inc.    769 
 91   Hibbett Sports, Inc. ●    5,016 
 97   HomeAway, Inc. ●    2,948 
 129   HSN, Inc.    6,763 
 32   Mattress Firm Holding Corp. ●    1,218 
 316   Pier 1 Imports, Inc.    7,323 
 221   rue21, Inc. ●    7,046 
 22   The Finish Line, Inc.    421 
         55,506 
     Semiconductors and Semiconductor Equipment - 1.4%     
 1,095   Lattice Semiconductor Corp. ●    5,092 
 123   Mindspeed Technologies, Inc. ●    282 
 36   Nanometrics, Inc. ●    499 
 150   Ultratech Stepper, Inc. ●    4,416 
         10,289 
     Software and Services - 18.6%     
 30   Aspen Technology, Inc. ●    927 
 3   Blackhawk Network Holdings, Inc. ●    77 
 530   Cadence Design Systems, Inc. ●    7,311 
 22   Cass Information Systems, Inc.    939 
 3   Commvault Systems, Inc. ●    255 
 111   Concur Technologies, Inc. ●    8,102 
 106   Cornerstone OnDemand, Inc. ●    3,840 
 37   CoStar Group, Inc. ●    4,053 
 204   DealerTrack Technologies, Inc. ●    5,695 
 23   Ebix, Inc.    430 
 176   Fair Isaac, Inc.    8,209 
 305   Fleetmatics Group Ltd. ●    7,169 
 166   Heartland Payment Systems, Inc.    5,469 
 67   Higher One Holdings, Inc. ●    665 
 86   IAC/InterActiveCorp.    4,063 
 235   Imperva, Inc. ●    9,162 
 41   j2 Global, Inc.    1,657 
 39   Keynote Systems, Inc.    438 
 388   LivePerson, Inc. ●    4,975 
 6   MicroStrategy, Inc. ●    530 
 95   Mitek Systems, Inc. ●    505 
 36   Model N, Inc. ●    706 
 27   Netscout Systems, Inc. ●    622 
 19   Nuance Communications, Inc. ●    354 
 226   PTC, Inc. ●    5,422 
 27   QLIK Technologies, Inc. ●    695 
 76   Sapient Corp. ●    889 
 145   ServiceNow, Inc. ●    5,956 
 138   Solera Holdings, Inc.    7,940 
 11   Sourcefire, Inc. ●    516 
 128   Splunk, Inc. ●    5,221 
 208   Trulia, Inc. ●    6,047 
 21   Tyler Corp. ●    1,354 
 206   Verint Systems, Inc. ●    6,798 
 128   Virtusa Corp. ●    2,834 
 429   Web.com Group, Inc. ●    7,458 
 85   WEX, Inc. ●    6,457 
 327   WNS Holdings Ltd. ADR ●    4,883 
         138,623 
     Technology Hardware and Equipment - 4.7%     
 21   Arris Group, Inc. ●    347 
 211   Aruba Networks, Inc. ●    4,748 
 8   Coherent, Inc.    439 
 48   Emulex Corp. ●    290 
 100   Extreme Networks, Inc. ●    333 
 40   IPG Photonics Corp.    2,575 
 230   Ixia ●    3,782 
 546   JDS Uniphase Corp. ●    7,376 
 109   Mitel Networks Corp. ●    381 
 13   Netgear, Inc. ●    396 
 37   Oplink Communications, Inc. ●    603 
 112   Palo Alto Networks, Inc. ●    6,085 
 11   Park Electrochemical Corp.    251 
 66   ParkerVision, Inc. ●    265 
 19   Plantronics, Inc.    822 
 108   Rogers Corp. ●    4,592 
 34   TTM Technologies, Inc. ●    247 
 53   Ubiquiti Networks, Inc.    822 
 12   Uni-Pixel, Inc. ●    412 
         34,766 
     Telecommunication Services - 0.0%     
 31   Allot Communications Ltd. ●    347 
           
     Transportation - 3.8%     
 274   Avis Budget Group, Inc. ●    7,914 
 115   Landstar System, Inc.    6,278 
 15   Marten Transport Ltd.    307 
 185   Old Dominion Freight Line, Inc. ●    7,123 
 216   Spirit Airlines, Inc. ●    5,756 
 36   Werner Enterprises, Inc.    827 
         28,205 
     Utilities - 0.2%     
 8   Portland General Electric Co.    267 
 21   UNS Energy Corp.    1,054 
 8   Westar Energy, Inc.    273 
         1,594 
     Total common stocks     
     (cost $611,976)   $715,263 
           

EXCHANGE TRADED FUNDS - 1.9%

     
     Other Investment Pools and Funds - 1.9%     
 129   iShares Russell 2000 Growth Index Fund   $13,836 
           
     Total exchange traded funds     
     (cost $13,575)   $13,836 
           
     Total long-term investments     
     (cost $625,551)   $729,099 
           
SHORT-TERM INVESTMENTS - 2.6% 
Repurchase Agreements - 2.6%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $768,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $783)
     
$768    0.17%, 4/30/2013   $768 

 

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

 

7

 

The Hartford Small Company Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount          Market Value ╪ 
SHORT-TERM INVESTMENTS - 2.6% - (continued) 
Repurchase Agreements - 2.6% - (continued)             
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $2,092, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -
2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$2,134)
            
$2,092    0.15%, 4/30/2013          $2,092 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $4,030, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $4,110)
            
 4,029    0.15%, 4/30/2013           4,029 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $5,597,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $5,708)
            
 5,597    0.14%, 4/30/2013           5,597 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,006, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $1,026)
            
 1,006    0.17%, 4/30/2013           1,006 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $3,410, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $3,478)
            
 3,410    0.14%, 4/30/2013           3,410 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$2,398, collateralized by U.S. Treasury Note
0.25% - 1.88%, 2014 - 2019, value of
$2,446)
            
 2,398    0.17%, 4/30/2013           2,398 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$43, collateralized by U.S. Treasury Note
3.88%, 2018, value of $44)
            
 43    0.13%, 4/30/2013           43 
                 19,343 
     Total short-term investments             
     (cost $19,343)          $19,343 
                   
        Total investments          
        (cost $644,894) ▲    100.5%  $748,442 
        Other assets and liabilities    (0.5)%   (3,711)
        Total net assets    100.0%  $744,731 

 

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.
   
  Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

  

At April 30, 2013, the cost of securities for federal income tax purposes was $652,885 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation   $114,685 
Unrealized Depreciation    (19,128)
Net Unrealized Appreciation   $95,557 

 

These securities were valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $5,623, which represents 0.8% 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.

 

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. Unless otherwise indicated, these issues are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $426, which represents 0.1% 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 Acquired  Shares/ Par   Security  Cost Basis 
08/2011   3,137   Allstar Co.  $1,853 

 

At April 30, 2013, the aggregate value of these securities was $5,623, which represents 0.8% of total net assets.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
AUD  Buy  05/03/2013  CSFB  $14   $14   $ 
AUD  Buy  05/01/2013  HSBC   25    25     
                      $ 

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
CSFB Credit Suisse First Boston Corp.
HSBC HSBC Bank USA
 
Currency Abbreviations:
AUD Australian Dollar
 
Other Abbreviations:
ADR American Depositary Receipt
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
REIT Real Estate Investment Trust

 

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

 

9

 

The Hartford Small Company Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks ‡  $715,263   $697,733   $11,907   $5,623 
Exchange Traded Funds   13,836    13,836         
Short-Term Investments   19,343        19,343     
Total  $748,442   $711,569   $31,250   $5,623 
Foreign Currency Contracts *                
Total  $   $   $   $ 

  

For the six-month period ended April 30, 2013, investments valued at $355 were transferred from Level 1 to Level 2, and there were no transfers from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).
The Fund has all or primarily all of the equity securities categorized in a particular level.  Refer to the Schedule of Investments for further industry breakout.
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3
   Transfers
Out of
Level 3
   Balance
as of
April 30,
2013
 
Assets:                                    
Common Stocks   $5,491   $   $1,471*  $   $   $(1,339)  $   $   $5,623 
Total   $5,491   $   $1,471   $   $   $(1,339)  $   $   $5,623 

 

*Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $1,471.

 

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

 

10

 

The Hartford Small Company Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $644,894)  $748,442 
Cash   2 
Foreign currency on deposit with custodian (cost $–)    
Unrealized appreciation on foreign currency contracts    
Receivables:     
Investment securities sold   6,290 
Fund shares sold   815 
Dividends and interest   58 
Other assets   88 
Total assets   755,695 
Liabilities:     
Payables:     
Investment securities purchased   10,349 
Fund shares redeemed   340 
Investment management fees   97 
Administrative fees   3 
Distribution fees   25 
Accrued expenses   150 
Total liabilities   10,964 
Net assets  $744,731 
Summary of Net Assets:     
Capital stock and paid-in-capital  $612,364 
Distributions in excess of net investment loss   (5,432)
Accumulated net realized gain   34,251 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   103,548 
Net assets  $744,731 
      
Shares authorized   500,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   

$21.02/$22.24

 
Shares outstanding   13,588 
Net assets  $285,627 
Class B: Net asset value per share  $17.88 
Shares outstanding   330 
Net assets  $5,898 
Class C: Net asset value per share  $17.82 
Shares outstanding   1,887 
Net assets  $33,626 
Class I: Net asset value per share  $21.45 
Shares outstanding   1,382 
Net assets  $29,642 
Class R3: Net asset value per share  $22.26 
Shares outstanding   2,176 
Net assets  $48,418 
Class R4: Net asset value per share  $22.78 
Shares outstanding   2,562 
Net assets  $58,351 
Class R5: Net asset value per share  $23.24 
Shares outstanding   326 
Net assets  $7,583 
Class Y: Net asset value per share  $23.44 
Shares outstanding   11,758 
Net assets  $275,586 

 

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

 

11

 

The Hartford Small Company Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $3,344 
Interest   10 
Less: Foreign tax withheld   (25)
Total investment income   3,329 
      
Expenses:     
Investment management fees   2,787 
Administrative services fees     
Class R3   47 
Class R4   42 
Class R5   4 
Transfer agent fees     
Class A   411 
Class B   15 
Class C   41 
Class I   40 
Class R3   1 
Class R4   1 
Class R5   1 
Class Y   2 
Distribution fees     
Class A   335 
Class B   29 
Class C   161 
Class R3   117 
Class R4   69 
Custodian fees   10 
Accounting services fees   49 
Registration and filing fees   48 
Board of Directors' fees   10 
Audit fees   8 
Other expenses   70 
Total expenses (before waivers and fees paid indirectly)   4,298 
Expense waivers   (9)
Transfer agent fee waivers   (27)
Commission recapture   (36)
Total waivers and fees paid indirectly   (72)
Total expenses, net   4,226 
Net Investment Loss   (897)
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   41,945 
Net realized gain on foreign currency contracts   3 
Net realized loss on other foreign currency transactions   (2)
Net Realized Gain on Investments and Foreign Currency Transactions   41,946 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   61,894 
Net unrealized appreciation of foreign currency contracts    
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies    
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   61,894 
Net Gain on Investments and Foreign Currency Transactions   103,840 
Net Increase in Net Assets Resulting from Operations  $102,943 

 

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

 

12

 

The Hartford Small Company Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment loss  $(897)  $(4,779)
Net realized gain on investments and foreign currency transactions   41,946    44,272 
Net unrealized appreciation of investments and foreign currency transactions   61,894    12,623 
Net Increase in Net Assets Resulting from Operations   102,943    52,116 
Distributions to Shareholders:          
From net realized gain on investments          
Class A   (18,096)   (15,141)
Class B   (461)   (517)
Class C   (2,518)   (2,128)
Class I   (1,663)   (1,042)
Class R3   (3,069)   (2,279)
Class R4   (3,508)   (2,444)
Class R5   (540)   (470)
Class Y   (15,031)   (11,102)
Total distributions   (44,886)   (35,123)
Capital Share Transactions:          
Class A   (4,095)   (33,861)
Class B   (450)   (3,229)
Class C   (663)   (4,412)
Class I   3,086    4,794 
Class R3   (3,469)   576 
Class R4   (2,616)   3,574 
Class R5   (1,827)   (1,449)
Class Y   9,244    1,021 
Net decrease from capital share transactions   (790)   (32,986)
Net Increase (Decrease) in Net Assets   57,267    (15,993)
Net Assets:          
Beginning of period   687,464    703,457 
End of period  $744,731   $687,464 
Undistributed (distribution in excess of) net investment income (loss)  $(5,432)  $(4,535)

 

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

 

13

 

The Hartford Small Company Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 Comission ("SEC") under the Investment Company Act of 1940, as amended ("1940 Act"). The Fund’s portfolio managers are Steven C. Angeli (80.19%), Mammen Chally (16.01%) and Jamie A. Rome (3.80%). The portfolio management team also includes Mario E. Abularach and Stephen C. Mortimer. 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported,

 

14

 

 

 

market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to

 

15

 

The Hartford Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share,

 

16

  

 

 

payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3. Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal

 

17

 

The Hartford Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a value at least equal to the amount of the commitment. As of April 30, 2013, the Fund had no outstanding when-issued or delayed-delivery investments.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

18

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

  Risk Exposure Category 
  Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                  
Unrealized appreciation on foreign currency contracts  $   $   $   $   $   $   $ 
Total  $   $   $   $   $   $   $ 

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain on Derivatives Recognized as a Result of Operations:
Net realized gain on foreign currency contracts  $   $3   $   $   $   $   $3 
Total   $   $3   $   $   $   $   $3 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation of foreign currency contracts  $   $   $   $   $   $   $ 
Total  $   $   $   $   $   $   $ 

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

19

 

The Hartford Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Long-Term Capital Gains ‡  $35,123   $ 

 

The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis are as follows:

 

   Amount 
Undistributed Long-Term Capital Gain  $44,873 
Accumulated Capital Losses   (4,226)
Unrealized Appreciation *   33,663 
Total Accumulated Earnings  $74,310 

 

*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.

 

20

 

 

  

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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $556 
Accumulated Net Realized Gain (Loss)   392 
Capital Stock and Paid-in-Capital   (948)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

As of October 31, 2012, the Fund elected to defer the following Late-Year Ordinary Losses:

 

   Amount 
Ordinary Income  $4,226 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement

 

21

 

The Hartford Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 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%      1.55%      1.25%      0.95%      0.90%   

 

d)Fees Paid Indirectly The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, are included in the Statement of Operations.

 

22

 

 

  

The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.39%
Class B   2.14 
Class C   2.11 
Class I   1.14 
Class R3   1.54 
Class R4   1.24 
Class R5   0.94 
Class Y   0.85 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $363 and contingent deferred sales charges of $4 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any

 

23

 

The Hartford Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage of
Fund
 
Class Y   10%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $393,555 
Sales Proceeds Excluding U.S. Government Obligations   433,649 

 

24

 

 

  

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   1,220    1,011    (2,396)       (165)   2,659    859    (5,158)       (1,640)
Amount  $23,995   $17,867   $(45,957)  $   $(4,095)  $50,939   $14,597   $(99,397)  $   $(33,861)
Class B                                                  
Shares   6    28    (58)       (24)   23    32    (246)       (191)
Amount  $103   $423   $(976)  $   $(450)  $392   $471   $(4,092)  $   $(3,229)
Class C                                                  
Shares   72    156    (255)       (27)   130    134    (517)       (253)
Amount  $1,195   $2,343   $(4,201)  $   $(663)  $2,165   $1,972   $(8,549)  $   $(4,412)
Class I                                                  
Shares   421    88    (353)       156    689    54    (494)       249 
Amount  $8,432   $1,581   $(6,927)  $   $3,086   $13,496   $939   $(9,641)  $   $4,794 
Class R3                                                  
Shares   219    164    (544)       (161)   462    127    (541)       48 
Amount  $4,548   $3,058   $(11,075)  $   $(3,469)  $9,321   $2,279   $(11,024)  $   $576 
Class R4                                                  
Shares   269    183    (564)       (112)   1,216    134    (1,170)       180 
Amount  $5,793   $3,499   $(11,908)  $   $(2,616)  $25,287   $2,440   $(24,153)  $   $3,574 
Class R5                                                  
Shares   73    27    (188)       (88)   193    25    (277)       (59)
Amount  $1,604   $540   $(3,971)  $   $(1,827)  $3,954   $470   $(5,873)  $   $(1,449)
Class Y                                                  
Shares   808    765    (1,098)       475    3,422    595    (3,916)       101 
Amount  $17,952   $15,029   $(23,737)  $   $9,244   $70,300   $11,101   $(80,380)  $   $1,021 
Total                                                  
Shares   3,088    2,422    (5,456)       54    8,794    1,960    (12,319)       (1,565)
Amount  $63,622   $44,340   $(108,752)  $   $(790)  $175,854   $34,269   $(243,109)  $   $(32,986)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   13   $267 
For the Year Ended October 31, 2012   69   $1,313 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

25

 

The Hartford Small Company Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

26

 

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27

 

The Hartford Small Company Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
 
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $19.52   $(0.04)  $2.88   $2.84   $   $(1.34)  $   $(1.34)  $21.02 
B   16.87    (0.10)   2.45    2.35        (1.34)       (1.34)   17.88 
C   16.82    (0.09)   2.43    2.34        (1.34)       (1.34)   17.82 
I   19.87    (0.02)   2.94    2.92        (1.34)       (1.34)   21.45 
R3   20.61    (0.06)   3.05    2.99        (1.34)       (1.34)   22.26 
R4   21.03    (0.03)   3.12    3.09        (1.34)       (1.34)   22.78 
R5   21.39    0.01    3.18    3.19        (1.34)       (1.34)   23.24 
Y   21.56    0.01    3.21    3.22        (1.34)       (1.34)   23.44 
 
For the Year Ended October 31, 2012
A   19.23    (0.18)   1.46    1.28        (0.99)       (0.99)   19.52 
B   16.88    (0.35)   1.33    0.98        (0.99)       (0.99)   16.87 
C   16.83    (0.29)   1.27    0.98        (0.99)       (0.99)   16.82 
I   19.51    (0.11)   1.46    1.35        (0.99)       (0.99)   19.87 
R3   20.27    (0.20)   1.53    1.33        (0.99)       (0.99)   20.61 
R4   20.60    (0.13)   1.55    1.42        (0.99)       (0.99)   21.03 
R5   20.88    (0.11)   1.61    1.50        (0.99)       (0.99)   21.39 
Y   21.02    (0.06)   1.59    1.53        (0.99)       (0.99)   21.56 
 
For the Year Ended October 31, 2011 (E)
A   17.48    (0.15)   1.90    1.75                    19.23 
B   15.46    (0.27)   1.69    1.42                    16.88 
C   15.41    (0.26)   1.68    1.42                    16.83 
I   17.68    (0.10)   1.93    1.83                    19.51 
R3   18.45    (0.20)   2.02    1.82                    20.27 
R4   18.70    (0.14)   2.04    1.90                    20.60 
R5   18.90    (0.08)   2.06    1.98                    20.88 
Y   19.01    (0.06)   2.07    2.01                    21.02 
 
For the Year Ended October 31, 2010 (E)
A   13.90    (0.13)   3.71    3.58                    17.48 
B   12.39    (0.22)   3.29    3.07                    15.46 
C   12.34    (0.22)   3.29    3.07                    15.41 
I   14.03    (0.09)   3.74    3.65                    17.68 
R3   14.70    (0.16)   3.91    3.75                    18.45 
R4   14.85    (0.11)   3.96    3.85                    18.70 
R5   14.97    (0.07)   4.00    3.93                    18.90 
Y   15.03    (0.05)   4.03    3.98                    19.01 
 
For the Year Ended October 31, 2009 (E)
A   13.09    (0.08)   0.89    0.81                    13.90 
B   11.71    (0.12)   0.80    0.68                    12.39 
C   11.71    (0.15)   0.78    0.63                    12.34 
I   13.18    (0.06)   0.91    0.85                    14.03 
R3   13.89    (0.13)   0.94    0.81                    14.70 
R4   13.98    (0.09)   0.96    0.87                    14.85 
R5   14.06    (0.06)   0.97    0.91                    14.97 
Y   14.10    (0.04)   0.97    0.93                    15.03 
 
For the Year Ended October 31, 2008
A   24.46    (0.06)   (8.68)   (8.74)       (2.63)       (2.63)   13.09 
B   22.30    (0.20)   (7.76)   (7.96)       (2.63)       (2.63)   11.71 
C   22.32    (0.18)   (7.80)   (7.98)       (2.63)       (2.63)   11.71 
I   24.55    (0.02)   (8.72)   (8.74)       (2.63)       (2.63)   13.18 
R3   25.83    (0.07)   (9.24)   (9.31)       (2.63)       (2.63)   13.89 
R4   25.91    (0.03)   (9.27)   (9.30)       (2.63)       (2.63)   13.98 
R5   25.97        (9.28)   (9.28)       (2.63)       (2.63)   14.06 
Y   26.00    0.02    (9.29)   (9.27)       (2.63)       (2.63)   14.10 

 

28

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
  
                            
 15.82%(F)  $285,627    1.42%(G)   1.40%(G)   (0.43)%(G)   57%
 15.37(F)   5,898    2.39(G)   2.15(G)   (1.17)(G)    
 15.36(F)   33,626    2.12(G)   2.12(G)   (1.14)(G)    
 15.95(F)   29,642    1.17(G)   1.15(G)   (0.21)(G)    
 15.71(F)   48,418    1.57(G)   1.55(G)   (0.56)(G)    
 15.88(F)   58,351    1.26(G)   1.25(G)   (0.27)(G)    
 16.09(F)   7,583    1.00(G)   0.95(G)   0.08(G)    
 16.10(F)   275,586    0.86(G)   0.86(G)   0.10(G)    
                            
                            
 7.44    268,501    1.41    1.40    (0.85)   124 
 6.65    5,972    2.37    2.15    (1.60)    
 6.67    32,182    2.12    2.12    (1.57)    
 7.70    24,366    1.14    1.14    (0.58)    
 7.30    48,148    1.58    1.55    (0.99)    
 7.63    56,217    1.27    1.25    (0.68)    
 7.93    8,859    1.00    0.95    (0.41)    
 8.02    243,219    0.87    0.87    (0.30)    
                            
                            
 10.01    296,062    1.37    1.37    (0.77)   111 
 9.18    9,192    2.30    2.15    (1.55)    
 9.21    36,465    2.10    2.10    (1.50)    
 10.35    19,056    1.08    1.08    (0.49)    
 9.86    46,392    1.57    1.55    (0.96)    
 10.16    51,387    1.26    1.25    (0.66)    
 10.48    9,867    0.99    0.95    (0.35)    
 10.57    235,036    0.86    0.86    (0.26)    
                            
                            
 25.76    289,558    1.41    1.40    (0.80)   181 
 24.78    12,384    2.36    2.15    (1.54)    
 24.88    40,018    2.16    2.15    (1.55)    
 26.02    13,283    1.17    1.15    (0.54)    
 25.51    35,873    1.59    1.57    (1.00)    
 25.93    45,096    1.28    1.26    (0.67)    
 26.25    11,706    1.02    1.02    (0.41)    
 26.48    273,558    0.87    0.87    (0.28)    
                            
                            
 6.19    275,834    1.53    1.32    (0.67)   180 
 5.81    16,169    2.59    1.76    (1.10)    
 5.38    38,082    2.31    2.04    (1.39)    
 6.45    16,312    1.24    1.11    (0.48)    
 5.83    12,822    1.66    1.65    (1.04)    
 6.22    31,532    1.31    1.31    (0.67)    
 6.47    12,384    1.11    1.05    (0.42)    
 6.59    245,727    0.91    0.91    (0.27)    
                            
                            
 (39.57)   274,412    1.39    1.39    (0.39)   183 
 (39.95)   21,008    2.31    2.02    (1.01)    
 (40.01)   41,294    2.15    2.15    (1.14)    
 (39.41)   11,912    1.19    1.15    (0.15)    
 (39.69)   2,990    1.66    1.65    (0.68)    
 (39.51)   18,332    1.29    1.29    (0.29)    
 (39.32)   7,510    1.00    1.00    (0.01)    
 (39.23)   166,183    0.89    0.89    0.12     

 

29

 

The Hartford Small Company Fund
Financial Highlights – (continued)

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account.

(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.

  

30

 

The Hartford Small Company Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

31

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

32

 

 

  

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,158.20   $7.50   $1,000.00   $1,017.84   $7.01    1.40%   181    365 
Class B  $1,000.00   $1,153.70   $11.50   $1,000.00   $1,014.12   $10.75    2.15    181    365 
Class C  $1,000.00   $1,153.60   $11.30   $1,000.00   $1,014.30   $10.57    2.12    181    365 
Class I  $1,000.00   $1,159.50   $6.17   $1,000.00   $1,019.08   $5.77    1.15    181    365 
Class R3  $1,000.00   $1,157.10   $8.30   $1,000.00   $1,017.10   $7.76    1.55    181    365 
Class R4  $1,000.00   $1,158.80   $6.70   $1,000.00   $1,018.59   $6.26    1.25    181    365 
Class R5  $1,000.00   $1,160.90   $5.10   $1,000.00   $1,020.08   $4.76    0.95    181    365 
Class Y  $1,000.00   $1,161.00   $4.62   $1,000.00   $1,020.52   $4.32    0.86    181    365 

 

34

 

The Hartford Small Company Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Small Company Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the

 

35

 

The Hartford Small Company Fund
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

36

 

The Hartford Small Company Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Small-cap Stock Risk: Small-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

37
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-SC13 4/13 114000 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

39

 

 

 
 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD SMALL/MID CAP EQUITY FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Small/Mid Cap Equity Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 9
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 10
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 11
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 12
Notes to Financial Statements (Unaudited) 13
Financial Highlights (Unaudited) 24
Directors and Officers (Unaudited) 26
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 28
Quarterly Portfolio Holdings Information (Unaudited) 28
Expense Example (Unaudited) 29
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 30
Principal Risks (Unaudited) 32

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Small/Mid Cap Equity Fund inception 01/01/2005
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks long-term capital appreciation.

 

Performance Overview 1/01/05 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   Since
Inception▲
 
Small/Mid Cap Equity A#   17.54%       18.70%       6.33%       5.75%    
Small/Mid Cap Equity A##        12.17%       5.13%       5.03%    
Small/Mid Cap Equity B#   17.07%       17.84%       5.67%       5.09%*    
Small/Mid Cap Equity B##        12.84%       5.34%       5.09%*    
Small/Mid Cap Equity C#   17.05%       17.83%       5.62%       5.01%    
Small/Mid Cap Equity C##        16.83%       5.62%       5.01%    
Small/Mid Cap Equity R3#   17.44%       18.47%       6.57%       6.05%    
Small/Mid Cap Equity R4#   17.54%       18.78%       6.67%       6.10%    
Small/Mid Cap Equity R5#   17.74%       19.19%       6.77%       6.17%    
Small/Mid Cap Equity Y#   17.71%       19.16%       6.77%       6.17%    
Russell 2500 Index   17.94%       18.96%       7.95%       7.18%    

 

Not Annualized
Inception: 01/01/2005
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class R3, R4 and R5 shares commenced operations on 9/30/11. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses.

 

Includes the Fund’s performance when it invested, prior to 2/1/10, at least 80% of its assets in common stocks of mid-capitalization companies.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Russell 2500 Index measures the performance of the small to mid-cap segment of the U.S. equity universe, commonly referred to as “smid” cap. The Russell 2500 Index is a subset of the Russell 3000 Index and includes approximately 2500 of the smallest securities based on a combination of their market cap and current index membership.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Small/Mid Cap Equity Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Small/Mid Cap Equity Class A   1.30%       1.44%    
Small/Mid Cap Equity Class B   2.05%       2.38%    
Small/Mid Cap Equity Class C   2.05%       2.21%    
Small/Mid Cap Equity Class R3   1.50%       1.65%    
Small/Mid Cap Equity Class R4   1.20%       1.35%    
Small/Mid Cap Equity Class R5   0.90%       1.03%    
Small/Mid Cap Equity Class Y   0.85%       0.90%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Manager
David J. Elliott, CFA
Vice President, Co-Director of Quantitative Investments and Director of Quantitative Portfolio Management

 

How did the Fund perform?

The Class A shares of The Hartford Small/Mid Cap Equity Fund returned 17.54%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmark, the Russell 2500 Index, which returned 17.94%. For the same period, the Fund outperformed the 16.98% average return 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?

U.S. equities surged during the period, ending at an all-time high. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. U.S. housing data continued to provide evidence that the sector at the epicenter of the financial crisis could be a key engine of economic recovery in 2013. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

All ten sectors in the Russell 2500 Index posted positive returns during the period. Strong performers included the Consumer Staples (+22.7%), Consumer Discretionary (+21.2%), and Health Care (+20.4%) sectors, while the Telecommunication Services (+8.8%), Materials (+10.2%) and Energy (+13.5%) sectors lagged on a relative basis.

 

Overall sector positioning detracted modestly from relative returns during the period due to an overweight to the Information Technology and Energy sectors. The Fund’s stock selection in the Industrials, Energy and Financials sectors contributed to relative performance. This was partially offset by unfavorable stock selection in the Health Care, Consumer Discretionary, and Telecommunication Services sectors. The Fund’s modest cash position also detracted from relative performance in an upward-trending market.

 

The largest detractors from both absolute and benchmark relative performance were Coeur D’alene Mines (Materials), Gold Resource Corp. (Materials), and Affymax (Health Care). Shares of Coeur D’alene Mines, a gold and silver mining company, fell due to lower production output and decreased precious metal prices. Gold Resource Corp., a Mexico-based gold producer, fell due to lower production output and decreased precious metal prices. Shares of Affymax, a U.S.-based pharmaceutical company, fell during the period after the company issued a press release indicating that they were recalling all batches of kidney disease drug Omontys from the market.

 

The largest contributors to relative and absolute performance were Barrett Business Services (Industrials), Alaska Air Group (Industrials), and Radian Group (Financials). Shares of Barrett Business Services, a U.S.-based company that provides outsourced workers' compensation coverage and other personnel services to businesses, rose as the company reported better than expected earnings during the period. Alaska Air Group, an airline holding company, rose during the period as sales increased during the period due to

 

3

 

The Hartford Small/Mid Cap Equity Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

increased capacity and travel routes. Shares of Radian Group, a credit enhancement and mortgage insurance company, rose during the period as the company reported better than expected earnings.

 

What is the outlook?

The Fund seeks to add value by utilizing Wellington Management’s proprietary quantitative research and investment tools in a highly disciplined framework. The Fund focuses on stock selection as the key driver of returns and uses quantitative portfolio optimization techniques to minimize unintended and uncompensated risks.

 

Based on individual stock decisions, the Fund ended the period most overweight (i.e. the Fund’s sector position was greater than the benchmark position) the Information Technology, Utilities, and Consumer Staples sectors and most underweight the Materials, Industrials, and Financials sectors relative to the Russell 2500 Index.

 

Diversification by Industry

as of April 30, 2013

 

Industry (Sector)  Percentage of
Net Assets
 
Automobiles and Components (Consumer Discretionary)   1.6%
Banks (Financials)   4.2 
Capital Goods (Industrials)   8.5 
Commercial and Professional Services (Industrials)   3.6 
Consumer Durables and Apparel (Consumer Discretionary)   4.4 
Consumer Services (Consumer Discretionary)   2.2 
Diversified Financials (Financials)   3.6 
Energy (Energy)   6.4 
Food, Beverage and Tobacco (Consumer Staples)   2.2 
Health Care Equipment and Services (Health Care)   3.4 
Household and Personal Products (Consumer Staples)   1.2 
Insurance (Financials)   2.9 
Materials (Materials)   4.2 
Media (Consumer Discretionary)   1.0 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   6.6 
Real Estate (Financials)   11.0 
Retailing (Consumer Discretionary)   5.4 
Semiconductors and Semiconductor Equipment (Information Technology)   1.7 
Software and Services (Information Technology)   9.9 
Technology Hardware and Equipment (Information Technology)   4.6 
Telecommunication Services (Services)   0.7 
Transportation (Industrials)   1.4 
Utilities (Utilities)   7.5 
Short-Term Investments   1.7 
Other Assets and Liabilities   0.1 
Total   100.0%

 

4

 

The Hartford Small/Mid Cap Equity Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.2% 
     Automobiles and Components - 1.6%     
 8   Cooper Tire & Rubber Co.  $207 
 15   Goodyear (The) Tire & Rubber Co. ●   184 
 3   Lear Corp.   150 
 8   Superior Industries International, Inc.   145 
 2   Visteon Corp. ●   141 
 13   Winnebago Industries, Inc. ●   234 
         1,061 
     Banks - 4.2%     
 23   CapitalSource, Inc.   208 
 44   Fifth Third Bancorp   746 
 16   First Horizon National Corp.   165 
 14   First Niagara Financial Group, Inc.   129 
 56   Huntington Bancshares, Inc.   398 
 10   MainSource Financial Group, Inc.   126 
 5   Ocwen Financial Corp. ●   172 
 6   Popular, Inc. ●   168 
 44   Regions Financial Corp.   369 
 20   United Community Banks, Inc. ●   222 
         2,703 
     Capital Goods - 8.5%     
 13   Aircastle Ltd.   179 
 3   Alliant Techsystems, Inc.   238 
 6   Altra Holdings, Inc.   147 
 4   American Railcar Industries, Inc.   139 
 14   Ampco-Pittsburgh Corp.   258 
 7   Babcock & Wilcox Co.   180 
 3   Carlisle Cos., Inc.   208 
 6   Dycom Industries, Inc. ●   124 
 2   Generac Holdings, Inc.   57 
 6   L.B. Foster Co. Class A   254 
 2   Lindsay Corp.   177 
 3   National Presto Industries, Inc.   232 
 3   Nortek, Inc. ●   223 
 6   Oshkosh Corp. ●   224 
    Seaboard Corp.   165 
 52   Taser International, Inc. ●   461 
 5   Timken Co.   279 
 9   Toro Co.   396 
 6   Trex Co., Inc. ●   282 
 3   Trinity Industries, Inc.   143 
 7   URS Corp.   285 
 4   Valmont Industries, Inc.   612 
 4   Wabco Holdings, Inc. ●   267 
         5,530 
     Commercial and Professional Services - 3.6%     
 10   Barrett Business Services, Inc.   554 
 5   Brink's Co.   125 
 5   Deluxe Corp.   198 
 4   Dun & Bradstreet Corp.   310 
 13   Enernoc, Inc. ●   221 
 3   Manpower, Inc.   175 
 8   Pitney Bowes, Inc.   113 
 6   Quad Graphics, Inc.   132 
 13   Steelcase, Inc.   170 
 6   Tetra Tech, Inc. ●   150 
 2   UniFirst Corp.   173 
         2,321 
     Consumer Durables and Apparel - 4.4%     
 8   Beazer Homes USA, Inc. ●   128 
 8   Blyth, Inc.   130 
 12   Brunswick Corp.   377 
 6   CSS Industries, Inc.   173 
 2   Fossil, Inc. ●   216 
 10   Hanesbrands, Inc. ●   477 
 5   Hooker Furniture Corp.   86 
 7   Iconix Brand Group, Inc. ●   203 
 3   Nacco Industries, Inc. Class A   161 
 6   Polaris Industries, Inc.   516 
 12   Pulte Group, Inc. ●   243 
 3   Steven Madden Ltd. ●   141 
         2,851 
     Consumer Services - 2.2%     
 4   American Public Education, Inc. ●   126 
 4   Brinker International, Inc.   148 
 6   Capella Education Co. ●   198 
 49   Career Education Corp. ●   108 
 6   DeVry, Inc.   174 
 4   Domino's Pizza, Inc.   237 
 7   Grand Canyon Education, Inc. ●   179 
 6   Multimedia Games Holding Co., Inc. ●   158 
 2   Strayer Education, Inc.   114 
         1,442 
     Diversified Financials - 3.6%     
 23   American Capital Ltd. ●   346 
 37   Apollo Investment Corp.   328 
 13   Calamos Asset Management, Inc.   142 
 1   Credit Acceptance Corp. ●   120 
 10   Discover Financial Services, Inc.   442 
 10   New Mountain Finance Corp.   159 
 34   Prospect Capital Corp.   374 
 9   Solar Capital Ltd.   206 
 6   TCP Capital Corp.   92 
 11   THL Credit, Inc.   163 
         2,372 
     Energy - 6.4%     
 12   Alon USA Energy, Inc.   193 
 14   Basic Energy Services, Inc. ●   191 
 3   Contango ORE, Inc.   117 
 1   Core Laboratories N.V.   189 
 9   Delek U.S. Holdings, Inc.   310 
 5   Exterran Holdings, Inc. ●   127 
 3   Helmerich & Payne, Inc.   193 
 20   Hercules Offshore, Inc. ●   148 
 11   HollyFrontier Corp.   520 
 26   ION Geophysical Corp. ●   161 
 2   Oil States International, Inc. ●   188 
 64   Rentech, Inc.   133 
 8   RPC, Inc.   103 
 8   Tesoro Corp.   448 
 31   Vaalco Energy, Inc. ●   210 
 11   Valero Energy Corp.   457 
 10   W&T Offshore, Inc.   114 
 11   Western Refining, Inc.   330 
         4,132 
     Food, Beverage and Tobacco - 2.2%     
 4   Cal-Maine Foods, Inc.   166 
 9   Dean Foods Co. ●   163 
 2   Green Mountain Coffee Roasters, Inc. ●   115 
 4   J&J Snack Foods Corp.   263 
 5   Monster Beverage Corp. ●   271 
 14   Pilgrim's Pride Corp. ●   136 

 

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

 

5

 

The Hartford Small/Mid Cap Equity Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.2% - (continued) 
     Food, Beverage and Tobacco - 2.2% - (continued)     
 13   Smithfield Foods, Inc. ●  $335 
         1,449 
     Health Care Equipment and Services - 3.4%     
 4   Air Methods Corp.   157 
 1   Bio-Reference Laboratories, Inc. ●   36 
 1   Community Health Systems, Inc.   55 
 4   Computer Programs & Systems, Inc.   194 
 4   Cyberonics, Inc. ●   187 
 27   Gentiva Health Services, Inc. ●   281 
 2   Magellan Health Services, Inc. ●   77 
 4   MEDNAX, Inc. ●   310 
 5   Molina Healthcare, Inc. ●   163 
 14   Natus Medical, Inc. ●   181 
 7   Orthofix International N.V. ●   217 
 15   Select Medical Holdings Corp.   122 
 7   Thoratec Corp. ●   239 
         2,219 
     Household and Personal Products - 1.2%     
 2   Energizer Holdings, Inc.   203 
 7   Herbalife Ltd.   278 
 4   Nu Skin Enterprises, Inc. Class A   207 
 6   Revlon, Inc. ●   112 
         800 
     Insurance - 2.9%     
 7   Assurant, Inc.   328 
 1   Everest Re Group Ltd.   189 
 7   First American Financial Corp.   177 
 9   Genworth Financial, Inc. ●   94 
 4   Hilltop Holdings, Inc. ●   53 
 6   Horace Mann Educators Corp.   137 
 12   Maiden Holdings Ltd.   128 
 6   Protective Life Corp.   236 
 2   Reinsurance Group of America, Inc.   138 
 19   Symetra Financial Corp.   262 
 5   United Fire Group, Inc.   151 
         1,893 
     Materials - 4.2%     
 4   Axiall Corp.   220 
 13   Coeur d'Alene Mines Corp. ●   194 
 8   Commercial Metals Co.   111 
 3   Domtar Corp.   236 
 11   Gold Resource Corp.   111 
 66   Graphic Packaging Holding Co. ●   498 
 13   Headwaters, Inc. ●   145 
 8   Kraton Performance Polymers, Inc. ●   186 
 3   Reliance Steel & Aluminum   208 
 18   Resolute Forest Products ●   256 
 4   Rock Tenn Co. Class A   411 
 2   Westlake Chemical Corp.   158 
         2,734 
     Media - 1.0%     
 21   Gannett Co., Inc.   418 
 31   Global Sources Ltd. ●   214 
         632 
     Pharmaceuticals, Biotechnology and Life Sciences - 6.6%     
 18   Bruker Corp. ●   316 
 12   Cambrex Corp. ●   145 
 3   Charles River Laboratories International, Inc. ●   126 
 9   Cubist Pharmaceuticals, Inc. ●   390 
 12   Emergent Biosolutions, Inc. ●   181 
 37   Enzon, Inc.   121 
 5   Genomic Health, Inc. ●   137 
 2   Mettler-Toledo International, Inc. ●   334 
 12   Myriad Genetics, Inc. ●   344 
 3   PAREXEL International Corp. ●   131 
 61   PDL Biopharma, Inc.   472 
 3   Pharmacyclics, Inc. ●   253 
 7   Santarus, Inc. ●   134 
 24   Sciclone Pharmaceuticals, Inc. ●   113 
 24   Sunesis Pharmaceuticals, Inc. ●   132 
 3   Techne Corp.   218 
 6   United Therapeutics Corp. ●   374 
 8   ViroPharma, Inc. ●   210 
 10   Warner Chilcott plc   141 
         4,272 
     Real Estate - 11.0%     
 6   AG Mortgage Investment Trust, Inc. REIT   163 
 5   Agree Realty Corp.   141 
 11   American Capital Mortgage Investment Corp. REIT   284 
 28   Anworth Mortgage Asset Corp. REIT   175 
 12   Capstead Mortgage Corp. REIT   161 
 14   CBL & Associates Properties, Inc. REIT   335 
 28   Colonial Properties Trust REIT   650 
 7   Corrections Corp. of America REIT   268 
 41   CYS Investments, Inc. REIT   515 
 12   Franklin Street Properties Corp. REIT   183 
 25   Hatteras Financial Corp. REIT   689 
 52   Inland Real Estate Corp. REIT   587 
 13   Invesco Mortgage Capital REIT   282 
 21   Mack-Cali Realty Corp. REIT   583 
 72   MFA Mortgage Investments, Inc. REIT   665 
 7   Penn Real Estate Investment Trust REIT   139 
 9   PennyMac Mortgage Investment Trust REIT   220 
 17   Piedmont Office Realty Trust, Inc.   351 
 8   Redwood Trust, Inc. REIT   189 
 20   Starwood Property Trust, Inc.   550 
         7,130 
     Retailing - 5.4%     
 9   American Eagle Outfitters, Inc.   175 
 6   ANN, Inc. ●   168 
 6   Blue Nile, Inc. ●   193 
 9   Chico's FAS, Inc.   170 
 4   Dillard's, Inc.   363 
 10   Francescas Holding Corp. ●   286 
 4   Lumber Liquidators Holdings, Inc. ●   295 
 2   Netflix, Inc. ●   344 
 3   O'Reilly Automotive, Inc. ●   333 
 5   Overstock.com, Inc. ●   108 
 6   Penske Automotive Group, Inc.   176 
 16   PetMed Express, Inc.   196 
 7   PetSmart, Inc.   496 
 3   Williams-Sonoma, Inc.   177 
         3,480 
     Semiconductors and Semiconductor Equipment - 1.7%     
 38   Entropic Communications, Inc. ●   161 
 11   Kulicke & Soffa Industries, Inc. ●   125 
 65   LSI Corp. ●   428 

 

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

 

6

 

 

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 98.2% - (continued) 
     Semiconductors and Semiconductor Equipment - 1.7% - (continued)     
 14   Teradyne, Inc. ●  $230 
 31   TriQuint Semiconductor, Inc. ●   178 
         1,122 
     Software and Services - 9.9%     
 5   AOL, Inc.   186 
 17   AVG Technologies N.V. ●   274 
 24   CA, Inc.   639 
 32   Cadence Design Systems, Inc. ●   435 
 3   Commvault Systems, Inc. ●   221 
 10   Convergys Corp.   175 
 7   CoreLogic, Inc. ●   177 
 18   Dice Holdings, Inc. ●   149 
 26   Earthlink, Inc.   145 
 22   Global Cash Access, Inc. ●   155 
 3   Guidewire Software, Inc. ●   136 
 4   Heartland Payment Systems, Inc.   128 
 8   j2 Global, Inc.   326 
 11   Jack Henry & Associates, Inc.   510 
 6   Lender Processing Services, Inc.   175 
 2   Manhattan Associates, Inc. ●   162 
 6   Netscout Systems, Inc. ●   141 
 5   Neustar, Inc. ●   206 
 3   Opentable, Inc. ●   188 
 7   Rosetta Stone, Inc. ●   120 
 8   Solarwinds, Inc. ●   386 
 11   Solera Holdings, Inc.   616 
 44   Synacor, Inc. ●   128 
 7   Travelzoo, Inc. ●   176 
 10   Unisys Corp. ●   193 
 9   ValueClick, Inc. ●   265 
         6,412 
     Technology Hardware and Equipment - 4.6%     
 13   Arris Group, Inc. ●   210 
 3   Arrow Electronics, Inc. ●   122 
 7   Aruba Networks, Inc. ●   146 
 10   Avnet, Inc. ●   314 
 95   Brocade Communications Systems, Inc. ●   551 
 11   Calix, Inc. ●   90 
 13   Comtech Telecommunications Corp.   312 
 63   Extreme Networks, Inc. ●   211 
 3   FLIR Systems, Inc.   61 
 4   Interdigital, Inc.   160 
 7   Synaptics, Inc. ●   293 
 9   Ubiquiti Networks, Inc.   139 
 6   Western Digital Corp.   348 
         2,957 
     Telecommunication Services - 0.7%     
 11   Leap Wireless International, Inc. ●   61 
 12   MetroPCS Communications, Inc. ●   137 
 11   Telephone & Data Systems, Inc.   256 
         454 
     Transportation - 1.4%     
 12   Alaska Air Group, Inc. ●   764 
 12   Swift Transportation Co. ●   167 
         931 
     Utilities - 7.5%     
 5   Avista Corp.   137 
 3   Chesapeake Utilities Corp.   181 
 15   El Paso Electric Co.   577 
 8   MGE Energy, Inc.   424 
 36   N.V. Energy, Inc.   770 
 10   Pinnacle West Capital Corp.   615 
 14   PNM Resources, Inc.   334 
 19   Portland General Electric Co.   610 
 14   UNS Energy Corp.   724 
 14   Westar Energy, Inc.   500 
      4,872 
     Total common stocks     
     (cost $55,344)  $63,769 
           
     Total long-term investments     
     (cost $55,344)  $63,769 
           
SHORT-TERM INVESTMENTS - 1.7%     
Repurchase Agreements - 1.7%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $43,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $44)
     
$43   0.17%, 4/30/2013  $43 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $117, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -
2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$119)
     
 117   0.15%, 4/30/2013   117 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $225, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $229)
     
 225   0.15%, 4/30/2013   225 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $312,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $318)
     
 312   0.14%, 4/30/2013   312 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $56, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $57)
     
 56   0.17%, 4/30/2013   56 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $190, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $194)
     
 190   0.14%, 4/30/2013   190 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$134, collateralized by U.S. Treasury Note
0.25% - 1.88%, 2014 - 2019, value of $136)
     
 134   0.17%, 4/30/2013   134 

 

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

 

7

 

The Hartford Small/Mid Cap Equity Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount      Market Value ╪ 
SHORT-TERM INVESTMENTS - 1.7% - (continued)          
Repurchase Agreements - 1.7% - (continued)          
          UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$2, collateralized by U.S. Treasury Note
3.88%, 2018, value of $2)
                    
$2   0.13%, 4/30/2013       $2 
              1,079 
     Total short-term investments          
     (cost $1,079)       $1,079 
                
     Total investments          
     (cost $56,423) ▲   99.9%  $64,848 
     Other assets and liabilities   0.1%   95 
     Total net assets   100.0%  $64,943 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $56,523 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $9,883 
Unrealized Depreciation   (1,558)
Net Unrealized Appreciation  $8,325 

 

Non-income producing.

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)    
   
Other Abbreviations:
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
REIT Real Estate Investment Trust

 

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

 

8

 

The Hartford Small/Mid Cap Equity Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks ‡  $63,769   $63,769   $   $ 
Short-Term Investments   1,079        1,079     
Total  $64,848   $63,769   $1,079   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.
The Fund has all or primarily all of the equity securities categorized in a particular level.  Refer to the Schedule of Investments for further industry breakout.

 

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

 

9

 

The Hartford Small/Mid Cap Equity Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $56,423)  $64,848 
Cash    
Receivables:     
Fund shares sold   112 
Dividends and interest   73 
Other assets   59 
Total assets   65,092 
Liabilities:     
Payables:     
Fund shares redeemed   107 
Investment management fees   8 
Administrative fees    
Distribution fees   4 
Accrued expenses   30 
Total liabilities   149 
Net assets  $64,943 
Summary of Net Assets:     
Capital stock and paid-in-capital  $59,537 
Undistributed net investment income   384 
Accumulated net realized loss   (3,403)
Unrealized appreciation of investments   8,425 
Net assets  $64,943 
      
Shares authorized   950,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $13.03/$13.79 
Shares outstanding   3,481 
Net assets  $45,370 
Class B: Net asset value per share  $12.45 
Shares outstanding   368 
Net assets  $4,576 
Class C: Net asset value per share  $12.35 
Shares outstanding   859 
Net assets  $10,604 
Class R3: Net asset value per share  $13.34 
Shares outstanding   13 
Net assets  $172 
Class R4: Net asset value per share  $13.32 
Shares outstanding   11 
Net assets  $149 
Class R5: Net asset value per share  $13.35 
Shares outstanding   11 
Net assets  $149 
Class Y: Net asset value per share  $13.34 
Shares outstanding   294 
Net assets  $3,923 

 

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

 

10

 

The Hartford Small/Mid Cap Equity Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $1,127 
Interest    
Less: Foreign tax withheld    
Total investment income   1,127 
      
Expenses:     
Investment management fees   267 
Administrative services fees     
Class R3    
Class R4    
Class R5    
Transfer agent fees     
Class A   54 
Class B   10 
Class C   13 
Class R3    
Class R4    
Class Y    
Distribution fees     
Class A   53 
Class B   23 
Class C   50 
Class R3    
Class R4    
Custodian fees   4 
Accounting services fees   5 
Registration and filing fees   34 
Board of Directors' fees   2 
Audit fees   6 
Other expenses   13 
Total expenses (before waivers and fees paid indirectly)   534 
Expense waivers   (45)
Transfer agent fee waivers   (3)
Commission recapture   (1)
Total waivers and fees paid indirectly   (49)
Total expenses, net   485 
Net Investment Income   642 
Net Realized Gain on Investments:     
Net realized gain on investments in securities   8,545 
Net Realized Gain on Investments   8,545 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments   2,737 
Net Changes in Unrealized Appreciation of Investments   2,737 
Net Gain on Investments   11,282 
Net Increase in Net Assets Resulting from Operations  $11,924 

 

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

 

11

 

The Hartford Small/Mid Cap Equity Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $642   $895 
Net realized gain on investments   8,545    7,397 
Net unrealized appreciation of investments   2,737    1,196 
Net Increase in Net Assets Resulting from Operations   11,924    9,488 
Distributions to Shareholders:          
From net investment income          
Class A   (456)    
Class B   (19)    
Class C   (45)    
Class R3   (1)    
Class R4   (4)    
Class R5   (2)   (1)
Class Y   (328)   (287)
Total distributions   (855)   (288)
Capital Share Transactions:          
Class A   (2,263)   (8,020)
Class B   (507)   (880)
Class C   (546)   (1,045)
Class R3   5    18 
Class R4   (147)   128 
Class R5   2     
Class Y   (18,727)   (70,992)
Net decrease from capital share transactions   (22,183)   (80,791)
Net Decrease in Net Assets   (11,114)   (71,591)
Net Assets:          
Beginning of period   76,057    147,648 
End of period  $64,943   $76,057 
Undistributed (distribution in excess of) net investment income (loss)  $384   $597 

 

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

 

12

 

The Hartford Small/Mid Cap Equity Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Small/Mid Cap 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 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current

 

13

 

The Hartford Small/Mid Cap Equity Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative

 

14

 

 

 

source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

15

 

The Hartford Small/Mid Cap Equity Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund had no illiquid or restricted investments as of April 30, 2013.

 

4.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may

 

16

 

 

 

fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

5.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $288   $455 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $597 
Accumulated Capital Losses *   (11,848)
Unrealized Appreciation †   5,588 
Total Accumulated Deficit  $(5,663)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 Small/Mid Cap Equity Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(50)
Accumulated Net Realized Gain (Loss)   248 
Capital Stock and Paid-in-Capital   (198)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2016  $2,542 
2017   9,306 
Total  $11,848 

 

As a result of mergers in the Fund, certain provisions in the IRC may limit the future utilization of capital losses.  During the year ended October 31, 2012, the Fund utilized $6,635 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

18

 

 

 

6.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 $2 billion   0.65%
On next $2 billion   0.64%
On next $5 billion   0.63%
Over $10 billion   0.62%

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class R3   Class R4   Class R5   Class Y 
 1.30%      2.05%      2.05%      1.50%      1.20%      0.90%      0.85%   

 

19

 

The Hartford Small/Mid Cap Equity Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

d)Fees Paid Indirectly – The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.30%
Class B   2.05 
Class C   2.05 
Class R3   1.50 
Class R4   1.20 
Class R5   0.90 
Class Y   0.85 

 

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $36 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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.

 

20

 

 

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. These fees are accrued daily and paid monthly.

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $51,471 
Sales Proceeds Excluding U.S. Government Obligations   74,247 

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R3   85%
Class R4   100 
Class R5   100 
Class Y   3 

 

21

 

The Hartford Small/Mid Cap Equity Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

9.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   466    38    (703)       (199)   486        (1,226)       (740)
Amount  $5,838   $441   $(8,542)  $   $(2,263)  $5,198   $   $(13,218)  $   $(8,020)
Class B                                                  
Shares   7    2    (52)       (43)   15        (101)       (86)
Amount  $88   $18   $(613)  $   $(507)  $152   $   $(1,032)  $   $(880)
Class C                                                  
Shares   38    4    (91)       (49)   128        (229)       (101)
Amount  $449   $43   $(1,038)  $   $(546)  $1,299   $   $(2,344)  $   $(1,045)
Class R3                                                  
Shares                       2                2 
Amount  $4   $1   $   $   $5   $18   $   $   $   $18 
Class R4                                                  
Shares           (12)       (12)   12                12 
Amount  $5   $4   $(156)  $   $(147)  $128   $   $   $   $128 
Class R5                                                  
Shares                                        
Amount  $   $2   $   $   $2   $   $   $   $   $ 
Class Y                                                  
Shares   132    27    (1,624)       (1,465)   626    28    (7,402)       (6,748)
Amount  $1,605   $328   $(20,660)  $   $(18,727)  $6,735   $287   $(78,014)  $   $(70,992)
Total                                                  
Shares   643    71    (2,482)       (1,768)   1,269    28    (8,958)       (7,661)
Amount  $7,989   $837   $(31,009)  $   $(22,183)  $13,530   $287   $(94,608)  $   $(80,791)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   15   $191 
For the Year Ended October 31, 2012   15   $163 

 

10.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

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.

 

22

 

 

 

12.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

13.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

14.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

23

 

The Hartford Small/Mid Cap Equity Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $11.21   $0.11   $1.84   $1.95   $(0.13)  $   $   $(0.13)  $13.03 
B   10.68    0.06    1.76    1.82    (0.05)           (0.05)   12.45 
C   10.60    0.06    1.74    1.80    (0.05)           (0.05)   12.35 
R3   11.47    0.10    1.89    1.99    (0.12)           (0.12)   13.34 
R4   11.48    0.13    1.87    2.00    (0.16)           (0.16)   13.32 
R5   11.51    0.14    1.88    2.02    (0.18)           (0.18)   13.35 
Y   11.51    0.14    1.88    2.02    (0.19)           (0.19)   13.34 
                                              
For the Year Ended October 31, 2012
A   10.10    0.08    1.03    1.11                    11.21 
B   9.69    (0.01)   1.00    0.99                    10.68 
C   9.62    (0.01)   0.99    0.98                    10.60 
R3   10.35    0.05    1.07    1.12                    11.47 
R4   10.36    0.09    1.06    1.15    (0.03)           (0.03)   11.48 
R5   10.36    0.12    1.07    1.19    (0.04)           (0.04)   11.51 
Y   10.36    0.23    0.96    1.19    (0.04)           (0.04)   11.51 
                                              
For the Year Ended October 31, 2011 (E)
A   9.37    0.03    0.73    0.76    (0.03)           (0.03)   10.10 
B   9.04    (0.05)   0.70    0.65                    9.69 
C   8.97    (0.05)   0.70    0.65                    9.62 
R3(H)   9.13        1.22    1.22                    10.35 
R4(H)   9.13        1.23    1.23                    10.36 
R5(H)   9.13        1.23    1.23                    10.36 
Y   9.60    0.07    0.76    0.83    (0.07)           (0.07)   10.36 
                                              
For the Year Ended October 31, 2010 (E)
A   7.49    0.02    1.86    1.88                    9.37 
B   7.27    (0.05)   1.82    1.77                    9.04 
C   7.21    (0.04)   1.80    1.76                    8.97 
Y   7.64    0.05    1.91    1.96                    9.60 
                                              
For the Year Ended October 31, 2009 (E)
A   6.04        1.45    1.45                    7.49 
B   5.89    (0.02)   1.40    1.38                    7.27 
C   5.86    (0.04)   1.39    1.35                    7.21 
Y   6.15    0.01    1.48    1.49                    7.64 
                                              
For the Year Ended October 31, 2008
A   12.73        (5.11)   (5.11)       (1.58)       (1.58)   6.04 
B   12.50    (0.06)   (4.97)   (5.03)       (1.58)       (1.58)   5.89 
C   12.46    (0.08)   (4.94)   (5.02)       (1.58)       (1.58)   5.86 
Y   12.88    0.05    (5.20)   (5.15)       (1.58)       (1.58)   6.15 

 

(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)Not annualized.
(G)Annualized.
(H)Commenced operations on September 30, 2011.
(I)During the year ended October 31, 2010, the Fund incurred $45.6 million in purchases associated with the transition of assets from The Hartford Select MidCap Value Fund, which merged into the Fund on February 19, 2010.  These purchases are excluded from the portfolio turnover calculation.

 

24

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
                            
 17.54%(F)  $45,370    1.44%(G)   1.30%(G)   1.85%(G)   72%
 17.07(F)   4,576    2.37(G)   2.05(G)   1.11(G)    
 17.05(F)   10,604    2.19(G)   2.05(G)   1.11(G)    
 17.44(F)   172    1.67(G)   1.50(G)   1.64(G)    
 17.54(F)   149    1.34(G)   1.20(G)   2.07(G)    
 17.74(F)   149    1.03(G)   0.90(G)   2.24(G)    
 17.71(F)   3,923    0.93(G)   0.85(G)   2.42(G)    
                            
                            
 10.99    41,266    1.44    1.30    0.69    121 
 10.22    4,391    2.38    2.05    (0.06)    
 10.19    9,624    2.21    2.05    (0.06)    
 10.82    144    1.65    1.50    0.52     
 11.11    262    1.35    1.20    0.90     
 11.48    127    1.03    0.90    1.11     
 11.49    20,243    0.90    0.85    1.01     
                            
                            
 8.09    44,655    1.36    1.30    0.27    202 
 7.19    4,821    2.31    2.05    (0.47)    
 7.25    9,702    2.13    2.05    (0.48)    
 13.36(F)   113    1.61(G)   1.50(G)   (0.40)(G)    
 13.47(F)   113    1.31(G)   1.20(G)   (0.12)(G)    
 13.47(F)   114    1.01(G)   0.90(G)   0.17(G)    
 8.61    88,130    0.87    0.85    0.68     
                            
                            
 25.10    46,068    1.45    1.31    0.19    399(I)
 24.35    5,420    2.39    2.06    (0.55)    
 24.41    10,025    2.22    2.06    (0.56)    
 25.65    42,540    0.89    0.87    0.65     
                            
                            
 24.01    25,208    1.76    1.21    0.03    172 
 23.43    3,396    2.89    1.59    (0.37)    
 23.04    5,778    2.59    1.88    (0.67)    
 24.23    2,061    1.01    0.95    0.18     
                            
                            
 (45.38)   21,304    1.50    1.35    0.05    292 
 (45.59)   2,584    2.56    1.82    (0.63)    
 (45.67)   3,002    2.39    1.99    (0.89)    
 (45.12)   136    0.98    0.95    0.67     

 

25

 

The Hartford Small/Mid Cap Equity Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

26

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

27

 

The Hartford Small/Mid Cap Equity Fund
Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

28

 

The Hartford Small/Mid Cap 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,175.40   $7.02   $1,000.00   $1,018.34   $6.52    1.30%   181    365 
Class B  $1,000.00   $1,170.70   $11.05   $1,000.00   $1,014.61   $10.26    2.05    181    365 
Class C  $1,000.00   $1,170.50   $11.05   $1,000.00   $1,014.61   $10.26    2.05    181    365 
Class R3  $1,000.00   $1,174.40   $8.10   $1,000.00   $1,017.34   $7.52    1.50    181    365 
Class R4  $1,000.00   $1,175.40   $6.48   $1,000.00   $1,018.84   $6.01    1.20    181    365 
Class R5  $1,000.00   $1,177.40   $4.87   $1,000.00   $1,020.32   $4.52    0.90    181    365 
Class Y  $1,000.00   $1,177.10   $4.60   $1,000.00   $1,020.57   $4.27    0.85    181    365 

 

29

 

The Hartford Small/Mid Cap Equity Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Small/Mid Cap Equity Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard,

 

30

 

 

 

the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

31

 

The Hartford Small/Mid Cap Equity Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Small/Mid-cap Stock Risk: Small- and mid-cap stocks are generally more volatile and risky and may be less liquid than large-cap stocks because they may have limited operating histories, narrow product lines, and focus on niche markets.

 

Quantitative Analysis Risk: The Fund uses quantitative analysis in its securities selection; securities selected by this method may perform differently from the broader stock market.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

32
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-SMC13 4/13 113999 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

40

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD STRATEGIC INCOME FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Strategic Income Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   6
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   29
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   31
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   33
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   34
Notes to Financial Statements (Unaudited)   35
Financial Highlights (Unaudited)   54
Directors and Officers (Unaudited)   56
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   58
Quarterly Portfolio Holdings Information (Unaudited)   58
Expense Example (Unaudited)   59
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   60
Principal Risks (Unaudited)   62

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Strategic Income Fund inception 05/31/2007
(sub-advised by Wellington Management Company LLP)
 
Investment objective – Seeks to provide current income and long-term total return.

 

Performance Overview 5/31/07 - 4/30/13

 

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   Since
Inception▲
 
Strategic Income A#   2.61%       7.55%       6.33%       5.75%    
Strategic Income A##        2.71%       5.36%       4.93%    
Strategic Income B#   2.22%       6.74%       5.45%       4.91%    
Strategic Income B##        1.74%       5.13%       4.78%    
Strategic Income C#   2.23%       6.76%       5.53%       4.99%    
Strategic Income C##        5.76%       5.53%       4.99%    
Strategic Income I#   2.84%       7.92%       6.59%       6.06%    
Strategic Income R3#   2.36%       7.14%       6.44%       6.46%    
Strategic Income R4#   2.61%       7.44%       6.54%       6.54%    
Strategic Income R5#   2.76%       7.76%       6.64%       6.63%    
Strategic Income Y#   2.79%       7.94%       6.66%       6.65%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       5.73%       6.13%    

 

Not Annualized

Inception: 05/31/2007

#Without sales charge

##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 4.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class Y shares commenced operations on 8/31/07. Accordingly, the “Since inception” performance shown for Class Y is since that date. Class R3, R4 and R5 shares commenced operations on 9/30/11. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of April 2, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays 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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Strategic Income Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Strategic Income Class A   0.95%       0.98%    
Strategic Income Class B   1.70%       1.78%    
Strategic Income Class C   1.69%       1.69%    
Strategic Income Class I   0.70%       0.70%    
Strategic Income Class R3   1.25%       1.34%    
Strategic Income Class R4   0.95%       1.02%    
Strategic Income Class R5   0.65%       0.71%    
Strategic Income Class Y   0.60%       0.60%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers        
Campe Goodman, CFA   Lucius T. Hill III   Joseph F. Marvan, CFA
Vice President and Fixed Income Portfolio Manager   Senior Vice President and Fixed Income Portfolio Manager   Senior Vice President and Fixed Income Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Strategic Income Fund returned 2.61%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the Barclays U.S. Aggregate Bond Index, which returned 0.91% for the same period. The Fund underperformed the 4.36% average return of the Lipper Multi-Sector Income Funds peer group, a group of funds that seek current income by allocating assets among several different fixed income securities sectors (with no more than 65% in any one sector except for defensive purposes), including U.S. government and foreign governments, with a significant portion of assets in securities rated below investment-grade.

 

Why did the Fund perform this way?

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02%-0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

During the period, we positioned the Fund with an underweight (i.e. the Fund’s position was less than the benchmark position) to investment grade credit, in favor of an allocation to lower tier credit sectors. In particular, the Fund held an allocation to bank loans, emphasizing the high and middle quality portions of the market, based on compelling valuations and attractive yields. The bank loan sector generated strong performance for the period and benefitted benchmark-relative results. Additionally, the Fund held bank loan exposure via credit default swap indexes which boosted relative results. The Fund also gained exposure to European investment grade credit, through credit default swap index exposure, which aided relative performance. An allocation to

 

3

 

The Hartford Strategic Income Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

non-agency mortgage backed securities represented the top contributor to relative outperformance as non-agencies performed strongly amid improved sentiment around U.S. housing, low long-term interest rates and strong investor demand. High yield credit exposure was also additive to the Fund’s relative performance, although this was partially offset by purchasing protection via high yield credit default swap index exposure.

 

The Fund was positioned with exposure to non-dollar developed government bonds during the period. Specifically, a position in Swedish bonds, which we believed would benefit from converging central bank policy rates and macro conditions, detracted modestly from relative performance.

 

What is the outlook?

In our view, the U.S. economy is less fragile than it has been in a long time. Through bold policy initiatives, we believe the Fed has shown its determination to keep the U.S. out of recession, and corporate and personal balance sheets are in their best shape in years. These reasons for optimism are tempered, nevertheless, by concerns about the ongoing debt crisis in Europe and fiscal challenges in the U.S. Furthermore, we believe that valuations in many fixed income sectors have risen closer to fair value.

 

We are still positioned with a moderately procyclical risk bias, favoring credit overall. This view is expressed through an overweight to U.S. financials within investment-grade credit, and through allocations to upper-tier high-yield bonds and bank loans. Non-agency residential mortgage-backed securities are still attractive to us against the backdrop of an improving housing market. We are relatively neutral agency mortgage-backed securities and continue to have an overweight to commercial mortgage-backed securities. We have a modest allocation to emerging markets debt.

 

Our views on interest rates depend on the time frame. Over the long term, we believe rates will revert to levels more consistent with the Fed’s long-run projections of short rates and economic growth, which are higher than those implied by today’s forward curve. In the near term, we believe that yields could stay low for a little longer than now anticipated by markets. Hence, we are currently positioned with a neutral duration posture.

 

Distribution by Credit Quality

as of April 30, 2013

 

Credit Rating *  Percentage of
Net Assets
 
Aaa / AAA   7.2%
Aa / AA   6.3 
A   2.1 
Baa / BBB   17.6 
Ba / BB   23.3 
B   20.2 
Caa / CCC or Lower   9.9 
Unrated   3.1 
U.S. Government Agencies and Securities   17.5 
Non-Debt Securities and Other Short-Term Instruments   2.5 
Other Assets & Liabilities   (9.7)
Total   100.0%

 

* Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

4

 

 

 

Diversification by Industry

as of April 30, 2013

 

Industry  Percentage of
Net Assets
 
Fixed Income Securities     
Accommodation and Food Services   0.9%
Administrative Waste Management and Remediation   0.7 
Agriculture, Construction, Mining and Machinery   0.1 
Agriculture, Forestry, Fishing and Hunting   0.0 
Air Transportation   0.3 
Apparel Manufacturing   0.2 
Arts, Entertainment and Recreation   2.5 
Beverage and Tobacco Product Manufacturing   0.2 
Chemical Manufacturing   0.9 
Computer and Electronic Product Manufacturing   1.4 
Construction   0.4 
Educational Services   0.0 
Electrical Equipment, Appliance Manufacturing   0.3 
Fabricated Metal Product Manufacturing   0.3 
Finance and Insurance   23.6 
Food Manufacturing   0.3 
Food Services   0.6 
Furniture and Related Product Manufacturing   0.3 
Health Care and Social Assistance   3.2 
Information   7.2 
Machinery Manufacturing   0.3 
Media   0.5 
Mining   1.2 
Miscellaneous Manufacturing   1.0 
Motor Vehicle and Parts Manufacturing   0.6 
Nonmetallic Mineral Product Manufacturing   0.4 
Other Services   0.2 
Paper Manufacturing   0.3 
Petroleum and Coal Products Manufacturing   1.3 
Pipeline Transportation   1.0 
Plastics and Rubber Products Manufacturing   0.5 
Primary Metal Manufacturing   0.3 
Printing and Related Support Activities   0.2 
Professional, Scientific and Technical Services   0.8 
Real Estate, Rental and Leasing   1.4 
Retail Trade   2.5 
Soap, Cleaning Compound and Toilet Manufacturing   0.0 
Transportation Equipment Manufacturing   0.1 
Truck Transportation   0.2 
Utilities   1.1 
Water Transportation   0.0 
Total   57.3%
Equity Securities     
Diversified Financials   0.2 
Energy   0.0 
Materials   0.0 
Telecommunication Services   0.0 
Total   0.2%
Call Options Purchased   0.0 
Foreign Government Obligations   32.4 
Put Options Purchased   0.0 
U.S. Government Agencies   13.4 
U.S. Government Securities   4.1 
Short-Term Investments   2.3 
Other Assets and Liabilities   (9.7)
Total   100.0%

 

5

 

The Hartford Strategic Income Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 19.0%     
     Finance and Insurance - 19.0%     
     Asset Backed Funding Certificates     
$1,353   0.42%, 01/25/2037 Δ  $781 
     Banc of America Commercial Mortgage, Inc.     
 1,885   5.17%, 11/10/2042 Δ   2,013 
 945   5.19%, 09/10/2047 ‡Δ   1,037 
 830   5.63%, 07/10/2046 Δ   933 
     Banc of America Mortgage Securities     
 550   3.13%, 09/25/2035 Δ   510 
     BB-UBS Trust     
 430   3.43%, 11/05/2036 ■   441 
     BCAP LLC Trust     
 970   0.37%, 01/25/2037 Δ   738 
 933   0.38%, 03/25/2037 Δ   781 
     Bear Stearns Adjustable Rate Mortgage Trust     
 1,248   2.47%, 10/25/2035 Δ   1,212 
     Bear Stearns Alt-A Trust     
 464   0.58%, 05/25/2036 Δ   295 
     Bear Stearns Commercial Mortgage Securities, Inc.     
 174   4.93%, 02/13/2042   186 
 1,085   5.15%, 10/12/2042 ‡Δ   1,187 
 345   5.41%, 12/11/2040   380 
 286   5.54%, 10/12/2041 ‡   323 
 825   5.58%, 04/12/2038 ‡Δ   920 
     Citigroup Commercial Mortgage Trust, Inc.     
 1,467   0.55%, 03/25/2037 Δ   786 
     Citigroup/Deutsche Bank Commercial Mortgage Trust     
 1,650   5.32%, 12/11/2049 ‡   1,879 
 545   5.89%, 11/15/2044 ‡   637 
     Commercial Mortgage Loan Trust     
 1,320   6.00%, 12/10/2049 Δ   1,557 
     Commercial Mortgage Pass-Through Certificates     
 430   2.77%, 12/10/2045 ‡   439 
 900   3.15%, 08/15/2045   950 
 3,320   4.34%, 12/10/2045 ■‡Δ   2,511 
 570   4.75%, 11/15/2045 ■   475 
 1,480   4.77%, 11/15/2045 ■‡Δ   1,478 
 125   5.02%, 08/15/2022 ■   128 
 300   5.94%, 06/10/2046 Δ   339 
     Commercial Mortgage Trust     
 705   3.21%, 04/10/2023 ‡   740 
 475   3.42%, 03/10/2031 ■   499 
     Countrywide Alternative Loan Trust     
 850   0.52%, 11/25/2035 Δ   664 
     Countrywide Home Loans, Inc.     
 1,549   3.08%, 09/25/2047 Δ   1,295 
     CS First Boston Mortgage Securities Corp.     
 2,225   4.83%, 04/15/2037 ‡   2,359 
     CW Capital Cobalt Ltd.     
 1,065   5.22%, 08/15/2048   1,188 
     First Franklin Mortgage Loan Trust     
 1,805   0.44%, 04/25/2036 Δ   1,095 
     First Horizon Alternative Mortgage Securities     
 2,502   2.33%, 04/25/2036 Δ   2,035 
 2,542   2.36%, 09/25/2035 Δ   2,259 
     First Horizon Mortgage Pass-through Trust     
 201   2.52%, 08/25/2037 Δ   168 
     GE Commercial Mortgage Corp. Trust     
 1,100   5.47%, 03/10/2044 Δ   1,217 
     GMAC Commercial Mortgage Securities, Inc.     
 220   5.24%, 11/10/2045 Δ   238 
     GMAC Mortgage Corp. Loan Trust     
 1,435   3.70%, 09/19/2035 Δ   1,385 
 181   3.87%, 04/19/2036 Δ   158 
     Goldman Sachs Mortgage Securities Corp. II     
 570   2.95%, 11/05/2034 ■╦   580 
 255   3.38%, 05/10/2045   274 
 195   4.75%, 07/10/2039   207 
     Goldman Sachs Mortgage Securities Trust     
 765   2.77%, 11/10/2045 ╦   778 
 650   3.55%, 04/10/2034 ■   697 
 2,520   4.86%, 11/10/2045 ■Δ   2,544 
 1,765   5.00%, 05/10/2045 ■Δ   1,487 
     Greenwich Capital Commercial Funding Corp.     
 1,750   5.44%, 03/10/2039 Δ   2,000 
 1,175   5.74%, 12/10/2049   1,369 
 1,550   6.06%, 07/10/2038 Δ   1,755 
     GSAA Home Equity Trust     
 2,141   0.27%, 12/25/2046 - 03/25/2047 Δ   1,248 
 4,262   0.28%, 02/25/2037 Δ   2,344 
 670   0.29%, 12/25/2036 Δ   371 
 1,203   0.30%, 03/25/2037 Δ   642 
 533   0.36%, 07/25/2036 Δ   285 
 1,203   0.37%, 03/25/2047 Δ   622 
 348   0.43%, 04/25/2047 Δ   220 
     GSAMP Trust     
 2,638   0.29%, 01/25/2037 Δ   1,484 
 404   0.30%, 12/25/2046 Δ   220 
 717   0.40%, 11/25/2036 Δ   409 
 1,308   0.43%, 12/25/2046 Δ   728 
     GSR Mortgage Loan Trust     
 1,724   2.78%, 01/25/2036 Δ   1,479 
 1,613   2.82%, 04/25/2035 Δ   1,508 
 197   2.95%, 10/25/2035 Δ   175 
     Harborview Mortgage Loan Trust     
 1,399   0.39%, 01/19/2038 Δ   1,151 
 1,782   0.42%, 05/19/2047 Δ   882 
 1,043   0.56%, 09/19/2035 Δ   834 
     Home Equity Loan Trust     
 781   2.87%, 11/25/2035 Δ   702 
     Impac Commercial Mortgage Backed Trust     
 141   1.70%, 02/25/2036 Δ   132 
     Impac Secured Assets Trust     
 2,568   0.48%, 08/25/2036 Δ   1,755 
     IndyMac Index Mortgage Loan Trust     
 407   0.49%, 01/25/2036 Δ   265 
 2,018   0.60%, 07/25/2046 Δ   1,031 
 1,078   2.68%, 03/25/2036 Δ   809 
 160   2.91%, 12/25/2036 Δ   135 
     JP Morgan Chase Commercial Mortgage Securities Corp.     
 471   2.75%, 10/15/2045 ■   307 

 

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

 

6

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 19.0% - (continued)
     Finance and Insurance - 19.0% - (continued)     
     JP Morgan Chase Commercial Mortgage Securities Corp. - (continued)     
$1,400   2.83%, 10/15/2045  $1,429 
 1,430   2.84%, 12/15/2047 ╦   1,459 
 450   3.91%, 05/05/2030 ■Δ   489 
 1,810   4.67%, 10/15/2045 ■Δ   1,783 
 1,325   5.20%, 12/15/2044 ╦Δ   1,453 
 932   5.30%, 01/12/2043 Δ   1,023 
 300   5.31%, 08/15/2046 ■Δ   322 
 1,755   5.34%, 08/12/2037   1,881 
 810   5.71%, 02/12/2049 Δ   937 
 1,060   6.07%, 02/12/2051   1,176 
     JP Morgan Mortgage Trust     
 648   3.02%, 08/25/2036 Δ   549 
 530   3.10%, 09/25/2035 Δ   512 
 2,451   4.13%, 05/25/2036 Δ   2,232 
     LB-UBS Commercial Mortgage Trust     
 970   4.74%, 07/15/2030 Δ   1,035 
 1,075   4.95%, 09/15/2030   1,158 
 945   5.20%, 11/15/2030 Δ   1,027 
 1,085   5.43%, 02/15/2040   1,234 
 1,107   5.87%, 09/15/2045 ☼   1,278 
 200   5.87%, 06/15/2038 Δ   227 
 1,200   6.15%, 04/15/2041 Δ   1,445 
     Lehman XS Trust     
 682   0.41%, 07/25/2046 Δ   513 
     Merrill Lynch Mortgage Investors Trust     
 508   2.88%, 07/25/2035 Δ   428 
 290   4.75%, 06/12/2043   309 
 98   5.29%, 01/12/2044 Δ   107 
     Morgan Stanley ABS Capital I     
 2,194   0.26%, 12/25/2036 Δ   1,207 
     Morgan Stanley Capital I     
 1,150   4.99%, 08/13/2042   1,239 
 470   5.68%, 10/15/2042 Δ   522 
 900   5.69%, 04/15/2049 ╦Δ   1,035 
     Morgan Stanley Capital I Trust     
 610   5.16%, 10/12/2052 Δ   667 
     Morgan Stanley Mortgage Loan Trust     
 2,047   0.37%, 05/25/2036 - 11/25/2036 Δ   1,035 
     Option One Mortgage Loan Trust     
 216   0.45%, 03/25/2037 Δ   109 
     Residential Accredit Loans, Inc.     
 1,684   2.99%, 11/25/2037 Δ   940 
 2,268   4.24%, 04/25/2035 Δ   1,981 
     Residential Asset Securitization Trust     
 1,067   0.65%, 03/25/2035 Δ   820 
     RFMSI Trust     
 168   3.22%, 04/25/2037 Δ   145 
     Sequoia Mortgage Trust     
 329   0.47%, 01/20/2035 Δ   307 
 90   2.60%, 07/20/2037 Δ   74 
     Soundview Home Equity Loan Trust, Inc.     
 3,766   0.44%, 07/25/2036 Δ   2,117 
 2,480   1.30%, 09/25/2037 Δ   1,596 
     Structured Adjustable Rate Mortgage Loan Trust     
 2,680   2.53%, 02/25/2036 Δ   2,154 
     Structured Asset Mortgage Investments Trust     
 788   0.42%, 05/25/2046 Δ   457 
     UBS-Barclays Commercial Mortgage Trust     
 810   2.97%, 02/10/2023   818 
 1,425   3.18%, 03/10/2046 Δ   1,492 
 1,015   3.53%, 05/10/2063   1,093 
     Wachovia Bank Commercial Mortgage Trust     
 525   4.94%, 04/15/2042   561 
 809   5.24%, 10/15/2044 ‡Δ   882 
 209   5.42%, 01/15/2045 Δ   229 
     Wells Fargo Alternative Loan Trust     
 350   6.25%, 11/25/2037   337 
     Wells Fargo Commercial Mortgage Trust     
 1,374   2.92%, 10/15/2045 ‡   1,411 
 270   4.78%, 10/15/2045 ■Δ   269 
     Wells Fargo Mortgage Backed Securities Trust     
 1,880   2.72%, 04/25/2036 Δ   1,771 
 610   3.04%, 09/25/2036 Δ   538 
 230   5.15%, 10/25/2035 Δ   228 
     WF-RBS Commercial Mortgage Trust     
 8,569   2.67%, 11/15/2044 ■►   1,011 
 795   2.88%, 12/15/2045 ‡   814 
 1,700   3.07%, 03/15/2045   1,765 
 535   3.20%, 03/15/2048   561 
 550   4.19%, 03/15/2045 ■Δ   433 
 2,661   4.46%, 12/15/2045 ■Δ   2,123 
 3,565   4.80%, 11/15/2045 ■Δ   3,287 
 290   4.87%, 02/15/2044 ■‡   341 
 445   4.90%, 06/15/2044 ■‡   525 
 635   5.00%, 06/15/2044 ■   552 
 710   5.56%, 04/15/2045 ■Δ   762 
         131,859 
           
     Total asset & commercial mortgage backed securities     
     (cost $123,544)  $131,859 
           
CORPORATE BONDS - 19.0%
     Accommodation and Food Services - 0.4%     
     Caesars Operating Escrow     
$500   9.00%, 02/15/2020 ■  $492 
     Choice Hotels International, Inc.     
 621   5.75%, 07/01/2022   696 
     Wynn Las Vegas LLC     
 1,135   7.75%, 08/15/2020   1,300 
         2,488 
     Administrative Waste Management and Remediation - 0.2%     
     Casella Waste Systems, Inc.     
 140   7.75%, 02/15/2019   135 
     Clean Harbors, Inc.     
 60   5.13%, 06/01/2021 ■   63 
 191   5.25%, 08/01/2020   202 
     Equinix, Inc.     
 50   4.88%, 04/01/2020   52 
 305   5.38%, 04/01/2023   320 

 

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

 

7

 

The Hartford Strategic Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 19.0% - (continued)
     Administrative Waste Management and Remediation - 0.2% - (continued)     
     Iron Mountain, Inc.     
$140   5.75%, 08/15/2024  $144 
 240   7.75%, 10/01/2019   271 
         1,187 
     Agriculture, Forestry, Fishing and Hunting - 0.0%     
     Ainsworth Lumber Ltd.     
 90   7.50%, 12/15/2017 ■   98 
           
     Apparel Manufacturing - 0.1%     
     Hanesbrands, Inc.     
 480   6.38%, 12/15/2020   531 
     Phillips Van-Heusen Corp.     
 270   7.38%, 05/15/2020   303 
     PVH Corp.     
 160   4.50%, 12/15/2022   165 
         999 
     Arts, Entertainment and Recreation - 1.3%     
     AMC Entertainment, Inc.     
 131   8.75%, 06/01/2019   144 
 195   9.75%, 12/01/2020   227 
     Carlson Wagonlit B.V.     
 200   6.88%, 06/15/2019 ■   212 
     CCO Holdings LLC     
 2,505   5.25%, 09/30/2022 ‡   2,552 
 270   5.75%, 01/15/2024 ☼   281 
     Cedar Fair L.P.     
 150   5.25%, 03/15/2021 ■   153 
     Cinemark USA, Inc.     
 30   5.13%, 12/15/2022 ■   31 
     Emdeon, Inc.     
 355   11.00%, 12/31/2019   414 
     Fidelity National Information Services, Inc.     
 750   5.00%, 03/15/2022   827 
     Great Canadian Gaming Co.     
CAD120   6.63%, 07/25/2022 ■   125 
     Greektown Superholdings, Inc.     
 380   13.00%, 07/01/2015   408 
     Isle of Capri Casinos, Inc.     
 361   8.88%, 06/15/2020   397 
     Liberty Media Corp.     
 650   8.50%, 07/15/2029   734 
     NAI Entertainment Holdings LLC     
 267   8.25%, 12/15/2017 ■   290 
     National CineMedia LLC     
 75   6.00%, 04/15/2022   82 
     NBC Universal Enterprise     
 440   5.25%, 12/19/2049 ■   444 
     NCR Corp.     
 565   4.63%, 02/15/2021 ■   565 
 60   5.00%, 07/15/2022 ■   61 
     Regal Entertainment Group     
 72   5.75%, 02/01/2025   73 
     Sirius XM Radio, Inc.     
 115   5.25%, 08/15/2022 ■   119 
     Starz Financial Corp     
 120   5.00%, 09/15/2019   125 
     Univision Communications, Inc.     
 310   6.75%, 09/15/2022 ■   344 
     Videotron Ltee     
 557   5.00%, 07/15/2022   574 
         9,182 
     Beverage and Tobacco Product Manufacturing - 0.2%     
     Constellation Brands, Inc.     
 120   4.25%, 05/01/2023 ☼   120 
 740   6.00%, 05/01/2022   854 
 415   7.25%, 05/15/2017   483 
         1,457 
     Chemical Manufacturing - 0.3%     
     Ashland, Inc.     
 235   4.75%, 08/15/2022 ■   246 
     Ferro Corp.     
 180   7.88%, 08/15/2018   189 
     Hexion Specialty Chemicals     
 265   8.88%, 02/01/2018   281 
     Hexion U.S. Finance Corp.     
 125   6.63%, 04/15/2020   130 
     Ineos Group Holdings plc     
 505   8.50%, 02/15/2016 ■   513 
     LyondellBasell Industries N.V.     
 300   6.00%, 11/15/2021   364 
         1,723 
     Computer and Electronic Product Manufacturing - 0.5%     
     CDW Escrow Corp.     
 800   8.50%, 04/01/2019   897 
     Esterline Technologies Corp.     
 530   7.00%, 08/01/2020   586 
     Freescale Semiconductor, Inc.     
 135   8.05%, 02/01/2020   145 
     Jabil Circuit, Inc.     
 180   4.70%, 09/15/2022   183 
     Micron Technology, Inc.     
 100   1.63%, 02/15/2033 ۞■   113 
 83   2.13%, 02/15/2033 ۞■   93 
     ON Semiconductor Corp.     
 87   2.63%, 12/15/2026 ۞   99 
     Seagate HDD Cayman     
 725   6.88%, 05/01/2020   787 
 490   7.00%, 11/01/2021   540 
         3,443 
     Construction - 0.3%     
     K Hovnanian Enterprises, Inc.     
 486   9.13%, 11/15/2020 ■   552 
     KB Home     
 181   1.38%, 02/01/2019 ۞   210 
 371   7.50%, 09/15/2022   423 
     Lennar Corp.     
 475   4.75%, 12/15/2017   503 
 200   4.75%, 11/15/2022 ■   201 
     Pulte Homes, Inc.     
 90   6.38%, 05/15/2033   91 
     Ryland Group, Inc.     
 255   5.38%, 10/01/2022   265 
         2,245 

 

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

 

8

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 19.0% - (continued)
     Fabricated Metal Product Manufacturing - 0.3%     
     Anixter International, Inc.     
$105   5.63%, 05/01/2019  $112 
     Ball Corp.     
 230   5.00%, 03/15/2022   244 
 640   6.75%, 09/15/2020   706 
     Crown Americas, Inc.     
 175   4.50%, 01/15/2023 ■   179 
     Masco Corp.     
 520   5.95%, 03/15/2022   589 
     Ply Gem Industries, Inc.     
 130   9.38%, 04/15/2017   144 
         1,974 
     Finance and Insurance - 3.3%     
     Ally Financial, Inc.     
 495   5.50%, 02/15/2017   540 
     CIT Group, Inc.     
 1,222   5.50%, 02/15/2019 ■‡   1,378 
     Community Choice Financial, Inc.     
 300   10.75%, 05/01/2019   292 
     Credit Acceptance Corp.     
 471   9.13%, 02/01/2017   513 
     DuPont Fabros Technology L.P.     
 260   8.50%, 12/15/2017   280 
     Felcor Lodging L.P.     
 130   5.63%, 03/01/2023 ■   135 
     Fibria Overseas Finance Ltd.     
 830   6.75%, 03/03/2021 ■   927 
     Host Hotels & Resorts L.P.     
 700   6.00%, 11/01/2020   783 
     Ineos Finance plc     
 481   8.38%, 02/15/2019 ■   542 
 300   9.00%, 05/15/2015 ■   314 
     ING US, Inc.     
 591   5.50%, 07/15/2022 ■   672 
     Ladder Capital Finance Holdings LLC     
 836   7.38%, 10/01/2017 ■   868 
     Lloyds Banking Group plc     
 520   6.50%, 09/14/2020 ■   594 
 1,000   7.88%, 11/01/2020 ■   1,092 
     Mapfre S.A.     
EUR1,450   5.92%, 07/24/2037   1,783 
     Minerva Luxembourg S.A.     
 560   7.75%, 01/31/2023 ■   598 
     National Money Mart Co.     
 230   10.38%, 12/15/2016   248 
     Nationstar Mortgage LLC     
 310   7.88%, 10/01/2020 ■   347 
     Natixis     
 4,900   0.53%, 01/15/2019 Δ   4,729 
     Nuveen Investments, Inc.     
 160   9.13%, 10/15/2017 ■   171 
 351   9.50%, 10/15/2020 ■   378 
     Provident Funding Associates L.P.     
 571   10.25%, 04/15/2017 ■   638 
     Royal Bank of Scotland plc     
 1,480   6.13%, 12/15/2022   1,592 
     SLM Corp.     
 100   6.00%, 01/25/2017   108 
 545   6.25%, 01/25/2016   593 
 840   8.45%, 06/15/2018   986 
     Softbank Corp.     
 605   4.50%, 04/15/2020 ■   627 
     TitleMax, Inc.     
 460   13.25%, 07/15/2015   501 
     UBS AG Stamford CT     
 515   7.63%, 08/17/2022   597 
         22,826 
     Food Manufacturing - 0.0%     
     Pinnacle Foods Finance LLC     
 250   4.88%, 05/01/2021 ■   257 
           
     Food Services - 0.1%     
     ARAMARK Corp.     
 335   5.75%, 03/15/2020 ■   351 
           
     Furniture and Related Product Manufacturing - 0.0%     
     Tempur-Pedic International, Inc.     
 40   6.88%, 12/15/2020 ■   44 
           
     Health Care and Social Assistance - 1.3%     
     Alere, Inc.     
 485   9.00%, 05/15/2016   509 
     Biomet, Inc.     
 425   6.50%, 08/01/2020 - 10/01/2020 ■   450 
     BioScrip, Inc.     
 305   10.25%, 10/01/2015   322 
     Community Health Systems, Inc.     
 1,371   5.13%, 08/15/2018 ‡   1,467 
 265   7.13%, 07/15/2020   296 
     Exelixis, Inc.     
 110   4.25%, 08/15/2019 ۞   115 
     Fresenius Medical Care U.S. Finance II, Inc.     
 340   5.63%, 07/31/2019 ■   380 
 250   9.00%, 07/15/2015 ■   288 
     HCA, Inc.     
 360   4.75%, 05/01/2023   375 
 260   5.88%, 05/01/2023   283 
 340   6.25%, 02/15/2021   372 
 800   6.50%, 02/15/2020   924 
 905   7.50%, 11/15/2095 ‡   840 
 1,225   8.50%, 04/15/2019   1,351 
     Health Management Associates, Inc.     
 155   7.38%, 01/15/2020   172 
     Hologic, Inc.     
 275   2.00%, 03/01/2042 ۞   280 
 65   6.25%, 08/01/2020   70 
     Radiation Therapy Services, Inc.     
 86   8.88%, 01/15/2017   82 
     Savient Pharmaceuticals, Inc.     
 350   4.75%, 02/01/2018 ۞   84 
     Tenet Healthcare Corp.     
 85   4.50%, 04/01/2021 ■   87 
         8,747 

 

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

 

9

 

The Hartford Strategic Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 19.0% - (continued)
     Information - 3.1%     
     Altice Financing S.A.     
$330   7.88%, 12/15/2019 ■  $365 
     Audatex North America, Inc.     
 605   6.75%, 06/15/2018 ■   651 
     Brocade Communications Systems, Inc.     
 475   4.63%, 01/15/2023 ■   467 
     CSC Holdings LLC     
 305   7.63%, 07/15/2018   358 
     DISH DBS Corp.     
 140   5.00%, 03/15/2023 ■   136 
 2,250   5.88%, 07/15/2022 ‡   2,295 
 835   6.75%, 06/01/2021   902 
 425   7.88%, 09/01/2019   484 
     First Data Corp.     
 410   6.75%, 11/01/2020 ■   440 
 595   8.25%, 01/15/2021 ■   632 
     Harron Communications L.P.     
 185   9.13%, 04/01/2020 ■   210 
     Hughes Satellite Systems Corp.     
 630   6.50%, 06/15/2019   701 
     Intelsat Jackson Holdings S.A.     
 280   6.63%, 12/15/2022 ■   303 
 250   7.50%, 04/01/2021   282 
     Intelsat Luxembourg S.A.     
 60   6.75%, 06/01/2018 ■   63 
 560   7.75%, 06/01/2021 ■   591 
     InterActiveCorp     
 130   4.75%, 12/15/2022 ■   131 
     Lawson Software, Inc.     
 147   9.38%, 04/01/2019   168 
     Level 3 Communications, Inc.     
 105   8.88%, 06/01/2019 ■   116 
     Level 3 Escrow, Inc.     
 75   8.13%, 07/01/2019   83 
     Level 3 Financing, Inc.     
 527   10.00%, 02/01/2018   580 
     MetroPCS Wireless, Inc.     
 640   7.88%, 09/01/2018   705 
     Netflix, Inc.     
 255   5.38%, 02/01/2021 ■   263 
     NII Capital Corp.     
 240   7.63%, 04/01/2021   212 
     NII International Telecom Sarl     
 55   11.38%, 08/15/2019 ■   63 
     SBA Communications Corp.     
 265   5.63%, 10/01/2019 ■   279 
     SBA Telecommunications, Inc.     
 180   5.75%, 07/15/2020 ■   192 
     SBA Tower Trust     
 1,355   3.60%, 04/16/2043 ■   1,355 
     Softbrands, Inc.     
 103   11.50%, 07/15/2018   121 
     Sprint Nextel Corp.     
 799   7.00%, 03/01/2020 ■   909 
 451   9.00%, 11/15/2018 ■   555 
     Syniverse Holdings, Inc.     
 480   9.13%, 01/15/2019   532 
     TW Telecom Holdings, Inc.     
 130   5.38%, 10/01/2022   136 
     Unitymedia Hessen GmbH & Co.     
 330   5.50%, 01/15/2023 ■   341 
 490   7.50%, 03/15/2019 ■   538 
     UPCB Finance III Ltd.     
 1,125   6.63%, 07/01/2020 ■   1,223 
     Vimpelcom Holdings     
 1,285   5.95%, 02/13/2023 ■   1,304 
     Wind Acquisition Finance S.A.     
 720   7.25%, 02/15/2018 ■   757 
     Windstream Corp.     
 125   6.38%, 08/01/2023   129 
 1,515   7.75%, 10/15/2020   1,663 
 225   7.88%, 11/01/2017   263 
     Zayo Group LLC     
 10   8.13%, 01/01/2020   11 
 5   10.13%, 07/01/2020   6 
         21,515 
     Machinery Manufacturing - 0.3%     
     Case New Holland, Inc.     
 1,700   7.88%, 12/01/2017 ‡   2,023 
     Gibraltar Industries, Inc.     
 65   6.25%, 02/01/2021 ■   70 
     Weekley Homes LLC     
 35   6.00%, 02/01/2023 ■   36 
         2,129 
     Media - 0.1%     
     Gray Television, Inc.     
 425   7.50%, 10/01/2020   461 
           
     Mining - 0.6%     
     American Rock Salt Co. LLC     
 81   8.25%, 05/01/2018 ■   78 
     Consol Energy, Inc.     
 130   8.00%, 04/01/2017   141 
     FMG Resources Pty Ltd.     
 980   6.00%, 04/01/2017 ■   1,019 
     Peabody Energy Corp.     
 575   6.25%, 11/15/2021   613 
 855   6.50%, 09/15/2020   932 
 900   7.38%, 11/01/2016   1,031 
     Vulcan Materials Co.     
 60   7.15%, 11/30/2037   62 
 100   7.50%, 06/15/2021   118 
         3,994 
     Miscellaneous Manufacturing - 0.4%     
     BE Aerospace, Inc.     
 1,525   5.25%, 04/01/2022   1,624 
     Bombardier, Inc.     
 300   7.75%, 03/15/2020 ■   355 
     DigitalGlobe, Inc.     
 250   5.25%, 02/01/2021 ■   253 
     Owens-Brockway Glass Container, Inc.     
 35   7.38%, 05/15/2016   40 

 

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

 

10

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 19.0% - (continued)
     Miscellaneous Manufacturing - 0.4% - (continued)     
     TransDigm Group, Inc.     
$490   7.75%, 12/15/2018  $543 
         2,815 
     Motor Vehicle and Parts Manufacturing - 0.3%     
     Meritor, Inc.     
 350   10.63%, 03/15/2018   386 
     Tenneco, Inc.     
 645   6.88%, 12/15/2020   712 
     TRW Automotive, Inc.     
 950   7.25%, 03/15/2017 ■   1,098 
         2,196 
     Nonmetallic Mineral Product Manufacturing - 0.4%     
     Ardagh Packaging Finance plc     
 275   7.38%, 10/15/2017 ■   303 
 200   9.13%, 10/15/2020 ■   226 
     Cemex S.A.B. de C.V.     
 105   3.75%, 03/15/2018   138 
     Grupo Cementos Chihuahua     
 1,180   8.13%, 02/08/2020 ■   1,254 
     Silgan Holdings, Inc.     
 730   5.00%, 04/01/2020   759 
         2,680 
     Other Services - 0.1%     
     Service Corp. International     
 530   4.50%, 11/15/2020   541 
           
     Paper Manufacturing - 0.3%     
     Boise Cascade LLC     
 90   6.38%, 11/01/2020 ■   96 
     Cascades, Inc.     
 275   7.88%, 01/15/2020   297 
     Clearwater Paper Corp.     
 120   4.50%, 02/01/2023 ■   120 
     P.H. Glatfelter Co.     
 420   5.38%, 10/15/2020   443 
     Rock-Tenn Co.     
 40   3.50%, 03/01/2020   42 
 300   4.00%, 03/01/2023   312 
     Smurfit Kappa Acquisitions     
 410   4.88%, 09/15/2018 ■   425 
         1,735 
     Petroleum and Coal Products Manufacturing - 1.1%     
     Antero Resources Finance Corp.     
 320   7.25%, 08/01/2019   347 
     Chesapeake Energy Corp.     
 521   2.50%, 05/15/2037 ۞   503 
     Continental Resources, Inc.     
 360   5.00%, 09/15/2022   392 
     Denbury Resources, Inc.     
 435   4.63%, 07/15/2023   439 
     EDC Finance Ltd.     
 1,115   4.88%, 04/17/2020 ■   1,125 
     Endeavour International Corp.     
 300   12.00%, 03/01/2018   284 
     EPE Holding/EP Energy Bond     
 120   8.13%, 12/15/2017 ■Þ   124 
     Everest Acquisition LLC     
 165   6.88%, 05/01/2019   181 
 373   9.38%, 05/01/2020   435 
     Ferrellgas Partners L.P.     
 90   6.50%, 05/01/2021   95 
     Harvest Operations Corp.     
 81   6.88%, 10/01/2017   91 
     Hornbeck Offshore Services, Inc.     
 75   5.88%, 04/01/2020   79 
     MEG Energy Corp.     
 305   6.38%, 01/30/2023 ■   322 
     Newfield Exploration Co.     
 625   5.75%, 01/30/2022   691 
 600   6.88%, 02/01/2020   654 
     Range Resources Corp.     
 250   5.75%, 06/01/2021   273 
 550   6.75%, 08/01/2020   610 
     Rosetta Resources, Inc.     
 160   5.63%, 05/01/2021 ☼   167 
 305   9.50%, 04/15/2018   338 
     Seadrill Ltd.     
 640   5.63%, 09/15/2017 ■   654 
         7,804 
     Pipeline Transportation - 0.7%     
     El Paso Corp.     
 520   7.00%, 06/15/2017   598 
 630   7.80%, 08/01/2031   713 
     Energy Transfer Equity L.P.     
 1,250   7.50%, 10/15/2020   1,463 
     Kinder Morgan Finance Co.     
 1,615   6.00%, 01/15/2018 ■╦   1,794 
     MarkWest Energy Partners L.P.     
 170   5.50%, 02/15/2023   187 
 182   6.25%, 06/15/2022   202 
         4,957 
     Plastics and Rubber Products Manufacturing - 0.1%     
     Associated Materials LLC     
 10   9.13%, 11/01/2017   11 
 75   9.13%, 11/01/2017 ■☼   81 
     Continental Rubber of America Corp.     
 445   4.50%, 09/15/2019 ■   462 
     Nortek, Inc.     
 125   8.50%, 04/15/2021   140 
 110   8.50%, 04/15/2021 ■   122 
         816 
     Printing and Related Support Activities - 0.2%     
     Deluxe Corp.     
 185   6.00%, 11/15/2020 ■   192 
 465   7.00%, 03/15/2019   509 
     Quebecor Media, Inc.     
 60   5.75%, 01/15/2023 ■   63 
     Valassis Communications, Inc.     
 690   6.63%, 02/01/2021   732 
         1,496 
     Professional, Scientific and Technical Services - 0.2%     
     Flextronics International Ltd.     
 115   4.63%, 02/15/2020 ■   118 
 170   5.00%, 02/15/2023 ■   173 
     Lamar Media Corp.     
 405   5.88%, 02/01/2022   443 

 

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

 

11

 

The Hartford Strategic Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 19.0% - (continued)
     Professional, Scientific and Technical Services - 0.2% - (continued)     
     Lender Processing Services, Inc.     
$205   5.75%, 04/15/2023  $219 
     SunGard Data Systems, Inc.     
 475   7.38%, 11/15/2018   513 
 155   7.63%, 11/15/2020   171 
         1,637 
     Real Estate, Rental and Leasing - 1.0%     
     Air Lease Corp.     
 395   4.50%, 01/15/2016   411 
 755   6.13%, 04/01/2017   827 
     CBRE Services, Inc.     
 575   5.00%, 03/15/2023   589 
     Hertz Global Holdings, Inc.     
 135   5.88%, 10/15/2020   147 
 85   6.25%, 10/15/2022   95 
     International Lease Finance Corp.     
 500   5.65%, 06/01/2014   522 
 375   5.75%, 05/15/2016   408 
 1,960   5.88%, 04/01/2019 ╦   2,151 
 100   6.25%, 05/15/2019   112 
 760   6.75%, 09/01/2016 ■   864 
     United Rentals North America, Inc.     
 575   5.75%, 07/15/2018   627 
         6,753 
     Retail Trade - 1.0%     
     99 Cents Only Stores     
 360   11.00%, 12/15/2019   416 
     AmeriGas Finance LLC     
 715   7.00%, 05/20/2022   799 
     Arcelik AS     
 995   5.00%, 04/03/2023 ■   1,022 
     AutoNation, Inc.     
 325   5.50%, 02/01/2020   357 
     Building Materials Corp.     
 644   6.75%, 05/01/2021 ■   713 
 141   7.50%, 03/15/2020 ■   156 
     GRD Holding III Corp.     
 250   10.75%, 06/01/2019 ■   268 
     JC Penney Corp., Inc.     
 105   5.65%, 06/01/2020   90 
 85   6.38%, 10/15/2036   68 
 170   7.40%, 04/01/2037   143 
 20   7.95%, 04/01/2017   20 
     Ltd. Brands, Inc.     
 1,145   5.63%, 02/15/2022   1,235 
 95   6.95%, 03/01/2033   100 
     Michaels Stores, Inc.     
 445   7.75%, 11/01/2018   489 
     PC Merger Sub, Inc.     
 395   8.88%, 08/01/2020 ■   446 
     Sally Holdings LLC     
 530   5.75%, 06/01/2022   571 
     Sotheby's     
 365   5.25%, 10/01/2022 ■   374 
         7,267 
     Soap, Cleaning Compound and Toilet Manufacturing - 0.0%     
     Avon Products, Inc.     
 50   4.60%, 03/15/2020   53 
 190   5.00%, 03/15/2023   207 
         260 
     Transportation Equipment Manufacturing - 0.1%     
     Huntington Ingalls Industries, Inc.     
 150   6.88%, 03/15/2018   166 
 575   7.13%, 03/15/2021   640 
         806 
     Utilities - 0.7%     
     AES (The) Corp.     
 1,100   8.00%, 06/01/2020   1,334 
     Calpine Corp.     
 1,404   7.50%, 02/15/2021 ■   1,587 
     Dolphin Subsidiary II, Inc.     
 1,005   7.25%, 10/15/2021   1,070 
     EDP Finance B.V.     
 645   4.90%, 10/01/2019 ■   655 
     Texas Competitive Electric Co.     
 410   11.50%, 10/01/2020 ■   323 
         4,969 
     Water Transportation - 0.0%     
     Royal Caribbean Cruises Ltd.     
 100   5.25%, 11/15/2022   103 
           
     Total corporate bonds     
     (cost $126,098)  $131,955 
           
FOREIGN GOVERNMENT OBLIGATIONS - 32.4%
     Argentina - 0.9%     
     Argentina (Republic of)     
$4,225   7.00%, 04/17/2017  $3,443 
 4,643   8.28%, 12/31/2033   2,673 
         6,116 
     Austria - 0.3%     
     Austria (Republic of)     
EUR 630   3.50%, 09/15/2021 ■  $976 
EUR860   4.65%, 01/15/2018 ■   1,349 
         2,325 
     Belgium - 0.6%     
     Belgium (Kingdom of)     
EUR430   3.75%, 09/28/2020   663 
EUR525   4.00%, 03/28/2022   824 
EUR1,180   4.00%, 03/28/2017 ■   1,761 
EUR480   4.25%, 09/28/2014   669 
         3,917 
     Brazil - 2.4%     
     Brazil (Republic of)     
 1,750   5.63%, 01/07/2041 ‡   2,194 
 3,500   5.88%, 01/15/2019 ‡   4,280 
 895   7.88%, 03/07/2015 ‡   1,008 
 3,450   8.25%, 01/20/2034 ‡   5,534 
 2,075   11.00%, 08/17/2040 ‡   2,540 
 715   12.25%, 03/06/2030 ‡   1,426 
         16,982 

 

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

 

12

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
FOREIGN GOVERNMENT OBLIGATIONS - 32.4% - (continued)
     Bulgaria - 0.1%     
     Bulgaria (Republic of)     
$400   8.25%, 01/15/2015 §  $449 
           
     Colombia - 1.1%     
     Colombia (Republic of)     
 1,800   7.38%, 09/18/2037 ‡   2,725 
 700   8.13%, 05/21/2024 ‡   1,032 
COP56,000   9.85%, 06/28/2027   48 
 2,430   11.75%, 02/25/2020 ‡   3,869 
COP 103,000   12.00%, 10/22/2015   67 
         7,741 
     Croatia - 0.3%     
     Croatia (Republic of)     
 1,940   6.38%, 03/24/2021 §   2,192 
           
     Denmark - 0.1%     
     Denmark (Kingdom of)     
DKK 3,915   4.00%, 11/15/2019   842 
           
     Ecuador - 0.0%     
     Ecuador (Republic of)     
 220   9.38%, 12/15/2015 §   231 
           
     Finland - 0.1%     
     Finland (Republic of)     
EUR 350   3.38%, 04/15/2020   537 
EUR 200   3.88%, 09/15/2017   303 
         840 
     France - 1.2%     
     France (Government of)     
EUR 1,040   3.00%, 07/12/2014   1,417 
EUR 4,445   3.75%, 04/25/2017   6,608 
EUR 40   4.50%, 04/25/2041   70 
         8,095 
     Hungary - 0.5%     
     Hungary (Republic of)     
 330   4.75%, 02/03/2015   339 
 1,284   5.38%, 02/21/2023   1,324 
 580   6.25%, 01/29/2020   644 
HUF 123,980   6.75%, 02/24/2017   581 
HUF21,650   7.50%, 11/12/2020   108 
 700   7.63%, 03/29/2041   822 
         3,818 
     Indonesia - 1.3%     
     Indonesia (Republic of)     
 750   6.75%, 03/10/2014 §   784 
 3,515   6.88%, 01/17/2018 §   4,240 
 2,590   7.75%, 01/17/2038 §   3,846 
 275   8.50%, 10/12/2035 §   427 
         9,297 
     Ireland - 0.2%     
     Ireland (Republic of)     
EUR 775   4.50%, 10/18/2018 - 04/18/2020   1,113 
         1,113 
     Italy - 1.3%     
     Italy (Republic of)     
EUR 1,975   4.25%, 08/01/2014   2,705 
EUR 530   5.00%, 03/01/2022   768 
     Italy Buoni Poliennali del Tesoro     
EUR 4,150   3.50%, 11/01/2017   5,667 
         9,140 
     Japan - 3.0%     
     Japan (Government of)     
JPY 141,750   0.30%, 03/20/2017   1,458 
JPY701,150   0.40%, 09/20/2016   7,243 
JPY458,250   0.50%, 03/20/2016   4,746 
JPY140,000   0.60%, 03/20/2016 - 03/20/2023 ☼   1,451 
JPY 75,000   0.80%, 12/20/2022   785 
JPY277,300   1.10%, 03/20/2021   2,982 
JPY85,850   1.30%, 12/20/2018   930 
JPY92,350   1.40%, 09/20/2019   1,010 
         20,605 
     Malaysia - 0.4%     
     Malaysia (Government of)     
MYR 3,060   4.26%, 09/15/2016   1,046 
MYR3,065   4.38%, 11/29/2019   1,070 
MYR1,020   5.09%, 04/30/2014   342 
         2,458 
     Mexico - 3.4%     
     Mexican Bonos De Desarrollo     
MXN 7,236   6.50%, 06/10/2021 - 06/09/2022   681 
MXN 13,313   7.25%, 12/15/2016   1,213 
MXN 14,971   10.00%, 12/05/2024   1,837 
     United Mexican States     
 7,322   3.63%, 03/15/2022   7,981 
 6,998   4.75%, 03/08/2044   7,743 
 2,226   5.75%, 10/12/2110   2,622 
 476   5.88%, 02/17/2014   494 
MXN2,125   7.75%, 12/14/2017   202 
MXN 6,916   9.50%, 12/18/2014   619 
         23,392 
     Netherlands - 0.5%     
     Netherlands (Kingdom of)     
EUR 655   2.25%, 07/15/2022   927 
EUR1,180   4.00%, 07/15/2018   1,820 
EUR500   4.50%, 07/15/2017   770 
         3,517 
     Norway - 0.0%     
     Norway (Kingdom of)     
NOK 1,545   3.75%, 05/25/2021   306 
           
     Panama - 0.7%     
     Panama (Republic of)     
 875   7.25%, 03/15/2015 ╦   974 
 1,770   8.88%, 09/30/2027 ╦   2,829 
 440   9.38%, 04/01/2029   747 
         4,550 
     Peru - 0.9%     
     Peru (Republic of)     
PEN 650   7.84%, 08/12/2020   308 
 2,800   8.75%, 11/21/2033 ╦   4,788 
 900   9.88%, 02/06/2015 ╦   1,040 
         6,136 

 

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

 

13

 

The Hartford Strategic Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
FOREIGN GOVERNMENT OBLIGATIONS - 32.4% - (continued)
     Philippines - 1.9%     
     Philippines (Republic of)     
$1,760   6.38%, 01/15/2032 ╦  $2,381 
 6,315   10.63%, 03/16/2025 ╦   10,822 
         13,203 
     Poland - 0.5%     
     Poland (Republic of)     
PLN 3,445   4.66%, 01/25/2014 ○   1,068 
PLN6,005   5.25%, 10/25/2017 - 10/25/2020   2,127 
PLN1,555   5.75%, 10/25/2021   587 
         3,782 
     Russia - 2.4%     
     Russia (Federation of)     
 1,400   3.25%, 04/04/2017 §   1,480 
 3,400   3.63%, 04/29/2015 §   3,562 
 3,100   5.00%, 04/29/2020 §   3,577 
 2,861   7.50%, 03/31/2030 §   3,599 
     Russian Federation     
 2,360   12.75%, 06/24/2028 §   4,625 
         16,843 
     Singapore - 0.1%     
     Singapore (Republic of)     
SGD 940   3.75%, 09/01/2016   852 
           
     South Africa - 0.9%     
     South Africa (Republic of)     
 205   6.50%, 06/02/2014   217 
 2,855   6.88%, 05/27/2019 ╦   3,562 
ZAR 1,000   7.00%, 02/28/2031   108 
ZAR 7,230   8.00%, 12/21/2018   890 
ZAR1,730   8.25%, 09/15/2017   212 
ZAR 6,160   10.50%, 12/21/2026   913 
         5,902 
     Spain - 0.9%     
     Spain (Kingdom of)     
EUR 1,025   3.30%, 10/31/2014   1,388 
EUR280   3.80%, 01/31/2017   384 
EUR2,000   4.50%, 01/31/2018   2,815 
EUR1,340   5.50%, 04/30/2021   1,977 
         6,564 
     Sweden - 0.3%     
     Sweden (Kingdom of)     
SEK 3,940   1.50%, 11/13/2023   602 
SEK6,690   3.75%, 08/12/2017   1,149 
SEK2,810   4.25%, 03/12/2019   508 
         2,259 
     Switzerland - 0.1%     
     Switzerland (Republic of)     
CHF 160   2.00%, 05/25/2022   195 
CHF270   3.00%, 01/08/2018   330 
         525 
     Turkey - 3.0%     
     Turkey (Republic of)     
 5,225   5.13%, 03/25/2022   5,970 
 530   5.63%, 03/30/2021   621 
 4,260   6.00%, 01/14/2041   5,123 
 3,140   7.25%, 03/15/2015   3,462 
 3,440   7.50%, 07/14/2017   4,149 
TRY 1,000   10.00%, 06/17/2015   610 
TRY785   10.50%, 01/15/2020   544 
         20,479 
     Ukraine - 0.3%     
     Ukraine (Government of)     
 1,990   6.25%, 06/17/2016 §   1,945 
           
     United Kingdom - 0.4%     
     United Kingdom (Government of)     
GBP 580   1.00%, 09/07/2017   916 
GBP115   1.75%, 09/07/2022   180 
GBP1,005   2.00%, 01/22/2016   1,632 
         2,728 
     Venezuela - 2.3%     
     Venezuela (Republic of)     
 5,170   7.00%, 12/01/2018 §   4,808 
 2,380   8.25%, 10/13/2024 §   2,146 
 4,320   11.95%, 08/05/2031 §   4,758 
 3,615   12.75%, 08/23/2022 §   4,127 
         15,839 
     Total foreign government obligations     
     (cost $217,206)  $224,983 
           
SENIOR FLOATING RATE INTERESTS ♦ - 19.3%
     Accommodation and Food Services - 0.5%     
     Caesars Entertainment Operating Co., Inc.     
$1,397   4.49%, 01/28/2018  $1,248 
 1,935   9.50%, 10/31/2016   1,962 
         3,210 
     Administrative Waste Management and Remediation - 0.5%     
     Acosta, Inc.     
 1,107   5.00%, 03/02/2018   1,123 
     ADS Waste Holdings, Inc.     
 434   4.25%, 10/09/2019   439 
     Affinia Group, Inc.     
 115   04/11/2016 ◊☼   116 
     Audio Visual Services Group, Inc.     
 1,264   6.75%, 11/09/2018   1,283 
     Brickman Group Holdings, Inc.     
 698   5.50%, 10/14/2016   707 
         3,668 
     Agriculture, Construction, Mining and Machinery - 0.1%     
     Pro Mach, Inc.     
 410   5.00%, 07/06/2017   412 
           
     Air Transportation - 0.3%     
     AWAS Finance Luxembourg S.aár.l.     
 565   4.75%, 07/16/2018   568 
     Delta Air Lines, Inc.     
 613   5.25%, 10/18/2018   620 

 

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

 

14

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS ♦ - 19.3% - (continued)
     Air Transportation - 0.3% - (continued)     
     Delta Air Lines, Inc., Term Loan     
$990   5.50%, 04/20/2017  $1,003 
         2,191 
     Apparel Manufacturing - 0.1%     
     J. Crew Group, Inc.     
 990   4.00%, 03/07/2018   1,000 
           
     Arts, Entertainment and Recreation - 1.2%     
     Affinity Gaming LLC     
 564   5.50%, 11/09/2017   573 
     Formula One Holdings     
 921   6.00%, 04/30/2019   935 
     FoxCo Acquisition LLC     
 264   5.50%, 07/14/2017   268 
     Golden Nugget, Inc.     
 289   7.32%, 06/22/2014 Þ   279 
     Golden Nugget, Inc., Delayed Draw     
 161   7.36%, 06/22/2014 Þ   156 
     Kabel Deutschland Holding AG     
 1,550   3.25%, 02/01/2019   1,557 
     MGM Resorts International     
 918   4.25%, 12/20/2019   931 
     Penn National Gaming, Inc.     
 414   3.75%, 07/16/2018   418 
     ROC Finance LLC     
 422   7.67%, 08/19/2017 Б   433 
     Rock Ohio Caesars LLC     
 96   7.67%, 08/19/2017 ☼   98 
     Salem Communications Corp.     
 165   4.50%, 03/13/2020   167 
     Seminole (The) Tribe of Florida, Inc.     
 310   04/11/2020 ◊☼   312 
     Town Sports International LLC     
 1,214   7.00%, 04/27/2018   1,234 
     Tribune Co.     
 978   4.00%, 12/31/2019   989 
         8,350 
     Chemical Manufacturing - 0.6%     
     Chemtura Corp.     
 184   5.50%, 08/29/2016   186 
     Cytec Industries, Inc.     
 34   09/20/2019 ◊   35 
     DuPont Performance Coatings, Inc.     
 165   4.75%, 02/01/2020   167 
     Ineos US Finance LLC     
 1,014   5.47%, 05/04/2018   1,025 
     Monarch, Inc.     
 191   8.25%, 09/12/2019 - 03/12/2020   195 
     Pinnacle Operating Corp.     
 510   04/29/2020 ◊☼   511 
 905   6.75%, 11/15/2018   917 
     PQ Corp.     
 1,027   4.50%, 08/07/2017   1,038 
         4,074 
     Computer and Electronic Product Manufacturing - 0.9%     
     Aeroflex, Inc.     
 462   5.75%, 05/09/2018   466 
     CDW LLC     
 110   04/30/2020 ◊☼   111 
 1,940   4.00%, 07/15/2017 ☼   1,941 
     Ceridian Corp.     
 986   6.00%, 05/09/2017   1,003 
     Freescale Semiconductor, Inc.     
 1,500   5.00%, 03/01/2020   1,521 
     NXP Semiconductors N.V.     
 1,017   4.75%, 01/10/2020   1,040 
         6,082 
     Construction - 0.1%     
     Aluma Systems, Inc.     
 189   6.25%, 10/23/2018 ◊   191 
     Brand Energy & Infrastructure Services, Inc.     
 786   5.28%, 10/23/2018   796 
         987 
     Educational Services - 0.0%     
     Bright Horizons Family Solutions, Inc.     
 175   4.00%, 01/30/2020   176 
           
     Electrical Equipment, Appliance Manufacturing - 0.3%     
     WESCO Distribution, Inc.     
 1,995   4.50%, 12/12/2019   2,015 
           
     Finance and Insurance - 1.3%     
     Asurion LLC     
 844   4.50%, 05/24/2019   853 
     Chrysler Group LLC     
 1,292   6.00%, 05/24/2017   1,308 
     Cooper Gay Swett & Crawford Ltd.     
 340   04/05/2020 ◊☼   343 
     Evertec LLC     
 405   04/11/2020 ◊☼   404 
     Macquarie Aircraft Leasing Finance S.A., Second Lien Term Loan     
 1,528   9.35%, 11/29/2013   1,498 
     Nuveen Investments, Inc.     
 2,041   5.20%, 05/13/2017   2,064 
     Ocwen Financial Corp.     
 350   5.00%, 02/15/2018   355 
     USI Insurance Services LLC     
 419   5.25%, 12/27/2019   424 
     Walter Investment Management     
 1,412   5.75%, 11/28/2017   1,435 
         8,684 
     Food Manufacturing - 0.3%     
     Advance Pierre Foods, Inc.     
 400   5.75%, 07/10/2017   406 
     Dole Food Co., Inc.     
 360   04/25/2020 ◊☼   362 
 250   8.50%, 12/07/2018 ◊   252 
     H. J. Heinz Co.     
 610   03/27/2020 ◊☼   615 
     Hostess Brands, Inc.     
 185   6.75%, 03/21/2020   189 
     U.S. Foodservice, Inc.     
 268   5.75%, 03/31/2017   271 
         2,095 

 

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

 

15

 

The Hartford Strategic Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS ♦ - 19.3% - (continued)     
     Food Services - 0.5%     
     Dunkin' Brands, Inc.     
$735   3.75%, 02/14/2020  $742 
     Landry's, Inc.     
 713   6.00%, 04/24/2018   723 
     OSI Restaurant Partners, Inc.     
 1,297   3.50%, 10/23/2019   1,304 
     Wendy's International, Inc.     
 746   4.51%, 05/15/2019   750 
         3,519 
     Furniture and Related Product Manufacturing - 0.3%     
     AOT Bedding Super Holdings LLC     
 519   5.00%, 10/01/2019   525 
     Tempur-Pedic International, Inc.     
 968   5.00%, 03/18/2020   983 
     Wilsonart International Holding LLC     
 808   4.78%, 10/31/2019 ☼    811 
         2,319 
     Health Care and Social Assistance - 1.9%     
     Alkermes, Inc.     
 443   4.50%, 09/25/2019   443 
     American Renal Holdings, Inc.     
 520   8.50%, 02/14/2020   524 
     Aptalis Pharma, Inc.     
 2,228   5.50%, 02/10/2017   2,248 
     Bausch & Lomb, Inc.     
 908   5.25%, 05/17/2019   918 
     Catalent Pharma Solutions, Inc.     
 260   12/31/2017 ◊☼    263 
 302   5.01%, 09/15/2017   305 
     Convatec, Inc.     
 180   5.00%, 12/22/2016   183 
     DaVita, Inc.     
 434   4.00%, 11/01/2019   438 
     HCA, Inc., Tranche B-3 Term Loan     
 1,000   3.50%, 05/01/2018   1,000 
     Health Management Associates, Inc.     
 975   4.50%, 11/16/2018   983 
     Hologic, Inc.     
 243   4.66%, 08/01/2019   246 
     IMS Health, Inc.     
 390   3.75%, 09/01/2017   394 
     Jazz Pharmaceuticals, Inc.     
 284   5.25%, 06/12/2018   288 
     Kinetic Concepts, Inc.     
 483   5.50%, 05/04/2018   490 
     MultiPlan, Inc.     
 863   4.00%, 08/26/2017   871 
     Par Pharmeceutical Cos., Inc.     
 423   4.25%, 09/30/2019   427 
     Sheridan Healthcare, Inc.     
 591   4.50%, 06/29/2018   598 
     Sheridan Holdings, Inc.     
 286   9.00%, 07/01/2019   291 
     Truven Health Analytics, Inc.     
 278   5.75%, 06/06/2019   281 
     US Renal Care, Inc.     
 918   6.25%, 07/03/2019   932 
 616   10.25%, 01/03/2020   628 
     Warner Chilcott Corp., Term Loan B-1     
 159   4.25%, 03/15/2018   161 
     Warner Chilcott Corp., Term Loan B-2     
 56   4.25%, 03/15/2018   57 
     Warner Chilcott Corp., Term Loan B-3     
 125   4.25%, 03/15/2018   127 
     Warner Chilcott plc     
 69   4.25%, 03/15/2018   70 
         13,166 
     Information - 4.1%     
     Alcatel-Lucent     
 100   6.25%, 06/29/2016   101 
 100   7.25%, 01/30/2019   102 
     Charter Communications Operating LLC     
 510   04/10/2020 ◊☼    509 
 941   4.00%, 05/15/2019   944 
     Crown Castle International Corp.     
 445   3.25%, 01/31/2019   448 
     Decision Insight Information Group I, Inc.     
 1,718   7.00%, 01/04/2017   1,736 
     Emdeon, Inc.     
 115   3.75%, 11/02/2018 ☼    116 
 247   5.00%, 11/02/2018   250 
     Epicor Software Corp.     
 742   5.00%, 05/16/2018   754 
     First Data Corp.     
 623   4.20%, 03/24/2017 - 09/30/2018   621 
     First Data Corp., Extended 1st Lien Term Loan     
 2,000   4.21%, 03/23/2018   1,992 
     Integra Telecom, Inc.     
 245   6.00%, 02/22/2019   250 
     Intelsat Jackson Holdings S.A.     
 1,241   4.50%, 04/02/2018   1,256 
     Kronos, Inc.     
 2,374   4.50%, 10/30/2019   2,403 
 670   8.65%, 04/30/2020   707 
     Lawson Software, Inc.     
 993   5.25%, 04/05/2018   1,008 
     Leap Wireless International, Inc.     
 515   4.75%, 03/01/2020   517 
     Level 3 Financing, Inc.     
 960   5.25%, 08/01/2019   972 
     MetroPCS Wireless, Inc., Term Loan B3     
 792   4.00%, 03/17/2018   792 
     MISYS plc     
 896   7.25%, 12/12/2018   910 
     MModal, Inc.     
 746   6.75%, 08/16/2019   729 
     Nine Entertainment Group Ltd     
 410   3.50%, 02/05/2020   411 
     Northland Cable Television, Inc.     
 1,913   7.75%, 12/30/2016   1,865 
     Novell, Inc.     
 555   7.25%, 11/22/2017   561 
     RedPrairie Corp.     
 324   6.75%, 12/21/2018   331 

 

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

 

16

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS ♦ - 19.3% - (continued)     
     Information - 4.1% - (continued)     
     Sorenson Communications, Inc.     
$1,010   8.76%, 10/31/2014  $1,026 
     Syniverse Holdings, Inc.     
 913   4.51%, 04/23/2019   920 
     UPC Financing Partnership     
 355   4.00%, 01/31/2021   359 
     Virgin Media Finance plc     
 3,275   02/15/2020 ◊☼    3,276 
     Warner Music Group Corp.     
 514   4.78%, 11/01/2018   520 
     Web.com Group, Inc.     
 1,226   5.50%, 10/27/2017   1,236 
     West Corp.     
 853   4.25%, 06/30/2018   866 
     WideOpenWest Finance LLC     
 263   4.75%, 03/26/2019   266 
         28,754 
     Media - 0.4%     
     Gray Television, Inc.     
 323   4.40%, 10/12/2019   328 
     Primedia, Inc.     
 1,965   7.50%, 01/13/2018   1,955 
     Univision Communications, Inc.     
 640   4.75%, 03/01/2020   645 
         2,928 
     Mining - 0.6%     
     American Rock Salt Co. LLC     
 545   5.50%, 04/25/2017   546 
     Arch Coal, Inc.     
 2,027   5.75%, 05/16/2018   2,053 
     Fortescue Metals Group Ltd.     
 1,547   5.54%, 10/18/2017   1,574 
         4,173 
     Miscellaneous Manufacturing - 0.6%     
     DigitalGlobe, Inc.     
 340   3.75%, 01/31/2020   343 
     Hamilton Sundstrand Corp.     
 499   4.00%, 12/13/2019   502 
     Reynolds Group Holdings, Inc.     
 1,692   4.75%, 09/28/2018   1,718 
     Sequa Automotive Group     
 499   6.25%, 11/15/2018   504 
     Sequa Corp.     
 261   5.25%, 06/19/2017   265 
     TransDigm Group, Inc.     
 495   3.75%, 02/28/2020   502 
         3,834 
     Motor Vehicle and Parts Manufacturing - 0.3%     
     Allison Transmission, Inc.     
 541   4.25%, 08/23/2019   548 
     Federal Mogul Corp., Tranche B Term Loan     
 459   2.17%, 12/29/2014   435 
     Federal Mogul Corp., Tranche C Term Loan     
 234   2.17%, 12/28/2015   222 
     Navistar, Inc.     
 206   7.00%, 08/17/2017   210 
     SRAM LLC     
 671   4.78%, 06/07/2018   676 
     Tower International, Inc.     
 190   04/16/2020 ◊☼    192 
         2,283 
     Other Services - 0.1%     
     Alliance Laundry Systems LLC     
 517   4.50%, 12/10/2018   522 
           
     Petroleum and Coal Products Manufacturing - 0.2%     
     Dynegy Midwest Generation LLC     
 106   9.25%, 08/05/2016 ◊    106 
     Dynegy Power LLC     
 212   04/16/2020 ◊☼    212 
     Dynegy, Inc.     
 133   04/15/2020 ◊☼    133 
     Plains Exploration & Production Co.     
 375   3.91%, 11/30/2019   375 
     Samson Investment Co.     
 410   6.00%, 09/25/2018   415 
         1,241 
     Pipeline Transportation - 0.3%     
     EP Energy LLC     
 1,135   4.03%, 04/30/2019   1,148 
 670   5.00%, 05/24/2018   673 
     NGPL Pipeco LLC     
 583   6.75%, 09/15/2017   591 
         2,412 
     Plastics and Rubber Products Manufacturing - 0.4%     
     Berry Plastics Holding Corp.     
 495   7.32%, 04/03/2015   497 
     Consolidated Container Co.     
 960   5.00%, 07/03/2019   973 
     Goodyear (The) Tire & Rubber Co.     
 900   4.25%, 04/30/2019   907 
     Tricorbraun, Inc.     
 382   5.51%, 05/03/2018   383 
         2,760 
     Primary Metal Manufacturing - 0.3%     
     Novelis, Inc.     
 1,194   3.75%, 03/10/2017   1,213 
     WireCo WorldGroup, Inc.     
 567   5.90%, 02/15/2017   574 
         1,787 
     Professional, Scientific and Technical Services - 0.6%     
     Advantage Sales & Marketing, Inc.     
 1,226   8.25%, 06/17/2018   1,229 
     AlixPartners LLP     
 591   4.50%, 06/30/2019   597 
 236   10.75%, 12/27/2019   242 
     Getty Images, Inc.     
 539   4.47%, 10/18/2019   546 
     Paradigm Ltd., Term Loan B1     
 647   4.75%, 07/30/2019   653 
     Paradigm Ltd., Term Loan B2     
 270   10.50%, 07/30/2020   274 
     SunGard Data Systems, Inc.     
 160   4.50%, 01/31/2020   161 

 

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

 

17

 

The Hartford Strategic Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS ♦ - 19.3% - (continued)     
     Professional, Scientific and Technical Services - 0.6% - (continued)     
     Visant Corp.     
$486   5.25%, 12/22/2016  $472 
         4,174 
     Real Estate, Rental and Leasing - 0.4%     
     Avis Budget Car Rental LLC     
 499   3.75%, 03/15/2019   505 
     Delos Aircraft, Inc.     
 240   4.75%, 04/12/2016   241 
     Fly Leasing Ltd.     
 858   6.75%, 08/08/2018   869 
     Realogy Corp.     
 156   8.32%, 10/05/2013   156 
     Realogy Corp., Extended 1st Lien Term Loan B     
 742   4.56%, 03/05/2020   750 
     Realogy Corp., Extended Credit Linked Deposit     
 48   3.26%, 10/10/2016   49 
         2,570 
     Retail Trade - 1.5%     
     American Builders & Contractors Supply Co.     
 180   3.50%, 04/05/2020   181 
     August LUXUK Holding Co.     
 129   6.25%, 04/27/2018   130 
 113   9.47%, 04/26/2019   114 
     August U.S. Holding Co., Inc.     
 100   5.76%, 04/27/2018   100 
 87   10.50%, 04/26/2019   88 
     BJ's Wholesale Club, Inc.     
 648   4.25%, 09/26/2019   653 
     EB Sports Corp.     
 3,845   11.50%, 12/31/2015 Þ    3,806 
     FleetPride, Inc.     
 798   5.25%, 11/19/2019   794 
     Michaels Stores, Inc.     
 525   3.75%, 01/28/2020   530 
     Neiman (The) Marcus Group, Inc.     
 1,065   4.75%, 05/16/2018   1,073 
     Party City Holdings, Inc.     
 547   4.25%, 07/27/2019   551 
     Rite Aid Corp.     
 290   4.00%, 02/21/2020   293 
 325   5.75%, 08/21/2020   337 
     Sports (The) Authority, Inc.     
 825   7.50%, 11/16/2017   829 
     Sprouts Farmers Markets Holdings LLC     
 315   04/12/2020 ◊☼    316 
     Supervalu, Inc.     
 435   6.25%, 03/21/2019   442 
         10,237 
     Truck Transportation - 0.2%     
     Nexeo Solutions LLC     
 1,060   5.00%, 09/09/2017   1,065 
     Swift Transportation Co., Inc.     
 637   4.00%, 12/21/2017   647 
         1,712 
     Utilities - 0.4%     
     Calpine Corp.     
 608   4.50%, 10/09/2019   615 
     Energy Transfer Equity L.P.     
 450   3.75%, 03/24/2017   452 
     LSP Madison Funding LLC     
 335   5.50%, 06/28/2019   339 
     Star West Generation LLC     
 540   5.00%, 03/13/2020   550 
     Texas Competitive Electric Holdings Co. LLC     
 900   4.73%, 10/10/2017   662 
     TPF Generation Holdings LLC, Second Lien Term Loan     
 146   9.60%, 12/21/2014   146 
         2,764 
     Total senior floating rate interests     
     (cost $131,809)   $134,099 
           
U.S. GOVERNMENT AGENCIES - 13.4%     
     FHLMC - 3.8%     
$9,004   2.23%, 08/25/2018 ►   $827 
 2,051   2.50%, 08/25/2020 ►    165 
 6,334   2.53%, 10/25/2020 ►    123 
 5,000   3.50%, 05/15/2043 ☼    5,315 
 7,900   4.00%, 05/15/2043 ☼    8,434 
 3,500   4.50%, 05/15/2043 ☼    3,748 
 2,401   4.77%, 05/15/2037 ►    416 
 2,200   5.00%, 05/15/2043 ☼    2,361 
 4,152   5.50%, 10/01/2036 - 12/01/2038 ╦    4,484 
 1,613   7.23%, 12/15/2036 ►    255 
         26,128 
     FNMA - 2.7%     
 765   2.14%, 11/01/2022 ╦    771 
 545   2.15%, 10/01/2022 ╦    551 
 268   2.20%, 12/01/2022   271 
 154   2.28%, 11/01/2022 ‡    157 
 129   2.34%, 11/01/2022   132 
 116   2.40%, 10/01/2022 ╦    119 
 104   2.42%, 11/01/2022   107 
 104   2.47%, 11/01/2022 ‡    108 
 2,000   2.50%, 05/12/2028 ☼    2,091 
 747   2.72%, 06/25/2042 ►    123 
 2,300   3.50%, 05/15/2028 - 05/15/2043 ☼    2,447 
 2,635   4.00%, 05/15/2028 - 01/01/2042 ╦☼    2,817 
 3,013   5.00%, 08/01/2037 ╦    3,280 
 3,357   5.50%, 04/01/2038 - 05/15/2043 ╦    3,688 
 2,483   5.69%, 09/25/2040 ►    419 
 1,247   6.00%, 09/01/2039 - 05/15/2043 ╦☼    1,363 
 2,368   9.81%, 10/25/2036 ►    416 
         18,860 
     GNMA - 6.9%     
 8,500   3.00%, 05/15/2043 ☼    9,045 
 16,200   3.50%, 05/15/2043 ☼    17,636 
 3,032   4.00%, 10/20/2040 - 05/15/2043 ☼    3,323 
 8,569   4.50%, 09/15/2033 - 05/15/2043 ☼    9,450 
 2,500   5.00%, 05/15/2043 ☼    2,732 

 

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

 

18

 

 

 

Shares or Principal Amount ╬

   

Market Value ╪

 
U.S. GOVERNMENT AGENCIES - 13.4% - (continued)     
     GNMA - 6.9% - (continued)     
$5,193   6.00%, 03/15/2032 - 04/15/2043  $5,882 
         48,068 
     Total U.S. government agencies     
     (cost $92,535)  $93,056 
           
U.S. GOVERNMENT SECURITIES - 4.1%     
U.S. Treasury Securities - 4.1% 
     U.S. Treasury Bonds - 0.5%     
$170    3.13%, 02/15/2043 ‡   $178 
 2,295    5.38%, 02/15/2031 ‡    3,280 
         3,458 
     U.S. Treasury Notes - 3.6%     
 650    0.38%, 04/15/2015 □    652 
 13,949    0.88%, 12/31/2016 - 01/31/2018 □‡Θ    14,129 
 760    1.00%, 08/31/2016 ‡    776 
 7,715    1.88%, 09/30/2017 ‡    8,158 
 1,010    2.13%, 08/15/2021 □    1,069 
         24,784 
         28,242 
     Total U.S. government securities     
     (cost $27,867)   $28,242 

 

Contracts  Market Value ╪ 
CALL OPTIONS PURCHASED - 0.0%     
Foreign Exchange Contracts - 0.0%  
     USD Call/CNY Put     
 1,452   Expiration: 06/26/2013  $ 
           
Interest Rate Contracts - 0.0%  
     U.S. Treasury 30-Year Bond Future Option     
    Expiration: 05/28/2013, Exercise Price: $150.00   8 
           
     Total call options purchased     
     (cost $19)   $8 

 

Contracts  Market Value ╪ 
PUT OPTIONS PURCHASED - 0.0%     
Foreign Exchange Contracts - 0.0%  
     AUD Put/USD Call     
AUD 427   Expiration: 05/09/2013   $ 
     EUR Put/USD Call     
EUR 242   Expiration: 08/01/2013    5 
     GBP Put/USD Call     
GBP 11   Expiration: 09/17/2013æ    1 
GBP11   Expiration: 09/24/2013Ð    1 
         7 
     Total put options purchased     
     (cost $13)   $7 
           
COMMON STOCKS - 0.0%     
     Energy - 0.0%     
 83,644   KCA Deutag ⌂●†   $395 
           
     Materials - 0.0%     
    LyondellBasell Industries Class A  2 
           
     Total common stocks     
     (cost $1,135)   $397 
           
PREFERRED STOCKS - 0.2%     
     Diversified Financials - 0.2%     
 12   Citigroup Capital XIII  $330 
 10   GMAC Capital Trust I ۞    274 
         604 
     Telecommunication Services - 0.0%     
 3   Intelsat S.A., 5.75%  ۞    148 
           
     Total preferred stocks     
     (cost $710)  $752 
           
     Total long-term investments     
     (cost $720,936)  $745,358 

 

Shares or Principal Amount ╬   Market Value ╪ 
SHORT-TERM INVESTMENTS - 2.3%     
Repurchase Agreements - 2.3%  
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $628,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $641)
     
$628    0.17%, 4/30/2013  $628 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,713, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $1,747)
     
 1,713    0.15%, 4/30/2013   1,713 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $3,298, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 -
2021, value of $3,364)
     
 3,298    0.15%, 4/30/2013   3,298 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $4,581,
collateralized by U.S. Treasury Note
0.75% - 2.13%, 2015 - 2019, value of
$4,673)
     
 4,581    0.14%, 4/30/2013   4,581 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $824,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value of
$840)
     
 824    0.17%, 4/30/2013   824 

 

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

 

19

 

The Hartford Strategic Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬          Market Value ╪ 
SHORT-TERM INVESTMENTS - 2.3% - (continued)             
Repurchase Agreements - 2.3% - (continued)         
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $2,791, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 -
2022, value of $2,847)
            
$2,791   0.14%, 4/30/2013          $2,791 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,963, collateralized by U.S.
Treasury Note 0.25% - 1.88%, 2014 -
2019, value of $2,002)
            
 1,963   0.17%, 4/30/2013           1,963 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$35, collateralized by U.S. Treasury Note
3.88%, 2018, value of $36)
            
 35   0.13%, 4/30/2013           35 
                 15,833 
     Total short-term investments             
     (cost $15,833)          $15,833 
                   
     Total investments             
     (cost $736,769) ▲     109.7 %  $761,191 
     Other assets and liabilities     (9.7 )%   (67,341)
     Total net assets     100.0 %  $693,850 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $737,674 and the aggregate gross unrealized appreciation and depreciation based on that cost were:    

 

Unrealized Appreciation  $30,284 
Unrealized Depreciation   (6,767)
Net Unrealized Appreciation  $23,517 

 

These securities are valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $395, which represents 0.1% of total net assets.

 

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.

 

This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.  The Fund has also pledged $3,405 of cash as collateral in connection with swap contracts.  In addition, cash of $9,240 was received from broker(s) as collateral in connection with swap contracts.  Securities valued at $8,201, held on behalf of the Fund at the custody bank, were designated by broker(s) as collateral in connection with swap contracts.

 

ΔVariable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

ÞThis security may pay interest in additional principal instead of cash.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $72,017, which represents 10.4% of total net assets.

 

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

 

20

 

 

 

§These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $46,796, which represents 6.7% 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 Acquired  Shares/ Par   Security  Cost Basis 
03/2011   83,644   KCA Deutag  $1,134 

 

At April 30, 2013, the aggregate value of these securities was $395, which represents 0.1% of total net assets.

 

۞Convertible security.

 

Securities disclosed are interest-only strips.  The interest rates represent effective yields based upon estimated future cash flows at April 30, 2013.

 

The interest rate disclosed for these securities represents the effective yield on the date of the acquisition.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $69,661 at April 30, 2013.

 

БThis security, or a portion of this security, has unfunded loan commitments.  As of April 30, 2013, the aggregate value of the unfunded commitment was $3,852 , which represents 0.6% of total net assets.

 

All or a portion of this position represents unsettled loan commitment.  The coupon rate will be determined at time of settlement.

 

æThis security has limitations.  If the U.S. Dollar per British Pound exchange rate is less than or equal to the barrier level of 1.39 at any point during the contract period, the counterparty will be required to pay the Fund the equivalent of par on the number of contracts traded.

 

ÐThis security has limitations.  If the U.S. Dollar per British Pound exchange rate is less than or equal to the barrier level of 1.41 at any point during the contract period, the counterparty will be required to pay the Fund the equivalent of par on the number of contracts traded.

 

Senior floating rate interests 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 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.  Unless otherwise noted, the interest rate disclosed for these securities represents the average coupon as of April 30, 2013.

 

All principal or contract amounts are in U.S. dollars unless otherwise indicated.

 

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

 

21

 

The Hartford Strategic Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

This security, or a portion of this security, is pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts held at April 30, 2013 as listed in the table below:

 

Description  Number of
Contracts*
   Expiration
Date
  Notional Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
Long position contracts:                       
Australian 10-Year Bond Future   23   06/17/2013  $2,928   $2,979   $51 
Australian 3-Year Bond Future   25   06/17/2013   2,822    2,848    26 
Canadian Government 10-Year Bond Future   14   06/19/2013   1,842    1,900    58 
Euro-BOBL Future   4   06/06/2013   668    668     
Euro-BTP Future   18   06/06/2013   2,610    2,749    139 
Euro-BUND Future   3   06/06/2013   579    579     
Euro-OAT Future   14   06/06/2013   2,544    2,577    33 
Euro-Schatz Future   26   06/06/2013   3,791    3,792    1 
U.S. Treasury 2-Year Note Future   202   06/28/2013   44,529    44,566    37 
U.S. Treasury 30-Year Bond Future   136   06/19/2013   20,059    20,179    120 
U.S. Treasury 5-Year Note Future   751   06/28/2013   93,149    93,605    456 
U.S. Treasury CME Ultra Long Term Bond Future   37   06/19/2013   6,083    6,081    (2)
                     $919 
Short position contracts:                       
Euro BUXL 30-Year Bond Future   7   06/06/2013  $1,260   $1,278   $(18)
Japan 10-Year Bond Future   21   06/11/2013   31,172    31,134    38 
Japan 10-Year Mini Bond Future   2   06/10/2013   297    297     
Long Gilt Future   7   06/26/2013   1,302    1,305    (3)
U.S. Treasury 10-Year Note Future   711   06/19/2013   94,849    94,818    31 
                     $48 
                     $967 

 

* The number of contracts does not omit 000's.

 

ΘAt April 30, 2013, this security, or a portion of this security, is designated to cover written call options in the table below:

 

Description (Counterparty)  Option Type  Exercise
Price/ Rate
   Expiration
Date
  Number of
Contracts*
   Market
Value ╪
   Premiums
Received
   Unrealized
Appreciation
(Depreciation)
 
USD Call/CNY Put (SCB)  Foreign Exchange   6.78 CNY   06/26/2013  CNY 1,452,000   $   $5   $5 

 

* The number of contracts does not omit 000's.  Number of contracts shown in  U.S. dollars unless otherwise noted.

 

Securities Sold Short Outstanding at April 30, 2013

 

Description  Principal
Amount
   Maturity Date  Market Value ╪   Unrealized
Appreciation/
Depreciation
 
FHLMC TBA, 5.50%  $2,800   05/15/2043  $3,023   $12 
FNMA TBA, 3.00%   29,000   05/15/2043   30,332    (152)
FNMA TBA, 4.00%   24,300   05/15/2043   26,008    (21)
FNMA TBA, 5.50%   2,300   05/15/2043   2,501    5 
GNMA TBA, 3.00%   4,400   05/15/2042   4,676    (46)
           $66,540   $(202)

 

At April 30, 2013, the aggregate value of these securities represents 9.6% of total net assets.

 

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

 

22

 

 

 

Credit Default Swap Contracts Outstanding at April 30, 2013

 

Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate /
Implied Credit
Spread (b)
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices:
Buy protection:                               
ABX.HE.AA.06  BCLY  $430    (0.32)%  07/25/45  $243   $112   $(131)
ABX.HE.AAA.06  BCLY   2,199    (0.18)%  07/25/45   223    35    (188)
ABX.HE.AAA.06  GSC   5,845    (0.18)%  07/25/45   524    94    (430)
ABX.HE.AAA.06  MSC   2,509    (0.18)%  07/25/45   262    40    (222)
ABX.HE.AAA.06-1  MSC   1,261    (0.18)%  07/25/45   25    20    (5)
ABX.HE.PENAAA.06  BOA   348    (0.11)%  05/25/46   79    59    (20)
ABX.HE.PENAAA.06  CSI   1,738    (0.11)%  05/25/46   523    293    (230)
ABX.HE.PENAAA.06  JPM   17    (0.11)%  05/25/46   5    3    (2)
ABX.HE.PENAAA.06-2  JPM   313    (0.11)%  05/25/46   56    53    (3)
ABX.HE.PENAAA.07  BCLY   1,594    (0.09)%  08/25/37   669    524    (145)
ABX.HE.PENAAA.07-1  JPM   398    (0.09)%  08/25/37   138    131    (7)
CDX.NA.HY.20  BCLY   4,265    (5.00)%  06/20/18   (200)   (262)   (62)
CDX.NA.HY.20  GSC   3,405    (5.00)%  06/20/18   (145)   (210)   (65)
CDX.NA.HY.20  JPM   6,205    (5.00)%  06/20/18   (270)   (381)   (111)
CDX.NA.HY.20  MSC   7,300    (5.00)%  06/20/18   (302)   (449)   (147)
CMBX.NA.A.1  DEUT   1,230    (0.35)%  10/12/52   562    467    (95)
CMBX.NA.A.1  GSC   435    (0.35)%  10/12/52   197    166    (31)
CMBX.NA.A.1  MSC   1,470    (0.35)%  10/12/52   608    559    (49)
CMBX.NA.AA.1  CSI   1,165    (0.25)%  10/12/52   266    207    (59)
CMBX.NA.AA.1  DEUT   1,400    (0.25)%  10/12/52   296    249    (47)
CMBX.NA.AA.1  JPM   2,465    (0.25)%  10/12/52   488    439    (49)
CMBX.NA.AA.1  UBS   3,190    (0.25)%  10/12/52   689    567    (122)
CMBX.NA.AA.2  BOA   1,665    (0.15)%  03/15/49   632    554    (78)
CMBX.NA.AA.2  JPM   1,470    (0.15)%  03/15/49   554    490    (64)
CMBX.NA.AJ.1  DEUT   300    (0.84)%  10/12/52   21    17    (4)
CMBX.NA.AJ.1  JPM   735    (0.84)%  10/12/52   52    41    (11)
CMBX.NA.AJ.1  MSC   535    (0.84)%  10/12/52   37    30    (7)
CMBX.NA.AJ.4  MSC   1,470    (0.96)%  02/17/51   528    392    (136)
CMBX.NA.AM.2  CSI   1,665    (0.50)%  03/15/49   102    65    (37)
CMBX.NA.AM.2  DEUT   1,665    (0.50)%  03/15/49   96    65    (31)
CMBX.NA.AM.2  MSC   2,945    (0.50)%  03/15/49   145    115    (30)
CMBX.NA.AM.3  CSI   1,560    (0.50)%  12/13/49   156    112    (44)
CMBX.NA.AM.3  MSC   1,380    (0.50)%  12/13/49   125    99    (26)
CMBX.NA.AM.4  BCLY   275    (0.50)%  02/17/51   45    23    (22)
CMBX.NA.AM.4  MSC   2,670    (0.50)%  02/17/51   428    221    (207)
ITRX.EUR.19  GSC  EUR 28,040    (1.00)%  06/20/23   1,849    1,349    (500)
ITRX.XOV.19  DEUT  EUR815    (5.00)%  06/20/18   (28)   (48)   (20)
ITRX.XOV.19  GSC  EUR1,950    (5.00)%  06/20/18   (10)   (115)   (105)
ITRX.XOV.19  MSC  EUR9,390    (5.00)%  06/20/18   (219)   (554)   (335)
Total                  $9,449   $5,572   $(3,877)
Sell protection:                               
ABX.HE.AAA.06  CSI  $472    0.11%  05/25/46  $(154)  $(124)  $30 
ABX.HE.AAA.06  JPM   472    0.11%  05/25/46   (153)   (124)   29 
ABX.HE.AAA.06-2  JPM   838    0.11%  05/25/46   (245)   (220)   25 
CDX.EM.19  DEUT   10,200    5.00%  06/20/18   1,301    1,307    6 
CDX.EM.19  DEUT   22,625    5.00%  06/20/18   2,973    2,900    (73)
CDX.EM.19  GSC   3,875    5.00%  06/20/18   515    496    (19)
CDX.NA.HY.20  GSC   20,830    1.00%  06/20/18   115    254    139 
CDX.NA.IG.19  GSC   27,380    1.00%  12/20/17   14    423    409 
CMBX.NA.AA.4  CSI   415    1.65%  02/17/51   (265)   (252)   13 
CMBX.NA.AA.4  MSC   4,020    1.65%  02/17/51   (2,507)   (2,441)   66 
CMBX.NA.AAA.3  JPM   2,545    0.08%  12/13/49   (111)   (52)   59 
CMBX.NA.AAA.5  MSC   2,500    0.35%  02/15/51   (134)   (62)   72 
CMBX.NA.AAA.6  BOA   865    0.50%  05/11/63   (30)   (22)   8 

 

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

 

23

 

The Hartford Strategic Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Credit Default Swap Contracts Outstanding at April 30, 2013 - (continued)

 

Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate /
Implied Credit
Spread (b)
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices: - (continued)                        
Sell protection: - (continued)                        
CMBX.NA.AAA.6  CSI  $635    0.50%      05/11/63  $(22)  $(16)  $6 
CMBX.NA.AAA.6  JPM   4,995    0.50%      05/11/63   (165)   (124)   41 
CMBX.NA.AAA.6  UBS   3,305    0.50%      05/11/63   (88)   (82)   6 
CMBX.NA.AAA.6  UBS   2,355    0.50%      05/11/63   (53)   (58)   (5)
CMBX.NA.AJ.3  BCLY   210    1.47%      12/13/49   (76)   (54)   22 
CMBX.NA.AJ.3  CSI   1,295    1.47%      12/13/49   (407)   (333)   74 
CMBX.NA.AJ.3  MSC   2,695    1.47%      12/13/49   (788)   (692)   96 
CMBX.NA.AJ.3  UBS   975    1.47%      12/13/49   (383)   (250)   133 
CMBX.NA.BB.6  CSI   200    5.00%      05/11/63   (10)   (4)   6 
CMBX.NA.BB.6  CSI   1,285    5.00%      05/11/63   (4)   (28)   (24)
CMBX.NA.BB.6  GSC   350    5.00%      05/11/63   (17)   (8)   9 
CMBX.NA.BB.6  JPM   65    5.00%      05/11/63   2    (1)   (3)
CMBX.NA.BB.6  MSC   3,530    5.00%      05/11/63   (225)   (77)   148 
CMBX.NA.BB.6  MSC   310    5.00%      05/11/63   8    (6)   (14)
CMBX.NA.BB.6  UBS   320    5.00%      05/11/63   (16)   (7)   9 
CMBX.NA.BB.6  UBS   1,065    5.00%      05/11/63   13    (23)   (36)
CMBX.NA.BBB-.6  CSI   440    3.00%      05/11/63   (25)   (7)   18 
CMBX.NA.BBB-.6  MSC   315    3.00%      05/11/63   (18)   (5)   13 
ITRX.EUR.19  GSC  EUR 28,305    1.00%      06/20/18   (262)   29    291 
PrimeX.ARM.1  CSI   113    4.42%      06/25/36   10    12    2 
PrimeX.ARM.1  MSC   914    4.42%      06/25/36   55    98    43 
PrimeX.ARM.2  BCLY   346    4.58%      12/25/37   (2)   12    14 
PrimeX.ARM.2  MSC   1,607    4.58%      06/25/36   (118)   56    174 
PrimeX.ARM.2  MSC   1,721    4.58%      12/25/37   57    60    3 
Total                  $(1,215)  $575   $1,790 
Total traded indices                  $8,234   $6,147   $(2,087)
Credit default swaps on single-name issues:                            
Sell protection:                               
Bank of America Corp.  CSI  $5,180    1.00% / 1.08%    12/20/17  $(110)  $(19)  $91 
Bank of America Corp.  GSC   9,200    1.00% / 1.03%    09/20/17   (639)   (10)   629 
Citigroup, Inc.  GSC   9,850    1.00% / 0.88%    09/20/17   (642)   52    694 
Citigroup, Inc.  GSC   4,450    1.00% / 0.93%    12/20/17   (80)   14    94 
Goldman Sachs Group, Inc.  CSI   2,665    1.00% / 1.10%    12/20/17   (82)   (13)   69 
Goldman Sachs Group, Inc.  UBS   4,600    1.00% / 1.04%    09/20/17   (339)   (8)   331 
Morgan Stanley  BCLY   4,600    1.00% / 1.21%    09/20/17   (516)   (41)   475 
Morgan Stanley  GSC   2,810    1.00% / 1.27%    12/20/17   (143)   (34)   109 
Total                  $(2,551)  $(59)  $2,492 
                   $5,683   $6,088   $405 

 

(a)The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.  Notional shown in U.S. dollars unless otherwise noted.

 

(b)Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues, U.S. municipal issues or sovereign government issues as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood of risk of default for the credit derivative.  The implied credit spread of a particular entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement.  Wider credit spreads represent a deterioration of the reference entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.  The percentage shown is the implied credit spread on April 30, 2013.  For credit default swap agreements on indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk.

 

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

 

24

 

 

 

Interest Rate Swap Contracts Outstanding at April 30, 2013

 

Counterparty  Payments made by Fund  Payments received by Fund  Notional
Amount *
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
BCLY  1.77% Fixed  6M EURIBOR  EUR 7,650   01/22/23  $   $(300)  $(300)
BCLY  1.88% Fixed  6M GBP LIBOR  GBP 125   11/08/22       (2)   (2)
BCLY  3M STIBOR  2.25% Fixed  SEK 64,800   01/22/23       179    179 
BOA  2.65% Fixed  6M JPY LIBOR  JPY 14,465    03/08/43       (3)   (3)
BOA  3M CAD BA CDOR  1.59% Fixed  CAD 7,750   04/29/18       8    8 
CSI  0.82% Fixed  6M JPY LIBOR  JPY 16,740   02/18/23   1    (1)   (2)
DEUT  0.40% Fixed  3M USD LIBOR   1,715   03/20/15       (2)   (2)
DEUT  0.51% Fixed  3M USD LIBOR   3,270   02/05/15       (5)   (5)
DEUT  0.82% Fixed  6M JPY LIBOR  JPY 16,735   02/18/23       (1)   (1)
GSC  0.54% Fixed  3M USD LIBOR   1,570   02/05/15       (3)   (3)
GSC  0.91% Fixed  6M LIBOR GBP  GBP 5,150   04/29/18       4    4 
GSC  2.75% Fixed  6M WIBOR PLN  PLN 550   06/19/15            
GSC  3.00% Fixed  3M LIBOR   175   06/19/43   1    (7)   (8)
GSC  3.15% Fixed  6M WIBOR PLN  PLN 575   06/19/15       (2)   (2)
GSC  6M EURIBOR  0.39% Fixed  EUR 130   06/19/15            
JPM  0.40% Fixed  3M USD LIBOR   1,780   03/20/15       (2)   (2)
JPM  0.54% Fixed  3M USD LIBOR   1,705   02/05/15       (3)   (3)
JPM  2.00% Fixed  3M LIBOR   2,000   03/20/23   (12)   (32)   (20)
JPM  3.16% Fixed  6M WIBOR PLN  PLN 1,150   06/19/15       (4)   (4)
JPM  6M EURIBOR  0.48% Fixed  EUR 270   06/19/15            
JPM  6M EURIBOR  0.51% Fixed  EUR 135   06/19/15       1    1 
MSC  2.59% Fixed  6M JPY LIBOR  JPY 18,190   03/22/43       (2)   (2)
                 $(10)  $(177)  $(167)

 

* Notional shown in U.S. dollars unless otherwise noted.

 

Spreadlock Swap Contracts Outstanding at April 30, 2013

 

Counterparty  Strike   Notional
Amount
   Determination
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
JPM   0.80%*      20,000   09/20/13  $   $(4)  $(4)

 

*This is a spreadlock swap between the 10-Year interest rate swap curve and the yield to maturity on a 30-Year FNMA.  If the yield to maturity on the 30-Year FNMA minus the 10-Year CMS (constant maturity swap curve) rate is greater than 0.80%, the Fund will receive money from the counterparty based on this differential.  If the yield to maturity on the 30-Year FNMA minus the 10-Year CMS rate is less than 0.80%, the Fund will pay the counterparty.

 

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

 

25

 

The Hartford Strategic Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
AUD  Buy  05/31/2013  UBS  $191   $191   $ 
AUD  Buy  05/31/2013  WEST   2,556    2,585    29 
AUD  Sell  05/31/2013  CBA   33    34    (1)
AUD  Sell  05/31/2013  CBK   140    140     
AUD  Sell  05/01/2013  JPM   4    4     
AUD  Sell  05/31/2013  NAB   33    33     
AUD  Sell  05/31/2013  WEST   260    263    (3)
BRL  Buy  08/02/2013  GSC   853    852    (1)
CAD  Buy  05/31/2013  BCLY   3,973    4,047    74 
CAD  Buy  05/31/2013  UBS   172    172     
CAD  Sell  05/22/2013  BCLY   117    119    (2)
CAD  Sell  05/31/2013  BCLY   341    347    (6)
CAD  Sell  05/01/2013  JPM   1    1     
CHF  Buy  05/31/2013  CSFB   19    19     
CHF  Buy  05/31/2013  DEUT   102    102     
CHF  Sell  05/31/2013  CSFB   69    70    (1)
CHF  Sell  05/31/2013  JPM   75    75     
CZK  Buy  05/31/2013  JPM   5    5     
CZK  Buy  05/31/2013  RBS   64    65    1 
CZK  Sell  05/31/2013  JPM   10    10     
DKK  Buy  05/31/2013  RBC   206    208    2 
EUR  Buy  05/31/2013  BCLY   25,848    26,205    357 
EUR  Buy  05/31/2013  BNP   1,653    1,673    20 
EUR  Buy  05/31/2013  CBK   186    187    1 
EUR  Buy  05/31/2013  DEUT   123    123     
EUR  Buy  05/31/2013  DEUT   171    171     
EUR  Buy  05/31/2013  GSC   171    171     
EUR  Buy  05/31/2013  JPM   72    72     
EUR  Sell  05/31/2013  BCLY   138    140    (2)
EUR  Sell  05/31/2013  CBK   33    33     
EUR  Sell  05/31/2013  DEUT   68    69    (1)
EUR  Sell  05/01/2013  JPM   8    8     
EUR  Sell  05/31/2013  JPM   5    5     
EUR  Sell  06/19/2013  JPM   1,728    1,756    (28)
EUR  Sell  05/31/2013  RBS   66    67    (1)
EUR  Sell  05/31/2013  UBS   442    447    (5)
GBP  Buy  05/31/2013  CBK   171    172    1 
GBP  Buy  05/31/2013  UBS   5,876    5,984    108 
GBP  Buy  05/31/2013  UBS   211    210    (1)
GBP  Sell  05/31/2013  CBK   323    325    (2)
GBP  Sell  05/01/2013  JPM            
GBP  Sell  05/31/2013  UBS   453    461    (8)
HUF  Buy  05/31/2013  CBK   35    35     
HUF  Sell  05/31/2013  BNP   66    67    (1)
INR  Buy  05/31/2013  JPM   68    69    1 
JPY  Buy  05/07/2013  BCLY   256    256     
JPY  Buy  05/31/2013  BNP   1,251    1,276    25 
JPY  Buy  05/31/2013  CBK   140    140     
JPY  Buy  05/31/2013  NAB   29,352    29,934    582 
JPY  Sell  05/31/2013  BCLY   257    257     
JPY  Sell  05/31/2013  CBK   68    68     
JPY  Sell  05/31/2013  DEUT   197    197     
JPY  Sell  05/01/2013  JPM   26    26     
JPY  Sell  05/31/2013  JPM   34    34     
KRW  Buy  05/31/2013  JPM   175    175     
KRW  Sell  05/31/2013  BCLY   291    296    (5)

 

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

 

26

 

 

 

Foreign Currency Contracts Outstanding at April 30, 2013 - (continued)

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
MXN  Buy  05/31/2013  DEUT  $117   $117   $ 
MXN  Buy  05/31/2013  RBC   275    279    4 
MXN  Sell  05/31/2013  RBC   204    207    (3)
MYR  Buy  05/31/2013  UBS   102    102     
MYR  Sell  05/31/2013  JPM   136    136     
NGN  Buy  11/25/2013  CBK   6,348    6,633    285 
NOK  Buy  05/31/2013  DEUT   99    99     
NOK  Buy  05/31/2013  MSC   8,181    8,368    187 
PLN  Buy  05/31/2013  BNP   371    371     
PLN  Sell  05/31/2013  DEUT   112    112     
PLN  Sell  05/31/2013  UBS   340    343    (3)
SEK  Buy  05/31/2013  CSFB   71    72    1 
SEK  Buy  05/31/2013  DEUT   65    66    1 
SEK  Sell  05/02/2013  CSFB   71    72    (1)
SEK  Sell  05/31/2013  UBS   9,826    10,021    (195)
SGD  Sell  05/31/2013  JPM   397    400    (3)
ZAR  Buy  05/31/2013  CSFB   480    497    17 
ZAR  Sell  05/31/2013  CBK   70    70     
                      $1,423 

 

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.

 

27

 

The Hartford Strategic Income Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
BCLY Barclays  
BNP BNP Paribas Securities  
BOA Banc of America Securities LLC  
CBA Commonwealth Bank of Australia
CBK Citibank NA  
CSFB Credit Suisse First Boston Corp.
CSI Credit Suisse International  
DEUT Deutsche Bank Securities, Inc.  
GSC Goldman Sachs & Co.
JPM JP Morgan Chase & Co.  
MSC Morgan Stanley  
NAB National Australia Bank
RBC RBC Dominion Securities  
RBS RBS Greenwich Capital
SCB Standard Chartered Bank  
UBS UBS AG  
WEST Westpac International  
 
Currency Abbreviations:
AUD Australian Dollar  
BRL Brazilian Real  
CAD Canadian Dollar  
CHF Swiss Franc  
CNY Chinese Yuan Renminbi  
COP Colombian Peso  
CZK Czech Koruna  
DKK Danish Krone  
EUR EURO  
GBP British Pound  
HUF Hungarian Forint  
INR Indian Rupee  
JPY Japanese Yen  
KRW South Korean Won  
MXN Mexican New Peso  
MYR Malaysian Ringgit  
NGN Nigerian Naira  
NOK Norwegian Krone  
PEN Peruvian New Sol  
PLN Polish New Zloty  
SEK Swedish Krona  
SGD Singapore Dollar  
TRY Turkish New Lira  
USD U.S. Dollar  
ZAR South African Rand  
 
Index Abbreviations:
ABX.HE Markit Asset Backed Security Home Equity
ABX.HE.PEN Markit Asset Backed Security Home Equity Penultimate
CDX.EM Credit Derivatives Emerging Markets
CDX.NA.HY Credit Derivatives North American High Yield
CDX.NA.IG Credit Derivatives North American Investment Grade
CMBX.NA Markit Commercial Mortgage Backed North American
ITRX.EUR Markit iTraxx - Europe
ITRX.XOV Markit iTraxx Index - Europe Crossover
PrimeX.ARM Markit PrimeX Mortgage Backed Security

 

Other Abbreviations:
CAD BA CDOR Canadian Bankers Acceptance Dealer Offered Rate
EURIBOR Euro Interbank Offered Rate
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
LIBOR London Interbank Offered Rate
STIBOR Stockholm Interbank Offer Rate
WIBOR Warsaw Interbank Offered Rate

 

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

 

28

 

The Hartford Strategic Income Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Asset & Commercial Mortgage Backed Securities  $131,859   $   $108,620   $23,239 
Call Options Purchased   8    8         
Common Stocks ‡   397    2        395 
Corporate Bonds   131,955        131,893    62 
Foreign Government Obligations   224,983    469    224,514     
Preferred Stocks   752    752         
Put Options Purchased   7        7     
Senior Floating Rate Interests   134,099        134,099     
U.S. Government Agencies   93,056        93,056     
U.S. Government Securities   28,242    178    28,064     
Short-Term Investments   15,833        15,833     
Total  $761,191   $1,409   $736,086   $23,696 
Credit Default Swaps *   4,456        4,456     
Foreign Currency Contracts *   1,696        1,696     
Futures *   990    990         
Interest Rate Swaps *   192        192     
Written Options *   5        5     
Total  $7,339   $990   $6,349   $ 
Liabilities:                    
Securities Sold Short  $66,540   $   $66,540   $ 
Total  $66,540   $   $66,540   $ 
Credit Default Swaps *   4,051        4,051     
Foreign Currency Contracts *   273        273     
Futures *   23    23         
Interest Rate Swaps *   359        359     
Spreadlock Swaps *   4        4     
Total  $4,710   $23   $4,687   $ 

 

For the six-month period ended April 30, 2013, investments valued at $500 were transferred from Level 1 to Level 2, and there were no transfers from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).  
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).  
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).
The Fund has all or primarily all of the equity securities categorized in a particular level.  Refer to the Schedule of Investments for further industry breakout.
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

29

 

The Hartford Strategic Income Fund
Investment Valuation Hierarchy Level Summary – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance as
of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3 *
   Transfers
Out of
Level 3 *
   Balance as
of April
30, 2013
 
Assets:                                             
Asset & Commercial Mortgage Backed Securities   $17,395   $1,204   $2,098  $993   $11,220   $(8,079)  $   $(1,592)  $23,239 
Common Stocks    693        (298)‡                       395 
Corporate Bonds    3,042    75    (102   (3)   10    (2,960)           62 
U.S. Government Agencies    2,178                            (2,178)    
Total   $23,308   $1,279   $1,698   $990   $11,230   $(11,039)  $   $(3,770)  $23,696 

 

*Investments are transferred into and out of Level 3 for a variety of reasons including, but not limited to:
1)Investments where trading has been halted (transfer into Level 3) or investments where trading has resumed (transfer out of Level 3).
2)Broker quoted investments (transfer into Level 3) or quoted prices in active markets (transfer out of Level 3).
3)Investments that have certain restrictions on trading (transfer into Level 3) or investments where trading restrictions have expired (transfer out of Level 3).
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $2,545.
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $(298).
§Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $3.

 

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

 

30

 

The Hartford Strategic Income Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $736,769)  $761,191 
Cash    3,487*
Foreign currency on deposit with custodian (cost $107)    107 
Unrealized appreciation on foreign currency contracts    1,696 
Unrealized appreciation on swap contracts    4,648 
Receivables:     
Investment securities sold    105,276 
Fund shares sold    740 
Dividends and interest    6,122 
Variation margin    85 
Swap premiums paid    15,688 
Other assets    74 
Total assets    899,114 
Liabilities:     
Unrealized depreciation on foreign currency contracts    273 
Unrealized depreciation on swap contracts    4,414 
Securities sold short, at market value (proceeds $66,338)    66,540 
Payables:     
Investment securities purchased    112,866 
Fund shares redeemed    1,538 
Investment management fees   61 
Dividends    113 
Administrative fees     
Distribution fees   41 
Collateral received from broker    9,240 
Variation margin    61 
Accrued expenses    81 
Swap premiums received    10,015 
Written options (proceeds $5)     
Other liabilities    21 
Total liabilities    205,264 
Net assets   $693,850 
Summary of Net Assets:     
Capital stock and paid-in-capital   $666,191 
Undistributed net investment income    659 
Accumulated net realized gain    144 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency    26,856 
Net assets   $693,850 

 

* Cash of $3,405 was pledged as collateral for open swap contracts at April 30, 2013.

 

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

 

31

 

The Hartford Strategic Income Fund
Statements of Assets and Liabilities – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares authorized    900,000 
Par value   $0.001 
Class A: Net asset value per share/Maximum offering price per share    $9.52/$9.97 
Shares outstanding    22,130 
Net assets   $210,584 
Class B: Net asset value per share  $9.51 
Shares outstanding    1,203 
Net assets   $11,449 
Class C: Net asset value per share  $9.53 
Shares outstanding    19,356 
Net assets   $184,537 
Class I: Net asset value per share  $9.55 
Shares outstanding    9,044 
Net assets   $86,327 
Class R3: Net asset value per share  $9.51 
Shares outstanding    18 
Net assets   $175 
Class R4: Net asset value per share  $9.51 
Shares outstanding    15 
Net assets   $142 
Class R5: Net asset value per share  $9.51 
Shares outstanding    12 
Net assets   $115 
Class Y: Net asset value per share  $9.51 
Shares outstanding    21,090 
Net assets   $200,521 

 

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

 

32

 

The Hartford Strategic Income Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends   $23 
Interest    16,013 
Less: Foreign tax withheld    (18)
Total investment income    16,018 
Expenses:     
Investment management fees    1,858 
Administrative services fees     
Class R3     
Class R4     
Class R5     
Transfer agent fees     
Class A    138 
Class B    11 
Class C    80 
Class I    42 
Class R3     
Class R4     
Class Y    2 
Distribution fees     
Class A    270 
Class B    59 
Class C    975 
Class R3     
Class R4     
Custodian fees    19 
Accounting services fees    69 
Registration and filing fees    52 
Board of Directors' fees    8 
Audit fees    8 
Other expenses    43 
Total expenses (before waivers)    3,634 
Expense waivers    (26)
Total waivers    (26)
Total expenses, net    3,608 
Net Investment Income    12,410 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities    6,654 
Net realized gain on purchased options    2,591 
Net realized loss on securities sold short    (333)
Net realized loss on futures    (1,421)
Net realized gain on written options    3,305 
Net realized loss on swap contracts    (2,233)
Net realized loss on foreign currency contracts    (7,838)
Net realized gain on other foreign currency transactions    172 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions    897 
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized appreciation of investments    5,608 
Net unrealized depreciation of purchased options    (1)
Net unrealized depreciation of securities sold short    (178)
Net unrealized appreciation of futures    1,022 
Net unrealized depreciation of written options    (385)
Net unrealized depreciation of swap contracts    (148)
Net unrealized appreciation of foreign currency contracts    1,356 
Net unrealized depreciation 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    7,270 
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions    8,167 
Net Increase in Net Assets Resulting from Operations   $20,577 

 

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

 

33

 

The Hartford Strategic Income Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income   $12,410   $21,928 
Net realized gain on investments, other financial instruments and foreign currency transactions    897    20,163 
Net unrealized appreciation of investments, other financial instruments and foreign currency transactions    7,270    15,049 
Net Increase in Net Assets Resulting from Operations    20,577    57,140 
Distributions to Shareholders:          
From net investment income          
Class A    (4,220)   (7,605)
Class B    (184)   (395)
Class C    (3,071)   (5,896)
Class I    (1,884)   (3,572)
Class R3    (3)   (4)
Class R4    (3)   (4)
Class R5    (3)   (4)
Class Y    (3,830)   (2,875)
Total from net investment income    (13,198)   (20,355)
From net realized gain on investments          
Class A    (6,363)   (574)
Class B    (353)   (40)
Class C    (5,982)   (558)
Class I    (2,850)   (234)
Class R3    (4)    
Class R4    (4)    
Class R5    (3)   (1)
Class Y    (4,823)   (16)
Total from net realized gain on investments    (20,382)   (1,423)
Total distributions    (33,580)   (21,778)
Capital Share Transactions:          
Class A    (5,128)   17,416 
Class B    (781)   (1,487)
Class C    (20,744)   15,230 
Class I    (16,500)   29,348 
Class R3    36    33 
Class R4    13    25 
Class R5    6    5 
Class Y    32,039    156,606 
Net increase (decrease) from capital share transactions    (11,059)   217,176 
Net Increase (Decrease) in Net Assets    (24,062)   252,538 
Net Assets:          
Beginning of period    717,912    465,374 
End of period   $693,850   $717,912 
Undistributed (distribution in excess of) net investment income (loss)   $659   $1,447 

 

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

 

34

 

The Hartford Strategic Income Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent

 

35

 

The Hartford Strategic Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the Valuation Date.

 

36

 

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price. For more information on specific valuation techniques and unobservable inputs, please see table below titled "Quantitative Information about Level 3 Fair Value Measurements".

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test).

 

37

 

The Hartford Strategic Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

Quantitative Information about Level 3 Fair Value Measurements:

 

Security Type / Valuation Technique  Unobservable Input(1)  Range (Weighted Average(2) )  Fair Value at
April 30, 2013
 
Asset & Commercial Mortgage Backed Securities:           
Cost  Recent trade price  04/11/2013  $818 
Discounted cash flow  Life expectancy (in months)  2 - 407 (31)   24,421 
   Internal rate of return  1.0% - 50.4% (12.8%)     
Common Stocks:           
Market comparable companies  Enterprise Value/EBITDA(3)  3.00x to 7.65x for Platform Services   395 
      3.97x to 6.87x for Land Drilling     
      5.72x to 7.99x MODU     
      5.61x to 6.98x Bentec     
Corportate Bonds:           
Evaluated bid  Prior day valuation  Not Applicable   62 
Total        $23,696 

 

(1) Significant changes to any unobservable inputs may result in a significant change to the fair value.

(2) Unless otherwise noted, inputs were weighted based on the fair value of the investments included in the range.

(3) EBITDA for each business is estimated for fiscal year ended 2013.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Trade date for senior floating rate interests purchased in the primary loan market is considered the date on which the loan allocations are determined. Trade date for senior floating rate interests purchased in the secondary loan market is the date on which the transaction is entered into.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. Paydown gains and losses on mortgage-related and other asset-backed securities are included in interest income in the Statement of Operations, as applicable.

 

38

 

 

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Dividends from net investment income are declared and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments that serve

 

39

 

The Hartford Strategic Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

In connection with the Fund’s ability to purchase investments on a when-issued or forward commitment basis, the Fund may enter into to-be announced (“TBA”) commitments. TBA commitments are forward agreements for the purchase or sale of mortgage-backed securities for a fixed price, with payment and delivery on an agreed-upon future settlement date. The specific securities to be delivered are not identified at the trade date; however, delivered securities must meet specified terms, including issuer, rate and mortgage terms. Although the Fund may enter into TBA commitments with the intention of acquiring or delivering securities for its portfolio, the Fund can extend the settlement date, roll the transaction, or dispose of a commitment prior to settlement if deemed appropriate to do so. If the TBA commitment is closed through the acquisition of an offsetting TBA commitment, the Fund realizes a gain or loss. In a TBA roll transaction, the Fund generally purchases or sells the initial TBA commitment prior to the agreed upon settlement date and enters into a new TBA commitment for future delivery or receipt of the mortgage-backed securities. TBA commitments involve a risk of loss if the value of the security to be purchased or sold declines or increases, respectively, prior to settlement date.

 

The Fund may enter into “dollar rolls” in which the Fund sells securities and contracts with the same counterparty to repurchase substantially similar securities (for example, same issuer, coupon and maturity) on a specified future date at an agreed upon price. The Fund gives up the right to receive interest paid on the investments sold. The Fund would benefit to the extent of any differences between the price received for the security and the lower forward price for the future purchase. Dollar rolls involve the risk that the market value of the securities that the Fund is required to purchase may decline below the agreed upon repurchase price of those securities. The Fund records dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions are excluded from the Fund’s portfolio turnover rate. The Fund had open dollar roll transactions as of April 30, 2013.

 

d)Senior Floating Rate Interests – The Fund, as shown on the Schedule of Investments, invests 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

 

40

 

 

 

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. The Fund may invest in multiple series or tranches of a senior floating rate interest, which may have varying terms and carry different associated risks. The Fund may also enter into unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. In certain circumstances, the Fund may receive various fees upon the restructure of a senior floating rate interest by a borrower. Fees earned/paid may be recorded as a component of income or realized gain/loss in the Statement of Operations.

 

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.

 

e)Mortgage Related and Other Asset Backed Securities The Fund may invest in mortgage related and other asset backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations, commercial mortgage backed securities, stripped mortgage backed securities, asset backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. Mortgage related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. These securities provide a monthly payment that consists of both interest and principal payments. Interest payments may be determined by fixed or adjustable rates. The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. The timely payment of principal and interest of certain mortgage related securities is guaranteed by the full faith and credit of the United States Government. Mortgage related and other asset backed securities created and guaranteed by non-governmental issuers, including government-sponsored corporations, may be supported by various forms of insurance or guarantees, but there can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund, as shown on the  Schedule of Investments, had mortgage related and other asset backed securities as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are

 

41

 

The Hartford Strategic Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. The Fund, as shown on the  Schedule of Investments, had outstanding futures contracts as of April 30, 2013.

 

c)Options 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) an investment or other financial asset at an agreed-upon price during a specific period of time or on a specific date. The Fund may write (sell) covered call and put options on futures, swaps (“swaptions”), securities, commodities or currencies. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying investments or currency or an option to purchase the same underlying investments 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 investments having a value equal to or greater than the fluctuating market value of the option investment or currency. Writing put options increases the Fund’s exposure to the underlying instrument. Writing call options decreases the Fund’s exposure to the underlying instrument. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options that are exercised or closed are added to the proceeds or offset amounts paid on the underlying futures, swap, investment or currency transaction to determine the realized gain or loss. The Fund as a writer of an option has no control over whether the underlying instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the instrument underlying the written option. There is the risk the Fund may not be able to enter into a closing transaction because of an illiquid market. The Fund may also purchase put and call options. Purchasing call options increases the Fund’s exposure to the underlying instrument. Purchasing put options decreases the Fund’s exposure to the underlying instrument. The Fund pays a premium, which is included on the Fund’s Statement of Assets and Liabilities as an investment and is subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options that expire are treated as realized losses. Certain options may be purchased with premiums to be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. The risk associated with purchasing put and call options is generally limited to the premium paid. Premiums paid for purchasing options that are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss. Entering into over-the-counter options also exposes the Fund to counterparty risk. Counterparty risk is the possibility that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements. The Fund, as shown on the  Schedule of Investments, had outstanding purchased options and written options contracts as of April 30, 2013. Transactions involving written options contracts during the six-month period ended April 30, 2013, are summarized below:

 

42

 

 

 

Options Contract Activity During the Six-Month Period Ended April 30, 2013: 

Call Options Written During the Period  Number of Contracts*   Premium Amounts 
Beginning of the period   168,562,000   $967 
Written   219,281,978    1,352 
Expired   (386,390,000)   (2,040)
Closed   (1,978)   (274)
Exercised        
End of Period   1,452,000   $5 

 

Put Options Written During the Period  Number of Contracts*   Premium Amounts 
Beginning of the period   167,110,000   $874 
Written   219,286,712    1,627 
Expired   (386,390,000)   (1,783)
Closed   (6,712)   (718)
Exercised        
End of Period      $ 

 

*The number of contracts does not omit 000's.

 

d)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

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 investment or index in the event of a credit event, such as payment default or bankruptcy.

 

43

 

The Hartford Strategic Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Under a credit default swap contract, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying investment 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. Although specified events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. These potential amounts would be partially offset by any recovery values of the respective referenced obligations or upfront payments received upon entering into the contract.

 

Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap contracts on corporate issues, sovereign government issues or U.S. municipal issues as of period-end are disclosed in the notes to the Schedule of Investments, as applicable, and serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the contract. Wider credit spreads represent a deterioration of the referenced entity’s soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. For credit default swap contracts on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced equity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. The Fund, as shown on the Schedule of Investments, had outstanding credit default swaps as of April 30, 2013.

 

Interest Rate Swap Contracts 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 or inflation benchmark (e.g. London Interbank Offered Rate (“LIBOR”)), 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 contracts is recorded as a realized gain or loss. 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 contract 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 contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The Fund, as shown on the Schedule of Investments, had outstanding interest rate swaps as of April 30, 2013.

 

Spreadlock Swap ContractsThe Fund may invest in spreadlock swap contracts. These contracts involve commitments to pay or receive a settlement amount calculated as the difference between the swap spread and a fixed spread at a specific forward date. The Fund, as shown on the Schedule of Investments, had outstanding spreadlock swaps as of April 30, 2013.

 

44

 

  

e)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Investments in securities, at value (purchased options), market value  $8   $7   $   $   $   $   $15 
Unrealized appreciation on foreign currency contracts       1,696                    1,696 
Unrealized appreciation on swap contracts   192        4,456                4,648 
Variation margin receivable *   85                        85 
Total  $285   $1,703   $4,456   $   $   $   $6,444 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $273   $   $   $   $   $273 
Unrealized depreciation on swap contracts   363        4,051                4,414 
Variation margin payable *   61                        61 
Written options, market value                            
Total  $424   $273   $4,051   $   $   $   $4,748 

 

*Only current day's variation margin is reported within the Statement of Assets and Liabilities. The variation margin is included in the open futures cumulative appreciation of $967 as reported in the Schedule of Investments.

 

The ratio of futures contracts to net assets at April 30, 2013 was 31.00%, compared to the six-month period ended April 30, 2013 period, average net assets of 24.41%. The volume of other derivatives that are presented in the Schedule of Investments is consistent with the derivative activity durning the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain (Loss) on Derivatives Recognized as a Result of Operations:          
Net realized gain on purchased options  $2,223   $368   $   $   $   $   $2,591 
Net realized loss on futures   (1,421)                       (1,421)
Net realized gain (loss) on written options   (518)       3,823                3,305 
Net realized gain (loss) on swap contracts   56        (2,289)               (2,233)
Net realized loss on foreign currency contracts       (7,838)                   (7,838)
Total  $340   $(7,470)  $1,534   $   $   $   $(5,596)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations: 
Net change in unrealized appreciation (depreciation) of purchased options  $1   $(2)  $   $   $   $   $(1)
Net change in unrealized appreciation of futures   1,022                        1,022 
Net change in unrealized appreciation (depreciation) of written options       1    (386)               (385)
Net change in unrealized appreciation (depreciation) of swap contracts   (176)       28                (148)
Net change in unrealized appreciation of foreign currency contracts       1,356                    1,356 
Total  $847   $1,355   $(358)  $   $   $   $1,844 

 

45

 

The Hartford Strategic Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. Senior floating rate interests and securities subject to prepayment and extension risk generally offer less potential for gains when interest rates decline. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities, senior floating rate interests, and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of losses deferred due to

 

46

 

 

 

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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $20,376   $21,163 
Long-Term Capital Gains ‡   1,423     

 

The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $14,743 
Undistributed Long-Term Capital Gain   7,351 
Unrealized Appreciation *   18,708 
Total Accumulated Earnings  $40,802 

 

*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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(2,187)
Accumulated Net Realized Gain (Loss)   1,999 
Capital Stock and Paid-in-Capital   188 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss

 

47

 

The Hartford Strategic Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 $1.5 billion   0.475% 
On next $2.5 billion   0.465% 
On next $5 billion   0.455% 
Over $10 billion   0.445% 

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services

 

48

 

 

 

to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.020% 
On next $5 billion   0.018% 
Over $10 billion   0.016% 

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 0.95%      1.70%      1.70%      0.70%      1.25%      0.95%      0.65%      0.60%   

 

d)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $304 and contingent deferred sales charges of $17 from the Fund.

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any

 

49

 

The Hartford Strategic Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage of
Class
 
Class R3   67%
Class R4   80 
Class R5   100 
Class Y   0 

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage of
Fund
 
Class Y   22%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $793,921 
Sales Proceeds Excluding U.S. Government Obligations   734,540 
Cost of Purchases for U.S. Government Obligations   20,106 
Sales Proceeds for U.S. Government Obligations   117,534 

 

50

 

 

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   2,685    1,077    (4,306)       (544)   7,418    810    (6,357)       1,871 
Amount  $25,459   $10,156   $(40,743)  $   $(5,128)  $69,479   $7,554   $(59,617)  $   $17,416 
Class B                                                  
Shares   89    52    (223)       (82)   220    37    (414)       (157)
Amount  $844   $487   $(2,112)  $   $(781)  $2,051   $349   $(3,887)  $   $(1,487)
Class C                                                  
Shares   1,362    865    (4,411)       (2,184)   6,120    582    (5,044)       1,658 
Amount  $12,933   $8,168   $(41,845)  $   $(20,744)  $57,285   $5,435   $(47,490)  $   $15,230 
Class I                                                  
Shares   1,445    398    (3,569)       (1,726)   6,702    326    (3,886)       3,142 
Amount  $13,742   $3,770   $(34,012)  $   $(16,500)  $62,768   $3,052   $(36,472)  $ $29,348 
Class R3                                                  
Shares   3    1    (1)       3    4                4 
Amount  $38   $7   $(9)  $   $36   $33   $4   $(4)  $   $33 
Class R4                                                  
Shares   1    1    (1)       1    3    1    (1)       3 
Amount  $11   $7   $(5)  $   $13   $29   $4   $(8)  $   $25 
Class R5                                                  
Shares                           1            1 
Amount  $   $6   $   $   $6   $   $5   $   $   $5 
Class Y                                                  
Shares   8,452    918    (5,938)       3,432    21,775    306    (5,172)       16,909 
Amount  $79,741   $8,653   $(56,355)  $   $32,039   $202,452   $2,891   $(48,737)  $   $156,606 
Total                                                  
Shares   14,037    3,312    (18,449)       (1,100)   42,242    2,063    (20,874)       23,431 
Amount  $132,768   $31,254   $(175,081)  $   $(11,059)  $394,097   $19,294   $(196,215)  $   $217,176 

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   17   $156 
For the Year Ended October 31, 2012   52   $486 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

51

 

The Hartford Strategic Income Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

12.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

13.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

14.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

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53

 

The Hartford Strategic Income Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (D)                          
A  $9.70   $0.17   $0.11   $0.28   $(0.18)  $(0.28)  $   $(0.46)  $9.52 
B   9.70    0.14    0.10    0.24    (0.15)   (0.28)       (0.43)   9.51 
C   9.72    0.14    0.10    0.24    (0.15)   (0.28)       (0.43)   9.53 
I   9.73    0.18    0.12    0.30    (0.20)   (0.28)       (0.48)   9.55 
R3   9.70    0.16    0.10    0.26    (0.17)   (0.28)       (0.45)   9.51 
R4   9.70    0.17    0.10    0.27    (0.18)   (0.28)       (0.46)   9.51 
R5   9.70    0.19    0.10    0.29    (0.20)   (0.28)       (0.48)   9.51 
Y   9.69    0.19    0.11    0.30    (0.20)   (0.28)       (0.48)   9.51 
                                              
For the Year Ended October 31, 2012 (D)                          
A   9.20    0.37    0.51    0.88    (0.35)   (0.03)       (0.38)   9.70 
B   9.20    0.30    0.51    0.81    (0.28)   (0.03)       (0.31)   9.70 
C   9.21    0.30    0.52    0.82    (0.28)   (0.03)       (0.31)   9.72 
I   9.22    0.39    0.53    0.92    (0.38)   (0.03)       (0.41)   9.73 
R3   9.20    0.33    0.52    0.85    (0.32)   (0.03)       (0.35)   9.70 
R4   9.20    0.36    0.52    0.88    (0.35)   (0.03)       (0.38)   9.70 
R5   9.20    0.39    0.52    0.91    (0.38)   (0.03)       (0.41)   9.70 
Y   9.20    0.36    0.54    0.90    (0.38)   (0.03)       (0.41)   9.69 
                                              
For the Year Ended October 31, 2011                          
A   9.22    0.48    (0.01)   0.47    (0.49)           (0.49)   9.20 
B   9.21    0.41        0.41    (0.42)           (0.42)   9.20 
C   9.23    0.42    (0.02)   0.40    (0.42)           (0.42)   9.21 
I   9.24    0.51    (0.02)   0.49    (0.51)           (0.51)   9.22 
R3(G)   9.10    0.04    0.08    0.12    (0.02)           (0.02)   9.20 
R4(G)   9.10    0.04    0.09    0.13    (0.03)           (0.03)   9.20 
R5(G)   9.10    0.04    0.09    0.13    (0.03)           (0.03)   9.20 
Y   9.21    0.51        0.51    (0.52)           (0.52)   9.20 
                                              
For the Year Ended October 31, 2010                          
A   8.69    0.56    0.51    1.07    (0.54)           (0.54)   9.22 
B   8.69    0.49    0.50    0.99    (0.47)           (0.47)   9.21 
C   8.70    0.49    0.52    1.01    (0.48)           (0.48)   9.23 
I   8.71    0.58    0.51    1.09    (0.56)           (0.56)   9.24 
Y   8.69    0.60    0.49    1.09    (0.57)           (0.57)   9.21 
                                              
For the Year Ended October 31, 2009                          
A   7.35    0.53    1.33    1.86    (0.52)           (0.52)   8.69 
B   7.35    0.46    1.33    1.79    (0.45)           (0.45)   8.69 
C   7.36    0.47    1.33    1.80    (0.46)           (0.46)   8.70 
I   7.37    0.54    1.34    1.88    (0.54)           (0.54)   8.71 
Y   7.35    0.57    1.32    1.89    (0.55)           (0.55)   8.69 
                                              
For the Year Ended October 31, 2008                          
A   9.75    0.65    (2.39)   (1.74)   (0.66)           (0.66)   7.35 
B   9.75    0.58    (2.40)   (1.82)   (0.58)           (0.58)   7.35 
C   9.76    0.59    (2.40)   (1.81)   (0.59)           (0.59)   7.36 
I   9.77    0.69    (2.41)   (1.72)   (0.68)           (0.68)   7.37 
Y   9.76    0.69    (2.41)   (1.72)   (0.69)           (0.69)   7.35 

 

(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)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(D)Per share amounts have been calculated using average shares outstanding method.
(E)Not annualized.
(F)Annualized.
(G)Commenced operations on September 30, 2011.

 

54

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(C)
 
                      
                            
 3.03%(E)  $210,584    0.97%(F)   0.95%(F)   3.67%(F)   32%
 2.54(E)   11,449    1.78(F)   1.70(F)   2.91(F)    
 2.54(E)   184,537    1.68(F)   1.68(F)   2.93(F)    
 3.15(E)   86,327    0.68(F)   0.68(F)   3.91(F)    
 2.78(E)   175    1.37(F)   1.25(F)   3.37(F)    
 2.92(E)   142    1.02(F)   0.95(F)   3.67(F)    
 3.07(E)   115    0.69(F)   0.65(F)   3.97(F)    
 3.11(E)   200,521    0.60(F)   0.60(F)   4.04(F)    
                            
                            
 9.80    219,909    0.98    0.96    3.90    121 
 8.96    12,461    1.78    1.72    3.17     
 9.11    209,271    1.69    1.69    3.17     
 10.18    104,759    0.70    0.70    4.11     
 9.47    141    1.34    1.27    3.56     
 9.79    132    1.02    0.97    3.88     
 10.12    112    0.71    0.67    4.20     
 10.08    171,127    0.60    0.60    3.82     
                            
                            
 5.20    191,353    0.98    0.98    5.27    156 
 4.51    13,259    1.78    1.75    4.52     
 4.43    183,209    1.71    1.71    4.50     
 5.47    70,365    0.71    0.71    5.47     
 1.34(E)   101    1.33(F)   1.30(F)   5.14(F)    
 1.37(E)   101    1.03(F)   1.00(F)   5.43(F)    
 1.40(E)   101    0.73(F)   0.70(F)   5.72(F)    
 5.69    6,885    0.63    0.63    5.50     
                            
                            
 12.74    196,945    0.97    0.97    6.26    158 
 11.72    15,110    1.77    1.77    5.48     
 11.89    155,499    1.70    1.70    5.53     
 12.98    60,203    0.71    0.71    6.53     
 12.99    8,272    0.62    0.62    6.70     
                            
                            
 26.24    146,738    1.00    1.00    6.70    164 
 25.20    14,397    1.83    1.83    5.87     
 25.30    120,513    1.74    1.74    5.98     
 26.48    45,664    0.75    0.75    7.00     
 26.69    15,036    0.65    0.65    7.22     
                            
                            
 (19.02)   79,242    0.97    0.61    7.14    132 
 (19.66)   6,308    1.81    1.45    6.33     
 (19.62)   67,863    1.75    1.38    6.40     
 (18.77)   24,508    0.75    0.38    7.37     
 (18.85)   36,751    0.67    0.30    7.49     

 

55

 

The Hartford Strategic Income Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

56

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

57

 

The Hartford Strategic Income Fund
Directors and Officers (Unaudited) – (continued)

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

58

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,026.10   $4.78   $1,000.00   $1,020.08   $4.76    0.95%  181   365 
Class B  $1,000.00   $1,022.20   $8.53   $1,000.00   $1,016.36   $8.51    1.70   181   365 
Class C  $1,000.00   $1,022.30   $8.40   $1,000.00   $1,016.49   $8.38    1.68   181   365 
Class I  $1,000.00   $1,028.40   $3.44   $1,000.00   $1,021.40   $3.43    0.68   181   365 
Class R3  $1,000.00   $1,023.60   $6.28   $1,000.00   $1,018.59   $6.27    1.25   181   365 
Class R4  $1,000.00   $1,026.10   $4.78   $1,000.00   $1,020.08   $4.76    0.95   181   365 
Class R5  $1,000.00   $1,027.60   $3.27   $1,000.00   $1,021.57   $3.26    0.65   181   365 
Class Y  $1,000.00   $1,027.90   $2.99   $1,000.00   $1,021.84   $2.98    0.60   181   365 

 

59

 

The Hartford Strategic Income Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Strategic Income Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

60

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

61

 

The Hartford Strategic Income Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early). These risks also apply to the Fund’s investments in U.S. government securities, which may not be guaranteed by the U.S. government.

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

Loan Risk: The Fund’s investments in loans may at times become difficult to value and highly illiquid; they are subject to credit risk such as nonpayment of principal or interest, and risks of bankruptcy and insolvency.

 

Mortgage-Backed Securities Risk: Mortgage-backed securities are subject to interest rate risk, credit risk, prepayment risk, extension risk, and the risk that an investment’s value may be reduced or become worthless if it receives interest or income payments only after other investments in the same pool.

 

Foreign Investment, Emerging Markets and Sovereign Debt Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks. Sovereign debt investments are subject to credit risk and the risk of default.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

62
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-SI13 4/13 114001 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

41

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD TARGET RETIREMENT 2010 FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Target Retirement 2010 Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 9
Notes to Financial Statements (Unaudited) 10
Financial Highlights (Unaudited) 18
Directors and Officers (Unaudited) 20
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 22
Quarterly Portfolio Holdings Information (Unaudited) 22
Expense Example (Unaudited) 23
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 24
Principal Risks (Unaudited) 26

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Target Retirement 2010 Fund inception 09/30/2005
(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks to maximize total return and secondarily, seeks capital preservation.

 

Performance Overview  9/30/05 - 4/30/13

 

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   Since
Inception▲
 
Target Retirement 2010 A#   5.87%       7.41%       4.10%       4.77%    
Target Retirement 2010 A##        1.51%       2.93%       3.99%    
Target Retirement 2010 R3#   5.67%       7.21%       3.91%       4.62%    
Target Retirement 2010 R4#   5.95%       7.59%       4.23%       4.90%    
Target Retirement 2010 R5#   5.89%       7.63%       4.32%       5.00%    
Target Retirement 2010 Y#   5.89%       7.54%       4.29%       5.00%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       5.73%       5.60%    
MSCI All Country World Index   13.78%       15.69%       2.09%       5.50%    

 

Not Annualized
Inception: 09/30/2005
# Without sales charge
## With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Target Retirement 2010 Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*        
   Net   Gross 
Target Retirement 2010 Class A   1.00%       1.36%    
Target Retirement 2010 Class R3   1.30%       1.70%    
Target Retirement 2010 Class R4   1.00%       1.40%    
Target Retirement 2010 Class R5   0.80%       1.10%    
Target Retirement 2010 Class Y   0.80%       1.00%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Rick A. Wurster, CFA, CMT Stephen A. Gorman, CFA
Vice President and Asset Allocation Portfolio Manager Vice President, Director, Tactical Asset Allocation, Asset Allocation Strategies Group and Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Target Retirement 2010 Fund returned 5.87%, before sales charge, for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. The Fund underperformed the average return for the Lipper Mixed-Asset Target 2010 Funds category, a group of funds with investment strategies similar to those of the Fund, which returned 6.12%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose .02% while shorter term yields declined anywhere between .02% - .08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the stock/bond mix of the Fund was approximately 41% equities and 59% fixed income. A modest underweight allocation (i.e. the Fund’s position was less than the benchmark position) to

 

3

 

The Hartford Target Retirement 2010 Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

fixed income and overweight to equities contributed as equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative results from the World Bond, Capital Appreciation and Total Return Bond Funds more than offset weak benchmark-relative performance in the International Opportunities, MidCap Value and Small Company Funds.

 

What is the outlook?

We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

 

Composition by Investments

as of April 30, 2013

 

Fund Name  Percentage of Net
Assets
 
The Hartford Alternative Strategies Fund, Class Y   12.8%
The Hartford Capital Appreciation Fund, Class Y   5.4 
The Hartford Dividend and Growth Fund, Class Y   10.2 
The Hartford Emerging Markets Research Fund, Class Y   4.0 
The Hartford Global Real Asset Fund, Class Y   8.7 
The Hartford Inflation Plus Fund, Class Y   13.2 
The Hartford International Opportunities Fund, Class Y   9.0 
The Hartford International Small Company Fund, Class Y   3.1 
The Hartford MidCap Value Fund, Class Y   1.8 
The Hartford Money Market Fund, Class Y   1.0 
The Hartford Small Company Fund, Class Y   1.8 
The Hartford Strategic Income Fund, Class Y   3.9 
The Hartford Total Return Bond Fund, Class Y   9.9 
The Hartford World Bond Fund, Class Y   15.0 
Other Assets and Liabilities   0.2 
Total   100.0%

 

4

 

The Hartford Target Retirement 2010 Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount     Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 99.8%
EQUITY FUNDS - 44.0%
 59   The Hartford Capital Appreciation Fund, Class Y       $2,548 
 205   The Hartford Dividend and Growth Fund, Class Y        4,845 
 211   The Hartford Emerging Markets Research Fund, Class Y        1,877 
 395   The Hartford Global Real Asset Fund, Class Y        4,140 
 257   The Hartford International Opportunities Fund, Class Y        4,272 
 95   The Hartford International Small Company Fund, Class Y        1,486 
 55   The Hartford MidCap Value Fund, Class Y        844 
 36   The Hartford Small Company Fund, Class Y        845 
              20,857 
     Total equity funds          
     (cost $17,819)       $20,857 
                
FIXED INCOME FUNDS - 55.8%
 590   The Hartford Alternative Strategies Fund, Class Y       $6,085 
 507   The Hartford Inflation Plus Fund, Class Y        6,249 
 467   The Hartford Money Market Fund, Class Y●        467 
 193   The Hartford Strategic Income Fund, Class Y        1,840 
 426   The Hartford Total Return Bond Fund, Class Y        4,721 
 655   The Hartford World Bond Fund, Class Y        7,103 
              26,465 
     Total fixed income funds          
     (cost $26,297)       $26,465 
                
     Total investments in affiliated investment companies          
     (cost $44,116)       $47,322 
                
     Total long-term investments          
     (cost $44,116)       $47,322 
                
     Total investments          
     (cost $44,116)    99.8%  $47,322 
     Other assets and liabilities   0.2%   74 
     Total net assets   100.0%  $47,396 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $44,339 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $3,079 
Unrealized Depreciation   (96)
Net Unrealized Appreciation  $2,983 

 

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 Target Retirement 2010 Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Affiliated Investment Companies  $47,322   $47,322   $   $ 
Total  $47,322   $47,322   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  

 

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

 

6

 

The Hartford Target Retirement 2010 Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in underlying affiliated funds, at market value (cost $44,116)  $47,322 
Receivables:     
Investment securities sold   99 
Fund shares sold   24 
Dividends and interest   12 
Other assets   58 
Total assets   47,515 
Liabilities:     
Payables:     
Investment securities purchased   8 
Fund shares redeemed   99 
Investment management fees   1 
Administrative fees   1 
Distribution fees   2 
Accrued expenses   8 
Total liabilities   119 
Net assets  $47,396 
Summary of Net Assets:     
Capital stock and paid-in-capital  $43,232 
Distributions in excess of net investment loss   (892)
Accumulated net realized gain   1,850 
Unrealized appreciation of investments   3,206 
Net assets  $47,396 
      
Shares authorized   950,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $10.33/$10.93 
Shares outstanding   606 
Net assets  $6,262 
Class R3: Net asset value per share  $10.26 
Shares outstanding   1,470 
Net assets  $15,087 
Class R4: Net asset value per share  $10.33 
Shares outstanding   2,284 
Net assets  $23,582 
Class R5: Net asset value per share  $10.34 
Shares outstanding   229 
Net assets  $2,363 
Class Y: Net asset value per share  $10.32 
Shares outstanding   10 
Net assets  $102 

 

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

 

7

 

The Hartford Target Retirement 2010 Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends from underlying affiliated funds  $587 
Total investment income   587 
      
Expenses:     
Investment management fees   37 
Administrative services fees     
Class R3   16 
Class R4   18 
Class R5   1 
Transfer agent fees     
Class A   4 
Class R3    
Class R4    
Class R5    
Class Y    
Distribution fees     
Class A   9 
Class R3   39 
Class R4   29 
Custodian fees    
Accounting services fees   3 
Registration and filing fees   21 
Board of Directors' fees   1 
Audit fees   5 
Other expenses   5 
Total expenses (before waivers)   188 
Expense waivers   (106)
Total waivers   (106)
Total expenses, net   82 
Net Investment Income   505 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   913 
Net realized gain on investments in underlying affiliated funds   1,161 
Net Realized Gain on Investments   2,074 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   214 
Net Changes in Unrealized Appreciation of Investments   214 
Net Gain on Investments   2,288 
Net Increase in Net Assets Resulting from Operations  $2,793 

 

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

 

8

 

The Hartford Target Retirement 2010 Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $505   $584 
Net realized gain on investments   2,074    2,490 
Net unrealized appreciation of investments   214    1,072 
Net Increase in Net Assets Resulting from Operations   2,793    4,146 
Distributions to Shareholders:          
From net investment income          
Class A   (271)   (197)
Class R3   (545)   (262)
Class R4   (841)   (403)
Class R5   (87)   (61)
Class Y   (6)   (4)
Total from net investment income   (1,750)   (927)
From net realized gain on investments          
Class A   (273)    
Class R3   (553)    
Class R4   (765)    
Class R5   (77)    
Class Y   (6)    
Total from net realized gain on investments   (1,674)    
Total distributions   (3,424)   (927)
Capital Share Transactions:          
Class A   (2,059)   (534)
Class R3   (2,934)   4,671 
Class R4   140    5,028 
Class R5   41    (353)
Class Y   (69)   4 
Net increase (decrease) from capital share transactions   (4,881)   8,816 
Net Increase (Decrease) in Net Assets   (5,512)   12,035 
Net Assets:          
Beginning of period   52,908    40,873 
End of period  $47,396   $52,908 
Undistributed (distribution in excess of) net investment income (loss)  $(892)  $353 

 

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

 

9

 

The Hartford Target Retirement 2010 Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Target Retirement 2010 Fund (the “Fund”), a series of the Company, are included in this report.

 

The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company.

 

Class A shares are sold with a front-end sales charge of up to 5.50%. Class 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.

 

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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair

 

10

 

 

value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

11

 

The Hartford Target Retirement 2010 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $927   $584 

 

12

 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $353 
Undistributed Long-Term Capital Gain   1,673 
Unrealized Appreciation *   2,769 
Total Accumulated Earnings  $4,795 

 

  * 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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $93 
Accumulated Net Realized Gain (Loss)   (93)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

During the year ended October 31, 2012, the Fund utilized $626 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

13

 

The Hartford Target Retirement 2010 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.15%   
On next $500 million   0.10%   
On next $1.5 billion   0.09%   
On next $2.5 billion   0.08%   
On next $2.5 billion   0.07%   
On next $2.5 billion   0.06%   
Over $10 billion   0.05%   

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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 period March 1, 2013 through April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class R3   Class R4   Class R5   Class Y 
 1.00%     1.30%     1.00%     0.80%     0.80%  

 

14

 

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions 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%  

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

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 six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $11 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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 April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R4   1%
Class R5   5 
Class Y   100 

 

15

 

The Hartford Target Retirement 2010 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $7,390 
Sales Proceeds Excluding U.S. Government Obligations   14,311 

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   63    54    (320)       (203)   199    21    (270)       (50)
Amount  $642   $542   $(3,243)  $   $(2,059)  $1,970   $196   $(2,700)  $   $(534)
Class R3                                                  
Shares   159    110    (557)       (288)   1,236    28    (792)       472 
Amount  $1,599   $1,098   $(5,631)  $   $(2,934)  $12,398   $262   $(7,989)  $   $4,671 
Class R4                                                  
Shares   236    161    (380)       17    1,015    42    (543)       514 
Amount  $2,399   $1,606   $(3,865)  $   $140   $10,126   $403   $(5,501)  $   $5,028 
Class R5                                                  
Shares   29    16    (40)       5    45    5    (85)       (35)
Amount  $286   $164   $(409)  $   $41   $449   $61   $(863)  $   $(353)
Class Y                                                  
Shares   10    1    (18)       (7)       1            1 
Amount  $100   $12   $(181)  $   $(69)  $   $4   $   $   $4 
Total                                                  
Shares   497    342    (1,315)       (476)   2,495    97    (1,690)       902 
Amount  $5,026   $3,422   $(13,329)  $   $(4,881)  $24,943   $926   $(17,053)  $   $8,816 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced

 

16

 

 

Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

17

 

The Hartford Target Retirement 2010 Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class 

Net Asset Value at

Beginning of

Period

  

Net Investment

Income (Loss)

  

Net Realized and

Unrealized Gain

(Loss) on

Investments

  

Total from

Investment

Operations

  

Dividends from Net

Investment Income

  

Distributions from

Realized Capital

Gains

  

Distributions from

Capital

   Total Distributions  

Net Asset Value at

End of Period

 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $10.44   $0.11   $0.47   $0.58   $(0.35)(F)  $(0.34)  $   $(0.69)  $10.33 
R3   10.38    0.10    0.45    0.55    (0.33)(F)   (0.34)       (0.67)   10.26 
R4   10.45    0.11    0.47    0.58    (0.36)(F)   (0.34)       (0.70)   10.33 
R5   10.47    0.11    0.47    0.58    (0.37)(F)   (0.34)       (0.71)   10.34 
Y   10.45    0.13    0.45    0.58    (0.37)(F)   (0.34)       (0.71)   10.32 
                                              
For the Year Ended October 31, 2012 (E)
A   9.81    0.13    0.71    0.84    (0.21)           (0.21)   10.44 
R3   9.75    0.10    0.74    0.84    (0.21)           (0.21)   10.38 
R4   9.82    0.13    0.73    0.86    (0.23)           (0.23)   10.45 
R5   9.83    0.15    0.73    0.88    (0.24)           (0.24)   10.47 
Y   9.82    0.15    0.71    0.86    (0.23)           (0.23)   10.45 
                                              
For the Year Ended October 31, 2011 (E)
A   9.59    0.19    0.20    0.39    (0.17)           (0.17)   9.81 
R3   9.55    0.17    0.20    0.37    (0.17)           (0.17)   9.75 
R4   9.60    0.19    0.22    0.41    (0.19)           (0.19)   9.82 
R5   9.61    0.21    0.20    0.41    (0.19)           (0.19)   9.83 
Y   9.60    0.21    0.20    0.41    (0.19)           (0.19)   9.82 
                                              
For the Year Ended October 31, 2010 (E)
A   8.50    0.17    1.09    1.26    (0.17)           (0.17)   9.59 
R3   8.48    0.14    1.10    1.24    (0.17)           (0.17)   9.55 
R4   8.51    0.18    1.09    1.27    (0.18)           (0.18)   9.60 
R5   8.51    0.19    1.10    1.29    (0.19)           (0.19)   9.61 
Y   8.50    0.19    1.10    1.29    (0.19)           (0.19)   9.60 
                                              
For the Year Ended October 31, 2009 (E)
A(I)   7.24    0.22    1.15    1.37    (0.11)           (0.11)   8.50 
R3   7.23    0.18    1.18    1.36    (0.11)           (0.11)   8.48 
R4   7.23    0.22    1.17    1.39    (0.11)           (0.11)   8.51 
R5   7.24    0.22    1.16    1.38    (0.11)           (0.11)   8.51 
Y   7.23    0.23    1.15    1.38    (0.11)           (0.11)   8.50 
                                              
For the Year Ended October 31, 2008
A   10.66    0.30    (3.10)   (2.80)   (0.41)   (0.21)       (0.62)   7.24 
R3   10.66    0.26    (3.11)   (2.85)   (0.37)   (0.21)       (0.58)   7.23 
R4   10.66    0.36    (3.17)   (2.81)   (0.41)   (0.21)       (0.62)   7.23 
R5   10.67    0.37    (3.16)   (2.79)   (0.43)   (0.21)       (0.64)   7.24 
Y   10.66    0.33    (3.11)   (2.78)   (0.44)   (0.21)       (0.65)   7.23 

 

(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 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) These distributions may be deemed a tax return of capital. Actual amounts and sources of distributions cannot be determined until fiscal year end.
(G) Not annualized.
(H) Annualized.
(I) Classes B and C were merged into Class A on July 24, 2009.
18

 

- Ratios and Supplemental Data -

 

Total Return(B)  

Net Assets at End of Period

(000's)

  

Ratio of Expenses to Average Net Assets

Before Waivers and Reimbursements and

Including Expenses not Subject to Cap(C)

  

Ratio of Expenses to Average Net Assets

After Waivers and Reimbursements and

Including Expenses not Subject to Cap(C)

  

Ratio of Net Investment

Income to Average Net

Assets(C)

  

Portfolio

Turnover

Rate(D)

 
                      
                            
 5.87%(G)  $6,262    0.65%(H)   0.33%(H)   2.18%(H)   15%
 5.67(G)   15,087    1.00(H)   0.53(H)   1.93(H)    
 5.95(G)   23,582    0.69(H)   0.23(H)   2.11(H)    
 5.89(G)   2,363    0.40(H)   0.13(H)   2.16(H)    
 5.89(G)   102    0.29(H)   0.13(H)   2.61(H)    
                            
                            
 8.81    8,445    0.70    0.34    1.30    91 
 8.75    18,241    1.04    0.49    1.00     
 8.98    23,700    0.74    0.19    1.33     
 9.13    2,348    0.44    0.14    1.51     
 9.02    174    0.34    0.14    1.46     
                            
                            
 4.09    8,424    0.74    0.33    1.96    51 
 3.93    12,539    1.08    0.48    1.71     
 4.26    17,209    0.77    0.18    1.96     
 4.30    2,541    0.48    0.13    2.11     
 4.31    160    0.37    0.13    2.15     
                            
                            
 15.02    9,738    0.79    0.27    1.86    49 
 14.87    7,168    1.14    0.42    1.66     
 15.16    10,173    0.85    0.12    2.02     
 15.33    2,361    0.55    0.07    2.09     
 15.34    153    0.45    0.07    2.07     
                            
                            
 19.29    9,342    0.95    0.24    3.00    31 
 19.24    1,578    1.25    0.39    2.37     
 19.58    9,020    1.03    0.09    3.00     
 19.48    2,051    0.73    0.04    2.99     
 19.56    133    0.65    0.04    3.12     
                            
                            
 (27.74)   6,520    1.02    0.42    2.87    68 
 (28.14)   8    1.47    0.87    2.70     
 (27.84)   4,823    1.04    0.45    1.67     
 (27.64)   1,131    0.71    0.11    1.86     
 (27.60)   111    0.76    0.16    3.40     

 

19

 

The Hartford Target Retirement 2010 Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

20

 

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

21

 

The Hartford Target Retirement 2010 Fund

Directors and Officers (Unaudited) – (continued)

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,058.70   $1.69   $1,000.00   $1,023.16   $1.66    0.33%   181    365 
Class R3  $1,000.00   $1,056.70   $2.70   $1,000.00   $1,022.17   $2.65    0.53    181    365 
Class R4  $1,000.00   $1,059.50   $1.18   $1,000.00   $1,023.65   $1.16    0.23    181    365 
Class R5  $1,000.00   $1,058.90   $0.66   $1,000.00   $1,024.15   $0.65    0.13    181    365 
Class Y  $1,000.00   $1,058.90   $0.66   $1,000.00   $1,024.15   $0.65    0.13    181    365 

 

23

 

The Hartford Target Retirement 2010 Fund

Approval of New Investment Management and Investment Sub-Advisory 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Target Retirement 2010 Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

24

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

25

 

The Hartford Target Retirement 2010 Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Target Date Risk: As the Fund’s target year approaches, it will increase its allocation to fixed income investments and decrease its allocation to equity investments. Conversely, the Fund will hold a higher percentage in equities and be more volatile when it’s further away from its target year. Target date funds are not guaranteed and you may experience losses, included losses near, at or after the target retirement year. There is no guarantee that the Fund will provide adequate income at and through your retirement.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

26
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-TR1013 4/13 114002 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

42

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD TARGET RETIREMENT 2015 FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Target Retirement 2015 Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 9
Notes to Financial Statements (Unaudited) 10
Financial Highlights (Unaudited) 18
Directors and Officers (Unaudited) 20
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 22
Quarterly Portfolio Holdings Information (Unaudited) 22
Expense Example (Unaudited) 23
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 24
Principal Risks (Unaudited) 26

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Target Retirement 2015 Fund inception 10/31/2008
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks to maximize total return and secondarily, seeks capital preservation.

 

Performance Overview 10/31/08 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class R3. Growth results in classes other than Class R3 will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   Since
Inception▲
 
Target Retirement 2015 R3   6.76%       8.07%       11.75%    
Target Retirement 2015 R4   6.96%       8.42%       12.09%    
Target Retirement 2015 R5   6.92%       8.46%       12.14%    
Target Retirement 2015 Y   6.92%       8.46%       12.14%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       7.26%    
MSCI All Country World Index   13.78%       15.69%       13.59%    

 

Not Annualized
Inception: 10/31/2008

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Class Y shares commenced operations on 02/28/13. Performance prior to that date is that of the Fund’s Class R5 shares which had different operating expenses.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Target Retirement 2015 Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Target Retirement 2015 Class R3   1.30%      1.67%   
Target Retirement 2015 Class R4   1.00%      1.37%   
Target Retirement 2015 Class R5   0.80%      1.07%   
Target Retirement 2015 Class Y   0.80%      0.97%   

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Rick A. Wurster, CFA, CMT Stephen A. Gorman, CFA
Vice President and Asset Allocation Portfolio Manager Vice President, Director, Tactical Asset Allocation, Asset Allocation Strategies Group and Portfolio Manager

 

How did the Fund perform?

The Class R3 shares of The Hartford Target Retirement 2015 Fund returned 6.76% for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. The Fund underperformed the average return for the Lipper Mixed-Asset Target 2015 Funds category, a group of funds with investment strategies similar to those of the Fund, which returned 7.08%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose .02% while shorter term yields declined anywhere between .02% - .08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the stock/bond mix of the Fund was approximately 47% equities and 53% fixed income. A modest underweight allocation (i.e. the Fund’s position was less than the benchmark position) to fixed income and overweight to equities contributed as

 

3

 

The Hartford Target Retirement 2015 Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative results from the World Bond, Capital Appreciation and Total Return Bond Funds more than offset weak benchmark-relative performance in the International Opportunities, MidCap Value and Small Company Funds.

 

What is the outlook?

We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

 

Composition by Investments

as of April 30, 2013

Fund Name  Percentage of Net
Assets
 
The Hartford Alternative Strategies Fund, Class Y   12.9%
The Hartford Capital Appreciation Fund, Class Y   6.5 
The Hartford Dividend and Growth Fund, Class Y   12.4 
The Hartford Emerging Markets Research Fund, Class Y   4.8 
The Hartford Global Real Asset Fund, Class Y   7.6 
The Hartford Inflation Plus Fund, Class Y   11.1 
The Hartford International Opportunities Fund, Class Y   10.9 
The Hartford International Small Company Fund, Class Y   3.9 
The Hartford MidCap Value Fund, Class Y   2.1 
The Hartford Small Company Fund, Class Y   2.1 
The Hartford Strategic Income Fund, Class Y   4.7 
The Hartford Total Return Bond Fund, Class Y   8.4 
The Hartford World Bond Fund, Class Y   12.5 
Other Assets and Liabilities   0.1 
Total   100.0%

 

4

 

The Hartford Target Retirement 2015 Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount   Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 99.9%          
EQUITY FUNDS - 50.3%          
 87   The Hartford Capital Appreciation Fund, Class Y       $3,748 
 302   The Hartford Dividend and Growth Fund, Class Y        7,113 
 308   The Hartford Emerging Markets Research Fund, Class Y        2,734 
 417   The Hartford Global Real Asset Fund, Class Y        4,379 
 377   The Hartford International Opportunities Fund, Class Y        6,269 
 141   The Hartford International Small Company Fund, Class Y        2,206 
 79   The Hartford MidCap Value Fund, Class Y        1,205 
 52   The Hartford Small Company Fund, Class Y        1,224 
              28,878 
     Total equity funds          
     (cost $24,428)       $28,878 
                
FIXED INCOME FUNDS - 49.6%          
 718   The Hartford Alternative Strategies Fund, Class Y       $7,399 
 516   The Hartford Inflation Plus Fund, Class Y        6,357 
 286   The Hartford Strategic Income Fund, Class Y        2,716 
 432   The Hartford Total Return Bond Fund, Class Y        4,782 
 663   The Hartford World Bond Fund, Class Y        7,186 
              28,440 
     Total fixed income funds          
     (cost $28,168)       $28,440 
                
     Total investments in affiliated investment companies          
     (cost $52,596)       $57,318 
                
     Total long-term investments          
     (cost $52,596)       $57,318 
                
     Total investments          
     (cost $52,596) ▲   99.9%  $57,318 
     Other assets and liabilities   0.1%   48 
     Total net assets   100.0%  $57,366 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $52,667 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $4,715 
Unrealized Depreciation   (64)
Net Unrealized Appreciation  $4,651 

 

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 Target Retirement 2015 Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Affiliated Investment Companies  $57,318   $57,318   $   $ 
Total  $57,318   $57,318   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.

 

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

 

6

 

The Hartford Target Retirement 2015 Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in underlying affiliated funds, at market value (cost $52,596)  $57,318 
Receivables:     
Investment securities sold   2 
Fund shares sold   14 
Dividends and interest   12 
Other assets   51 
Total assets   57,397 
Liabilities:     
Payables:     
Investment securities purchased   15 
Fund shares redeemed   2 
Investment management fees   1 
Administrative fees   2 
Distribution fees   4 
Accrued expenses   7 
Total liabilities   31 
Net assets  $57,366 
Summary of Net Assets:     
Capital stock and paid-in-capital  $51,727 
Distributions in excess of net investment loss   (923)
Accumulated net realized gain   1,840 
Unrealized appreciation of investments   4,722 
Net assets  $57,366 
      
Shares authorized   200,000 
Par value  $0.001 
Class R3: Net asset value per share  $14.15 
Shares outstanding   2,347 
Net assets  $33,206 
Class R4: Net asset value per share  $14.22 
Shares outstanding   1,660 
Net assets  $23,592 
Class R5: Net asset value per share  $14.23 
Shares outstanding   33 
Net assets  $466 
Class Y: Net asset value per share  $14.23 
Shares outstanding   7 
Net assets  $102 

 

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

 

7

 

The Hartford Target Retirement 2015 Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends from underlying affiliated funds  $653 
Total investment income   653 
      
Expenses:     
Investment management fees   42 
Administrative services fees     
Class R3   33 
Class R4   17 
Class R5    
Transfer agent fees     
Class R3    
Class R4    
Class R5    
Class Y    
Distribution fees     
Class R3   81 
Class R4   28 
Custodian fees    
Accounting services fees   3 
Registration and filing fees   19 
Board of Directors' fees   2 
Audit fees   5 
Other expenses   5 
Total expenses (before waivers)   235 
Expense waivers   (127)
Total waivers   (127)
Total expenses, net   108 
Net Investment Income   545 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   945 
Net realized gain on investments in underlying affiliated funds   966 
Net Realized Gain on Investments   1,911 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   1,198 
Net Changes in Unrealized Appreciation of Investments   1,198 
Net Gain on Investments   3,109 
Net Increase in Net Assets Resulting from Operations  $3,654 

 

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

 

8

 

The Hartford Target Retirement 2015 Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $545   $526 
Net realized gain on investments   1,911    1,244 
Net unrealized appreciation of investments   1,198    2,349 
Net Increase in Net Assets Resulting from Operations   3,654    4,119 
Distributions to Shareholders:          
From net investment income          
Class R3   (1,036)   (479)
Class R4   (718)   (235)
Class R5   (16)   (37)
Total from net investment income   (1,770)   (751)
From net realized gain on investments          
Class R3   (682)   (710)
Class R4   (450)   (290)
Class R5   (37)   (46)
Total from net realized gain on investments   (1,169)   (1,046)
Total distributions   (2,939)   (1,797)
Capital Share Transactions:          
Class R3   (1,062)   5,540 
Class R4   1,281    10,291 
Class R5   (1,307)   (50)
Class Y   100     
Net increase (decrease) from capital share transactions   (988)   15,781 
Net Increase (Decrease) in Net Assets   (273)   18,103 
Net Assets:          
Beginning of period   57,639    39,536 
End of period  $57,366   $57,639 
Undistributed (distribution in excess of) net investment income (loss)  $(923)  $302 

 

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

 

9

 

The Hartford Target Retirement 2015 Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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.

 

Class 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.

 

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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

10

 

 

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income – Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding.

 

11

 

The Hartford Target Retirement 2015 Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

12

 

 

 

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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $760   $427 
Long-Term Capital Gains ‡   1,037    337 

 

‡ The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $302 
Undistributed Long-Term Capital Gain   1,169 
Unrealized Appreciation *   3,453 
Total Accumulated Earnings  $4,924 

 

*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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $70 
Accumulated Net Realized Gain (Loss)   (70)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

13

 

The Hartford Target Retirement 2015 Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.15% 
On next $500 million   0.10% 
On next $1.5 billion   0.09% 
On next $2.5 billion   0.08% 
On next $2.5 billion   0.07% 
On next $2.5 billion   0.06% 
Over $10 billion   0.05% 

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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%

 

14

 

 

 

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 period March 1, 2013 through April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class R3   Class R4   Class R5   Class Y 
 1.30%     1.00%     0.80%     0.80%  

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses as follows:

 

Class R3   Class R4   Class R5 
 1.15%     0.85%     0.80%  

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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% of average daily net assets. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

15

 

The Hartford Target Retirement 2015 Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

6.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R4   1%
Class R5   36 
Class Y   100 

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, the Fund's aggregate purchases and sales of investment securities (excluding short-term investments) were as follows:

 

   Amount 
Cost of Purchases Excluding U.S. Government Obligations  $8,717 
Sales Proceeds Excluding U.S. Government Obligations   11,147 

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class R3                                                  
Shares   144    127    (345)       (74)   843    94    (523)       414 
Amount  $1,985   $1,717   $(4,764)  $   $(1,062)  $11,385   $1,189   $(7,034)  $   $5,540 
Class R4                                                  
Shares   229    86    (220)       95    1,006    41    (285)       762 
Amount  $3,181   $1,168   $(3,068)  $   $1,281   $13,598   $525   $(3,832)  $   $10,291 
Class R5                                                  
Shares   6    4    (104)       (94)   37    7    (46)       (2)
Amount  $86   $53   $(1,446)  $   $(1,307)  $507   $83   $(640)  $   $(50)
Class Y                                                  
Shares   7                7                     
Amount  $100   $   $   $   $100   $   $   $   $   $ 
Total                                                  
Shares   386    217    (669)       (66)   1,886    142    (854)       1,174 
Amount  $5,352   $2,938   $(9,278)  $   $(988)  $25,490   $1,797   $(11,506)  $   $15,781 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

16

 

 

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

17

 

The Hartford Target Retirement 2015 Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)                        
R3  $13.98   $0.13   $0.77   $0.90   $(0.44)  $(0.29)  $   $(0.73)  $14.15 
R4   14.06    0.14    0.79    0.93    (0.48)   (0.29)       (0.77)   14.22 
R5   14.08    0.26    0.67    0.93    (0.49)   (0.29)       (0.78)   14.23 
Y(H)   13.87    0.01    0.35    0.36                    14.23 
                                              
For the Year Ended October 31, 2012                    
R3   13.43    0.14    1.00    1.14    (0.23)   (0.36)       (0.59)   13.98 
R4   13.50    0.15    1.04    1.19    (0.27)   (0.36)       (0.63)   14.06 
R5   13.51    0.19    1.01    1.20    (0.27)   (0.36)       (0.63)   14.08 
                                              
For the Year Ended October 31, 2011 (E)                    
R3   13.29    0.21    0.31    0.52    (0.16)   (0.22)       (0.38)   13.43 
R4   13.34    0.26    0.30    0.56    (0.18)   (0.22)       (0.40)   13.50 
R5   13.35    0.27    0.29    0.56    (0.18)   (0.22)       (0.40)   13.51 
                                              
For the Year Ended October 31, 2010                    
R3   11.69    0.14    1.62    1.76    (0.16)           (0.16)   13.29 
R4   11.72    0.16    1.64    1.80    (0.18)           (0.18)   13.34 
R5   11.72    0.24    1.57    1.81    (0.18)           (0.18)   13.35 
                                              
From October 31, 2008  (commencement of operations) through October 31, 2009                    
R3   10.00    0.21    1.59    1.80    (0.11)           (0.11)   11.69 
R4   10.00    0.23    1.61    1.84    (0.12)           (0.12)   11.72 
R5   10.00    0.26    1.58    1.84    (0.12)           (0.12)   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)Ratios do not include expenses of the Underlying Funds.
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)Commenced operations on February 28, 2013.

 

18

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net
Assets(C)
   Portfolio
Turnover
Rate(D)
 
                      
                            
 6.76%(F)  $33,206    0.97%(G)   0.51%(G)   1.86%(G)   16%
 6.96(F)   23,592    0.67(G)   0.21(G)   2.09(G)    
 6.92(F)   466    0.39(G)   0.11(G)   3.76(G)    
 2.60(F)   102    0.29(G)   0.11(G)   0.35(G)    
                            
                            
 9.00    33,848    0.99    0.47    1.01    90 
 9.32    22,006    0.69    0.17    1.17     
 9.44    1,785    0.39    0.12    1.41     
                            
                            
 3.95    26,952    1.04    0.47    1.58    52 
 4.24    10,835    0.74    0.17    1.89     
 4.26    1,749    0.44    0.12    1.99     
                            
                            
 15.16    14,282    1.28    0.40    1.42    37 
 15.50    7,787    1.01    0.10    1.76     
 15.63    1,499    0.76    0.05    1.87     
                            
                            
 18.33    2,003    2.24    0.37    2.27    15 
 18.70    1,883    1.92    0.07    2.61     
 18.71    1,459    1.65    0.02    2.67     

 

19

 

The Hartford Target Retirement 2015 Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

20

 

 

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

21

 

The Hartford Target Retirement 2015 Fund
Directors and Officers (Unaudited) – (continued)

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class R3  $1,000.00   $1,067.60   $2.62   $1,000.00   $1,022.26   $2.56    0.51%   181    365 
Class R4  $1,000.00   $1,069.60   $1.09   $1,000.00   $1,023.74   $1.07    0.21    181    365 
Class R5  $1,000.00   $1,069.20   $0.56   $1,000.00   $1,024.25   $0.55    0.11    181    365 
Class Y*  $1,000.00   $1,026.00   $0.19   $1,000.00   $1,008.17   $0.19    0.11    61    365 

 

*Commenced operations on February 28, 2013.

 

23

 

The Hartford Target Retirement 2015 Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Target Retirement 2015 Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

24

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

25

 

The Hartford Target Retirement 2015 Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Target Date Risk: As the Fund’s target year approaches, it will increase its allocation to fixed income investments and decrease its allocation to equity investments. Conversely, the Fund will hold a higher percentage in equities and be more volatile when it’s further away from its target year. Target date funds are not guaranteed and you may experience losses, included losses near, at or after the target retirement year. There is no guarantee that the Fund will provide adequate income at and through your retirement.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

26
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-TR1513 4/13 114003 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

43

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD TARGET RETIREMENT 2020 FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford Target Retirement 2020 Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 9
Notes to Financial Statements (Unaudited) 10
Financial Highlights (Unaudited) 18
Directors and Officers (Unaudited) 20
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 22
Quarterly Portfolio Holdings Information (Unaudited) 22
Expense Example (Unaudited) 23
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 24
Principal Risks (Unaudited) 26

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Target Retirement 2020 Fund inception 09/30/2005

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks to maximize total return and secondarily, seeks capital preservation.

 

Performance Overview 9/30/05 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   Since
Inception▲
 
Target Retirement 2020 A#   7.88%       9.34%       3.90%       4.80%    
Target Retirement 2020 A##        3.33%       2.73%       4.02%    
Target Retirement 2020 R3#   7.79%       9.17%       3.70%       4.64%    
Target Retirement 2020 R4#   8.05%       9.52%       4.04%       4.92%    
Target Retirement 2020 R5#   8.08%       9.55%       4.13%       5.03%    
Target Retirement 2020 Y#   7.99%       9.56%       4.12%       5.06%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       5.73%       5.60%    
MSCI All Country World Index   13.78%       15.69%       2.09%       5.50%    

 

Not Annualized
Inception: 09/30/2005
#Without sales charge
##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Target Retirement 2020 Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Target Retirement 2020 Class A   1.05%       1.30%    
Target Retirement 2020 Class R3   1.35%       1.63%    
Target Retirement 2020 Class R4   1.05%       1.33%    
Target Retirement 2020 Class R5   0.85%       1.03%    
Target Retirement 2020 Class Y   0.85%       0.93%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Rick A. Wurster, CFA, CMT Stephen A. Gorman, CFA
Vice President and Asset Allocation Portfolio Manager Vice President, Director, Tactical Asset Allocation, Asset Allocation Strategies Group and Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Target Retirement 2020 Fund returned 7.88%, before sales charge, for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. The Fund outperformed the average return for the Lipper Mixed-Asset Target 2020 Funds category, a group of funds with investment strategies similar to those of the Fund, which returned 7.37%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose .02% while shorter term yields declined anywhere between .02 - .08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the stock/bond mix of the Fund was approximately 55% equities and 45% fixed income. A modest underweight allocation (i.e. the Fund’s position was less than the benchmark position) to fixed income and overweight to equities contributed as

 

3

 

The Hartford Target Retirement 2020 Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative results from the World Bond, Capital Appreciation and International Small Company Funds more than offset weak benchmark-relative performance in the International Opportunities, MidCap Value and Small Company Funds.

 

What is the outlook?

We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

 

Composition by Investments

as of April 30, 2013

 

Fund Name  Percentage of  Net
Assets
 
The Hartford Alternative Strategies Fund, Class Y   12.8%
The Hartford Capital Appreciation Fund, Class Y   7.8 
The Hartford Dividend and Growth Fund, Class Y   14.7 
The Hartford Emerging Markets Research Fund, Class Y   5.7 
The Hartford Global Real Asset Fund, Class Y   6.3 
The Hartford Inflation Plus Fund, Class Y   8.5 
The Hartford International Opportunities Fund, Class Y   13.1 
The Hartford International Small Company Fund, Class Y   4.5 
The Hartford MidCap Value Fund, Class Y   2.5 
The Hartford Small Company Fund, Class Y   2.5 
The Hartford Strategic Income Fund, Class Y   5.6 
The Hartford Total Return Bond Fund, Class Y   6.4 
The Hartford World Bond Fund, Class Y   9.6 
Other Assets and Liabilities   0.0 
Total   100.0%

 

4

 

The Hartford Target Retirement 2020 Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount      Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 100.0%          
EQUITY FUNDS - 57.1%          
 311   The Hartford Capital Appreciation Fund, Class Y     $13,311 
 1,069   The Hartford Dividend and Growth Fund, Class Y        25,218 
 1,098   The Hartford Emerging Markets Research Fund, Class Y        9,761 
 1,020   The Hartford Global Real Asset Fund, Class Y        10,702 
 1,343   The Hartford International Opportunities Fund, Class Y        22,346 
 495   The Hartford International Small Company Fund, Class Y        7,766 
 285   The Hartford MidCap Value Fund, Class Y        4,340 
 186   The Hartford Small Company Fund, Class Y        4,353 
              97,797 
     Total equity funds          
     (cost $81,962)       $97,797 
                
FIXED INCOME FUNDS - 42.9%          
 2,121   The Hartford Alternative Strategies Fund, Class Y       $21,868 
 1,185   The Hartford Inflation Plus Fund, Class Y        14,602 
 1,014   The Hartford Strategic Income Fund, Class Y        9,638 
 984   The Hartford Total Return Bond Fund, Class Y        10,905 
 1,514   The Hartford World Bond Fund, Class Y        16,412 
              73,425 
     Total fixed income funds          
     (cost $72,614)       $73,425 
                
     Total investments in affiliated investment companies          
     (cost $154,576)       $171,222 
                
     Total long-term investments          
     (cost $154,576)       $171,222 
                
     Total investments          
     (cost $154,576) ▲   100.0%  $171,222 
     Other assets and liabilities   %   53 
     Total net assets   100.0%  $171,275 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $155,120 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $16,231 
Unrealized Depreciation   (129)
Net Unrealized Appreciation  $16,102 

 

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 Target Retirement 2020 Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Affiliated Investment Companies  $171,222   $171,222   $   $ 
Total  $171,222   $171,222   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.

 

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

 

6

 

The Hartford Target Retirement 2020 Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in underlying affiliated funds, at market value (cost $154,576)  $171,222 
Receivables:     
Investment securities sold   21 
Fund shares sold   37 
Dividends and interest   27 
Other assets   69 
Total assets   171,376 
Liabilities:     
Payables:     
Investment securities purchased   33 
Fund shares redeemed   39 
Investment management fees   4 
Administrative fees   4 
Distribution fees   9 
Accrued expenses   12 
Total liabilities   101 
Net assets  $171,275 
Summary of Net Assets:     
Capital stock and paid-in-capital  $151,349 
Distributions in excess of net investment loss   (2,719)
Accumulated net realized gain   5,999 
Unrealized appreciation of investments   16,646 
Net assets  $171,275 
      
Shares authorized   950,000 
Par value  $   0.001 
Class A: Net asset value per share/Maximum offering price per share   $11.39/$12.05 
Shares outstanding   1,882 
Net assets  $21,448 
Class R3: Net asset value per share  $11.31 
Shares outstanding   5,443 
Net assets  $61,576 
Class R4: Net asset value per share  $11.39 
Shares outstanding   6,544 
Net assets  $74,506 
Class R5: Net asset value per share  $11.41 
Shares outstanding   1,195 
Net assets  $13,631 
Class Y: Net asset value per share  $11.40 
Shares outstanding   10 
Net assets  $114 

 

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

 

7

 

The Hartford Target Retirement 2020 Fund
Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends from underlying affiliated funds  $2,074 
Total investment income   2,074 
      
Expenses:     
Investment management fees   125 
Administrative services fees     
Class R3   59 
Class R4   54 
Class R5   7 
Transfer agent fees     
Class A   13 
Class R3   1 
Class R4    
Class R5    
Class Y    
Distribution fees     
Class A   27 
Class R3   149 
Class R4   89 
Custodian fees    
Accounting services fees   10 
Registration and filing fees   22 
Board of Directors' fees   2 
Audit fees   6 
Other expenses   9 
Total expenses (before waivers)   573 
Expense waivers   (271)
Total waivers   (271)
Total expenses, net   302 
Net Investment Income   1,772 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   2,689 
Net realized gain on investments in underlying affiliated funds   3,855 
Net Realized Gain on Investments   6,544 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   4,527 
Net Changes in Unrealized Appreciation of Investments   4,527 
Net Gain on Investments   11,071 
Net Increase in Net Assets Resulting from Operations  $12,843 

 

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

 

8

 

The Hartford Target Retirement 2020 Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $1,772   $1,602 
Net realized gain on investments   6,544    7,121 
Net unrealized appreciation of investments   4,527    5,076 
Net Increase in Net Assets Resulting from Operations   12,843    13,799 
Distributions to Shareholders:          
From net investment income          
Class A   (723)   (370)
Class R3   (1,818)   (739)
Class R4   (2,322)   (859)
Class R5   (462)   (244)
Class Y   (4)   (2)
Total from net investment income   (5,329)   (2,214)
From net realized gain on investments          
Class A   (598)    
Class R3   (1,495)    
Class R4   (1,793)    
Class R5   (347)    
Class Y   (3)    
Total from net realized gain on investments   (4,236)    
Total distributions   (9,565)   (2,214)
Capital Share Transactions:          
Class A   (2,647)   (874)
Class R3   (1,361)   12,651 
Class R4   2,141    19,050 
Class R5   (698)   (345)
Class Y   (7)   2 
Net increase (decrease) from capital share transactions   (2,572)   30,484 
Net Increase in Net Assets   706    42,069 
Net Assets:          
Beginning of period   170,569    128,500 
End of period  $171,275   $170,569 
Undistributed (distribution in excess of) net investment income (loss)  $(2,719)  $838 

 

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

 

9

 

The Hartford Target Retirement 2020 Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Target Retirement 2020 Fund (the “Fund”), a series of the Company, are included in this report.

 

The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company.

 

Class A shares are sold with a front-end sales charge of up to 5.50%. Class 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.

 

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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

10

  

 

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding.

 

11

 

The Hartford Target Retirement 2020 Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

12

 

 

 

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, if applicable):

 

   For the Year Ended   For the Year Ended 
   October 31, 2012   October 31, 2011 
Ordinary Income  $2,214   $1,383 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $838 
Undistributed Long-Term Capital Gain   4,235 
Unrealized Appreciation *   11,575 
Total Accumulated Earnings  $16,648 

 

*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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $157 
Accumulated Net Realized Gain (Loss)   (157)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

During the year ended October 31, 2012, the Fund utilized $2,658 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

13

 

The Hartford Target Retirement 2020 Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5. Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.15%  
On next $500 million   0.10%  
On next $1.5 billion   0.09%  
On next $2.5 billion   0.08%  
On next $2.5 billion   0.07%  
On next $2.5 billion   0.06%  
Over $10 billion   0.05%  

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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%  

 

14

 

 

 

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 period March 1, 2013 through April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class R3   Class R4   Class R5   Class Y 
 1.05%      1.35%      1.05%      0.85%      0.85%   

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions 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%   

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

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 six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $27 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

15

 

The Hartford Target Retirement 2020 Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

6.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class Y   100%

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $27,801 
Sales Proceeds Excluding U.S. Government Obligations   35,418 

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   234    122    (593)       (237)   341    36    (454)       (77)
Amount  $2,589   $1,316   $(6,552)  $   $(2,647)  $3,632   $368   $(4,874)  $   $(874)
Class R3                                                  
Shares   488    309    (917)       (120)   2,067    73    (945)       1,195 
Amount  $5,382   $3,313   $(10,056)  $   $(1,361)  $22,017   $739   $(10,105)  $   $12,651 
Class R4                                                  
Shares   804    381    (984)       201    2,996    85    (1,279)       1,802 
Amount  $8,910   $4,115   $(10,884)  $   $2,141   $32,019   $859   $(13,828)  $   $19,050 
Class R5                                                  
Shares   111    75    (248)       (62)   282    24    (338)       (32)
Amount  $1,236   $809   $(2,743)  $   $(698)  $3,027   $244   $(3,616)  $   $(345)
Class Y                                                  
Shares           (1)       (1)       1            1 
Amount  $   $7   $(14)  $   $(7)  $   $2   $   $   $2 
Total                                                  
Shares   1,637    887    (2,743)       (219)   5,686    219    (3,016)       2,889 
Amount  $18,117   $9,560   $(30,249)  $   $(2,572)  $60,695   $2,212   $(32,423)  $   $30,484 

 

16

 

 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

17

 

The Hartford Target Retirement 2020 Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $11.18   $0.12   $0.72   $0.84   $(0.35)  $(0.28)  $   $(0.63)  $11.39 
R3   11.10    0.10    0.72    0.82    (0.33)   (0.28)       (0.61)   11.31 
R4   11.18    0.12    0.73    0.85    (0.36)   (0.28)       (0.64)   11.39 
R5   11.20    0.13    0.73    0.86    (0.37)   (0.28)       (0.65)   11.41 
Y   11.20    0.13    0.72    0.85    (0.37)   (0.28)       (0.65)   11.40 
                                              
For the Year Ended October 31, 2012
A   10.38    0.12    0.85    0.97    (0.17)           (0.17)   11.18 
R3   10.31    0.10    0.85    0.95    (0.16)           (0.16)   11.10 
R4   10.38    0.13    0.86    0.99    (0.19)           (0.19)   11.18 
R5   10.40    0.14    0.85    0.99    (0.19)           (0.19)   11.20 
Y   10.40    0.14    0.85    0.99    (0.19)           (0.19)   11.20 
                                              
For the Year Ended October 31, 2011 (E)
A   10.12    0.16    0.24    0.40    (0.14)           (0.14)   10.38 
R3   10.07    0.13    0.25    0.38    (0.14)           (0.14)   10.31 
R4   10.12    0.17    0.24    0.41    (0.15)           (0.15)   10.38 
R5   10.14    0.18    0.24    0.42    (0.16)           (0.16)   10.40 
Y   10.13    0.18    0.25    0.43    (0.16)           (0.16)   10.40 
                                              
For the Year Ended October 31, 2010 (E)
A   8.89    0.14    1.23    1.37    (0.14)           (0.14)   10.12 
R3   8.87    0.11    1.23    1.34    (0.14)           (0.14)   10.07 
R4   8.89    0.16    1.22    1.38    (0.15)           (0.15)   10.12 
R5   8.90    0.17    1.22    1.39    (0.15)           (0.15)   10.14 
Y   8.90    0.14    1.25    1.39    (0.16)           (0.16)   10.13 
                                              
For the Year Ended October 31, 2009
A(H)   7.56    0.19    1.25    1.44    (0.11)           (0.11)   8.89 
R3   7.55    0.17    1.25    1.42    (0.10)           (0.10)   8.87 
R4   7.55    0.19    1.26    1.45    (0.11)           (0.11)   8.89 
R5   7.56    0.20    1.25    1.45    (0.11)           (0.11)   8.90 
Y   7.56    0.21    1.24    1.45    (0.11)           (0.11)   8.90 
                                              
For the Year Ended October 31, 2008
A   11.68    0.26    (3.86)   (3.60)   (0.43)   (0.09)       (0.52)   7.56 
R3   11.67    0.35    (3.99)   (3.64)   (0.39)   (0.09)       (0.48)   7.55 
R4   11.67    0.37    (3.98)   (3.61)   (0.42)   (0.09)       (0.51)   7.55 
R5   11.68    0.39    (3.97)   (3.58)   (0.45)   (0.09)       (0.54)   7.56 
Y   11.68    0.29    (3.86)   (3.57)   (0.46)   (0.09)       (0.55)   7.56 

 

(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 expenses of the Underlying Funds.
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)Classes B and C were merged into Class A on July 24, 2009.

 

18

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net
Assets(C)
   Portfolio
Turnover
Rate(D)
 
  
                            
 7.88%(F)  $21,448    0.58%(G)   0.35%(G)   2.26%(G)   16%
 7.79(F)   61,576    0.91(G)   0.55(G)   1.91(G)    
 8.05(F)   74,506    0.61(G)   0.25(G)   2.22(G)    
 8.08(F)   13,631    0.31(G)   0.15(G)   2.37(G)    
 7.99(F)   114    0.21(G)   0.15(G)   2.38(G)    
                            
                            
 9.50    23,686    0.60    0.35    1.11    86 
 9.39    61,748    0.93    0.50    0.86     
 9.70    70,933    0.63    0.20    1.14     
 9.73    14,083    0.33    0.15    1.29     
 9.72    119    0.23    0.15    1.30     
                            
                            
 3.91    22,785    0.63    0.35    1.50    38 
 3.75    45,045    0.95    0.50    1.26     
 4.07    47,150    0.64    0.20    1.58     
 4.09    13,411    0.34    0.15    1.67     
 4.22    109    0.24    0.15    1.69     
                            
                            
 15.54    23,735    0.65    0.29    1.54    28 
 15.30    23,842    0.98    0.44    1.30     
 15.68    29,544    0.68    0.14    1.67     
 15.82    11,725    0.38    0.09    1.76     
 15.72    105    0.27    0.07    1.55     
                            
                            
 19.38    18,297    0.75    0.25    2.52    20 
 19.19    1,151    1.19    0.40    1.57     
 19.53    17,503    0.81    0.10    2.48     
 19.59    9,213    0.51    0.05    2.63     
 19.63    10    0.42    0.05    2.69     
                            
                            
 (32.13)   13,495    0.77    0.48    2.30    51 
 (32.37)   70    1.21    0.91    1.00     
 (32.18)   8,281    0.83    0.55    1.12     
 (31.98)   6,165    0.53    0.23    0.96     
 (31.89)   9    0.46    0.17    2.74     

 

19

 

The Hartford Target Retirement 2020 Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

20

 

 

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

21

 

The Hartford Target Retirement 2020 Fund
Directors and Officers (Unaudited) – (continued)

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period). 

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,078.80   $1.81   $1,000.00   $1,023.06   $1.76    0.35%  181  365
Class R3  $1,000.00   $1,077.90   $2.84   $1,000.00   $1,022.06   $2.76    0.55   181  365
Class R4  $1,000.00   $1,080.50   $1.30   $1,000.00   $1,023.55   $1.26    0.25   181  365
Class R5  $1,000.00   $1,080.80   $0.77   $1,000.00   $1,024.05   $0.75    0.15   181  365
Class Y  $1,000.00   $1,079.90   $0.77   $1,000.00   $1,024.05   $0.75    0.15   181  365

 

23

 

The Hartford Target Retirement 2020 Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Target Retirement 2020 Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

24

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

25

 

The Hartford Target Retirement 2020 Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Target Date Risk: As the Fund’s target year approaches, it will increase its allocation to fixed income investments and decrease its allocation to equity investments. Conversely, the Fund will hold a higher percentage in equities and be more volatile when it’s further away from its target year. Target date funds are not guaranteed and you may experience losses, included losses near, at or after the target retirement year. There is no guarantee that the Fund will provide adequate income at and through your retirement.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

26
 

 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-TR2013 4/13 114004 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

44

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD TARGET RETIREMENT 2025 FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Target Retirement 2025 Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   9
Notes to Financial Statements (Unaudited)   10
Financial Highlights (Unaudited)   18
Directors and Officers (Unaudited)   20
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   22
Quarterly Portfolio Holdings Information (Unaudited)   22
Expense Example (Unaudited)   23
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   24
Principal Risks (Unaudited)   26

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Target Retirement 2025 Fund inception 10/31/2008
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks to maximize total return and secondarily, seeks capital preservation.

 

Performance Overview 10/31/08 -  4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class R3. Growth results in classes other than Class R3 will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   Since
Inception▲
 
Target Retirement 2025 R3   8.89%       9.97%       12.17%   
Target Retirement 2025 R4   9.00%       10.30%       12.50%   
Target Retirement 2025 R5   9.11%       10.34%       12.56%   
Target Retirement 2025 Y   9.18%       10.41%       12.58%   
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       7.26%   
MSCI All Country World Index   13.78%       15.69%       13.59%   

 

Not Annualized
Inception: 10/31/2008

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Class Y shares commenced operations on 02/28/13. Performance prior to that date is that of the Fund’s Class R5 shares which had different operating expenses.

 

Barclays U.S. Aggregate Bond Index (formerly known as Barclays Capital U.S. Aggregate Bond Index) is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Target Retirement 2025 Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Target Retirement 2025 Class R3   1.35%       1.68%    
Target Retirement 2025 Class R4   1.05%       1.38%    
Target Retirement 2025 Class R5   0.85%       1.08%    
Target Retirement 2025 Class Y   0.85%       0.98%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Rick A. Wurster, CFA, CMT Stephen A. Gorman, CFA
Vice President and Asset Allocation Portfolio Manager Vice President, Director, Tactical Asset Allocation, Asset Allocation Strategies Group and Portfolio Manager

 

How did the Fund perform?

The Class R3 shares of The Hartford Target Retirement 2025 Fund returned 8.89% for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. The Fund underperformed the average return for the Lipper Mixed-Asset Target 2025 Funds category, a group of funds with investment strategies similar to those of the Fund, which returned 9.64%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose .02% while shorter term yields declined anywhere between .02% - .08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the stock/bond mix of the Fund was approximately 62% equities and 38% fixed income. A modest underweight allocation (i.e. the Fund’s position was less than the benchmark position) to fixed income and overweight to equities contributed as

 

3

 

The Hartford Target Retirement 2025 Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative performance in the Capital Appreciation, World Bond and Alternative Strategies Funds more than offset weak benchmark-relative results from the International Opportunities, MidCap Value and Small Company Funds.

 

What is the outlook?

We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

 

Composition by Investments

as of April 30, 2013

Fund Name  Percentage of Net
Assets
 
The Hartford Alternative Strategies Fund, Class Y   12.8%
The Hartford Capital Appreciation Fund, Class Y   9.0 
The Hartford Dividend and Growth Fund, Class Y   17.2 
The Hartford Emerging Markets Research Fund, Class Y   6.6 
The Hartford Global Real Asset Fund, Class Y   4.8 
The Hartford Inflation Plus Fund, Class Y   5.9 
The Hartford International Opportunities Fund, Class Y   15.0 
The Hartford International Small Company Fund, Class Y   5.3 
The Hartford MidCap Value Fund, Class Y   2.9 
The Hartford Small Company Fund, Class Y   2.9 
The Hartford Strategic Income Fund, Class Y   6.5 
The Hartford Total Return Bond Fund, Class Y   4.4 
The Hartford World Bond Fund, Class Y   6.6 
Other Assets and Liabilities   0.1 
Total   100.0%

 

4

 

The Hartford Target Retirement 2025 Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount   Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 99.9%     
EQUITY FUNDS - 63.7%          
 173   The Hartford Capital Appreciation Fund, Class Y     $7,397 
 601   The Hartford Dividend and Growth Fund, Class Y        14,181 
 611   The Hartford Emerging Markets Research Fund, Class Y        5,435 
 378   The Hartford Global Real Asset Fund, Class Y        3,970 
 746   The Hartford International Opportunities Fund, Class Y        12,408 
 276   The Hartford International Small Company Fund, Class Y        4,328 
 158   The Hartford MidCap Value Fund, Class Y        2,398 
 103   The Hartford Small Company Fund, Class Y        2,418 
              52,535 
     Total equity funds          
     (cost $44,232)       $52,535 
                
FIXED INCOME FUNDS - 36.2%          
 1,026   The Hartford Alternative Strategies Fund, Class Y       $10,581 
 399   The Hartford Inflation Plus Fund, Class Y        4,911 
 564   The Hartford Strategic Income Fund, Class Y        5,363 
 326   The Hartford Total Return Bond Fund, Class Y        3,610 
 502   The Hartford World Bond Fund, Class Y        5,442 
              29,907 
     Total fixed income funds          
     (cost $29,841)       $29,907 
                
     Total investments in affiliated investment companies          
     (cost $74,073)       $82,442 
                
     Total long-term investments          
     (cost $74,073)       $82,442 
                
     Total investments          
     (cost $74,073) ▲   99.9%  $82,442 
     Other assets and liabilities   0.1%   44 
     Total net assets   100.0%  $82,486 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $74,188 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $8,434 
Unrealized Depreciation   (180)
Net Unrealized Appreciation  $8,254 

 

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 Target Retirement 2025 Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Affiliated Investment Companies  $82,442   $82,442   $   $ 
Total  $82,442   $82,442   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  

 

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

 

6

 

The Hartford Target Retirement 2025 Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in underlying affiliated funds, at market value (cost $74,073)  $82,442 
Receivables:     
Investment securities sold   20 
Fund shares sold   45 
Dividends and interest   9 
Other assets   52 
Total assets   82,568 
Liabilities:     
Payables:     
Investment securities purchased   45 
Fund shares redeemed   20 
Investment management fees   2 
Administrative fees   3 
Distribution fees   5 
Accrued expenses   7 
Total liabilities   82 
Net assets  $82,486 
Summary of Net Assets:     
Capital stock and paid-in-capital  $73,124 
Distributions in excess of net investment loss   (1,125)
Accumulated net realized gain   2,118 
Unrealized appreciation of investments   8,369 
Net assets  $82,486 
      
Shares authorized   200,000 
Par value  $0.001 
Class R3: Net asset value per share  $14.84 
Shares outstanding   2,567 
Net assets  $38,098 
Class R4: Net asset value per share  $14.91 
Shares outstanding   2,893 
Net assets  $43,147 
Class R5: Net asset value per share  $14.93 
Shares outstanding   76 
Net assets  $1,138 
Class Y: Net asset value per share  $14.94 
Shares outstanding   7 
Net assets  $103 

 

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

 

7

 

The Hartford Target Retirement 2025 Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends from underlying affiliated funds  $949 
Total investment income   949 
      
Expenses:     
Investment management fees   58 
Administrative services fees     
Class R3   37 
Class R4   29 
Class R5   1 
Transfer agent fees     
Class R3    
Class R4    
Class R5    
Class Y    
Distribution fees     
Class R3   93 
Class R4   48 
Custodian fees    
Accounting services fees   5 
Registration and filing fees   19 
Board of Directors' fees   1 
Audit fees   5 
Other expenses   5 
Total expenses (before waivers)   301 
Expense waivers   (156)
Total waivers   (156)
Total expenses, net   145 
Net Investment Income   804 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   1,120 
Net realized gain on investments in underlying affiliated funds   1,113 
Net Realized Gain on Investments   2,233 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   3,607 
Net Changes in Unrealized Appreciation of Investments   3,607 
Net Gain on Investments   5,840 
Net Increase in Net Assets Resulting from Operations  $6,644 

 

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

 

8

 

The Hartford Target Retirement 2025 Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the 
Year Ended 
October 31, 2012
 
Operations:          
Net investment income  $804   $561 
Net realized gain on investments   2,233    1,329 
Net unrealized appreciation of investments   3,607    3,763 
Net Increase in Net Assets Resulting from Operations   6,644    5,653 
Distributions to Shareholders:          
From net investment income          
Class R3   (1,078)   (352)
Class R4   (1,091)   (335)
Class R5   (31)   (24)
Total from net investment income   (2,200)   (711)
From net realized gain on investments          
Class R3   (635)   (654)
Class R4   (601)   (513)
Class R5   (28)   (37)
Total from net realized gain on investments   (1,264)   (1,204)
Total distributions   (3,464)   (1,915)
Capital Share Transactions:          
Class R3   (1,443)   9,077 
Class R4   6,698    11,117 
Class R5   (538)   (23)
Class Y   100     
Net increase from capital share transactions   4,817    20,171 
Net Increase in Net Assets   7,997    23,909 
Net Assets:          
Beginning of period   74,489    50,580 
End of period  $82,486   $74,489 
Undistributed (distribution in excess of) net investment income (loss)  $(1,125)  $271 

 

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

 

9

 

The Hartford Target Retirement 2025 Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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.

 

Class 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.

 

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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation – Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

10

 


 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a

 

11

 

The Hartford Target Retirement 2025 Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

12

 


 

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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $1,006   $314 
Long-Term Capital Gains ‡   909    200 

 

The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $323 
Undistributed Long-Term Capital Gain   1,212 
Unrealized Appreciation *   4,647 
Total Accumulated Earnings  $6,182 

 

*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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $72 
Accumulated Net Realized Gain (Loss)   (72)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

13

 

The Hartford Target Retirement 2025 Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.15%   
On next $500 million   0.10%   
On next $1.5 billion   0.09%   
On next $2.5 billion   0.08%   
On next $2.5 billion   0.07%   
On next $2.5 billion   0.06%   
Over $10 billion   0.05%   

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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 period March 1,

 

14

 


 

2013 through April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class R3   Class R4   Class R5   Class Y 
 1.35%     1.05%     0.85%     0.85%  

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses as follows:

 

Class R3   Class R4   Class R5 
 1.20%     0.90%     0.85%  

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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% of average daily net assets. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

15

 

The Hartford Target Retirement 2025 Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

6.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage of
Class
 
Class R4   0%
Class R5   14 
Class Y   100 

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $17,497 
Sales Proceeds Excluding U.S. Government Obligations   14,212 

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class R3                                                  
Shares   233    123    (456)       (100)   987    79    (398)       668 
Amount  $3,345   $1,713   $(6,501)  $   $(1,443)  $13,520   $1,006   $(5,449)  $   $9,077 
Class R4                                                  
Shares   656    121    (308)       469    1,149    66    (401)       814 
Amount  $9,480   $1,692   $(4,474)  $   $6,698   $15,774   $848   $(5,505)  $   $11,117 
Class R5                                                  
Shares   30    4    (72)       (38)   13    5    (19)       (1)
Amount  $436   $59   $(1,033)  $   $(538)  $181   $61   $(265)  $   $(23)
Class Y                                                  
Shares   7                7                     
Amount  $100   $   $   $   $100   $   $   $   $   $ 
Total                                                  
Shares   926    248    (836)       338    2,149    150    (818)       1,481 
Amount  $13,361   $3,464   $(12,008)  $   $4,817   $29,475   $1,915   $(11,219)  $   $20,171 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

16

 


 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

17

 

The Hartford Target Retirement 2025 Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
 
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
R3  $14.27   $0.14   $1.08   $1.22   $(0.41)  $(0.24)  $   $(0.65)  $14.84 
R4   14.36    0.15    1.09    1.24    (0.45)   (0.24)       (0.69)   14.91 
R5   14.37    0.20    1.06    1.26    (0.46)   (0.24)       (0.70)   14.93 
Y(H)   14.45    0.01    0.48    0.49                    14.94 
                                              
For the Year Ended October 31, 2012
R3   13.55    0.11    1.10    1.21    (0.17)   (0.32)       (0.49)   14.27 
R4   13.62    0.15    1.11    1.26    (0.20)   (0.32)       (0.52)   14.36 
R5   13.64    0.16    1.09    1.25    (0.20)   (0.32)       (0.52)   14.37 
                                              
For the Year Ended October 31, 2011 (E)
R3   13.27    0.15    0.37    0.52    (0.12)   (0.12)       (0.24)   13.55 
R4   13.32    0.18    0.38    0.56    (0.14)   (0.12)       (0.26)   13.62 
R5   13.33    0.20    0.37    0.57    (0.14)   (0.12)       (0.26)   13.64 
                                              
For the Year Ended October 31, 2010
R3   11.60    0.09    1.68    1.77    (0.10)           (0.10)   13.27 
R4   11.63    0.12    1.69    1.81    (0.12)           (0.12)   13.32 
R5   11.64    0.16    1.66    1.82    (0.13)           (0.13)   13.33 
                                              
From October 31, 2008  (commencement of operations) through October 31, 2009
R3   10.00    0.16    1.56    1.72    (0.12)           (0.12)   11.60 
R4   10.00    0.18    1.57    1.75    (0.12)           (0.12)   11.63 
R5   10.00    0.20    1.56    1.76    (0.12)           (0.12)   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) Ratios do not include expenses of the Underlying Funds.
(D) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E) Per share amounts have been calculated using average shares outstanding method.
(F) Not annualized.
(G) Annualized.
(H) Commenced operations on February 28, 2013.

 

18

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net
Assets(C)
   Portfolio
Turnover
Rate(D)
 
  
                            
 8.89%(F)  $38,098    0.94%(G)   0.53%(G)   2.02%(G)   18%
 9.00(F)   43,147    0.64(G)   0.24(G)   2.14(G)    
 9.11(F)   1,138    0.35(G)   0.13(G)   2.77(G)    
 3.39(F)   103    0.25(G)   0.13(G)   0.40(G)    
                            
                            
 9.35    38,052    0.97    0.49    0.76    87 
 9.73    34,794    0.67    0.19    1.03     
 9.68    1,643    0.37    0.14    1.18     
                            
                            
 3.92    27,080    1.02    0.50    1.09    46 
 4.19    21,926    0.72    0.20    1.34     
 4.29    1,574    0.42    0.15    1.47     
                            
                            
 15.36    14,148    1.30    0.43    0.95    26 
 15.69    9,714    1.01    0.13    1.28     
 15.71    1,912    0.76    0.08    1.35     
                            
                            
 17.44    2,046    2.25    0.42    1.73    12 
 17.81    2,060    1.94    0.12    1.99     
 17.92    1,381    1.71    0.07    2.09     

 

19

 

The Hartford Target Retirement 2025 Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

20

 


 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

21

 

The Hartford Target Retirement 2025 Fund
Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class R3  $1,000.00   $1,088.90   $2.75   $1,000.00   $1,022.16   $2.66    0.53%  181  365
Class R4  $1,000.00   $1,090.00   $1.22   $1,000.00   $1,023.62   $1.18    0.24   181  365
Class R5  $1,000.00   $1,091.10   $0.67   $1,000.00   $1,024.15   $0.65    0.13   181  365
Class Y*  $1,000.00   $1,033.90   $0.22   $1,000.00   $1,008.14   $0.22    0.13   61  365

 

* Commenced operations on February 28, 2013.

 

23

 

The Hartford Target Retirement 2025 Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Target Retirement 2025 Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

24

 


 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

25

 

The Hartford Target Retirement 2025 Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Target Date Risk: As the Fund’s target year approaches, it will increase its allocation to fixed income investments and decrease its allocation to equity investments. Conversely, the Fund will hold a higher percentage in equities and be more volatile when it’s further away from its target year. Target date funds are not guaranteed and you may experience losses, included losses near, at or after the target retirement year. There is no guarantee that the Fund will provide adequate income at and through your retirement.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

26
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-TR2513 4/13 114005 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

45

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD TARGET RETIREMENT 2030 FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Target Retirement 2030 Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   9
Notes to Financial Statements (Unaudited)   10
Financial Highlights (Unaudited)   18
Directors and Officers (Unaudited)   20
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   22
Quarterly Portfolio Holdings Information (Unaudited)   22
Expense Example (Unaudited)   23
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   24
Principal Risks (Unaudited)   26

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Target Retirement 2030 Fund inception 09/30/2005

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks to maximize total return and secondarily, seeks capital preservation.

 

Performance Overview 9/30/05 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   Since
Inception▲
 
Target Retirement 2030 A#   10.09%      11.41%      3.74%      4.73%   
Target Retirement 2030 A##        5.29%      2.57%      3.96%   
Target Retirement 2030 R3#   10.08%      11.31%      3.55%      4.58%   
Target Retirement 2030 R4#   10.28%      11.61%      3.89%      4.86%   
Target Retirement 2030 R5#   10.20%      11.63%      3.95%      4.92%   
Target Retirement 2030 Y#   10.27%      11.60%      3.95%      4.99%   
Barclays U.S. Aggregate Bond Index   0.91%      3.68%      5.73%      5.60%   
MSCI All Country World Index   13.78%      15.69%      2.09%      5.50%   

 

Not Annualized
Inception: 09/30/2005
#Without sales charge
##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Target Retirement 2030 Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

 

Operating Expenses*

 

   Net   Gross 
Target Retirement 2030 Class A   1.05%       1.39%    
Target Retirement 2030 Class R3   1.35%       1.66%    
Target Retirement 2030 Class R4   1.05%       1.36%    
Target Retirement 2030 Class R5   0.85%       1.06%    
Target Retirement 2030 Class Y   0.85%       0.96%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers    
Rick A. Wurster, CFA, CMT   Stephen A. Gorman, CFA
Vice President and Asset Allocation Portfolio Manager   Vice President, Director, Tactical Asset Allocation, Asset Allocation Strategies Group and Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Target Retirement 2030 Fund returned 10.09%, before sales charge, for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. However, the Fund outperformed the average return for the Lipper Mixed-Asset Target 2030 Funds category, a group of funds with investment strategies similar to those of the Fund, which returned 9.96%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02%-0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the stock/bond mix of the Fund was approximately 69% equities and 31% fixed income. A modest underweight allocation (i.e. the Fund’s position was less than the benchmark position) to fixed income and overweight to equities contributed as

 

3

 

The Hartford Target Retirement 2030 Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative performance in the Capital Appreciation, World Bond and International Small Company Funds more than offset weak benchmark-relative results from the International Opportunities and MidCap Value Funds.

 

What is the outlook?

We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

 

Composition by Investments

as of April 30, 2013

Fund Name  Percentage of Net
Assets
 
The Hartford Alternative Strategies Fund, Class Y   12.8%
The Hartford Capital Appreciation Fund, Class Y   10.2 
The Hartford Dividend and Growth Fund, Class Y   19.6 
The Hartford Emerging Markets Research Fund, Class Y   7.5 
The Hartford Global Real Asset Fund, Class Y   3.4 
The Hartford Inflation Plus Fund, Class Y   3.4 
The Hartford International Opportunities Fund, Class Y   17.1 
The Hartford International Small Company Fund, Class Y   6.0 
The Hartford MidCap Value Fund, Class Y   3.3 
The Hartford Small Company Fund, Class Y   3.3 
The Hartford Strategic Income Fund, Class Y   7.4 
The Hartford Total Return Bond Fund, Class Y   2.4 
The Hartford World Bond Fund, Class Y   3.6 
Other Assets and Liabilities   0.0 
Total   100.0%

 

4

 

The Hartford Target Retirement 2030 Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount          Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 100.0%             
EQUITY FUNDS - 70.4%             
 457   The Hartford Capital Appreciation Fund, Class Y          $19,561 
 1,588   The Hartford Dividend and Growth Fund, Class Y           37,462 
 1,618   The Hartford Emerging Markets Research Fund, Class Y           14,385 
 621   The Hartford Global Real Asset Fund, Class Y           6,511 
 1,973   The Hartford International Opportunities Fund, Class Y           32,839 
 734   The Hartford International Small Company Fund, Class Y           11,509 
 416   The Hartford MidCap Value Fund, Class Y           6,333 
 268   The Hartford Small Company Fund, Class Y           6,285 
                 134,885 
     Total equity funds             
     (cost $111,485)          $134,885 
                   
FIXED INCOME FUNDS - 29.6%             
 2,388   The Hartford Alternative Strategies Fund, Class Y          $24,621 
 521   The Hartford Inflation Plus Fund, Class Y           6,424 
 1,499   The Hartford Strategic Income Fund, Class Y           14,257 
 410   The Hartford Total Return Bond Fund, Class Y           4,544 
 634   The Hartford World Bond Fund, Class Y           6,869 
                 56,715 
     Total fixed income funds             
     (cost $55,985)          $56,715 
                   
     Total investments in affiliated investment companies             
     (cost $167,470)          $191,600 
                   
     Total long-term investments             
     (cost $167,470)          $191,600 
                   
     Total investments             
     (cost $167,470) ▲     100.0 %  $191,600 
     Other assets and liabilities      %   55 
     Total net assets     100.0 %  $191,655 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $168,019 and the aggregate gross unrealized appreciation and depreciation based on that cost were:  

 

Unrealized Appreciation  $23,615 
Unrealized Depreciation   (34)
Net Unrealized Appreciation  $23,581 

 

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 Target Retirement 2030 Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                     
Affiliated Investment Companies  $191,600   $191,600   $   $ 
Total  $191,600   $191,600   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  

 

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

 

6

 

The Hartford Target Retirement 2030 Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in underlying affiliated funds, at market value (cost $167,470)  $191,600 
Receivables:     
Investment securities sold   91 
Fund shares sold   53 
Dividends and interest   11 
Other assets   74 
Total assets   191,829 
Liabilities:     
Payables:     
Investment securities purchased   50 
Fund shares redeemed   91 
Investment management fees   5 
Administrative fees   4 
Distribution fees   10 
Accrued expenses   14 
Total liabilities   174 
Net assets  $191,655 
Summary of Net Assets:     
Capital stock and paid-in-capital  $164,732 
Distributions in excess of net investment loss   (2,621)
Accumulated net realized gain   5,414 
Unrealized appreciation of investments   24,130 
Net assets  $191,655 
      
Shares authorized   950,000 
Par value  $ 0.001 
Class A: Net asset value per share/Maximum offering price per share   

$10.46/$11.07

 
Shares outstanding   2,480 
Net assets  $25,941 
Class R3: Net asset value per share  $10.33 
Shares outstanding   6,637 
Net assets  $68,541 
Class R4: Net asset value per share  $10.44 
Shares outstanding   8,215 
Net assets  $85,752 
Class R5: Net asset value per share  $10.46 
Shares outstanding   1,079 
Net assets  $11,287 
Class Y: Net asset value per share  $10.49 
Shares outstanding   13 
Net assets  $134 

 

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

 

7

 

The Hartford Target Retirement 2030 Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

Investment Income:     
Dividends from underlying affiliated funds  $2,309 
Total investment income   2,309 
      
Expenses:     
Investment management fees   135 
Administrative services fees     
Class R3   65 
Class R4   59 
Class R5   6 
Transfer agent fees     
Class A   21 
Class R3   1 
Class R4    
Class R5    
Class Y    
Distribution fees     
Class A   31 
Class R3   163 
Class R4   99 
Custodian fees    
Accounting services fees   11 
Registration and filing fees   22 
Board of Directors' fees   2 
Audit fees   6 
Other expenses   10 
Total expenses (before waivers)   631 
Expense waivers   (335)
Total waivers   (335)
Total expenses, net   296 
Net Investment Income   2,013 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   2,530 
Net realized gain on investments in underlying affiliated funds   3,433 
Net Realized Gain on Investments   5,963 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   9,607 
Net Changes in Unrealized Appreciation of Investments   9,607 
Net Gain on Investments   15,570 
Net Increase in Net Assets Resulting from Operations  $17,583 

 

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

 

8

 

The Hartford Target Retirement 2030 Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the 
Year Ended 
October 31, 2012
 
Operations:          
Net investment income  $2,013   $1,466 
Net realized gain on investments   5,963    7,040 
Net unrealized appreciation of investments   9,607    6,968 
Net Increase in Net Assets Resulting from Operations   17,583    15,474 
Distributions to Shareholders:          
From net investment income          
Class A   (717)   (288)
Class R3   (1,827)   (595)
Class R4   (2,358)   (816)
Class R5   (343)   (154)
Class Y   (5)   (2)
Total from net investment income   (5,250)   (1,855)
From net realized gain on investments          
Class A   (728)    
Class R3   (1,954)    
Class R4   (2,290)    
Class R5   (331)    
Class Y   (5)    
Total from net realized gain on investments   (5,308)    
Total distributions   (10,558)   (1,855)
Capital Share Transactions:          
Class A   696    310 
Class R3   1,386    12,325 
Class R4   6,538    15,616 
Class R5   (310)   61 
Class Y   (32)   2 
Net increase from capital share transactions   8,278    28,314 
Net Increase in Net Assets   15,303    41,933 
Net Assets:          
Beginning of period   176,352    134,419 
End of period  $191,655   $176,352 
Undistributed (distribution in excess of) net investment income (loss)  $(2,621)  $616 

 

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

 

9

 

The Hartford Target Retirement 2030 Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Target Retirement 2030 Fund (the “Fund”), a series of the Company, are included in this report.

 

The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company.

 

Class A shares are sold with a front-end sales charge of up to 5.50%. Class 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.

 

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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

10

 

 

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a

 

11

 

The Hartford Target Retirement 2030 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

12

 

 

 

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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $1,855   $979 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $616 
Undistributed Long-Term Capital Gain   5,308 
Unrealized Appreciation *   13,974 
Total Accumulated Earnings  $19,898 

 

  * 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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $130 
Accumulated Net Realized Gain (Loss)   (130)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

During the year ended October 31, 2012, the Fund utilized $1,534 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

13

 

The Hartford Target Retirement 2030 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.15%  
On next $500 million   0.10%  
On next $1.5 billion   0.09%  
On next $2.5 billion   0.08%  
On next $2.5 billion   0.07%  
On next $2.5 billion   0.06%  
Over $10 billion   0.05%  

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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 period March 1,

 

14

 

 

 

2013 through April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class R3   Class R4   Class R5   Class Y 
 1.05%      1.35%      1.05%      0.85%      0.85%   

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions 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%   

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

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 six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $57 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

15

 

The Hartford Target Retirement 2030 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

6.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class Y   100%

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, the Fund's aggregate purchases and sales of investment securities (excluding short-term investments) were as follows:

 

   Amount 
Cost of Purchases for U.S. Government Obligations   30,809 
Sales Proceeds for U.S. Government Obligations   28,526 

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   320    147    (391)       76    548    31    (535)       44 
Amount  $3,192   $1,436   $(3,932)  $   $696   $5,254   $286   $(5,230)  $   $310 
Class R3                                                  
Shares   545    394    (792)       147    2,293    66    (1,052)       1,307 
Amount  $5,421   $3,781   $(7,816)  $   $1,386   $21,887   $595   $(10,157)  $   $12,325 
Class R4                                                  
Shares   1,008    479    (827)       660    2,506    90    (939)       1,657 
Amount  $10,162   $4,648   $(8,272)  $   $6,538   $23,926   $816   $(9,126)  $   $15,616 
Class R5                                                  
Shares   151    69    (249)       (29)   246    16    (253)       9 
Amount  $1,506   $674   $(2,490)  $   $(310)  $2,366   $154   $(2,459)  $   $61 
Class Y                                                  
Shares       1    (4)       (3)                    
Amount  $   $10   $(42)  $   $(32)  $   $2   $   $   $2 
Total                                                  
Shares   2,024    1,090    (2,263)       851    5,593    203    (2,779)       3,017 
Amount  $20,281   $10,549   $(22,552)  $   $8,278   $53,433   $1,853   $(26,972)  $   $28,314 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

16

 

 

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

17

 

The Hartford Target Retirement 2030 Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain 
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)                          
A  $10.09   $0.11   $0.85   $0.96   $(0.29)  $(0.30)  $   $(0.59)  $10.46 
R3   9.96    0.10    0.85    0.95    (0.28)   (0.30)       (0.58)   10.33 
R4   10.07    0.12    0.86    0.98    (0.31)   (0.30)       (0.61)   10.44 
R5   10.10    0.13    0.84    0.97    (0.31)   (0.30)       (0.61)   10.46 
Y   10.12    0.13    0.85    0.98    (0.31)   (0.30)       (0.61)   10.49 
                                              
For the Year Ended October 31, 2012 (E)                          
A   9.28    0.09    0.84    0.93    (0.12)           (0.12)   10.09 
R3   9.17    0.07    0.83    0.90    (0.11)           (0.11)   9.96 
R4   9.27    0.10    0.83    0.93    (0.13)           (0.13)   10.07 
R5   9.29    0.11    0.84    0.95    (0.14)           (0.14)   10.10 
Y   9.31    0.11    0.84    0.95    (0.14)           (0.14)   10.12 
                                              
For the Year Ended October 31, 2011 (E)                          
A   9.01    0.10    0.25    0.35    (0.08)           (0.08)   9.28 
R3   8.92    0.08    0.26    0.34    (0.09)           (0.09)   9.17 
R4   9.00    0.11    0.26    0.37    (0.10)           (0.10)   9.27 
R5   9.02    0.12    0.25    0.37    (0.10)           (0.10)   9.29 
Y   9.04    0.12    0.25    0.37    (0.10)           (0.10)   9.31 
                                              
For the Year Ended October 31, 2010 (E)                          
A   7.84    0.09    1.16    1.25    (0.08)           (0.08)   9.01 
R3   7.77    0.08    1.15    1.23    (0.08)           (0.08)   8.92 
R4   7.83    0.10    1.16    1.26    (0.09)           (0.09)   9.00 
R5   7.84    0.11    1.16    1.27    (0.09)           (0.09)   9.02 
Y   7.86    0.12    1.15    1.27    (0.09)           (0.09)   9.04 
                                              
For the Year Ended October 31, 2009 (E)                          
A(H)   6.80    0.12    1.04    1.16    (0.12)           (0.12)   7.84 
R3   6.77    0.10    1.04    1.14    (0.14)           (0.14)   7.77 
R4   6.78    0.12    1.05    1.17    (0.12)           (0.12)   7.83 
R5   6.80    0.13    1.04    1.17    (0.13)           (0.13)   7.84 
Y   6.82    0.14    1.04    1.18    (0.14)           (0.14)   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)   6.80 
R3   10.88    (0.01)   (3.68)   (3.69)   (0.32)   (0.10)       (0.42)   6.77 
R4   10.91    0.02    (3.67)   (3.65)   (0.38)   (0.10)       (0.48)   6.78 
R5   10.93    0.03    (3.68)   (3.65)   (0.38)   (0.10)       (0.48)   6.80 
Y   10.95    0.18    (3.82)   (3.64)   (0.39)   (0.10)       (0.49)   6.82 

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include expenses of the Underlying Funds.
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)Classes B and C were merged into Class A on July 24, 2009.

 

18

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets 
After Waivers and Reimbursements and
 Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net
Assets(C)
   Portfolio
Turnover
Rate(D)
 
                      
                            
 10.09%(F)  $25,941    0.63%(G)   0.31%(G)   2.26%(G)   16%
 10.08(F)   68,541     0.91(G)    0.51(G)    2.06(G)     
 10.28(F)   85,752     0.61(G)    0.21(G)    2.33(G)    
 10.20(F)   11,287     0.31(G)    0.11(G)    2.51(G)    
 10.27(F)   134     0.21(G)    0.11(G)    2.67(G)    
                            
                            
 10.15    24,249    0.66    0.32    0.94    83 
 9.97    64,641    0.93    0.47    0.73     
 10.24    76,109    0.63    0.17    1.04     
 10.38    11,192    0.33    0.12    1.15     
 10.34    161    0.23    0.12    1.15     
                            
                            
 3.91    21,889    0.71    0.33    1.03    34 
 3.75    47,518    0.95    0.48    0.84     
 4.06    54,660    0.64    0.18    1.16     
 4.09    10,206    0.34    0.13    1.23     
 4.08    146    0.24    0.13    1.24     
                            
                            
 16.03    20,891    0.73    0.27    1.09    23 
 15.88    20,350    0.99    0.42    0.97     
 16.21    36,119    0.68    0.12    1.24     
 16.35    8,668    0.39    0.07    1.30     
 16.31    140    0.28    0.07    1.39     
                            
                            
 17.45    17,090    0.81    0.24    1.80    16 
 17.37    3,209    1.15    0.39    1.42     
 17.66    19,940    0.82    0.09    1.79     
 17.68    6,082    0.52    0.04    1.90     
 17.83    29    0.43    0.04    2.08     
                            
                            
 (34.83)   12,679    0.86    0.51    1.43    35 
 (35.18)   1,070    1.25    0.86    (0.10)    
 (34.87)   7,578    0.89    0.54    0.17     
 (34.82)   2,530    0.58    0.22    0.33     
 (34.69)   25    0.54    0.19    1.89     

 

19

 

The Hartford Target Retirement 2030 Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

20

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

21

 

The Hartford Target Retirement 2030 Fund

Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,100.90   $1.62   $1,000.00   $1,023.26   $1.56    0.31%  181  365
Class R3  $1,000.00   $1,100.80   $2.67   $1,000.00   $1,022.26   $2.57    0.51   181  365
Class R4  $1,000.00   $1,102.80   $1.11   $1,000.00   $1,023.74   $1.07    0.21   181  365
Class R5  $1,000.00   $1,102.00   $0.57   $1,000.00   $1,024.25   $0.55    0.11   181  365
Class Y  $1,000.00   $1,102.70   $0.57   $1,000.00   $1,024.25   $0.55    0.11   181  365

 

23

 

The Hartford Target Retirement 2030 Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Target Retirement 2030 Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

24

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

25

 

The Hartford Target Retirement 2030 Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Target Date Risk: As the Fund’s target year approaches, it will increase its allocation to fixed income investments and decrease its allocation to equity investments. Conversely, the Fund will hold a higher percentage in equities and be more volatile when it’s further away from its target year. Target date funds are not guaranteed and you may experience losses, included losses near, at or after the target retirement year. There is no guarantee that the Fund will provide adequate income at and through your retirement.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

26
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-TR3013 4/13 114006 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

46

 

 

 
 

 

 

HARTFORDFUNDS

 

 

THE HARTFORD TARGET RETIREMENT 2035 FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford Target Retirement 2035 Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   9
Notes to Financial Statements (Unaudited)   10
Financial Highlights (Unaudited)   18
Directors and Officers (Unaudited)   20
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   22
Quarterly Portfolio Holdings Information (Unaudited)   22
Expense Example (Unaudited)   23
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   24
Principal Risks (Unaudited)   26

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Target Retirement 2035 Fund inception 10/31/2008
(sub-advised by Wellington Management Company, LLP)
 

Investment objective – Seeks to maximize total return and secondarily, seeks capital preservation.

  

Performance Overview 10/31/08 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class R3. Growth results in classes other than Class R3 will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   Since
Inception▲
 
Target Retirement 2035 R3   11.14%       12.54%       13.41%    
Target Retirement 2035 R4   11.22%       12.85%       13.74%    
Target Retirement 2035 R5   11.27%       12.89%       13.79%    
Target Retirement 2035 Y   11.27%       12.89%       13.79%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       7.26%    
MSCI All Country World Index   13.78%       15.69%       13.59%    

 

Not Annualized
Inception: 10/31/2008

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Class Y shares commenced operations on 02/28/13. Performance prior to that date is that of the Fund’s Class R5 shares which had different operating expenses.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Target Retirement 2035 Fund

Manager Discussion

April 30, 2013 (Unaudited)

  

Operating Expenses*

 

   Net   Gross 
Target Retirement 2035 Class R3   1.35%       1.75%    
Target Retirement 2035 Class R4   1.05%       1.45%    
Target Retirement 2035 Class R5   0.85%       1.17%    
Target Retirement 2035 Class Y   0.85%       1.07%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Rick A. Wurster, CFA, CMT Stephen A. Gorman, CFA
Vice President and Asset Allocation Portfolio Manager Vice President, Director, Tactical Asset Allocation, Asset Allocation
Strategies Group and Portfolio Manager

 

How did the Fund perform?

The Class R3 shares of The Hartford Target Retirement 2035 Fund returned 11.14% for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. The Fund underperformed the average return for the Lipper Mixed-Asset Target 2035 Funds category, a group of funds with investment strategies similar to those of the Fund, which returned 11.64%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02%-0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the stock/bond mix of the Fund was approximately 76% equities and 24% fixed income. A modest underweight allocation (i.e. the Fund’s position was less than the benchmark position) to fixed income and overweight to equities contributed as

 

3

 

The Hartford Target Retirement 2035 Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative performance in the Capital Appreciation, Strategic Income and International Small Company Funds more than offset weak benchmark-relative results from the International Opportunities, MidCap Value and Small Company Funds.

 

What is the outlook?

We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

 

Composition by Investments

as of April 30, 2013

 

Fund Name  Percentage of Net
Assets
 
The Hartford Alternative Strategies Fund, Class Y   12.9%
The Hartford Capital Appreciation Fund, Class Y   11.3 
The Hartford Dividend and Growth Fund, Class Y   21.9 
The Hartford Emerging Markets Research Fund, Class Y   8.4 
The Hartford Global Real Asset Fund, Class Y   2.0 
The Hartford Inflation Plus Fund, Class Y   0.8 
The Hartford International Opportunities Fund, Class Y   19.2 
The Hartford International Small Company Fund, Class Y   6.7 
The Hartford MidCap Value Fund, Class Y   3.7 
The Hartford Small Company Fund, Class Y   3.7 
The Hartford Strategic Income Fund, Class Y   8.3 
The Hartford Total Return Bond Fund, Class Y   0.4 
The Hartford World Bond Fund, Class Y   0.6 
Other Assets and Liabilities   0.1 
Total   100.0%

 

4

 

The Hartford Target Retirement 2035 Fund

Schedule of Investments

April 30, 2013 (Unaudited) 

(000’s Omitted)

 

Shares or Principal Amount        Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 99.9%           
EQUITY FUNDS - 76.9%           
 160   The Hartford Capital Appreciation Fund, Class Y         $6,837 
 558   The Hartford Dividend and Growth Fund, Class Y          13,173 
 567   The Hartford Emerging Markets Research Fund, Class Y          5,038 
 115   The Hartford Global Real Asset Fund, Class Y          1,203 
 694   The Hartford International Opportunities Fund, Class Y          11,549 
 257   The Hartford International Small Company Fund, Class Y          4,027 
 149   The Hartford MidCap Value Fund, Class Y          2,260 
 96   The Hartford Small Company Fund, Class Y          2,243 
               46,330 
     Total equity funds           
     (cost $38,885)         $46,330 
                 
FIXED INCOME FUNDS - 23.0%           
 758   The Hartford Alternative Strategies Fund, Class Y         $7,810 
 37   The Hartford Inflation Plus Fund, Class Y          461 
 527   The Hartford Strategic Income Fund, Class Y          5,008 
 22   The Hartford Total Return Bond Fund, Class Y          240 
 33   The Hartford World Bond Fund, Class Y          361 
               13,880 
     Total fixed income funds           
     (cost $13,803)         $13,880 
                 
     Total investments in affiliated investment companies           
     (cost $52,688)         $60,210 
                 
     Total long-term investments
(cost $52,688)
        $60,210 
                 
     Total investments           
     (cost $52,688) ▲   99.9 %   $60,210 
     Other assets and liabilities   0.1 %    34 
     Total net assets   100.0 %   $60,244 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $52,773 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $7,437 
Unrealized Depreciation    
Net Unrealized Appreciation  $7,437 

 

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 Target Retirement 2035 Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited) 

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Affiliated Investment Companies  $60,210   $60,210   $   $ 
Total  $60,210   $60,210   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.

 

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

 

6

 

The Hartford Target Retirement 2035 Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited) 

(000’s Omitted)

  

Assets:     
Investments in underlying affiliated funds, at market value (cost $52,688)  $60,210 
Receivables:     
Investment securities sold   43 
Fund shares sold   23 
Dividends and interest   1 
Other assets   50 
Total assets   60,327 
Liabilities:     
Payables:     
Investment securities purchased   25 
Fund shares redeemed   43 
Investment management fees   1 
Administrative fees   2 
Distribution fees   4 
Accrued expenses   8 
Total liabilities   83 
Net assets  $60,244 
Summary of Net Assets:     
Capital stock and paid-in-capital  $51,934 
Distributions in excess of net investment loss   (703)
Accumulated net realized gain   1,491 
Unrealized appreciation of investments   7,522 
Net assets  $60,244 
      
Shares authorized   200,000 
Par value  $ 0.001 
Class R3: Net asset value per share  $15.45 
Shares outstanding   2,205 
Net assets  $34,060 
Class R4: Net asset value per share  $15.52 
Shares outstanding   1,642 
Net assets  $25,491 
Class R5: Net asset value per share  $15.53 
Shares outstanding   38 
Net assets  $589 
Class Y: Net asset value per share  $15.53 
Shares outstanding   7 
Net assets  $104 

 

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

 

7

 

The Hartford Target Retirement 2035 Fund

Statement of  Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited) 

(000’s Omitted)

 

Investment Income:     
Dividends from underlying affiliated funds  $680 
Total investment income   680 
      
Expenses:     
Investment management fees   40 
Administrative services fees     
Class R3   32 
Class R4   16 
Class R5    
Transfer agent fees     
Class R3    
Class R4    
Class R5    
Class Y    
Distribution fees     
Class R3   78 
Class R4   26 
Custodian fees    
Accounting services fees   3 
Registration and filing fees   19 
Board of Directors' fees   1 
Audit fees   5 
Other expenses   5 
Total expenses (before waivers)   225 
Expense waivers   (124)
Total waivers   (124)
Total expenses, net   101 
Net Investment Income   579 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   672 
Net realized gain on investments in underlying affiliated funds   904 
Net Realized Gain on Investments   1,576 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   3,484 
Net Changes in Unrealized Appreciation of Investments   3,484 
Net Gain on Investments   5,060 
Net Increase in Net Assets Resulting from Operations  $5,639 

 

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

 

8

 

The Hartford Target Retirement 2035 Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

  

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $579   $324 
Net realized gain on investments   1,576    661 
Net unrealized appreciation of investments   3,484    3,364 
Net Increase in Net Assets Resulting from Operations   5,639    4,349 
Distributions to Shareholders:          
From net investment income          
Class R3   (846)   (221)
Class R4   (556)   (135)
Class R5   (17)   (14)
Total from net investment income   (1,419)   (370)
From net realized gain on investments          
Class R3   (373)   (732)
Class R4   (243)   (340)
Class R5   (16)   (38)
Total from net realized gain on investments   (632)   (1,110)
Total distributions   (2,051)   (1,480)
Capital Share Transactions:          
Class R3   1,032    9,229 
Class R4   4,529    8,915 
Class R5   (686)   103 
Class Y   100     
Net increase from capital share transactions   4,975    18,247 
Net Increase in Net Assets   8,563    21,116 
Net Assets:          
Beginning of period   51,681    30,565 
End of period  $60,244   $51,681 
Undistributed (distribution in excess of) net investment income (loss)  $(703)  $137 

 

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

 

9

 

The Hartford Target Retirement 2035 Fund

Notes to Financial Statements

April 30, 2013 (Unaudited) 

(000’s Omitted)

  

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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.

 

Class 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.

 

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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of

 

10

 

 

 

a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.

·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class

 

11

 

The Hartford Target Retirement 2035 Fund

Notes to Financial Statements – (continued) 

April 30, 2013 (Unaudited) 

(000’s Omitted)

  

specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

12

 

 

 

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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $600   $153 
Long-Term Capital Gains ‡   880    268 

 

The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $137 
Undistributed Long-Term Capital Gain   632 
Unrealized Appreciation *   3,953 
Total Accumulated Earnings  $4,722 

 

*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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $20 
Accumulated Net Realized Gain (Loss)   (20)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

13

 

The Hartford Target Retirement 2035 Fund

Notes to Financial Statements – (continued) 

April 30, 2013 (Unaudited) 

(000’s Omitted)

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.15% 
On next $500 million   0.10% 
On next $1.5 billion   0.09% 
On next $2.5 billion   0.08% 
On next $2.5 billion   0.07% 
On next $2.5 billion   0.06% 
Over $10 billion   0.05% 

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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% 

 

14

  

 

 

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 period March 1, 2013 through April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

  

Class R3   Class R4   Class R5   Class Y 
 1.35%    1.05%    0.85%    0.85% 

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses as follows:

 

Class R3   Class R4   Class R5 
 1.20%    0.90%    0.85% 

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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% of average daily net assets. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

15

 

The Hartford Target Retirement 2035 Fund

Notes to Financial Statements – (continued) 

April 30, 2013 (Unaudited) 

(000’s Omitted)

 

6.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

  

    Percentage
of Class
 
Class R5     34 %
Class Y     100  

  

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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   $ 14,554  
Sales Proceeds Excluding U.S. Government Obligations     10,383  

 

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class R3                                                  
Shares   334    86    (353)       67    874    75    (270)       679 
Amount  $4,914   $1,219   $(5,101)  $   $1,032   $12,025   $953   $(3,749)  $   $9,229 
Class R4                                                  
Shares   462    56    (216)       302    843    37    (230)       650 
Amount  $6,905   $799   $(3,175)  $   $4,529   $11,663   $475   $(3,223)  $   $8,915 
Class R5                                                  
Shares   8    2    (57)       (47)   9    4    (5)       8 
Amount  $118   $33   $(837)  $   $(686)  $117   $52   $(66)  $   $103 
Class Y                                                  
Shares   7                7                     
Amount  $100   $   $   $   $100   $   $   $   $   $ 
Total                                                  
Shares   811    144    (626)       329    1,726    116    (505)       1,337 
Amount  $12,037   $2,051   $(9,113)  $   $4,975   $23,805   $1,480   $(7,038)  $   $18,247 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

16

 

 

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

17

 

The Hartford Target Retirement 2035 Fund

Financial Highlights

 

– Selected Per-Share Data – (A)

 

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited)                          
R3  $14.47   $0.16   $1.40   $1.56   $(0.40)  $(0.18)  $   $(0.58)  $15.45 
R4   14.56    0.23    1.35    1.58    (0.44)   (0.18)       (0.62)   15.52 
R5   14.57    0.36    1.22    1.58    (0.44)   (0.18)       (0.62)   15.53 
Y(G)   14.91    0.01    0.61    0.62                    15.53 
                                              
For the Year Ended October 31, 2012                          
R3   13.70    0.10    1.30    1.40    (0.14)   (0.49)       (0.63)   14.47 
R4   13.77    0.13    1.32    1.45    (0.17)   (0.49)       (0.66)   14.56 
R5   13.78    0.14    1.32    1.46    (0.18)   (0.49)       (0.67)   14.57 
                                              
For the Year Ended October 31, 2011 (H)                         
R3   13.44    0.11    0.46    0.57    (0.10)   (0.21)       (0.31)   13.70 
R4   13.49    0.15    0.46    0.61    (0.12)   (0.21)       (0.33)   13.77 
R5   13.49    0.17    0.45    0.62    (0.12)   (0.21)       (0.33)   13.78 
                                              
For the Year Ended October 31, 2010                          
R3   11.63    0.08    1.82    1.90    (0.09)           (0.09)   13.44 
R4   11.66    0.12    1.82    1.94    (0.11)           (0.11)   13.49 
R5   11.66    0.14    1.81    1.95    (0.12)           (0.12)   13.49 
                                              
From October 31, 2008  (commencement of operations) through October 31, 2009 
R3   10.00    0.15    1.59    1.74    (0.11)           (0.11)   11.63 
R4   10.00    0.17    1.61    1.78    (0.12)           (0.12)   11.66 
R5   10.00    0.18    1.60    1.78    (0.12)           (0.12)   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)Ratios do not include expenses of the Underlying Funds.
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Not annualized.
(F)Annualized.
(G)Commenced operations on February 28, 2013.
(H)Per share amounts have been calculated using average shares outstanding method.

 

18

  

 

– Ratios and Supplemental Data –

 

  

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net
Assets(C)
   Portfolio
Turnover
Rate(D)
 
                      
                      
 11.14%(E)  $34,060    0.98%(F)   0.50%(F)   2.10%(F)   19%
 11.22(E)   25,491    0.67(F)   0.21(F)   2.25(F)    
 11.27(E)   589    0.40(F)   0.10(F)   3.05(F)    
 4.16(E)   104    0.28(F)   0.10(F)   0.49(F)    
                            
                            
 10.93    30,934    1.01    0.46    0.67    95 
 11.31    19,507    0.71    0.16    0.90     
 11.34    1,240    0.43    0.11    1.11     
                            
                            
 4.29    19,991    1.10    0.45    0.82    54 
 4.55    9,508    0.80    0.15    1.09     
 4.66    1,066    0.50    0.10    1.17     
                            
                            
 16.38    9,464    1.44    0.39    0.75    30 
 16.74    5,550    1.16    0.09    1.02     
 16.78    1,403    0.89    0.04    1.12     
                            
                            
 17.72    1,508    2.35    0.37    1.50    15 
 18.09    1,777    2.03    0.07    1.75     
 18.10    1,198    1.77    0.02    1.84     

 

19

 

The Hartford Target Retirement 2035 Fund

Directors and Officers (Unaudited)

 

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

20

  

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

21

 

The Hartford Target Retirement 2035 Fund

Directors and Officers (Unaudited)  – (continued)

 

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

22

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
     Days in
the
current
1/2
year
     Days
in the
full
year
 
Class R3  $1,000.00   $1,111.40   $2.63   $1,000.00   $1,022.30   $2.52    0.50%   181    365 
Class R4  $1,000.00   $1,112.20   $1.09   $1,000.00   $1,023.77   $1.04    0.21    181    365 
Class R5  $1,000.00   $1,112.70   $0.52   $1,000.00   $1,024.30   $0.50    0.10    181    365 
Class Y*  $1,000.00   $1,041.60   $0.17   $1,000.00   $1,008.19   $0.17    0.10    61    365 

 

*Commenced operations on February 28, 2013.

 

23

 

The Hartford Target Retirement 2035 Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Target Retirement 2035 Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

24

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

25

 

The Hartford Target Retirement 2035 Fund

Principal Risks (Unaudited)

 

  

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Target Date Risk: As the Fund’s target year approaches, it will increase its allocation to fixed income investments and decrease its allocation to equity investments. Conversely, the Fund will hold a higher percentage in equities and be more volatile when it’s further away from its target year. Target date funds are not guaranteed and you may experience losses, included losses near, at or after the target retirement year. There is no guarantee that the Fund will provide adequate income at and through your retirement.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

26
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-TR3513 4/13 114007 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

47

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD TARGET RETIREMENT 2040 FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Target Retirement 2040 Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   9
Notes to Financial Statements (Unaudited)   10
Financial Highlights (Unaudited)   18
Directors and Officers (Unaudited)   20
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   22
Quarterly Portfolio Holdings Information (Unaudited)   22
Expense Example (Unaudited)   23
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   24
Principal Risks (Unaudited)   26

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

  

 

 

The Hartford Target Retirement 2040 Fund inception 10/31/2008

(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks to maximize total return and secondarily, seeks capital preservation.

 

Performance Overview 10/31/08 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class R3. Growth results in classes other than Class R3 will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   Since
Inception▲
 
Target Retirement 2040 R3   11.27%       11.88%       13.27%    
Target Retirement 2040 R4   11.39%       12.15%       13.60%    
Target Retirement 2040 R5   11.50%       12.26%       13.67%    
Target Retirement 2040 Y   11.50%       12.26%       13.67%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       7.26%    
MSCI All Country World Index   13.78%       15.69%       13.59%    

 

Not Annualized
Inception: 10/31/2008

  

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Class Y shares commenced operations on 02/28/13. Performance prior to that date is that of the Fund’s Class R5 shares which had different operating expenses.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

  

The Hartford Target Retirement 2040 Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*
 
   Net   Gross 
Target Retirement 2040 Class R3   1.35%       1.73%    
Target Retirement 2040 Class R4   1.05%       1.42%    
Target Retirement 2040 Class R5   0.85%       1.14%    
Target Retirement 2040 Class Y   0.85%       1.04%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Rick A. Wurster, CFA, CMT Stephen A. Gorman, CFA
Vice President and Asset Allocation Portfolio Manager Vice President, Director, Tactical Asset Allocation , Asset Allocation
Strategies Group and Portfolio Manager

 

How did the Fund perform?

The Class R3 shares of The Hartford Target Retirement 2040 Fund returned 11.27% for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. The Fund underperformed the average return for the Lipper Mixed-Asset Target 2040 Funds category, a group of funds with investment strategies similar to those of the Fund, which returned 11.88%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02%-0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the stock/bond mix of the Fund was approximately 78% equities and 22% fixed income. A modest underweight allocation (i.e. the Fund’s position was less than the benchmark position) to fixed income and overweight to equities contributed as

 

3

 

The Hartford Target Retirement 2040 Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

  

equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative performance in the Capital Appreciation, International Small Company and Strategic Income Funds more than offset weak benchmark-relative results from the International Opportunities, MidCap Value and Small Company Funds.

 

What is the outlook?

We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

 

Composition by Investments

as of April 30, 2013 

Fund Name   

Percentage of Net
Assets

 
The Hartford Alternative Strategies Fund, Class Y   12.9%
The Hartford Capital Appreciation Fund, Class Y   11.7 
The Hartford Dividend and Growth Fund, Class Y   22.3 
The Hartford Emerging Markets Research Fund, Class Y   8.5 
The Hartford Global Real Asset Fund, Class Y   1.7 
The Hartford Inflation Plus Fund, Class Y   0.2 
The Hartford International Opportunities Fund, Class Y   19.7 
The Hartford International Small Company Fund, Class Y   6.9 
The Hartford MidCap Value Fund, Class Y   3.8 
The Hartford Small Company Fund, Class Y   3.8 
The Hartford Strategic Income Fund, Class Y   8.5 
Other Assets and Liabilities   0.0 
Total   100.0%

  

4

 

The Hartford Target Retirement 2040 Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount     Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 100.0%         
EQUITY FUNDS - 78.4%          
 205   The Hartford Capital Appreciation Fund, Class Y       $8,779 
 711   The Hartford Dividend and Growth Fund, Class Y        16,775 
 722   The Hartford Emerging Markets Research Fund, Class Y        6,418 
 119   The Hartford Global Real Asset Fund, Class Y        1,246 
 890   The Hartford International Opportunities Fund, Class Y        14,818 
 332   The Hartford International Small Company Fund, Class Y        5,201 
 189   The Hartford MidCap Value Fund, Class Y        2,878 
 121   The Hartford Small Company Fund, Class Y        2,828 
              58,943 
     Total equity funds          
     (cost $49,112)       $58,943 
                
FIXED INCOME FUNDS - 21.6%          
 939   The Hartford Alternative Strategies Fund, Class Y       $9,678 
 15   The Hartford Inflation Plus Fund, Class Y        188 
 673   The Hartford Strategic Income Fund, Class Y        6,396 
              16,262 
     Total fixed income funds          
     (cost $16,229)       $16,262 
                
     Total investments in affiliated investment companies          
     (cost $65,341)       $75,205 
                
     Total long-term investments          
     (cost $65,341)       $75,205 
                
     Total investments           
     (cost $65,341) ▲   100.0%  $75,205 
     Other assets and liabilities   %   33 
     Total net assets   100.0%  $75,238 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $65,526 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $9,735 
Unrealized Depreciation   (56)
Net Unrealized Appreciation  $9,679 

 

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 Target Retirement 2040 Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Affiliated Investment Companies  $75,205   $75,205   $   $ 
Total  $75,205   $75,205   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  

 

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

 

6

 

The Hartford Target Retirement 2040 Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in underlying affiliated funds, at market value (cost $65,341)  $75,205 
Receivables:     
Investment securities sold   39 
Fund shares sold   72 
Other assets   52 
Total assets   75,368 
Liabilities:     
Payables:     
Investment securities purchased   75 
Fund shares redeemed   39 
Investment management fees   2 
Administrative fees   2 
Distribution fees   5 
Accrued expenses   7 
Total liabilities   130 
Net assets  $75,238 
Summary of Net Assets:     
Capital stock and paid-in-capital  $64,915 
Distributions in excess of net investment loss   (920)
Accumulated net realized gain   1,379 
Unrealized appreciation of investments   9,864 
Net assets  $75,238 
      
Shares authorized   200,000 
Par value  $   0.001 
Class R3: Net asset value per share  $15.65 
Shares outstanding   2,419 
Net assets  $37,870 
Class R4: Net asset value per share  $15.72 
Shares outstanding   2,317 
Net assets  $36,437 
Class R5: Net asset value per share  $15.74 
Shares outstanding   53 
Net assets  $827 
Class Y: Net asset value per share  $15.74 
Shares outstanding   7 
Net assets  $104 

 

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

 

7

 

The Hartford Target Retirement 2040 Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends from underlying affiliated funds  $878 
Total investment income   878 
      
Expenses:     
Investment management fees   51 
Administrative services fees     
Class R3   35 
Class R4   24 
Class R5   1 
Transfer agent fees     
Class R3   1 
Class R4    
Class R5    
Class Y    
Distribution fees     
Class R3   88 
Class R4   40 
Custodian fees    
Accounting services fees   4 
Registration and filing fees   19 
Board of Directors' fees   1 
Audit fees   5 
Other expenses   5 
Total expenses (before waivers)   274 
Expense waivers   (152)
Total waivers   (152)
Total expenses, net   122 
Net Investment Income   756 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   863 
Net realized gain on investments in underlying affiliated funds   702 
Net Realized Gain on Investments   1,565 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   5,071 
Net Changes in Unrealized Appreciation of Investments   5,071 
Net Gain on Investments   6,636 
Net Increase in Net Assets Resulting from Operations  $7,392 

 

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

 

8

 

The Hartford Target Retirement 2040 Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the 
Year Ended 
October 31, 2012
 
Operations:          
Net investment income  $756   $391 
Net realized gain on investments   1,565    678 
Net unrealized appreciation of investments   5,071    4,292 
Net Increase in Net Assets Resulting from Operations   7,392    5,361 
Distributions to Shareholders:          
From net investment income          
Class R3   (917)   (273)
Class R4   (879)   (163)
Class R5   (24)   (17)
Total from net investment income   (1,820)   (453)
From net realized gain on investments          
Class R3   (398)   (679)
Class R4   (343)   (308)
Class R5   (19)   (35)
Total from net realized gain on investments   (760)   (1,022)
Total distributions   (2,580)   (1,475)
Capital Share Transactions:          
Class R3   1,408    5,784 
Class R4   5,479    15,120 
Class R5   (838)   175 
Class Y   100     
Net increase from capital share transactions   6,149    21,079 
Net Increase in Net Assets   10,961    24,965 
Net Assets:          
Beginning of period   64,277    39,312 
End of period  $75,238   $64,277 
Undistributed (distribution in excess of) net investment income (loss)  $(920)  $144 

 

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

 

9

 

The Hartford Target Retirement 2040 Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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.

 

Class 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.

 

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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

10

  

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

  

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a

 

 

11

 

The Hartford Target Retirement 2040 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

  

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

12

 

 

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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $805   $142 
Long-Term Capital Gains ‡   670    194 

 

The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $298 
Undistributed Long-Term Capital Gain   605 
Unrealized Appreciation *   4,608 
Total Accumulated Earnings  $5,511 

 

*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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $24 
Accumulated Net Realized Gain (Loss)   (24)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

13

 

The Hartford Target Retirement 2040 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets   Annual Fee 
On first $500 million   0.15%  
On next $500 million   0.10%  
On next $1.5 billion   0.09%  
On next $2.5 billion   0.08%  
On next $2.5 billion   0.07%  
On next $2.5 billion   0.06%  
Over $10 billion   0.05%  

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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% 

 

14

 

 

 

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 period March 1, 2013 through April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

 

Class R3   Class R4   Class R5   Class Y 
 1.35%     1.05%     0.85%     0.85%  

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses as follows:

 

Class R3   Class R4   Class R5 
 1.20%     0.90%     0.85%  

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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% of average daily net assets. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

15

 

The Hartford Target Retirement 2040 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

6.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage 
of Class
 
Class Y   100%

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $14,262 
Sales Proceeds Excluding U.S. Government Obligations   9,066 

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class R3                                                  
Shares   284    91    (281)       94    924    74    (579)       419 
Amount  $4,240   $1,315   $(4,147)  $   $1,408   $12,969   $952   $(8,137)  $   $5,784 
Class R4                                                  
Shares   393    84    (109)       368    1,264    36    (204)       1,096 
Amount  $5,903   $1,221   $(1,645)  $   $5,479   $17,592   $471   $(2,943)  $   $15,120 
Class R5                                                  
Shares   13    3    (72)       (56)   16    4    (8)       12 
Amount  $184   $43   $(1,065)  $   $(838)  $238   $52   $(115)  $   $175 
Class Y                                                  
Shares   7                7                     
Amount  $100   $   $   $   $100   $   $   $   $   $ 
Total                                                  
Shares   697    178    (462)       413    2,204    114    (791)       1,527 
Amount  $10,427   $2,579   $(6,857)  $   $6,149   $30,799   $1,475   $(11,195)  $   $21,079 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the

 

16

 

 

1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

17

 

The Hartford Target Retirement 2040 Fund

Financial Highlights 

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of 
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                              
For the Six-Month Period Ended April 30, 2013 (Unaudited)                    
R3  $14.62   $0.16   $1.43   $1.59   $(0.39)  $(0.17)  $   $(0.56)  $15.65 
R4   14.71    0.21    1.41    1.62    (0.44)   (0.17)       (0.61)   15.72 
R5   14.72    0.31    1.32    1.63    (0.44)   (0.17)       (0.61)   15.74 
Y(G)   15.10    0.01    0.63    0.64                    15.74 
                                              
For the Year Ended October 31, 2012                    
R3   13.75    0.10    1.26    1.36    (0.13)   (0.36)       (0.49)   14.62 
R4   13.82    0.13    1.29    1.42    (0.17)   (0.36)       (0.53)   14.71 
R5   13.83    0.14    1.28    1.42    (0.17)   (0.36)       (0.53)   14.72 
                                              
For the Year Ended October 31, 2011 (H)                    
R3   13.48    0.10    0.41    0.51    (0.09)   (0.15)       (0.24)   13.75 
R4   13.52    0.14    0.42    0.56    (0.11)   (0.15)       (0.26)   13.82 
R5   13.53    0.16    0.40    0.56    (0.11)   (0.15)       (0.26)   13.83 
                                              
For the Year Ended October 31, 2010                    
R3   11.59    0.06    1.91    1.97    (0.08)           (0.08)   13.48 
R4   11.62    0.11    1.90    2.01    (0.11)           (0.11)   13.52 
R5   11.63    0.12    1.89    2.01    (0.11)           (0.11)   13.53 
                                              
From October 31, 2008  (commencement of operations) through October 31, 2009                    
R3   10.00    0.15    1.55    1.70    (0.11)           (0.11)   11.59 
R4   10.00    0.17    1.57    1.74    (0.12)           (0.12)   11.62 
R5   10.00    0.18    1.57    1.75    (0.12)           (0.12)   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)Ratios do not include expenses of the Underlying Funds.
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Not annualized.
(F)Annualized.
(G)Commenced operations on February 28, 2013.
(H)Per share amounts have been calculated using average shares outstanding method.

 

18

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net
Assets(C)
   Portfolio
Turnover
Rate(D)
 
  
                            
 11.27%(E)  $37,870    0.95%(F)   0.50%(F)   2.11%(F)   13%
  11.39(E)   36,437     0.65(F)    0.21(F)    2.30(F)    
  11.50(E)   827     0.37(F)    0.10(F)    2.93(F)    
  4.86(E)   104     0.26(F)    0.10(F)    0.50(F)    
                            
                            
 10.44    33,996    0.99    0.45    0.65    99 
 10.81    28,670    0.68    0.15    0.81     
 10.84    1,611    0.40    0.10    1.06     
 
 
 3.78    26,194    1.06    0.44    0.73    41 
 4.12    11,782    0.76    0.14    1.01     
 4.15    1,336    0.47    0.09    1.12     
                            
                            
 17.06    9,856    1.45    0.38    0.64    24 
 17.35    4,727    1.18    0.08    0.93     
 17.36    1,863    0.91    0.03    1.00     
                            
                            
 17.34    1,301    2.41    0.35    1.48    15 
 17.70    1,629    2.10    0.05    1.79     
 17.81    1,321    1.81        1.83     

 

19

 

The Hartford Target Retirement 2040 Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

20

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010. 

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

21

 

The Hartford Target Retirement 2040 Fund

Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

   

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

    Actual return     Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account 
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
 
Class R3   $1,000.00   $1,112.70   $2.63   $1,000.00   $1,022.30   $2.52    0.50%  181  365  
Class R4   $1,000.00   $1,113.90   $1.08   $1,000.00   $1,023.78   $1.03    0.21   181  365  
Class R5   $1,000.00   $1,115.00   $0.53   $1,000.00   $1,024.30   $0.50    0.10   181  365  
Class Y*   $1,000.00   $1,048.60   $0.17   $1,000.00   $1,008.19   $0.17    0.10   61  365  

 

*Commenced operations on February 28, 2013.

 

23

 

The Hartford Target Retirement 2040 Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Target Retirement 2040 Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

24

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

25

 

The Hartford Target Retirement 2040 Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Target Date Risk: As the Fund’s target year approaches, it will increase its allocation to fixed income investments and decrease its allocation to equity investments. Conversely, the Fund will hold a higher percentage in equities and be more volatile when it’s further away from its target year. Target date funds are not guaranteed and you may experience losses, included losses near, at or after the target retirement year. There is no guarantee that the Fund will provide adequate income at and through your retirement.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

26
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-TR4013 4/13 114008 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

48

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD TARGET RETIREMENT 2045 FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Target Retirement 2045 Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 9
Notes to Financial Statements (Unaudited) 10
Financial Highlights (Unaudited) 18
Directors and Officers (Unaudited) 20
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 22
Quarterly Portfolio Holdings Information (Unaudited) 22
Expense Example (Unaudited) 23
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 24
Principal Risks (Unaudited) 26

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

  

 

 

The Hartford Target Retirement 2045 Fund inception 10/31/2008
(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks to maximize total return and secondarily, seeks capital preservation.

 

 

Performance Overview 10/31/08 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class R3. Growth results in classes other than Class R3 will vary from what is seen above due to differences in the expenses charged to those share classes.

   

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   Since
Inception▲
 
Target Retirement 2045 R3   11.22%       11.46%       13.18%    
Target Retirement 2045 R4   11.38%       11.86%       13.53%    
Target Retirement 2045 R5   11.35%       11.82%       13.56%    
Target Retirement 2045 Y   11.35%       11.82%       13.56%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       7.26%    
MSCI All Country World Index   13.78%       15.69%       13.59%    

 

Not Annualized
Inception: 10/31/2008

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Class Y shares commenced operations on 02/28/13. Performance prior to that date is that of the Fund’s Class R5 shares which had different operating expenses.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Target Retirement 2045 Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*

 

   Net   Gross 
Target Retirement 2045 Class R3   1.40%      1.90%   
Target Retirement 2045 Class R4   1.10%      1.59%   
Target Retirement 2045 Class R5   0.90%      1.31%   
Target Retirement 2045 Class Y   0.90%      1.21%   

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

      

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Rick A. Wurster, CFA, CMT Stephen A. Gorman, CFA
Vice President and Asset Allocation Portfolio Manager Vice President, Director, Tactical Asset Allocation, Asset Allocation Strategies Group and Portfolio Manager

 

How did the Fund perform?

The Class R3 shares of The Hartford Target Retirement 2045 Fund returned 11.22% for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. The Fund underperformed the average return for the Lipper Mixed-Asset Target 2045 Funds category, a group of funds with investment strategies similar to those of the Fund, which returned 12.45%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02%-0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the

 

3

 

The Hartford Target Retirement 2045 Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

stock/bond mix of the Fund was approximately 78% equities and 22% fixed income. A modest underweight allocation (i.e. the Fund’s position was less than the benchmark position) to fixed income and overweight to equities contributed as equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative performance in the Capital Appreciation, Strategic Income and International Small Company Funds more than offset weak benchmark-relative results from the International Opportunities, MidCap Value and Small Company Funds.

 

What is the outlook?

We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

 

Composition by Investments
as of April 30, 2013   

 

Fund Name  Percentage of Net
Assets
 
The Hartford Alternative Strategies Fund, Class Y   12.9%
The Hartford Capital Appreciation Fund, Class Y   11.6 
The Hartford Dividend and Growth Fund, Class Y   22.4 
The Hartford Emerging Markets Research Fund, Class Y   8.6 
The Hartford Global Real Asset Fund, Class Y   1.7 
The Hartford Inflation Plus Fund, Class Y   0.2 
The Hartford International Opportunities Fund, Class Y   19.6 
The Hartford International Small Company Fund, Class Y   6.8 
The Hartford MidCap Value Fund, Class Y   3.8 
The Hartford Small Company Fund, Class Y   3.8 
The Hartford Strategic Income Fund, Class Y   8.5 
Other Assets and Liabilities   0.1 
Total   100.0%

 

4

 

The Hartford Target Retirement 2045 Fund

Schedule of Investments

April 30, 2013 (Unaudited)

000’s Omitted

  

Shares or Principal Amount      Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 99.9%          
EQUITY FUNDS - 78.3%          
 80   The Hartford Capital Appreciation Fund, Class Y     $3,421 
 280   The Hartford Dividend and Growth Fund, Class Y        6,605 
 284   The Hartford Emerging Markets Research Fund, Class Y        2,528 
 49   The Hartford Global Real Asset Fund, Class Y        511 
 348   The Hartford International Opportunities Fund, Class Y        5,791 
 129   The Hartford International Small Company Fund, Class Y        2,019 
 74   The Hartford MidCap Value Fund, Class Y        1,126 
 48   The Hartford Small Company Fund, Class Y        1,117 
              23,118 
     Total equity funds          
     (cost $19,400)       $23,118 
                
FIXED INCOME FUNDS - 21.6%          
 369   The Hartford Alternative Strategies Fund, Class Y       $3,805 
 6   The Hartford Inflation Plus Fund, Class Y        74 
 264   The Hartford Strategic Income Fund, Class Y        2,509 
              6,388 
     Total fixed income funds          
     (cost $6,361)       $6,388 
                
     Total investments in affiliated investment companies          
     (cost $25,761)       $29,506 
                
     Total long-term investments          
     (cost $25,761)       $29,506 
                
     Total investments          
     (cost $25,761) ▲   99.9%  $29,506 
     Other assets and liabilities   0.1%   39 
     Total net assets   100.0%  $29,545 

  

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $25,826 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $3,688 
Unrealized Depreciation   (8)
Net Unrealized Appreciation  $3,680 

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

  

5

 

The Hartford Target Retirement 2045 Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

  

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                
Affiliated Investment Companies  $29,506   $29,506   $   $ 
Total  $29,506   $29,506   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  

 

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

 

6

 

The Hartford Target Retirement 2045 Fund

Statement of Assets and Liabilities

April 30, 2013  (Unaudited)

(000’s Omitted)

  

Assets:     
Investments in underlying affiliated funds, at market value (cost $25,761)  $29,506 
Receivables:     
Investment securities sold   11 
Fund shares sold   29 
Other assets   48 
Total assets   29,594 
Liabilities:     
Payables:     
Investment securities purchased   28 
Fund shares redeemed   11 
Investment management fees   1 
Administrative fees   1 
Distribution fees   2 
Accrued expenses   6 
Total liabilities   49 
Net assets  $29,545 
Summary of Net Assets:     
Capital stock and paid-in-capital  $25,433 
Distributions in excess of net investment loss   (363)
Accumulated net realized gain   730 
Unrealized appreciation of investments   3,745 
Net assets  $29,545 
      
Shares authorized   200,000 
Par value  $0.001 
Class R3: Net asset value per share  $15.12 
Shares outstanding   960 
Net assets  $14,520 
Class R4: Net asset value per share  $15.19 
Shares outstanding   961 
Net assets  $14,588 
Class R5: Net asset value per share  $15.19 
Shares outstanding   22 
Net assets  $333 
Class Y: Net asset value per share  $15.19 
Shares outstanding   7 
Net assets  $104 

 

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

 

7

 

The Hartford Target Retirement 2045 Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends from underlying affiliated funds  $339 
Total investment income   339 
      
Expenses:     
Investment management fees   20 
Administrative services fees    
Class R3   14 
Class R4   9 
Class R5    
Transfer agent fees    
Class R3    
Class R4    
Class R5    
Class Y    
Distribution fees     
Class R3   34 
Class R4   16 
Custodian fees    
Accounting services fees   2 
Registration and filing fees   18 
Board of Directors' fees   1 
Audit fees   5 
Other expenses   5 
Total expenses (before waivers)   124 
Expense waivers   (69)
Total waivers   (69)
Total expenses, net   55 
Net Investment Income   284 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   346 
Net realized gain on investments in underlying affiliated funds   450 
Net Realized Gain on Investments   796 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   1,794 
Net Changes in Unrealized Appreciation of Investments   1,794 
Net Gain on Investments   2,590 
Net Increase in Net Assets Resulting from Operations  $2,874 

 

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

 

8

 

The Hartford Target Retirement 2045 Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $284   $133 
Net realized gain on investments   796    227 
Net unrealized appreciation of investments   1,794    1,568 
Net Increase in Net Assets Resulting from Operations   2,874    1,928 
Distributions to Shareholders:          
From net investment income          
Class R3   (345)   (73)
Class R4   (335)   (58)
Class R5   (10)   (10)
Total from net investment income   (690)   (141)
From net realized gain on investments          
Class R3   (118)   (500)
Class R4   (110)   (295)
Class R5   (9)   (53)
Total from net realized gain on investments   (237)   (848)
Total distributions   (927)   (989)
Capital Share Transactions:          
Class R3   512    4,069 
Class R4   1,976    6,202 
Class R5   (695)   52 
Class Y   100     
Net increase from capital share transactions   1,893    10,323 
Net Increase in Net Assets   3,840    11,262 
Net Assets:          
Beginning of period   25,705    14,443 
End of period  $29,545   $25,705 
Undistributed (distribution in excess of) net investment income (loss)  $(363)  $43 

 

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

 

9

  

The Hartford Target Retirement 2045 Fund

Notes to Financial Statements

April 30, 2013  (Unaudited)

(000’s Omitted)

  

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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.

 

Class 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.

 

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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

10

 

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding.

 

11

 

The Hartford Target Retirement 2045 Fund

Notes to Financial Statements — (continued)

April 30, 2013  (Unaudited)

(000’s Omitted)

 

Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

12

 

 

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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $216   $60 
Long-Term Capital Gains ‡   773    123 

 

The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $43 
Undistributed Long-Term Capital Gain   236 
Unrealized Appreciation *   1,886 
Total Accumulated Earnings  $2,165 

 

*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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $7 
Accumulated Net Realized Gain (Loss)   (7)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

     

 

13

 

The Hartford Target Retirement 2045 Fund

Notes to Financial Statements — (continued)

April 30, 2013  (Unaudited)

(000’s Omitted)

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.15%   
On next $500 million   0.10%   
On next $1.5 billion   0.09%   
On next $2.5 billion   0.08%   
On next $2.5 billion   0.07%   
On next $2.5 billion   0.06%   
Over $10 billion   0.05%   

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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 period March 1,

  

14

 

 

2013 through April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class R3   Class R4   Class R5   Class Y 
 1.40%     1.10%     0.90%     0.90%  

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses as follows:

 

Class R3   Class R4   Class R5 
 1.25%     0.95%     0.90%  

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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% of average daily net assets. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

15

 

The Hartford Target Retirement 2045 Fund

Notes to Financial Statements — (continued)

April 30, 2013  (Unaudited)

(000’s Omitted)

 

6.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R4   1%
Class R5   55 
Class Y   100 

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, the Fund's aggregate purchases and sales of investment securities (excluding short-term investments) were as follows:

 

   Amount 
Cost of Purchases Excluding U.S. Government Obligations  $6,647 
Sales Proceeds Excluding U.S. Government Obligations   5,067 

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
 Shares
 
Class R3                                                  
Shares   143    33    (140)       36    336    47    (77)       306 
Amount  $2,064   $462   $(2,014)  $   $512   $4,541   $573   $(1,045)  $   $4,069 
Class R4                                                  
Shares   204    32    (99)       137    578    28    (148)       458 
Amount  $2,962   $445   $(1,431)  $   $1,976   $7,836   $353   $(1,987)  $   $6,202 
Class R5                                                  
Shares   7    1    (57)       (49)   4    5    (4)       5 
Amount  $99   $19   $(813)  $   $(695)  $48   $63   $(59)  $   $52 
Class Y                                                  
Shares   7                7                     
Amount  $100   $   $   $   $100   $   $   $   $   $ 
Total                                                  
Shares   361    66    (296)       131    918    80    (229)       769 
Amount  $5,225   $926   $(4,258)  $   $1,893   $12,425   $989   $(3,091)  $   $10,323 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

16

 

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

17

 

The Hartford Target Retirement 2045 Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized  and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End  of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)                     
R3  $14.09   $0.14   $1.39   $1.53   $(0.37)  $(0.13)  $   $(0.50)  $15.12 
R4   14.17    0.16    1.40    1.56    (0.41)   (0.13)       (0.54)   15.19 
R5   14.18    0.22    1.34    1.56    (0.42)   (0.13)       (0.55)   15.19 
Y(H)   14.57    0.01    0.61    0.62                    15.19 
                                              
For the Year Ended October 31, 2012 (E)                     
R3   13.73    0.07    1.18    1.25    (0.10)   (0.79)       (0.89)   14.09 
R4   13.79    0.10    1.21    1.31    (0.14)   (0.79)       (0.93)   14.17 
R5   13.80    0.13    1.18    1.31    (0.14)   (0.79)       (0.93)   14.18 
                                              
For the Year Ended October 31, 2011 (E)                     
R3   13.47    0.07    0.47    0.54    (0.08)   (0.20)       (0.28)   13.73 
R4   13.51    0.11    0.47    0.58    (0.10)   (0.20)       (0.30)   13.79 
R5   13.51    0.12    0.48    0.60    (0.11)   (0.20)       (0.31)   13.80 
                                              
For the Year Ended October 31, 2010                      
R3   11.59    0.06    1.88    1.94    (0.06)           (0.06)   13.47 
R4   11.62    0.10    1.88    1.98    (0.09)           (0.09)   13.51 
R5   11.62    0.11    1.87    1.98    (0.09)           (0.09)   13.51 
                                              
From October 31, 2008  (commencement of operations) through October 31, 2009                      
R3   10.00    0.12    1.58    1.70    (0.11)           (0.11)   11.59 
R4   10.00    0.15    1.58    1.73    (0.11)           (0.11)   11.62 
R5   10.00    0.15    1.58    1.73    (0.11)           (0.11)   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)Ratios do not include expenses of the Underlying Funds.
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)Commenced operations on February 28, 2013.

 

18

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net
Assets(C)
   Portfolio
Turnover
Rate(D)
 
                      
                            
 11.22%(F)  $14,520    1.07%(G)   0.55%(G)   1.98%(G)   19%
 11.38(F)   14,588    0.77(G)   0.26(G)   2.25(G)    
 11.35(F)   333    0.49(G)   0.15(G)   3.13(G)    
 4.26(F)   104    0.38(G)   0.15(G)   0.44(G)    
                            
                            
 10.14    13,020    1.15    0.49    0.54    89 
 10.53    11,680    0.84    0.19    0.75     
 10.56    1,005    0.56    0.14    0.96     
                            
                            
 4.03    8,477    1.33    0.48    0.50    50 
 4.33    5,048    1.03    0.18    0.81     
 4.44    918    0.73    0.13    0.86     
                            
                            
 16.79    3,918    1.77    0.42    0.47    19 
 17.09    2,399    1.48    0.12    0.76     
 17.14    1,371    1.18    0.07    0.84     
                            
                            
 17.28    1,380    2.40    0.39    1.21    7 
 17.65    1,499    2.08    0.09    1.49     
 17.65    1,190    1.82    0.04    1.54     

 

19

 

The Hartford Target Retirement 2045 Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

20

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

21

 

The Hartford Target Retirement 2045 Fund

Directors and Officers (Unaudited) – (continued)

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

22

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account 
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
 
Class R3  $1,000.00   $1,112.20   $2.90   $1,000.00   $1,022.05   $2.77    0.55%  181  365  
Class R4  $1,000.00   $1,113.80   $1.34   $1,000.00   $1,023.53   $1.28    0.26   181  365  
Class R5  $1,000.00   $1,113.50   $0.79   $1,000.00   $1,024.05   $0.75    0.15   181  365  
Class Y*  $1,000.00   $1,042.60   $0.26   $1,000.00   $1,008.10   $0.26    0.15   61  365  

 

*Commenced operations on February 28, 2013.

 

23

 

The Hartford Target Retirement 2045 Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Target Retirement 2045 Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard,

 

24

 

 

the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

25

 

The Hartford Target Retirement 2045 Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Target Date Risk: As the Fund’s target year approaches, it will increase its allocation to fixed income investments and decrease its allocation to equity investments. Conversely, the Fund will hold a higher percentage in equities and be more volatile when it’s further away from its target year. Target date funds are not guaranteed and you may experience losses, included losses near, at or after the target retirement year. There is no guarantee that the Fund will provide adequate income at and through your retirement.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

26
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-TR4513 4/13 114009 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

49

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD TARGET RETIREMENT 2050 FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford Target Retirement 2050 Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 6
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 7
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 8
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 9
Notes to Financial Statements (Unaudited) 10
Financial Highlights  (Unaudited) 18
Directors and Officers (Unaudited) 20
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 22
Quarterly Portfolio Holdings Information (Unaudited) 22
Expense Example (Unaudited) 23
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 24
Principal Risks (Unaudited) 26

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Target Retirement 2050 Fund inception 10/31/2008
(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks to maximize total return and secondarily, seeks capital preservation.

 

Performance Overview  10/31/08 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class R3. Growth results in classes other than Class R3 will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   Since
Inception▲
 
Target Retirement 2050 R3   11.25%       11.57%       13.03%    
Target Retirement 2050 R4   11.44%       11.91%       13.37%    
Target Retirement 2050 R5   11.40%       11.88%       13.41%    
Target Retirement 2050 Y   11.40%       11.88%       13.41%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       7.26%    
MSCI All Country World Index   13.78%       15.69%       13.59%    

 

Not Annualized
Inception: 10/31/2008

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of June 4, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Class Y shares commenced operations on 02/28/13. Performance prior to that date is that of the Fund’s Class R5 shares which had different operating expenses.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial Mortgage-Backed Securities Index.

 

MSCI All Country World Index is a free float-adjusted market capitalization index that measures equity market performance in the global developed and emerging markets, consisting of 45 developed and emerging market country indices. This index is unmanaged, and its results include reinvested dividends and/or distributions, but do not reflect the effect of sales charges, commissions, expenses or taxes.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Target Retirement 2050 Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*        
   Net   Gross 
Target Retirement 2050 Class R3   1.40%       1.89%    
Target Retirement 2050 Class R4   1.10%       1.59%    
Target Retirement 2050 Class R5   0.90%       1.30%    
Target Retirement 2050 Class Y   0.90%       1.20%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Rick A. Wurster, CFA, CMT Stephen A. Gorman, CFA
Vice President and Asset Allocation Portfolio Manager Vice President, Director, Tactical Asset Allocation, Asset Allocation Strategies Group and Portfolio Manager

 

How did the Fund perform?

The Class R3 shares of The Hartford Target Retirement 2050 Fund returned 11.25% for the six-month period ended April 30, 2013. In comparison, the Fund’s benchmarks, the MSCI All Country World Index and the Barclays U.S. Aggregate Bond Index returned 13.78% and 0.91%, respectively, for the same period. However, the Fund underperformed the average return for the Lipper Mixed-Asset Target 2050 Funds category, a group of funds with investment strategies similar to those of the Fund, which returned 12.56%.

 

Why did the Fund perform this way?

Global equities surged during the period, nearing an all-time high by the end of April. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period. The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02%-0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

There are two main drivers of benchmark-relative fund performance: the asset allocation among various asset classes and the performance of the underlying funds. Value added from “Asset Allocation” includes the value added by both the Fund’s strategic asset allocation across a diverse set of asset classes and how those allocations are implemented within the asset classes. Performance of the underlying funds measures the results of the underlying funds versus their respective benchmarks. The portfolio managers have control over the selection of the underlying funds.

 

In aggregate, asset allocation contributed to benchmark-relative performance. With regard to asset allocation, the stock/bond mix of the Fund was approximately 55% equities and 45% fixed income. A modest underweight allocation (i.e.

 

3

 

The Hartford Target Retirement 2050 Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

the Fund’s position was less than the benchmark position) to fixed income and overweight to equities contributed as equities strongly outperformed fixed income during the period. Within equities, a structural overweight allocation to U.S. equity oriented strategies helped as U.S. equities outperformed non-U.S. equities during the period. Additionally, an allocation to international small cap equities was additive. Inflation sensitive assets such as commodities and natural resource equities underperformed global equities, and our allocation to those assets detracted from benchmark-relative performance. Within fixed income, positive results from exposure to high yield bonds and emerging market debt weren’t enough to offset weaker results from exposure to global government bonds and Treasury Inflation Protected Securities (TIPS), which lagged the Barclays U.S. Aggregate Bond Index.

 

Beyond asset class decisions, we seek to add value by selecting the underlying funds available in our investment universe using both quantitative and qualitative criteria. In aggregate, performance from the underlying funds (net of fees) contributed positively on a benchmark-relative basis. Strong benchmark-relative performance in the Capital Appreciation, Strategic Income and International Small Company Funds more than offset weak benchmark-relative results from the International Opportunities, MidCap Value and Small Company Funds.

 

What is the outlook?

We expect improvement in the global economy as the year progresses. While sovereign debt issues and concerns about recession remain a focus in Europe over the short term, improved fiscal situations and structural reforms have the potential to positively affect growth. We will continue to monitor the macro situation across the globe, and will adjust our positioning accordingly as opportunities arise.

 

Composition by Investments

as of April 30, 2013 

 

Fund Name  Percentage of Net
Assets
 
The Hartford Alternative Strategies Fund, Class Y   12.9%
The Hartford Capital Appreciation Fund, Class Y   11.6 
The Hartford Dividend and Growth Fund, Class Y   22.2 
The Hartford Emerging Markets Research Fund, Class Y   8.5 
The Hartford Global Real Asset Fund, Class Y   1.7 
The Hartford Inflation Plus Fund, Class Y   0.3 
The Hartford International Opportunities Fund, Class Y   19.7 
The Hartford International Small Company Fund, Class Y   6.9 
The Hartford MidCap Value Fund, Class Y   3.8 
The Hartford Small Company Fund, Class Y   3.8 
The Hartford Strategic Income Fund, Class Y   8.5 
Other Assets and Liabilities   0.1 
Total   100.0%

 

4

 

The Hartford Target Retirement 2050 Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount     Market Value ╪ 
AFFILIATED INVESTMENT COMPANIES - 99.9%
EQUITY FUNDS - 78.2%
 95   The Hartford Capital Appreciation Fund, Class Y       $4,077 
 331   The Hartford Dividend and Growth Fund, Class Y        7,799 
 336   The Hartford Emerging Markets Research Fund, Class Y        2,987 
 58   The Hartford Global Real Asset Fund, Class Y        604 
 414   The Hartford International Opportunities Fund, Class Y        6,896 
 155   The Hartford International Small Company Fund, Class Y        2,432 
 87   The Hartford MidCap Value Fund, Class Y        1,326 
 56   The Hartford Small Company Fund, Class Y        1,315 
              27,436 
     Total equity funds          
     (cost $23,025)       $27,436 
                
FIXED INCOME FUNDS - 21.7%
 439   The Hartford Alternative Strategies Fund, Class Y       $4,531 
 7   The Hartford Inflation Plus Fund, Class Y        87 
 313   The Hartford Strategic Income Fund, Class Y        2,980 
              7,598 
     Total fixed income funds          
     (cost $7,571)       $7,598 
                
     Total investments in affiliated investment companies          
     (cost $30,596)       $35,034 
                
     Total long-term investments          
     (cost $30,596)       $35,034 
                
     Total investments          
     (cost $30,596) ▲   99.9%  $35,034 
     Other assets and liabilities   0.1%   38 
     Total net assets   100.0%  $35,072 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $30,663 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $4,383 
Unrealized Depreciation   (12)
Net Unrealized Appreciation  $4,371 

 

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 Target Retirement 2050 Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Affiliated Investment Companies  $35,034   $35,034   $   $ 
Total  $35,034   $35,034   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.  

 

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

 

6

 

The Hartford Target Retirement 2050 Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in underlying affiliated funds, at market value (cost $30,596)  $35,034 
Receivables:     
Fund shares sold   39 
Other assets   49 
Total assets   35,122 
Liabilities:     
Payables:     
Investment securities purchased   39 
Fund shares redeemed    
Investment management fees   1 
Administrative fees   1 
Distribution fees   2 
Accrued expenses   7 
Total liabilities   50 
Net assets  $35,072 
Summary of Net Assets:     
Capital stock and paid-in-capital  $30,335 
Distributions in excess of net investment loss   (410)
Accumulated net realized gain   709 
Unrealized appreciation of investments   4,438 
Net assets  $35,072 
      
Shares authorized   200,000 
Par value  $0.001 
Class R3: Net asset value per share  $15.25 
Shares outstanding   1,025 
Net assets  $15,630 
Class R4: Net asset value per share  $15.32 
Shares outstanding   1,216 
Net assets  $18,630 
Class R5: Net asset value per share  $15.32 
Shares outstanding   46 
Net assets  $708 
Class Y: Net asset value per share  $15.32 
Shares outstanding   7 
Net assets  $104 

 

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

 

7

 

The Hartford Target Retirement 2050 Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends from underlying affiliated funds  $385 
Total investment income   385 
      
Expenses:     
Investment management fees   23 
Administrative services fees     
Class R3   14 
Class R4   12 
Class R5    
Transfer agent fees     
Class R3    
Class R4    
Class R5    
Class Y    
Distribution fees     
Class R3   35 
Class R4   20 
Custodian fees    
Accounting services fees   2 
Registration and filing fees   18 
Board of Directors' fees   1 
Audit fees   5 
Other expenses   4 
Total expenses (before waivers)   134 
Expense waivers   (75)
Total waivers   (75)
Total expenses, net   59 
Net Investment Income   326 
Net Realized Gain on Investments:     
Capital gain distribution received from underlying affiliated funds   389 
Net realized gain on investments in underlying affiliated funds   387 
Net Realized Gain on Investments   776 
Net Changes in Unrealized Appreciation of Investments:     
Net unrealized appreciation of investments in underlying affiliated funds   2,204 
Net Changes in Unrealized Appreciation of Investments   2,204 
Net Gain on Investments   2,980 
Net Increase in Net Assets Resulting from Operations  $3,306 

 

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

 

8

 

The Hartford Target Retirement 2050 Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $326   $160 
Net realized gain on investments   776    176 
Net unrealized appreciation of investments   2,204    1,930 
Net Increase in Net Assets Resulting from Operations   3,306    2,266 
Distributions to Shareholders:          
From net investment income          
Class R3   (344)   (78)
Class R4   (424)   (69)
Class R5   (17)   (12)
Total from net investment income   (785)   (159)
From net realized gain on investments          
Class R3   (84)   (425)
Class R4   (92)   (290)
Class R5   (9)   (51)
Total from net realized gain on investments   (185)   (766)
Total distributions   (970)   (925)
Capital Share Transactions:          
Class R3   847    4,186 
Class R4   3,002    7,508 
Class R5   (697)   217 
Class Y   99     
Net increase from capital share transactions   3,251    11,911 
Net Increase in Net Assets   5,587    13,252 
Net Assets:          
Beginning of period   29,485    16,233 
End of period  $35,072   $29,485 
Undistributed (distribution in excess of) net investment income (loss)  $(410)  $49 

 

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

 

9

 

The Hartford Target Retirement 2050 Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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.

 

Class 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.

 

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 Wellington Management Company, LLP (“Wellington Management”), sub-adviser to the Fund.

 

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, (2) on our website www.hartfordfunds.com and (3) on the SEC’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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation Investments in open-end mutual funds are valued at the respective NAV of each Underlying Fund as determined as of the NYSE Close on the Valuation Date.

 

The Fund generally uses market prices in valuing the remaining portfolio investments. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors.

 

10

 

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments 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 six-month period ended April 30, 2013, the Fund held no Level 3 investments; therefore, no reconciliation of Level 3 investments is presented.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary which follows the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income is accrued on the ex-dividend date. Income and capital gain distributions from the Underlying Funds are accrued on the ex-dividend date.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a

 

11

 

The Hartford Target Retirement 2050 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income, if any, and realized capital gains, if any, at least once a year. 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, net 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 note).

 

3.Principal Risks:

 

a)Market Risks – The Fund is exposed to the risks of the Underlying Funds and/or ETFs in direct proportion to the amount of assets the Fund allocates to each Underlying Fund and/or ETF. The market values of the Underlying Funds and/or ETFs may decline due to general market conditions which are not specifically related to a particular company in which the Underlying Fund and/or ETF invested, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities in which the Underlying Funds and/or ETFs invest may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.

 

4.Federal Income Taxes:

 

a)Federal Income Taxes – For federal income tax purposes, the Fund intends to continue to qualify as a Regulated Investment Company (“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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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.

 

12

 

 

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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $159   $71 
Long-Term Capital Gains ‡   766    129 

 

  The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $49 
Undistributed Long-Term Capital Gain   185 
Unrealized Appreciation *   2,167 
Total Accumulated Earnings  $2,401 

 

  * 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 U.S. GAAP and tax accounting for such items as expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $2 
Accumulated Net Realized Gain (Loss)   (2)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

13

 

The Hartford Target Retirement 2050 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

5.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $500 million   0.15%   
On next $500 million   0.10%   
On next $1.5 billion   0.09%   
On next $2.5 billion   0.08%   
On next $2.5 billion   0.07%   
On next $2.5 billion   0.06%   
Over $10 billion   0.05%   

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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%  

 

14

 

 

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 period March 1, 2013 through April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses, through February 28, 2014 as follows:

 

Class R3   Class R4   Class R5   Class Y 
 1.40%     1.10%     0.90%     0.90%  

 

From November 1, 2012 through February 28, 2013, the respective investment manager contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions and extraordinary expenses as follows:

 

Class R3   Class R4   Class R5 
 1.25%     0.95%     0.90%  

 

Contractual limitations for total operating expenses include expenses incurred as the result of investing in other investment companies including the Underlying Funds. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations, as applicable.

 

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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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% of average daily net assets. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

15

 

The Hartford Target Retirement 2050 Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

6.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R4   1%
Class R5   28 
Class Y   100 

 

7.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $7,782 
Sales Proceeds Excluding U.S. Government Obligations   4,801 

 

8.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class R3                                                  
Shares   174    30    (148)       56    457    41    (187)       311 
Amount  $2,547   $427   $(2,127)  $   $847   $6,234   $503   $(2,551)  $   $4,186 
Class R4                                                  
Shares   225    36    (56)       205    657    29    (128)       558 
Amount  $3,297   $516   $(811)  $   $3,002   $8,904   $359   $(1,755)  $   $7,508 
Class R5                                                  
Shares   11    2    (62)       (49)   12    5    (1)       16 
Amount  $168   $25   $(890)  $   $(697)  $168   $63   $(14)  $   $217 
Class Y                                                  
Shares   7                7                     
Amount  $99   $   $   $   $99   $   $   $   $   $ 
Total                                                  
Shares   417    68    (266)       219    1,126    75    (316)       885 
Amount  $6,111   $968   $(3,828)  $   $3,251   $15,306   $925   $(4,320)  $   $11,911 

 

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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

16

 

 

10.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

11.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

17

 

The Hartford Target Retirement 2050 Fund

Financial Highlights

- Selected Per-Share Data (A) -

 

Class 

Net Asset Value at

Beginning of

Period

  

Net Investment

Income (Loss)

  

Net Realized and

Unrealized Gain

(Loss) on

Investments

  

Total from

Investment

Operations

  

Dividends from Net

Investment Income

  

Distributions from

Realized Capital

Gains

  

Distributions from

Capital

   Total Distributions  

Net Asset Value at

End of Period

 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
R3  $14.16   $0.14   $1.41   $1.55   $(0.37)  $(0.09)  $   $(0.46)  $15.25 
R4   14.24    0.16    1.42    1.58    (0.41)   (0.09)       (0.50)   15.32 
R5   14.25    0.20    1.38    1.58    (0.42)   (0.09)       (0.51)   15.32 
Y(H)   14.70    0.01    0.61    0.62                    15.32 
                                              
For the Year Ended October 31, 2012
R3   13.61    0.09    1.20    1.29    (0.11)   (0.63)       (0.74)   14.16 
R4   13.68    0.12    1.21    1.33    (0.14)   (0.63)       (0.77)   14.24 
R5   13.69    0.13    1.21    1.34    (0.15)   (0.63)       (0.78)   14.25 
                                              
For the Year Ended October 31, 2011 (E)
R3   13.42    0.06    0.42    0.48    (0.07)   (0.22)       (0.29)   13.61 
R4   13.46    0.10    0.43    0.53    (0.09)   (0.22)       (0.31)   13.68 
R5   13.47    0.12    0.41    0.53    (0.09)   (0.22)       (0.31)   13.69 
                                              
For the Year Ended October 31, 2010
R3   11.58    0.06    1.84    1.90    (0.06)           (0.06)   13.42 
R4   11.61    0.09    1.85    1.94    (0.09)           (0.09)   13.46 
R5   11.61    0.10    1.85    1.95    (0.09)           (0.09)   13.47 
                                              
From October 31, 2008  (commencement of operations) through October 31, 2009
R3   10.00    0.12    1.57    1.69    (0.11)           (0.11)   11.58 
R4   10.00    0.15    1.57    1.72    (0.11)           (0.11)   11.61 
R5   10.00    0.16    1.56    1.72    (0.11)           (0.11)   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) Ratios do not include expenses of the Underlying Funds.
(D) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E) Per share amounts have been calculated using average shares outstanding method.
(F) Not annualized.
(G) Annualized.
(H) Commenced operations on February 28, 2013.

 

18

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net
Assets(C)
   Portfolio
Turnover
Rate(D)
 
                      
                            
 11.25%(F)  $15,630    1.05%(G)   0.55%(G)   1.99%(G)   15%
 11.44(F)   18,630    0.75(G)   0.26(G)   2.23(G)    
 11.40(F)   708    0.46(G)   0.15(G)   2.82(G)    
 5.15(F)   104    0.35(G)   0.15(G)   0.44(G)    
                            
                            
 10.33    13,727    1.14    0.49    0.58    102 
 10.62    14,404    0.84    0.19    0.79     
 10.66    1,354    0.55    0.14    0.99     
                            
                            
 3.57    8,955    1.28    0.47    0.46    55 
 3.95    6,201    0.98    0.17    0.73     
 3.97    1,077    0.68    0.12    0.82     
                            
                            
 16.46    3,619    1.79    0.42    0.44    19 
 16.78    3,161    1.49    0.12    0.84     
 16.90    1,456    1.20    0.07    0.82     
                            
                            
 17.18    1,285    2.42    0.39    1.23    8 
 17.54    1,262    2.13    0.09    1.53     
 17.55    1,190    1.83    0.04    1.56     

 

19

 

The Hartford Target Retirement 2050 Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

20

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

21

 

The Hartford Target Retirement 2050 Fund

Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC, HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class R3  $1,000.00   $1,112.50   $2.90   $1,000.00   $1,022.05   $2.78    0.55%   181    365 
Class R4  $1,000.00   $1,114.40   $1.34   $1,000.00   $1,023.53   $1.28    0.26    181    365 
Class R5  $1,000.00   $1,114.00   $0.79   $1,000.00   $1,024.05   $0.75    0.15    181    365 
Class Y*  $1,000.00   $1,051.50   $0.26   $1,000.00   $1,008.10   $0.26    0.15    61    365 

 

* Commenced operations on February 28, 2013.

 

23

 

The Hartford Target Retirement 2050 Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Target Retirement 2050 Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the

 

24

 

 

following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

25

 

The Hartford Target Retirement 2050 Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Asset Allocation Strategy Risk: The portfolio managers’ asset allocation strategy may not always work as intended, and asset allocation does not guarantee better performance or reduce the risk of investment loss.

 

Target Date Risk: As the Fund’s target year approaches, it will increase its allocation to fixed income investments and decrease its allocation to equity investments. Conversely, the Fund will hold a higher percentage in equities and be more volatile when it’s further away from its target year. Target date funds are not guaranteed and you may experience losses, included losses near, at or after the target retirement year. There is no guarantee that the Fund will provide adequate income at and through your retirement.

 

Fund of Funds Risk: The Fund invests in a number of Underlying Funds, and is subject to the risks of the Underlying Funds in direct proportion to the amount of assets it invests in each Underlying Fund. The Underlying Funds may invest in the following: foreign securities including emerging markets, fixed income securities (which carry credit and interest rate risk) including junk bonds, small- and mid-cap stocks, mortgage- and asset-backed securities, and derivatives.

 

26
 

 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-TR50 4/13 114010 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

50

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD TOTAL RETURN BOND FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

 

The Hartford Total Return Bond Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 25
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 26
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 28
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 29
Notes to Financial Statements (Unaudited) 30
Financial Highlights (Unaudited) 48
Directors and Officers (Unaudited) 51
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 53
Quarterly Portfolio Holdings Information (Unaudited) 53
Expense Example (Unaudited) 54
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 55
Principal Risks (Unaudited) 57

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Total Return Bond Fund inception 07/22/1996
(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks a competitive total return, with income as a secondary objective.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
Total Return Bond A#   2.01%       6.16%       5.38%       4.47%    
Total Return Bond A##        1.38%       4.41%       3.99%    
Total Return Bond B#   1.65%       5.41%       4.61%       3.91%*    
Total Return Bond B##        0.41%       4.28%       3.91%*    
Total Return Bond C#   1.54%       5.36%       4.58%       3.75%    
Total Return Bond C##        4.36%       4.58%       3.75%    
Total Return Bond I#   2.16%       6.44%       5.68%       4.68%    
Total Return Bond R3#   1.82%       5.82%       5.13%       4.49%    
Total Return Bond R4#   1.98%       6.15%       5.38%       4.66%    
Total Return Bond R5#   2.13%       6.47%       5.69%       4.85%    
Total Return Bond Y#   2.18%       6.58%       5.81%       4.92%    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       5.73%       5.04%    

 

Not Annualized
# Without sales charge
## With sales charge
* Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 8/31/06. Performance prior to that date is that of the Fund's Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of March 5, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays 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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Total Return Bond Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Total Return Bond Class A   0.95%       0.98%    
Total Return Bond Class B   1.70%       1.85%    
Total Return Bond Class C   1.69%       1.69%    
Total Return Bond Class I   0.68%       0.68%    
Total Return Bond Class R3   1.25%       1.27%    
Total Return Bond Class R4   0.95%       0.95%    
Total Return Bond Class R5   0.65%       0.66%    
Total Return Bond Class Y   0.55%       0.55%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers        
Joseph  F. Marvan, CFA   Lucius T. Hill III   Campe Goodman, CFA
Senior Vice President and Fixed Income Portfolio Manager   Senior Vice President and Fixed Income Portfolio Manager   Vice President and Fixed Income Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Total Return Bond Fund returned 2.01%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the Barclays U.S. Aggregate Bond Index, which returned 0.91% for the same period. The Fund also outperformed the 1.57% average return of the Lipper Intermediate Investment Grade Debt 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 semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02% to 0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

The primary drivers of the Fund’s outperformance were its MBS and investment grade credit exposures. The Fund’s allocation to non-agency MBS was a significant contributor to relative results as non-agencies performed strongly amid improved sentiment around U.S. housing, low long-term interest rates and strong investor demand. Our investment grade credit exposure was also a contributor to relative results; in particular, our overweight to U.S. financials was a top contributor as aggressive central bank monetary policy and investors’ ongoing search for yield caused higher beta sectors to outperform. The Fund’s overweight to Commercial MBS was also positive for performance as was the Fund’s duration and yield curve positioning. Exposure to emerging markets debt, via credit default swap indexes, was also modestly additive to relative results. The Fund’s positioning in high yield credit detracted from performance overall. Positive results from an allocation to bank loans and BB-rated high yield issuers were more than offset by the negative

 

3

 

The Hartford Total Return Bond Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

impact of high yield credit default swap index positions, which were used as a source of liquidity and to manage overall portfolio risk.

 

What is the outlook?

In our view, the U.S. economy is less fragile than it has been in a long time. Through bold policy initiatives, we believe that the Fed has shown its determination to keep the U.S. out of recession, and corporate and personal balance sheets are in their best shape in years. These reasons for optimism are tempered, nevertheless, by concerns about the ongoing debt crisis in Europe and fiscal challenges in the U.S. Furthermore, we believe that valuations in many fixed income sectors have risen closer to fair value.

 

We ended the period positioned with a moderately procyclical risk bias, favoring credit overall. This view is expressed through an overweight to U.S. financials within investment-grade credit, and through allocations to upper-tier high-yield bonds and bank loans. We believe non-agency residential MBS still appear attractive to us against the backdrop of an improving housing market. We ended the period relatively neutral agency MBS and continued to have an overweight to CMBS.

 

Our views on interest rates depend on the time frame. Over the long term, we believe rates will revert to levels more consistent with the Fed’s long-run projections of short rates and economic growth, which are higher than those implied by today’s forward curve. In the near term, we believe that yields could stay low for a little longer than now anticipated by markets. Hence, we believe that we ended the period with the Fund currently positioned with a neutral duration posture.

 

Distribution by Credit Quality
as of April 30, 2013

Credit Rating *  Percentage of
Net Assets
 
Aaa / AAA   5.2%
Aa / AA   3.5 
A   6.8 
Baa / BBB   17.5 
Ba / BB   9.8 
B   4.5 
Caa / CCC or Lower   5.7 
Unrated   0.6 
U.S. Government Agencies and Securities   65.7 
Non-Debt Securities and Other Short-Term Instruments   4.3 
Other Assets & Liabilities   (23.6)
Total   100.0%

 

* Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

Diversification by Industry
as of April 30, 2013

Industry  Percentage of
Net Assets
 
Fixed Income Securities     
Accommodation and Food Services   0.3%
Administrative Waste Management and Remediation   0.2 
Air Transportation   0.3 
Apparel Manufacturing   0.1 
Arts, Entertainment and Recreation   2.9 
Beverage and Tobacco Product Manufacturing   1.0 
Chemical Manufacturing   0.4 
Computer and Electronic Product Manufacturing   0.5 
Construction   0.1 
Educational Services   0.0 
Fabricated Metal Product Manufacturing   0.2 
Finance and Insurance   29.4 
Food Manufacturing   0.2 
Food Services   0.1 
Furniture and Related Product Manufacturing   0.0 
General Obligations   0.6 
Health Care and Social Assistance   1.8 
Higher Education (Univ., Dorms, etc.)   0.1 
Information   3.4 
Machinery Manufacturing   0.2 
Mining   0.7 
Miscellaneous Manufacturing   0.8 
Motor Vehicle and Parts Manufacturing   0.3 
Nonmetallic Mineral Product Manufacturing   0.2 
Other Services   0.0 
Paper Manufacturing   0.1 
Petroleum and Coal Products Manufacturing   2.3 
Pipeline Transportation   0.9 
Plastics and Rubber Products Manufacturing   0.2 
Primary Metal Manufacturing   0.2 
Professional, Scientific and Technical Services   0.2 
Real Estate, Rental and Leasing   1.3 
Retail Trade   1.8 
Soap, Cleaning Compound and Toilet Manufacturing   0.0 
Transportation Equipment Manufacturing   0.2 
Truck Transportation   0.3 
Utilities   1.2 
Utilities - Electric   0.3 
Utilities - Water and Sewer   0.2 
Wholesale Trade   0.3 
Total   53.3%
Equity Securities     
Diversified Banks   0.0 
Other Diversified Financial Services   0.1 
Thrifts and Mortgage Finance   0.0 
Total   0.1%
Foreign Government Obligations   0.3 
Put Options Purchased   0.0 
U.S. Government Agencies   41.3 
U.S. Government Securities   24.4 
Short-Term Investments   4.2 
Other Assets and Liabilities   (23.6)
Total   100.0%

 

The above table represents investments by industry, rather than industry sub-classification. Each industry combines multiple sub-classifications into one industry category.  Detailed information on sub-classifications breakdowns is available in the Schedule of Investments.

 

4

 

The Hartford Total Return Bond Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 15.2%    
Finance and Insurance - 15.2%  
     Captive Auto Finance - 1.4%     
     Ally Automotive Receivables Trust     
$2,420   3.38%, 09/15/2017 ■  $2,484 
 2,440   3.61%, 08/15/2016 ■   2,492 
     Carnow Automotive Receivables Trust     
 193   2.09%, 01/15/2015 ■   194 
     CPS Automotive Trust     
 1,365   1.82%, 12/16/2019 ■   1,377 
     Credit Acceptance Automotive Loan Trust     
 2,380   1.21%, 10/15/2020 ■   2,380 
 805   2.21%, 09/15/2020 ■   814 
 2,240   3.12%, 03/16/2020 ■   2,258 
     Ford Credit Automotive Owner Trust     
 1,500   2.54%, 02/15/2016   1,542 
 1,560   3.21%, 07/15/2017   1,629 
 710   5.53%, 05/15/2016 ■   735 
     Harley-Davidson Motorcycle Trust     
 1,780   2.12%, 08/15/2017   1,801 
     Hyundai Automotive Receivables Trust     
 2,850   2.27%, 02/15/2017   2,928 
     Prestige Automotive Receivables Trust     
 1,685   2.49%, 04/16/2018 ■   1,710 
     Santander Drive Automotive Receivables Trust     
 2,340   3.89%, 07/17/2017   2,410 
     SNAAC Automotive Receivables Trust     
 651   1.78%, 06/15/2016 ■   655 
         25,409 
     Captive Retail Finance - 0.1%     
     CNH Equipment Trust     
 1,315   2.97%, 05/15/2017 ‡   1,358 
     Fieldstone Mortgage Investment Corp.     
 1,436   0.54%, 04/25/2047 Δ   900 
         2,258 
     Other Financial Investment Activities - 0.4%     
     Soundview Home Equity Loan Trust, Inc.     
 1,071   0.35%, 06/25/2037 Δ   649 
 3,900   0.38%, 07/25/2037 Δ   1,851 
 4,705   0.44%, 07/25/2036 Δ   2,645 
 3,520   0.45%, 06/25/2036 Δ   2,460 
         7,605 
     Real Estate Credit (Mortgage Banking) - 13.3%     
     Asset Backed Funding Certificates     
 2,086   0.42%, 01/25/2037 Δ   1,204 
     Banc of America Commercial Mortgage, Inc.     
 3,375   5.17%, 11/10/2042 Δ   3,604 
 2,555   5.19%, 09/10/2047 Δ   2,803 
 1,515   5.63%, 07/10/2046 Δ   1,704 
     Banc of America Funding Corp.     
 3,508   0.50%, 05/20/2047 Δ   3,048 
 4,428   5.77%, 05/25/2037   3,918 
     BB-UBS Trust     
 3,095   3.43%, 11/05/2036 ■   3,177 
     BCAP LLC Trust     
 729   0.37%, 01/25/2037 Δ   555 
 1,896   0.38%, 03/25/2037 Δ   1,589 
     Bear Stearns Adjustable Rate Mortgage Trust     
 3,478   2.32%, 08/25/2035 ‡Δ   3,528 
 6,028   2.47%, 10/25/2035 Δ   5,852 
     Bear Stearns Alt-A Trust     
 400   0.58%, 05/25/2036 Δ   255 
 4,520   0.70%, 01/25/2036 Δ   3,065 
     Bear Stearns Commercial Mortgage Securities, Inc.     
 2,930   5.15%, 10/12/2042 Δ   3,206 
 946   5.41%, 12/11/2040   1,041 
 1,585   5.54%, 10/12/2041 ‡   1,792 
 2,950   5.58%, 04/12/2038 Δ   3,290 
     Cal Funding II Ltd.     
 879   3.47%, 10/25/2027 ■   900 
     Citigroup Commercial Mortgage Trust, Inc.     
 1,370   0.55%, 03/25/2037 Δ   733 
     Citigroup/Deutsche Bank Commercial Mortgage Trust     
 947   5.22%, 07/15/2044 ‡Δ   1,036 
 2,875   5.32%, 12/11/2049 ‡   3,274 
     Commercial Mortgage Loan Trust     
 2,500   6.01%, 12/10/2049 Δ   2,949 
     Commercial Mortgage Pass-Through Certificates     
 11,170   1.82%, 07/10/2046 ■►   855 
 1,150   2.77%, 12/10/2045   1,174 
 1,895   4.34%, 12/10/2045 ■Δ   1,433 
 1,175   4.75%, 11/15/2045 ■   978 
     Commercial Mortgage Trust     
 1,175   3.42%, 03/10/2031 ■   1,234 
     Consumer Portfolio Services, Inc.     
 270   5.01%, 06/17/2019 ■   280 
     Countrywide Alternative Loan Trust     
 1,702   0.52%, 11/25/2035 Δ   1,330 
     Countrywide Home Loans, Inc.     
 1,193   2.99%, 04/20/2036 Δ   817 
 3,285   3.08%, 09/25/2047 Δ   2,744 
     CS First Boston Mortgage Securities Corp.     
 2,389   5.50%, 06/25/2035   2,388 
     CW Capital Cobalt Ltd.     
 5,180   5.22%, 08/15/2048   5,777 
     DBUBS Mortgage Trust     
 11,543   2.05%, 01/01/2021 ■►   525 
     First Franklin Mortgage Loan Trust     
 6,725   0.44%, 04/25/2036 Δ   4,079 
     First Horizon Alternative Mortgage Securities     
 6,289   2.33%, 04/25/2036 Δ   5,116 
 9,431   2.36%, 09/25/2035 Δ   8,379 
     GE Business Loan Trust     
 1,192   1.20%, 05/15/2034 ■Δ   823 
     GMAC Commercial Mortgage Securities, Inc.     
 195   5.24%, 11/10/2045 Δ   211 
     GMAC Mortgage Corp. Loan Trust     
 1,974   3.70%, 09/19/2035 Δ   1,905 
 264   3.87%, 04/19/2036 Δ   231 

 

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

 

5

 

The Hartford Total Return Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 15.2% - (continued)    
Finance and Insurance - 15.2% - (continued)  
     Real Estate Credit (Mortgage Banking) - 13.3% - (continued)     
     Goldman Sachs Mortgage Securities Corp. II     
$1,480   2.95%, 11/05/2034 ■  $1,505 
 375   3.38%, 05/10/2045   403 
     Goldman Sachs Mortgage Securities Trust     
 2,040   2.77%, 11/10/2045   2,076 
 1,685   2.93%, 06/05/2031 ■   1,778 
 3,325   3.55%, 04/10/2034 ■   3,565 
 1,410   4.86%, 11/10/2045 ■Δ   1,423 
     Greenwich Capital Commercial Funding Corp.     
 2,025   5.74%, 12/10/2049   2,359 
 1,000   6.06%, 07/10/2038 Δ   1,133 
     GSAA Home Equity Trust     
 1,957   0.27%, 03/25/2037 Δ   1,195 
 7,352   0.28%, 02/25/2037 Δ   4,045 
 1,501   0.29%, 12/25/2036 Δ   830 
 2,669   0.30%, 03/25/2037 Δ   1,425 
 1,177   0.36%, 07/25/2036 Δ   628 
 728   0.43%, 04/25/2047 Δ   459 
     GSAMP Trust     
 1,165   0.30%, 02/25/2037 Δ   635 
 3,272   0.40%, 11/25/2036 Δ   1,865 
     GSR Mortgage Loan Trust     
 454   0.70%, 11/25/2035 Δ   349 
 6,393   2.78%, 01/25/2036 Δ   5,486 
     Harborview Mortgage Loan Trust     
 2,663   0.39%, 01/19/2038 Δ   2,191 
 3,941   0.42%, 05/19/2047 Δ   1,950 
 2,076   0.56%, 09/19/2035 Δ   1,661 
     IndyMac Index Mortgage Loan Trust     
 346   0.49%, 01/25/2036 Δ   225 
 4,365   0.60%, 07/25/2046 Δ   2,229 
 1,428   2.49%, 01/25/2036 Δ   1,331 
 834   2.56%, 08/25/2035 Δ   663 
 5,424   2.68%, 03/25/2036 Δ   4,070 
 67   2.91%, 12/25/2036 Δ   57 
     JP Morgan Chase Commercial Mortgage Securities Corp.     
 911   2.75%, 10/15/2045 ■   593 
 3,575   2.83%, 10/15/2045   3,650 
 2,980   2.84%, 12/15/2047   3,040 
 1,150   3.91%, 05/05/2030 ■Δ   1,249 
 245   4.67%, 10/15/2045 ■Δ   241 
 35   4.92%, 10/15/2042   37 
 3,575   5.20%, 12/15/2044 Δ   3,919 
 2,917   5.30%, 01/12/2043 Δ   3,202 
 795   5.31%, 08/15/2046 ■Δ   855 
 2,085   5.34%, 08/12/2037   2,235 
 2,005   5.71%, 02/12/2049 Δ   2,319 
 2,625   6.07%, 02/12/2051   2,912 
     JP Morgan Mortgage Trust     
 378   2.88%, 04/25/2037 Δ   322 
 1,790   3.10%, 09/25/2035 Δ   1,730 
 294   4.13%, 05/25/2036 Δ   256 
     LB-UBS Commercial Mortgage Trust     
 225   4.74%, 07/15/2030 Δ   240 
 2,250   4.95%, 09/15/2030   2,425 
2,640   5.20%, 11/15/2030 Δ  2,868 
 3,087   5.43%, 02/15/2040   3,511 
 365   5.87%, 06/15/2038 Δ   414 
 1,875   6.15%, 04/15/2041 Δ   2,257 
 14,540   13.05%, 09/15/2039 ►   41 
     Lehman Brothers Small Balance Commercial     
 272   4.67%, 09/25/2030 ■Δ   281 
     Lehman XS Trust     
 1,447   0.41%, 07/25/2046 Δ   1,088 
     Merrill Lynch Mortgage Investors Trust     
 782   2.88%, 07/25/2035 Δ   658 
 1,061   3.02%, 03/25/2036 Δ   767 
 2,284   5.20%, 09/12/2042   2,438 
     Merrill Lynch Mortgage Trust     
 570   4.75%, 06/12/2043   607 
     Merrill Lynch/Countrywide Commercial Mortgage Trust     
 13,526   3.72%, 07/12/2046 ►   132 
     Morgan Stanley ABS Capital I     
 1,485   0.26%, 12/25/2036 Δ   817 
     Morgan Stanley Capital I     
 180   5.45%, 02/12/2044 Δ   206 
 920   5.68%, 10/15/2042 Δ   1,021 
 3,450   5.69%, 04/15/2049 Δ   3,967 
     Morgan Stanley Capital I Trust     
 43,668   2.12%, 09/15/2047 ■►   1,348 
 2,050   5.16%, 10/12/2052 Δ   2,243 
     Morgan Stanley Mortgage Loan Trust     
 2,778   0.37%, 05/25/2036 - 11/25/2036 Δ   1,401 
     National Credit Union Administration     
 1,386   1.84%, 10/07/2020 Δ   1,403 
     Option One Mortgage Loan Trust     
 1,095   0.45%, 03/25/2037 Δ   554 
     Residential Accredit Loans, Inc.     
 3,511   2.99%, 11/25/2037 Δ   1,961 
     Residential Asset Securitization Trust     
 1,280   0.65%, 03/25/2035 Δ   983 
     RFMSI Trust     
 251   3.22%, 04/25/2037 Δ   216 
     SBA Tower Trust     
 2,400   2.93%, 12/15/2017 ■   2,486 
     Securitized Asset Backed Receivables LLC     
 1,452   0.29%, 07/25/2036 Δ   704 
     Sequoia Mortgage Trust     
 520   2.60%, 07/20/2037 Δ   429 
     Structured Adjustable Rate Mortgage Loan Trust     
 787   0.50%, 09/25/2034 Δ   686 
     Structured Asset Mortgage Investments Trust     
 1,645   0.42%, 05/25/2046 Δ   954 
     UBS-Barclays Commercial Mortgage Trust     
 4,650   3.18%, 03/10/2046 Δ   4,868 
 2,665   3.53%, 05/10/2063   2,871 
     Wachovia Bank Commercial Mortgage Trust     
 1,311   5.24%, 10/15/2044 Δ   1,431 

 

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

 

6

 

 

 

 

Shares or Principal Amount  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 15.2% - (continued)    
Finance and Insurance - 15.2% - (continued)  
     Real Estate Credit (Mortgage Banking) - 13.3% - (continued)     
     Wells Fargo Alternative Loan Trust     
$2,170   6.25%, 11/25/2037  $2,087 
     Wells Fargo Commercial Mortgage Trust     
 3,525   2.92%, 10/15/2045   3,620 
 755   4.78%, 10/15/2045 ■Δ   752 
     Wells Fargo Mortgage Backed Securities Trust     
 2,504   2.91%, 12/28/2037 Δ   2,250 
 1,158   5.15%, 10/25/2035 Δ   1,143 
     WF-RBS Commercial Mortgage Trust     
 2,120   2.88%, 12/15/2045   2,170 
 365   3.20%, 03/15/2048   383 
 1,030   4.19%, 03/15/2045 ■Δ   811 
 1,420   4.46%, 12/15/2045 ■Δ   1,133 
 760   4.87%, 02/15/2044 ■   893 
 4,380   4.90%, 06/15/2044 ■   5,169 
 1,230   5.00%, 06/15/2044 ■   1,069 
 960   5.56%, 04/15/2045 ■Δ   1,030 
         235,684 
         270,956 
     Total asset & commercial mortgage backed securities     
     (cost $253,470)  $270,956 
           
CORPORATE BONDS - 32.5%     
Accommodation and Food Services - 0.2%     
     Traveler Accommodation - 0.2%     
     Choice Hotels International, Inc.     
$66   5.70%, 08/28/2020  $73 
 995   5.75%, 07/01/2022   1,114 
     Wynn Las Vegas LLC     
 2,335   7.75%, 08/15/2020   2,674 
         3,861 
Administrative Waste Management and Remediation - 0.1%     
     Other Support Services - 0.0%     
     Iron Mountain, Inc.     
 501   7.75%, 10/01/2019   566 
           
     Waste Treatment and Disposal - 0.1%     
     Clean Harbors, Inc.     
 150   5.13%, 06/01/2021 ■   157 
 605   5.25%, 08/01/2020   640 
         797 
         1,363 
Air Transportation - 0.2%     
     Scheduled Air Transportation - 0.2%     
     Continental Airlines, Inc.     
 2,610   4.00%, 10/29/2024   2,747 
     US Airways Group, Inc.     
 396   6.25%, 04/22/2023   445 
         3,192 
Apparel Manufacturing - 0.1%     
     Accessories and Other Apparel Manufacturing - 0.0%     
     PVH Corp.     
 205   4.50%, 12/15/2022   212 
     Cut and Sew Apparel Manufacturing - 0.1%     
     Hanesbrands, Inc.     
 660   6.38%, 12/15/2020   730 
     Phillips Van-Heusen Corp.     
 850   7.38%, 05/15/2020   955 
         1,685 
         1,897 
Arts, Entertainment and Recreation - 2.6%     
     Cable and Other Subscription Programming - 1.6%     
     CCO Holdings LLC     
 765   5.25%, 09/30/2022   779 
 3,300   6.63%, 01/31/2022   3,630 
 814   7.38%, 06/01/2020   914 
     DirecTV Holdings LLC     
 2,630   3.80%, 03/15/2022   2,762 
 1,820   5.00%, 03/01/2021   2,073 
     Time Warner Cable, Inc.     
 3,230   4.50%, 09/15/2042   3,072 
 1,400   5.88%, 11/15/2040   1,559 
     Time Warner Entertainment Co., L.P.     
 3,190   8.38%, 07/15/2033   4,574 
     Time Warner, Inc.     
 1,065   3.40%, 06/15/2022   1,124 
 1,650   6.10%, 07/15/2040   2,025 
 1,100   6.25%, 03/29/2041   1,371 
     Viacom, Inc.     
 3,000   5.63%, 09/15/2019   3,596 
         27,479 
     Data Processing, Hosting and Related Services - 0.0%     
     Fidelity National Information Services, Inc.     
 705   5.00%, 03/15/2022   777 
           
     Motion Picture and Video Industries - 0.0%     
     NAI Entertainment Holdings LLC     
 306   8.25%, 12/15/2017 ■   332 
     National CineMedia LLC     
 65   6.00%, 04/15/2022   71 
         403 
     Newspaper, Periodical, Book and Database Publisher - 0.2%     
     News America, Inc.     
 3,120   6.15%, 03/01/2037 - 02/15/2041   3,855 
           
     Radio and Television Broadcasting - 0.8%     
     CBS Corp.     
 1,624   3.38%, 03/01/2022   1,694 
 1,690   4.85%, 07/01/2042   1,751 
     Liberty Media Corp.     
 1,761   8.25%, 02/01/2030   1,972 
     NBC Universal Enterprise     
 560   1.66%, 04/15/2018 ■   567 
 1,005   1.97%, 04/15/2019 ■   1,021 
     NBC Universal Media LLC     
 2,075   5.15%, 04/30/2020   2,514 
 1,554   5.95%, 04/01/2041   1,989 
 1,470   6.40%, 04/30/2040   1,974 

 

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

 

7

 

The Hartford Total Return Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE BONDS - 32.5% - (continued)
Arts, Entertainment and Recreation - 2.6% - (continued)
     Radio and Television Broadcasting - 0.8% - (continued)     
     Starz Financial Corp      
$335   5.00%, 09/15/2019   $350 
         13,832 
         46,346 
Beverage and Tobacco Product Manufacturing - 0.9%
     Beverage Manufacturing - 0.7%     
     Anheuser-Busch InBev Worldwide, Inc.      
 3,050   7.75%, 01/15/2019 ‡    4,023 
     Constellation Brands, Inc.      
 740   6.00%, 05/01/2022    853 
 2,405   7.25%, 05/15/2017    2,802 
     Molson Coors Brewing Co.      
 865   3.50%, 05/01/2022    915 
     Pernod-Ricard S.A.      
 3,655   2.95%, 01/15/2017 ■    3,847 
         12,440 
     Tobacco Manufacturing - 0.2%     
     Altria Group, Inc.      
 1,658   10.20%, 02/06/2039    2,823 
     Lorillard Tobacco Co.      
 505   8.13%, 06/23/2019    647 
         3,470 
         15,910 
Chemical Manufacturing - 0.2%
     Basic Chemical Manufacturing - 0.2%     
     Ashland, Inc.      
 455   4.75%, 08/15/2022 ■    476 
     Dow Chemical Co.      
 2,720   8.55%, 05/15/2019    3,667 
         4,143 
Computer and Electronic Product Manufacturing - 0.4%
     Computer and Peripheral Equipment Manufacturing - 0.3%     
     Apple, Inc.      
 2,825   2.40%, 05/03/2023    2,821 
     Hewlett-Packard Co.      
 1,340   2.65%, 06/01/2016    1,374 
     Seagate HDD Cayman      
 1,510   6.88%, 05/01/2020    1,640 
         5,835 
     Navigational, Measuring and Control Instruments - 0.1%     
     Esterline Technologies Corp.      
 820   7.00%, 08/01/2020    906 
           
     Semiconductor, Electronic Component Manufacturing - 0.0%     
     Jabil Circuit, Inc.      
 565   4.70%, 09/15/2022    574 
           
         7,315 
Construction - 0.1%
     Residential Building Construction - 0.1%     
     D.R. Horton, Inc.      
 515   6.50%, 04/15/2016    577 
     Pulte Homes, Inc.      
 335   7.88%, 06/15/2032    372 
    Ryland Group, Inc.    
 340   5.38%, 10/01/2022   353 
         1,302 
Fabricated Metal Product Manufacturing - 0.2%     
     Boiler, Tank and Shipping Container Manufacturing - 0.1%     
     Ball Corp.     
 895   5.00%, 03/15/2022 ‡   951 
 1,020   6.75%, 09/15/2020 ‡   1,126 
         2,077 
     Other Fabricated Metal Product Manufacturing - 0.1%     
     Crown Americas, Inc.     
 425   4.50%, 01/15/2023 ■   434 
 1,170   6.25%, 02/01/2021   1,293 
     Masco Corp.     
 240   5.95%, 03/15/2022   271 
         1,998 
     Spring and Wire Product Manufacturing - 0.0%     
     Anixter International, Inc.     
 350   5.63%, 05/01/2019 ‡   374 
           
         4,449 
Finance and Insurance - 13.7%     
     Captive Auto Finance - 0.2%     
     Credit Acceptance Corp.     
 700   9.13%, 02/01/2017   763 
     Ford Motor Credit Co. LLC     
 1,025   3.00%, 06/12/2017   1,062 
 1,675   5.88%, 08/02/2021   1,955 
 215   6.63%, 08/15/2017   253 
         4,033 
     Commercial Banking - 0.7%     
     Barclays Bank plc     
 5,350   6.05%, 12/04/2017 ■   6,057 
     BNP Paribas     
 5,050   2.38%, 09/14/2017   5,179 
 1,700   3.25%, 03/11/2015   1,769 
         13,005 
     Consumer Lending - 0.1%     
     Minerva Luxembourg S.A.     
 750   7.75%, 01/31/2023 ■   801 
           
     Depository Credit Banking - 2.9%     
     Bank of America Corp.     
 2,095   2.00%, 01/11/2018   2,102 
 2,850   5.63%, 07/01/2020 ‡   3,382 
 2,805   5.75%, 12/01/2017 ‡   3,261 
 1,800   5.88%, 01/05/2021 ‡   2,172 
 1,700   7.63%, 06/01/2019 ‡   2,176 
     Citigroup, Inc.     
 1,350   1.30%, 04/01/2016   1,357 
 3,000   4.05%, 07/30/2022   3,118 
 3,300   4.59%, 12/15/2015   3,596 
 600   4.88%, 05/07/2015   639 
 1,835   6.13%, 08/25/2036   2,114 
 3,800   6.63%, 06/15/2032   4,580 
 2,658   8.50%, 05/22/2019   3,576 

 

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

 

8

 

 

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE BONDS - 32.5% - (continued)     
Finance and Insurance - 13.7% - (continued)     
     Depository Credit Banking - 2.9% - (continued)     
     HSBC Holdings plc      
$2,500   6.80%, 06/01/2038   $3,308 
     HSBC USA, Inc.      
 1,260   1.63%, 01/16/2018    1,269 
     PNC Bank NA      
 905   6.00%, 12/07/2017    1,082 
 1,163   6.88%, 04/01/2018    1,443 
     PNC Funding Corp.      
 4,000   5.25%, 11/15/2015    4,424 
     Wells Fargo & Co.      
 1,200   1.50%, 07/01/2015    1,221 
 1,740   3.45%, 02/13/2023    1,775 
 1,750   4.60%, 04/01/2021    2,024 
     Wells Fargo Bank NA      
 3,190   0.50%, 05/16/2016 Δ    3,152 
         51,771 
     Insurance Carriers - 1.0%     
     American International Group, Inc.      
 1,980   2.38%, 08/24/2015 ‡    2,029 
 805   3.80%, 03/22/2017 ‡    873 
 700   8.25%, 08/15/2018    908 
     ING US, Inc.      
 860   5.50%, 07/15/2022 ■    978 
     Massachusetts Mutual Life Insurance Co.      
 1,172   8.88%, 06/01/2039 ■    1,902 
     Nationwide Financial Services, Inc.      
 1,837   5.38%, 03/25/2021 ■    2,069 
     Nationwide Mutual Insurance Co.      
 2,650   9.38%, 08/15/2039 ■    3,992 
     Teachers Insurance & Annuity Association of America      
 2,658   6.85%, 12/16/2039 ■    3,677 
     Wellpoint, Inc.      
 1,280   1.88%, 01/15/2018    1,301 
         17,729 
     International Trade Financing (Foreign Banks) - 0.6%     
     Royal Bank of Scotland plc      
 3,465   2.55%, 09/18/2015    3,569 
 2,200   3.95%, 09/21/2015    2,340 
 2,535   6.13%, 12/15/2022    2,727 
     TSMC Global LTD      
 2,210   0.95%, 04/03/2016 ■    2,213 
         10,849 
     Monetary Authorities - Central Bank - 0.3%     
     Lloyds Banking Group plc      
 1,205   6.50%, 09/14/2020 ■    1,377 
     Santander U.S. Debt S.A.      
 3,400   3.72%, 01/20/2015 ■    3,451 
         4,828 
     Nondepository Credit Banking - 2.1%     
     American Express Co.      
 1,000   7.25%, 05/20/2014    1,069 
     Capital One Financial Corp.      
 3,550   2.15%, 03/23/2015    3,625 
 1,750   6.15%, 09/01/2016    2,007 
    CIT Group, Inc.    
 40   5.00%, 05/15/2017   44 
 70   5.38%, 05/15/2020   79 
 2,789   5.50%, 02/15/2019 ■   3,144 
 485   6.63%, 04/01/2018 ■   566 
     Discover Financial Services, Inc.     
 2,600   5.20%, 04/27/2022   2,980 
     General Electric Capital Corp.     
 4,508   4.38%, 09/16/2020   5,114 
 5,150   5.30%, 02/11/2021   5,983 
 210   5.88%, 01/14/2038   255 
 3,925   6.00%, 08/07/2019   4,809 
 1,700   6.25%, 12/15/2022 ♠   1,879 
     Provident Funding Associates L.P.     
 796   10.25%, 04/15/2017 ■   890 
     SLM Corp.     
 3,725   7.25%, 01/25/2022   4,144 
 1,245   8.45%, 06/15/2018   1,462 
         38,050 
     Other Financial Investment Activities - 0.3%     
     Ladder Capital Finance Holdings LLC     
 1,360   7.38%, 10/01/2017 ■   1,413 
     State Street Corp.     
 3,255   4.96%, 03/15/2018   3,700 
         5,113 
     Other Investment Pools and Funds - 0.2%     
     Fibria Overseas Finance Ltd.     
 1,685   7.50%, 05/04/2020 ■   1,917 
     Ineos Finance plc     
 740   9.00%, 05/15/2015 ■   775 
         2,692 
     Real Estate Investment Trust (REIT) - 1.0%     
     Brandywine Operating Partnership L.P.     
 2,900   3.95%, 02/15/2023   2,982 
     DuPont Fabros Technology L.P.     
 825   8.50%, 12/15/2017   887 
     HCP, Inc.     
 1,850   2.63%, 02/01/2020   1,879 
     Health Care, Inc.     
 1,005   2.25%, 03/15/2018   1,025 
 1,000   4.13%, 04/01/2019   1,096 
     Kimco Realty Corp.     
 615   4.30%, 02/01/2018   688 
     Liberty Property L.P.     
 1,050   3.38%, 06/15/2023   1,060 
 860   4.13%, 06/15/2022   923 
     Realty Income Corp.     
 1,865   3.25%, 10/15/2022   1,879 
     Ventas Realty L.P.     
 1,295   2.00%, 02/15/2018   1,310 
 1,520   2.70%, 04/01/2020   1,544 
 2,750   3.25%, 08/15/2022   2,803 
         18,076 
     Sales Financing - 0.1%     
     Imerial Tobacco Finance plc     
 2,400   3.50%, 02/11/2023 ■   2,458 

 

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

 

9

 

The Hartford Total Return Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE BONDS - 32.5% - (continued)
Finance and Insurance - 13.7% - (continued)
     Securities and Commodity Contracts and Brokerage - 4.2%     
     Bear Stearns & Co., Inc.      
$280   5.55%, 01/22/2017   $319 
 155   7.25%, 02/01/2018    193 
     Goldman Sachs Group, Inc.      
 4,030   5.75%, 01/24/2022    4,812 
 2,821   6.00%, 06/15/2020    3,398 
 1,900   6.45%, 05/01/2036    2,099 
 6,565   6.75%, 10/01/2037    7,532 
     JP Morgan Chase & Co.      
 5,501   3.15%, 07/05/2016    5,848 
 1,705   3.38%, 05/01/2023 ☼    1,701 
 5,125   4.35%, 08/15/2021    5,755 
 440   4.50%, 01/24/2022    497 
 2,745   6.00%, 01/15/2018    3,272 
     Merrill Lynch & Co., Inc.      
 1,316   5.70%, 05/02/2017    1,467 
 10,470   6.05%, 05/16/2016    11,645 
 2,560   7.75%, 05/14/2038    3,467 
     Morgan Stanley      
 695   1.75%, 02/25/2016    700 
 3,475   4.88%, 11/01/2022    3,746 
 715   5.55%, 04/27/2017    807 
 4,025   5.75%, 01/25/2021    4,791 
 6,700   6.25%, 08/28/2017    7,822 
 1,225   6.38%, 07/24/2042    1,553 
     UBS AG Stamford CT      
 2,950   7.63%, 08/17/2022    3,420 
         74,844 
         244,249 
Health Care and Social Assistance - 1.7%
     General Medical and Surgical Hospitals - 0.5%     
     Community Health Systems, Inc.      
 1,910   5.13%, 08/15/2018 ‡    2,044 
     HCA, Inc.      
 1,785   6.50%, 02/15/2020    2,062 
 920   7.25%, 09/15/2020    1,020 
 1,336   7.50%, 11/15/2095    1,239 
 470   8.50%, 04/15/2019    518 
     Memorial Sloan-Kettering Cancer Center      
 1,985   5.00%, 07/01/2042    2,289 
         9,172 
     Health and Personal Care Stores - 0.3%     
     CVS Caremark Corp.      
 3,657   8.35%, 07/10/2031 ■    5,051 
           
     Offices and Physicians - 0.1%     
     Partners Healthcare System, Inc.      
 1,180   3.44%, 07/01/2021    1,261 
           
     Pharmaceutical and Medicine Manufacturing - 0.7%     
     AbbVie, Inc.      
 2,000   1.20%, 11/06/2015 ■    2,016 
 1,840   1.75%, 11/06/2017 ■    1,867 
 3,390   2.00%, 11/06/2018 ■    3,447 
     Express Scripts, Inc.      
 1,295   2.10%, 02/12/2015    1,322 
    Gilead Sciences, Inc.    
 1,579   4.40%, 12/01/2021   1,812 
     Mylan, Inc.     
 1,000   6.00%, 11/15/2018 ■   1,097 
     Zoetis, Inc.     
 830   3.25%, 02/01/2023 ■   852 
         12,413 
     Specialty Hospital-Except Psychiatric & Drug Abuse - 0.1%     
     Fresenius Medical Care U.S. Finance II, Inc.     
 1,385   5.63%, 07/31/2019 ■   1,548 
 260   9.00%, 07/15/2015 ■   299 
         1,847 
         29,744 
Information - 2.5%     
     Cable and Other Program Distribution - 0.5%     
     CSC Holdings LLC     
 315   7.63%, 07/15/2018   370 
     DISH DBS Corp.     
 3,186   5.88%, 07/15/2022   3,250 
 3,200   7.88%, 09/01/2019   3,648 
     Rogers Communications, Inc.     
 740   8.75%, 05/01/2032   1,110 
     TCI Communications, Inc.     
 685   8.75%, 08/01/2015   805 
         9,183 
     Data Processing Services - 0.1%     
     Audatex North America, Inc.     
 875   6.75%, 06/15/2018 ■   942 
           
     Internet Publishing and Broadcasting - 0.0%     
     Netflix, Inc.     
 670   5.38%, 02/01/2021 ■   690 
           
     Other Information Services - 0.0%     
     InterActiveCorp     
 220   4.75%, 12/15/2022 ■   221 
           
     Satellite Telecommunications - 0.1%     
     Hughes Satellite Systems Corp.     
 890   6.50%, 06/15/2019   990 
     Intelsat Jackson Holdings S.A.     
 1,117   8.50%, 11/01/2019   1,257 
         2,247 
     Software Publishers - 0.1%     
     Brocade Communications Systems, Inc.     
 1,105   4.63%, 01/15/2023 ■   1,085 
           
     Telecommunications - Other - 0.7%     
     SBA Tower Trust     
 3,435   3.60%, 04/16/2043 ■   3,434 
     Sprint Nextel Corp.     
 1,630   7.00%, 03/01/2020 ■   1,854 
 547   9.00%, 11/15/2018 ■   673 
     Telefonica Emisiones SAU     
 1,525   3.99%, 02/16/2016   1,605 

 

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

  

10

 

 

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE BONDS - 32.5% - (continued)
Information - 2.5% - (continued)
     Telecommunications - Other - 0.7% - (continued)     
     UPCB Finance III Ltd.      
$443   6.63%, 07/01/2020 ■   $482 
     UPCB Finance VI Ltd.      
 1,335   6.88%, 01/15/2022 ■    1,465 
     Vivendi S.A.      
 1,600   2.40%, 04/10/2015 ■    1,630 
     Wind Acquisition Finance S.A.      
 1,490   7.25%, 02/15/2018 ■    1,566 
         12,709 
     Telecommunications - Wired Carriers - 0.6%     
     Deutsche Telekom International Finance B.V.      
 3,045   3.13%, 04/11/2016 ■    3,227 
     Paetec Holding Corp.      
 293   9.88%, 12/01/2018    337 
     Unitymedia Hessen GmbH & Co.      
 1,980   7.50%, 03/15/2019 ■    2,173 
     Videotron Ltee      
 380   9.13%, 04/15/2018    400 
     Windstream Corp.      
 190   6.38%, 08/01/2023    197 
 670   7.50%, 04/01/2023    730 
 750   7.75%, 10/15/2020    823 
 1,890   7.88%, 11/01/2017    2,207 
         10,094 
     Telecommunications - Wireless Carriers - 0.1%     
     Qwest Corp.      
 825   7.25%, 10/15/2035    862 
     SBA Telecommunications, Inc.      
 135   5.75%, 07/15/2020 ■    144 
         1,006 
     Wireless Communications Services - 0.3%     
     Altice Financing S.A.      
 850   7.88%, 12/15/2019 ■    939 
     Verizon Communications, Inc.      
 2,205   6.40%, 02/15/2038    2,776 
     Vimpelcom Holdings      
 1,810   5.95%, 02/13/2023 ■    1,837 
         5,552 
         43,729 
Machinery Manufacturing - 0.2%
     Agriculture, Construction, Mining and Machinery - 0.2%     
     Case New Holland, Inc.      
 3,530   7.88%, 12/01/2017    4,201 
           
Mining - 0.6%
     Coal Mining - 0.2%     
     Consol Energy, Inc.      
 405   8.00%, 04/01/2017    438 
     Peabody Energy Corp.      
 575   6.00%, 11/15/2018    621 
 1,562   6.50%, 09/15/2020    1,703 
 1,345   7.38%, 11/01/2016    1,540 
         4,302 
     Metal Ore Mining - 0.3%     
     Freeport-McMoRan Copper & Gold, Inc.      
 4,990   3.88%, 03/15/2023 ■    5,030 
    Nonmetallic Mineral Mining and Quarrying - 0.1%
     FMG Resources Pty Ltd.     
 355   6.00%, 04/01/2017 ■   369 
 542   7.00%, 11/01/2015 ■   568 
     Vulcan Materials Co.     
 100   7.15%, 11/30/2037   104 
 195   7.50%, 06/15/2021   230 
         1,271 
         10,603 
Miscellaneous Manufacturing - 0.6%     
     Aerospace Product and Parts Manufacturing - 0.3%     
     BE Aerospace, Inc.     
 1,765   5.25%, 04/01/2022 ‡   1,880 
 1,321   6.88%, 10/01/2020 ‡   1,483 
     Bombardier, Inc.     
 1,440   7.75%, 03/15/2020 ■   1,706 
         5,069 
     Other Miscellaneous Manufacturing - 0.3%     
     Hutchison Whampoa International Ltd.     
 4,600   2.00%, 11/08/2017 ■   4,634 
     Owens-Brockway Glass Container, Inc.     
 1,175   7.38%, 05/15/2016   1,345 
         5,979 
         11,048 
Motor Vehicle and Parts Manufacturing - 0.2%     
     Motor Vehicle Manufacturing - 0.2%     
     Daimler Finance NA LLC     
 1,760   1.25%, 01/11/2016 ■   1,768 
     Tenneco, Inc.     
 905   6.88%, 12/15/2020   999 
         2,767 
Nonmetallic Mineral Product Manufacturing - 0.2%     
     Glass and Glass Product Manufacturing - 0.2%     
     Ardagh Packaging Finance plc     
 865   7.38%, 10/15/2017 ■   954 
     Silgan Holdings, Inc.     
 2,315   5.00%, 04/01/2020   2,407 
         3,361 
Paper Manufacturing - 0.1%     
     Converted Paper Product Manufacturing - 0.0%     
     Clearwater Paper Corp.     
 170   4.50%, 02/01/2023 ■   169 
           
     Pulp, Paper and Paperboard Mills - 0.1%     
     P.H. Glatfelter Co.     
 330   5.38%, 10/15/2020   348 
     Rock-Tenn Co.     
 150   3.50%, 03/01/2020   156 
 1,120   4.00%, 03/01/2023   1,164 
         1,668 
         1,837 
Petroleum and Coal Products Manufacturing - 2.2%     
     Natural Gas Distribution - 0.1%     
     Ferrellgas Partners L.P.     
 1,204   6.50%, 05/01/2021   1,267 
           
     Oil and Gas Extraction - 1.7%     
     Anadarko Petroleum Corp.     
 1,495   6.38%, 09/15/2017 ‡   1,789 

 

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

  

11

 

The Hartford Total Return Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE BONDS - 32.5% - (continued)
Petroleum and Coal Products Manufacturing - 2.2% - (continued)
     Oil and Gas Extraction - 1.7% - (continued)     
     Chesapeake Energy Corp.     
$603   2.50%, 05/15/2037 ۞  $582 
     CNPC General Capital     
 4,290   1.45%, 04/16/2016 ■   4,289 
     Continental Resources, Inc.     
 1,210   5.00%, 09/15/2022   1,316 
     Denbury Resources, Inc.     
 565   4.63%, 07/15/2023   571 
     EDC Finance Ltd.     
 1,405   4.88%, 04/17/2020 ■   1,417 
     Gazprom Neft OAO via GPN Capital S.A.     
 1,215   4.38%, 09/19/2022 ■   1,217 
     Harvest Operations Corp.     
 736   6.88%, 10/01/2017   824 
     Hornbeck Offshore Services, Inc.     
 400   5.88%, 04/01/2020   421 
     Lukoil International Finance B.V.     
 3,800   3.42%, 04/24/2018 ■   3,868 
     Newfield Exploration Co.     
 1,540   5.75%, 01/30/2022   1,704 
     Nexen, Inc.     
 1,210   7.50%, 07/30/2039   1,795 
     Pemex Project Funding Master Trust     
 2,575   6.63%, 06/15/2035   3,239 
     Petrobras International Finance Co.     
 940   5.38%, 01/27/2021   1,038 
 3,055   5.75%, 01/20/2020   3,448 
     Pioneer Natural Resources Co.     
 290   6.65%, 03/15/2017   340 
 910   7.50%, 01/15/2020   1,175 
     Range Resources Corp.     
 850   6.75%, 08/01/2020   943 
     Seadrill Ltd.     
 1,050   5.63%, 09/15/2017 ■   1,074 
         31,050 
     Petroleum and Coal Products Manufacturing - 0.2%     
     MEG Energy Corp.     
 481   6.38%, 01/30/2023 ■   507 
     Rosneft Oil Co.     
 990   3.15%, 03/06/2017 ■   1,000 
     Valero Energy Corp.     
 2,086   9.38%, 03/15/2019   2,867 
         4,374 
     Support Activities For Mining - 0.2%     
     Transocean, Inc.     
 414   5.05%, 12/15/2016   462 
 1,820   6.38%, 12/15/2021   2,180 
         2,642 
         39,333 
Pipeline Transportation - 0.8%
     Pipeline Transportation of Natural Gas - 0.8%     
     El Paso Corp.     
 900   7.00%, 06/15/2017   1,036 
 661   7.80%, 08/01/2031   748 
     Energy Transfer Equity L.P.     
 2,773   7.50%, 10/15/2020   3,244 
     Kinder Morgan Energy Partners L.P.     
 1,880   6.85%, 02/15/2020   2,391 
    Kinder Morgan Finance Co.    
 4,555   6.00%, 01/15/2018 ■   5,059 
     MarkWest Energy Partners L.P.     
 295   5.50%, 02/15/2023   324 
 571   6.25%, 06/15/2022   635 
         13,437 
Plastics and Rubber Products Manufacturing - 0.1%     
     Rubber Product Manufacturing - 0.1%     
     Continental Rubber of America Corp.     
 1,145   4.50%, 09/15/2019 ■   1,188 
           
Primary Metal Manufacturing - 0.1%     
     Iron and Steel Mills and Ferroalloy Manufacturing - 0.1%     
     ArcelorMittal     
 1,310   9.50%, 02/15/2015   1,479 
           
Professional, Scientific and Technical Services - 0.1%     
     Advertising and Related Services - 0.0%     
     Lamar Media Corp.     
 905   5.88%, 02/01/2022   990 
           
     Computer Systems Design and Related Services - 0.1%     
     Flextronics International Ltd.     
 200   4.63%, 02/15/2020 ■   204 
 295   5.00%, 02/15/2023 ■   301 
     Lender Processing Services, Inc.     
 566   5.75%, 04/15/2023   604 
         1,109 
         2,099 
Real Estate, Rental and Leasing - 1.3%     
     Activities Related To Real Estate - 0.1%     
     Duke Realty L.P.     
 1,750   3.63%, 04/15/2023   1,782 
           
     Automotive Equipment Rental and Leasing - 0.0%     
     United Rentals North America, Inc.     
 60   5.75%, 07/15/2018   65 
           
     General Rental Centers - 0.2%     
     ERAC USA Finance Co.     
 2,605   6.38%, 10/15/2017 ■   3,134 
           
     Industrial Machinery and Equipment Rental and Leasing - 1.0%     
     Air Lease Corp.     
 1,105   4.50%, 01/15/2016   1,149 
 230   4.75%, 03/01/2020   238 
     Cox Communications, Inc.     
 7,350   2.95%, 06/30/2023 ■☼   7,334 
     International Lease Finance Corp.     
 674   5.75%, 05/15/2016   733 
 5,850   5.88%, 04/01/2019   6,420 
 801   6.25%, 05/15/2019   898 
 674   8.88%, 09/01/2017   818 
         17,590 
         22,571 

 

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

 

12

 

 

 

Shares or Principal Amount  Market Value ╪ 
CORPORATE BONDS - 32.5% - (continued)     
Retail Trade - 1.2%     
     Automobile Dealers - 0.1%     
     AutoNation, Inc.     
$1,170   5.50%, 02/01/2020 ‡  $1,286 
           
     Automotive Parts, Accessories and Tire Stores - 0.2%     
     AutoZone, Inc.     
 4,164   3.70%, 04/15/2022 ‡   4,371 
           
     Building Material and Supplies Dealers - 0.1%     
     Building Materials Corp.     
 1,490   6.75%, 05/01/2021 ■   1,650 
 831   7.50%, 03/15/2020 ■   918 
         2,568 
     Clothing Stores - 0.2%     
     Ltd. Brands, Inc.     
 2,862   5.63%, 02/15/2022   3,088 
 261   6.95%, 03/01/2033   274 
         3,362 
     Direct Selling Establishments - 0.4%     
     AmeriGas Partners L.P.     
 640   6.25%, 08/20/2019 ‡   693 
     Energy Transfer Partners     
 2,645   3.60%, 02/01/2023   2,699 
 2,590   6.50%, 02/01/2042   3,120 
         6,512 
     Electronics and Appliance Stores - 0.1%     
     Arcelik AS     
 1,265   5.00%, 04/03/2023 ■   1,300 
           
     Other Miscellaneous Store Retailers - 0.1%     
     Sally Holdings LLC     
 660   5.75%, 06/01/2022   711 
     Sotheby's     
 1,025   5.25%, 10/01/2022 ■   1,049 
         1,760 
         21,159 
Soap, Cleaning Compound and Toilet Manufacturing - 0.0%     
     Soap, Cleaning Compound and Toilet Manufacturing - 0.0%     
     Avon Products, Inc.     
 475   2.38%, 03/15/2016   485 
           
Transportation Equipment Manufacturing - 0.2%     
     Railroad Rolling Stock Manufacturing - 0.1%     
     Kansas City Southern de Mexico S.A. de C.V.     
 1,000   2.35%, 05/15/2020 ■☼   1,004 
 1,385   3.00%, 05/15/2023 ■☼   1,389 
         2,393 
     Ship and Boat Building - 0.1%     
     Huntington Ingalls Industries, Inc.     
 1,710   6.88%, 03/15/2018   1,892 
           
         4,285 
Truck Transportation - 0.3%     
     Specialized Freight Trucking - 0.3%     
     Penske Truck Leasing Co.     
 4,740   2.88%, 07/17/2018 ■   4,968 
           
Utilities - 1.1%     
     Electric Generation, Transmission and Distribution - 1.1%     
     AES (The) Corp.     
 375   9.75%, 04/15/2016   454 
     Calpine Corp.     
 2,088   7.50%, 02/15/2021 ■╦   2,359 
 273   7.50%, 02/15/2021 §   309 
 883   7.88%, 01/15/2023 ■   1,011 
     Carolina Power & Light Co.     
 1,205   4.10%, 05/15/2042   1,257 
     CenterPoint Energy, Inc.     
 2,775   6.85%, 06/01/2015   3,098 
     Dolphin Subsidiary II, Inc.     
 2,625   7.25%, 10/15/2021   2,796 
     EDP Finance B.V.     
 1,080   4.90%, 10/01/2019 ■   1,097 
     MidAmerican Energy Holdings Co.     
 3,385   8.48%, 09/15/2028 ‡   5,025 
     Pacific Gas & Electric Co.     
 1,628   8.25%, 10/15/2018   2,188 
         19,594 
Wholesale Trade - 0.3%     
     Beer, Wine, Distilled Alcoholic Beverage Wholesalers - 0.3%     
     Heineken N.V.     
 1,291   1.40%, 10/01/2017 ■   1,294 
     SABMiller Holdings, Inc.     
 3,000   2.45%, 01/15/2017 ■   3,142 
 1,000   3.75%, 01/15/2022 ■   1,094 
         5,530 
     Total corporate bonds     
     (cost $537,743)  $577,445 
           
FOREIGN GOVERNMENT OBLIGATIONS - 0.3%     
     Mexico - 0.2%     
     United Mexican States     
$3,174   4.75%, 03/08/2044  $3,512 
           
     Russia - 0.1%     
     Russian Federation     
 1,800   3.25%, 04/04/2017 ■   1,903 
           
     Total foreign government obligations     
     (cost $4,922)  $5,415 
           
MUNICIPAL BONDS - 1.2%     
     General Obligations - 0.6%     
     California State GO     
$1,420   7.50%, 04/01/2034 ‡  $2,044 
 430   7.60%, 11/01/2040 ‡   652 
     California State GO, Taxable     
 4,785   7.55%, 04/01/2039 ╦   7,156 
         9,852 
     Higher Education (Univ., Dorms, etc.) - 0.1%     
     Curators University, System Facs Rev Build America Bonds     
 950   5.79%, 11/01/2041   1,284 

 

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

 

13

 

The Hartford Total Return Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
MUNICIPAL BONDS - 1.2% - (continued)     
     Utilities - Electric - 0.3%     
     Municipal Elec Auth Georgia     
$4,510   6.64%, 04/01/2057  $5,416 
           
     Utilities - Water and Sewer - 0.2%     
     San Francisco City & County, CA, Public Utilities     
 3,515   6.00%, 11/01/2040   4,481 
           
     Total municipal bonds     
     (cost $17,708)  $21,033 
           
SENIOR FLOATING RATE INTERESTS♦ - 4.4%     
Accommodation and Food Services - 0.1%     
     Traveler Accommodation - 0.1%     
     Caesars Entertainment Operating Co., Inc.     
$1,154   4.45%, 01/28/2018  $1,031 
 1,174   5.45%, 01/28/2018   1,064 
         2,095 
Administrative Waste Management and Remediation - 0.1%     
     Business Support Services - 0.1%     
     Audio Visual Services Group, Inc.     
 517   6.75%, 11/09/2018   525 
     ISS A/S     
 325   03/24/2018 ◊☼   326 
         851 
     Facilities Support Services - 0.0%     
     Affinia Group, Inc.     
 310   04/11/2016 ◊☼   312 
           
         1,163 
Air Transportation - 0.1%     
     Scheduled Air Transportation - 0.1%     
     Delta Air Lines, Inc.     
 454   4.00%, 10/18/2018   459 
     United Airlines, Inc.     
 645   4.00%, 04/01/2019   651 
         1,110 
Apparel Manufacturing - 0.0%     
     Accessories and Other Apparel Manufacturing - 0.0%     
     PVH Corp.     
 335   3.25%, 02/13/2020   338 
           
Arts, Entertainment and Recreation - 0.3%     
     Cable and Other Subscription Programming - 0.1%     
     Cequel Communications LLC     
 235   3.50%, 02/14/2019 ☼   236 
     CSC Holdings, Inc.     
 440   2.70%, 04/15/2020   439 
     Kabel Deutschland Holding AG     
 930   3.25%, 02/01/2019   934 
         1,609 
     Gambling Industries - 0.1%     
     MGM Resorts International     
 623   4.25%, 12/20/2019   632 
     Rock Ohio Caesars LLC     
 200   03/28/2019 ◊☼   202 
     Seminole (The) Tribe of Florida, Inc.     
 670   04/11/2020 ◊☼    674 
         1,508 
     Newspaper, Periodical, Book and Database Publisher - 0.1%     
     Tribune Co.     
 1,486   4.00%, 12/31/2019    1,503 
           
     Radio and Television Broadcasting - 0.0%     
     Sinclair Television Group, Inc.     
 295   3.00%, 10/28/2016    296 
           
     Spectator Sports - 0.0%     
     Penn National Gaming, Inc.     
 205   3.75%, 07/16/2018    207 
           
         5,123 
Beverage and Tobacco Product Manufacturing - 0.1%     
     Beverage Manufacturing - 0.1%     
     Constellation Brands, Inc.     
 1,080   04/25/2020 ◊☼    1,080 
           
Chemical Manufacturing - 0.2%     
     Basic Chemical Manufacturing - 0.2%     
     Huntsman International LLC, Extended Term Loan B     
 350   2.74%, 04/19/2017    352 
     Pinnacle Operating Corp.     
 1,175   04/29/2020 ◊☼    1,178 
 398   6.75%, 11/15/2018    403 
     PQ Corp.     
 599   4.50%, 08/07/2017    605 
         2,538 
     Other Chemical and Preparations Manufacturing - 0.0%     
     Cytec Industries, Inc.     
 108   09/20/2019 ◊    109 
     DuPont Performance Coatings, Inc.     
 135   4.75%, 02/01/2020    137 
     Monarch, Inc.     
 207   8.25%, 09/12/2019    210 
     Utex Industries, Inc.     
 105   04/10/2020 ◊☼    106 
         562 
     Paint, Coating and Adhesive Manufacturing - 0.0%     
     Tronox Pigments Holland     
 490   02/08/2018 ◊☼    497 
           
         3,597 
Computer and Electronic Product Manufacturing - 0.1%     
     Computer and Peripheral Equipment Manufacturing - 0.1%     
     CDW LLC     
 1,290   04/30/2020 ◊☼    1,293 

 

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

 

14

 

 

 

Shares or Principal Amount  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS♦ - 4.4% - (continued)     
Computer and Electronic Product Manufacturing - 0.1% - (continued)     
     Semiconductor, Electronic Components - 0.0%     
     NXP Semiconductors N.V.     
$718   4.75%, 01/10/2020   $734 
           
         2,027 
Construction - 0.0%     
     Construction - Other Specialty Trade Contractors - 0.0%     
     Brand Energy & Infrastructure Services, Inc.     
 289   6.25%, 10/23/2018    293 
           
     Other Heavy Construction - 0.0%     
     Aluma Systems, Inc.     
 69   6.25%, 10/23/2018    70 
           
         363 
Educational Services - 0.0%     
     Educational Support Services - 0.0%     
     Bright Horizons Family Solutions, Inc.     
 145   4.00%, 01/30/2020    146 
           
Finance and Insurance - 0.5%     
     Activities Related To Credit Banking - 0.1%     
     Evertec LLC     
 955   04/11/2020 ◊☼    953 
           
     Agencies, Brokerages and Other Insurance - 0.1%     
     Cooper Gay Swett & Crawford Ltd.     
 365   04/05/2020 ◊☼    368 
     USI Insurance Services LLC     
 419   5.25%, 12/27/2019    424 
         792 
     Captive Auto Finance - 0.1%     
     Chrysler Group LLC     
 1,799   6.00%, 05/24/2017    1,822 
     Macquarie Aircraft Leasing Finance S.A., Second Lien Term Loan     
 735   4.20%, 11/29/2013    720 
         2,542 
     Insurance Carriers - 0.0%     
     Asurion LLC     
 509   4.50%, 05/24/2019    514 
           
     Other Financial Investment Activities - 0.2%     
     Nuveen Investments, Inc.     
 2,110   4.20%, 05/13/2017 ☼    2,134 
     Ocwen Financial Corp.     
 190   5.00%, 02/15/2018    193 
     Walter Investment Management     
 923   5.75%, 11/28/2017    938 
         3,265 
         8,066 
Food Manufacturing - 0.2%     
     Fruits, Vegetable Preserving, Specialty Foods - 0.1%     
     Dole Food Co., Inc.     
 1,175   04/25/2020 ◊☼    1,182 
           
     Other Food Manufacturing - 0.1%     
     H. J. Heinz Co.     
 2,280   03/27/2020 ◊☼    2,300 
     Hostess Brands, Inc.     
 160   6.75%, 03/21/2020    164 
     U.S. Foodservice, Inc.     
 462   5.75%, 03/31/2017    467 
         2,931 
         4,113 
Food Services - 0.1%     
     Full-Service Restaurants - 0.1%     
     OSI Restaurant Partners, Inc.     
 1,736   3.50%, 10/23/2019    1,745 
           
Furniture and Related Product Manufacturing - 0.0%     
     Household, Institution Furniture, Kitchen Cabinet - 0.0%     
     Tempur-Pedic International, Inc.     
 529   5.00%, 03/18/2020    537 
           
     Other Furniture Related Product Manufacturing - 0.0%     
     Wilsonart International Holding LLC     
 319   4.00%, 10/31/2019    320 
           
         857 
Health Care and Social Assistance - 0.1%     
     General Medical and Surgical Hospitals - 0.1%     
     HCA, Inc.     
 575   05/30/2017 ◊☼    575 
 975   2.95%, 05/01/2018 ☼    977 
         1,552 
     Medical Equipment and Supplies Manufacturing - 0.0%     
     Kinetic Concepts, Inc.     
 194   5.50%, 05/04/2018    197 
           
     Scientific Research and Development Services - 0.0%     
     IMS Health, Inc.     
 287   3.75%, 09/01/2017    289 
           
         2,038 
Information - 0.9%     
     Cable and Other Program Distribution - 0.3%     
     Charter Communications Operating LLC     
 1,875   04/10/2020 - 01/19/2021 ◊☼    1,870 
     UPC Financing Partnership     
 520   06/10/2021 ◊☼    519 
 335   4.00%, 01/31/2021    339 
     Virgin Media Finance plc     
 1,970   02/15/2020 ◊☼    1,971 
         4,699 
     Data Processing Services - 0.2%     
     First Data Corp.     
 830   4.20%, 03/24/2017 - 09/30/2018    827 
     First Data Corp., Extended 1st Lien Term Loan     
 2,555   4.20%, 03/23/2018    2,545 
         3,372 
     Software Publishers - 0.2%     
     Emdeon, Inc.     
 650   3.75%, 11/02/2018 ☼    655 

 

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

 

15

 

The Hartford Total Return Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS♦ - 4.4% - (continued)     
Information - 0.9% - (continued)     
     Software Publishers - 0.2% - (continued)     
     Epicor Software Corp.     
$200   4.50%, 05/16/2018   $203 
     Kronos, Inc.     
 943   4.50%, 10/30/2019    954 
 175   9.75%, 04/30/2020    185 
     Lawson Software, Inc.     
 995   5.25%, 04/05/2018    1,010 
     Web.com Group, Inc.     
 732   4.50%, 10/27/2017    738 
         3,745 
     Telecommunications - Other - 0.1%     
     Nine Entertainment Group Ltd     
 565   3.50%, 02/05/2020    566 
     Sorenson Communications, Inc.     
 855   9.50%, 10/31/2014    869 
     Warner Music Group Corp.     
 227   5.25%, 11/01/2018    230 
         1,665 
     Telecommunications - Wireless Carriers - 0.0%     
     Alcatel-Lucent     
 209   7.25%, 01/30/2019    215 
     Light Tower Fiber LLC     
 240   4.50%, 04/01/2020    242 
     Syniverse Holdings, Inc.     
 470   1.35%, 04/23/2019 ☼Б    472 
         929 
     Wireless Communications Services - 0.1%     
     Leap Wireless International, Inc.     
 1,210   4.75%, 03/01/2020    1,215 
     Windstream Corp.     
 219   3.50%, 01/23/2020    220 
         1,435 
         15,845 
Mining - 0.1%     
     Metal Ore Mining - 0.0%     
     Fortescue Metals Group Ltd.     
 1,114   5.25%, 10/18/2017    1,134 
           
     Mining and Quarrying Nonmetallic Mineral - 0.1%     
     Arch Coal, Inc.     
 1,383   5.75%, 05/16/2018    1,401 
           
         2,535 
Miscellaneous Manufacturing - 0.2%     
     Aerospace Product and Parts Manufacturing - 0.1%     
     DigitalGlobe, Inc.     
 365   3.75%, 01/31/2020    369 
     Doncasters plc     
 1,255   5.50%, 04/05/2020    1,264 
     Hamilton Sundstrand Corp.     
 349   4.00%, 12/13/2019    351 
         1,984 
     Miscellaneous Manufacturing - 0.1%     
     Reynolds Group Holdings, Inc.     
 766   4.75%, 09/28/2018    778 
           
         2,762 
Motor Vehicle and Parts Manufacturing - 0.1%     
     Motor Vehicle Parts Manufacturing - 0.1%     
     Federal Mogul Corp., Tranche B Term Loan     
 659   2.14%, 12/29/2014    624 
     Federal Mogul Corp., Tranche C Term Loan     
 336   2.14%, 12/28/2015    319 
     Tower International, Inc.     
 635   04/16/2020 ◊☼    642 
         1,585 
Other Services - 0.0%     
     Commercial/Industrial Machine and Equipment - 0.0%     
     Apex Tool Group LLC     
 105   4.50%, 01/31/2020    106 
           
Petroleum and Coal Products Manufacturing - 0.1%     
     Oil and Gas Extraction - 0.1%     
     Dynegy Power LLC     
 246   04/16/2020 ◊☼    246 
     Dynegy, Inc.     
 154   04/15/2020 ◊☼    154 
     Ruby Western Pipeline Holdings LLC     
 625   3.50%, 03/31/2020    631 
         1,031 
Pipeline Transportation - 0.1%     
     Pipeline Transportation of Crude Oil - 0.0%     
     Philadelphia Energy Solutions LLC     
 370   04/03/2018 ◊☼    377 
           
     Pipeline Transportation of Natural Gas - 0.1%     
     EP Energy LLC     
 1,720   4.50%, 04/30/2019    1,739 
           
         2,116 
Plastics and Rubber Products Manufacturing - 0.1%     
     Plastics Product Manufacturing - 0.1%     
     Berry Plastics Group, Inc.     
 1,550   3.50%, 02/10/2020    1,548 
     Consolidated Container Co.     
 517   5.00%, 07/03/2019    524 
         2,072 
Primary Metal Manufacturing - 0.1%     
     Alumina and Aluminum Production and Processing - 0.1%     
     Novelis, Inc.     
 2,298   3.75%, 03/10/2017    2,335 
           
Professional, Scientific and Technical Services - 0.1%     
     Professional Services - Computer System Design and Related - 0.1%     
     MoneyGram International, Inc.     
 785   4.25%, 03/27/2020    791 
     SunGard Data Systems, Inc.     
 354   4.50%, 01/31/2020    359 
         1,150 
Real Estate, Rental and Leasing - 0.0%     
     Automotive Equipment Rental and Leasing - 0.0%     
     The Hertz Corp.     
 420   3.00%, 03/11/2018    421 

 

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

 

16

 

 

 

Shares or Principal Amount  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS♦ - 4.4% - (continued)     
Retail Trade - 0.6%     
     Automobile Dealers - 0.0%     
     TI Automotive Ltd.     
$410   5.50%, 03/14/2019   $416 
           
     Building Material and Supplies Dealers - 0.0%     
     American Builders & Contractors Supply Co.     
 425   3.50%, 04/05/2020    429 
           
     Department Stores - 0.1%     
     Neiman (The) Marcus Group, Inc.     
 1,310   4.00%, 05/16/2018    1,320 
           
     Grocery Stores - 0.0%     
     Sprouts Farmers Markets Holdings LLC     
 485   04/12/2020 ◊☼    486 
           
     Other Miscellaneous Store Retailers - 0.1%     
     Aramark Corp.     
 1,120   3.75%, 07/26/2016    1,132 
 340   4.00%, 08/22/2019    343 
     Rite Aid Corp.     
 320   4.00%, 02/21/2020    324 
 115   5.75%, 08/21/2020    119 
         1,918 
     Specialty Food Stores - 0.2%     
     Weight Watchers International, Inc.     
 2,660   3.75%, 04/02/2020    2,651 
           
     Sporting Goods, Hobby and Musical Instrument Store - 0.2%     
     EB Sports Corp.     
 2,209   11.50%, 12/31/2015 Þ    2,187 
     Michaels Stores, Inc.     
 460   3.75%, 01/28/2020    464 
         2,651 
         9,871 
Truck Transportation - 0.0%     
     Freight Trucking - General - 0.0%     
     Nexeo Solutions LLC     
 294   5.00%, 09/09/2017    295 
           
Utilities - 0.1%     
     Electric Generation, Transmission and Distribution - 0.1%     
     Star West Generation LLC     
 1,380   5.00%, 03/13/2020    1,406 
           
     Total senior floating rate interests     
     (cost $76,547)   $77,391 
           
U.S. GOVERNMENT AGENCIES - 41.3%     
     FHLMC - 5.9%     
$3,013   0.48%, 01/15/2039 ►   $464 
 14,095   2.23%, 08/25/2018 ►    1,294 
 32,436   2.53%, 10/25/2020 ►    630 
 35,000   3.50%, 05/15/2043 ☼    37,204 
 14,697   4.00%, 01/15/2041 ►    2,177 
 13,365   4.00%, 08/01/2025 - 05/15/2043 ☼    14,370 
 11,600   4.50%, 05/15/2043 ☼    12,421 
 3,805   4.77%, 05/15/2037 ►    660 
 27,480   5.50%, 01/01/2037 - 06/01/2041    29,735 
 5,094   6.00%, 01/01/2023 - 06/01/2038    5,607 
 6,857   7.23%, 12/15/2036 ►    1,082 
         105,644 
     FNMA - 13.0%     
 3,259   2.14%, 11/01/2022    3,283 
 4,694   2.15%, 10/01/2022    4,752 
 2,235   2.20%, 12/01/2022    2,260 
 1,307   2.28%, 11/01/2022    1,329 
 1,104   2.34%, 11/01/2022    1,126 
 990   2.40%, 10/01/2022    1,016 
 868   2.42%, 11/01/2022    892 
 890   2.47%, 11/01/2022    916 
 16,400   2.50%, 05/12/2028 ☼    17,148 
 4,367   2.72%, 06/25/2042 ►    721 
 22,600   3.00%, 05/15/2027 ☼    23,868 
 7,300   3.50%, 05/15/2028 ☼    7,754 
 51,731   4.00%, 06/01/2025 - 05/15/2043 ☼    55,394 
 18,747   4.50%, 08/01/2024 - 05/15/2041 ☼    20,196 
 40,505   5.00%, 04/01/2018 - 04/25/2038    43,994 
 27,399   5.50%, 01/01/2017 - 05/15/2043    29,960 
 10,568   5.69%, 09/25/2040 ►    1,783 
 10,933   6.00%, 11/01/2013 - 05/15/2043 ☼    12,028 
 6,550   6.44%, 11/25/2039 ►    1,187 
 151   7.00%, 10/01/2037    180 
 80   7.50%, 12/01/2029 - 09/01/2031    95 
 7,468   9.81%, 10/25/2036 ►    1,312 
         231,194 
     GNMA - 22.4%     
 59,200   3.00%, 05/15/2043 ☼    62,993 
 118,700   3.50%, 05/15/2043 ☼    129,209 
 54,955   4.00%, 09/20/2040 - 05/15/2043    60,351 
 75,381   4.50%, 07/15/2033 - 05/15/2043 ☼    83,283 
 29,345   5.00%, 08/15/2039 - 06/20/2040    32,605 
 2,586   5.50%, 05/15/2033 - 04/15/2038    2,855 
 22,078   6.00%, 02/15/2029 - 06/15/2041    25,004 
 963   6.50%, 09/15/2028 - 07/15/2032    1,118 
         397,418 
     Total U.S. government agencies     
     (cost $718,778)   $734,256 
           
U.S. GOVERNMENT SECURITIES - 24.4%     
U.S. Treasury Securities - 24.4%     
     U.S. Treasury Bonds - 7.1%     
$25,631    3.13%, 11/15/2041 - 02/15/2043 ‡   $26,893 
 544    3.75%, 08/15/2041 ‡    642 
 15,802    4.38%, 05/15/2041 ‡    20,641 
 17,076    4.75%, 02/15/2041 ‡    23,591 
 26,422    5.38%, 02/15/2031 ‡    37,759 
 10,325    6.25%, 05/15/2030 ‡    15,988 
         125,514 

 

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

 

17

 

The Hartford Total Return Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
U.S. GOVERNMENT SECURITIES - 24.4% - (continued)     
U.S. Treasury Securities - 24.4% - (continued)     
     U.S. Treasury Notes - 17.3%     
$4,386   0.25%, 10/31/2013 - 10/31/2014 ‡  $4,390 
 44,000   0.63%, 07/15/2014 ‡   44,244 
 154,975   0.88%, 04/30/2017 ‡   157,336 
 59,116   2.00%, 04/30/2016 - 02/15/2022 ‡   62,067 
 5,625   3.13%, 04/30/2017 □   6,214 
 31,375   4.25%, 11/15/2014 ‡   33,329 
         307,580 
         433,094 
     Total U.S. government securities     
     (cost $427,638)  $433,094 

 

Contracts  Market Value ╪ 
PUT OPTIONS PURCHASED - 0.0%     
     Interest Rate Contracts - 0.0%     
     Interest Rate Swaption USD     
 6,000   Expiration: 04/17/2023, Exercise Rate: 3.46%  $881 
           
     Total put options purchased     
     (cost $873)  $881 

 

Shares or Principal Amount  Market Value ╪ 
PREFERRED STOCKS - 0.1%     
     Diversified Banks - 0.0%     
    U.S. Bancorp  $430 
           
     Other Diversified Financial Services - 0.1%     
 44   Citigroup Capital XIII   1,256 
           
     Thrifts and Mortgage Finance - 0.0%     
 85   Federal Home Loan Mortgage Corp.   404 
           
     Total preferred stocks     
     (cost $3,707)  $2,090 
           
     Total long-term investments     
     (cost $2,041,386)  $2,122,561 
           
SHORT-TERM INVESTMENTS - 4.2%     
Repurchase Agreements - 4.2%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $2,978,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $3,038)
     
$2,978   0.17%, 4/30/2013  $2,978 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $8,115, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note 0.75%,
2013, value of $8,278)
     
 8,115   0.15%, 4/30/2013   8,115 

     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $15,630, collateralized by
U.S. Treasury Note 0.88% - 3.13%, 2017 -
2021, value of $15,943)
          
 15,630   0.15%, 4/30/2013       15,630 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $21,708,
collateralized by U.S. Treasury Note
0.75% - 2.13%, 2015 - 2019, value of
$22,142)
          
 21,708   0.14%, 4/30/2013        21,708 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $3,904,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value
of $3,982)
          
 3,904   0.17%, 4/30/2013        3,904 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $13,228, collateralized by
U.S. Treasury Note 1.00% - 2.25%, 2016 -
2022, value of $13,493)
          
 13,228   0.14%, 4/30/2013        13,228 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $9,300, collateralized by
U.S. Treasury Note 0.25% - 1.88%, 2014 -
2019, value of $9,486)
          
 9,300   0.17%, 4/30/2013        9,300 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$166, collateralized by U.S. Treasury
Note 3.88%, 2018, value of $170)
          
 166   0.13%, 4/30/2013        166 
              75,029 
     Total short-term investments          
     (cost $75,029)       $75,029 
                
     Total investments          
     (cost $2,116,415) ▲   123.6%  $2,197,590 
     Other assets and liabilities   (23.6)%   (420,276)
     Total net assets   100.0%  $1,777,314 

 

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

 

18

 

 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $2,119,787 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation   $84,968 
Unrealized Depreciation    (7,165)
Net Unrealized Appreciation   $77,803 

 

This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

 

ΔVariable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $204,506, which represents 11.5% of total net assets.

 

§These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $309, which rounds to zero percent of total net assets.

 

Perpetual maturity security.  Maturity date shown is the first call date.

 

۞Convertible security.

 

Securities disclosed are interest-only strips.  The interest rates represent effective yields based upon estimated future cash flows at April 30, 2013.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $398,462 at April 30, 2013.

 

All or a portion of this position represents unsettled loan commitment.  The coupon rate will be determined at time of settlement.

 

ÞThis security may pay interest in additional principal instead of cash.

 

Senior floating rate interests 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 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.  Unless otherwise noted, the interest rate disclosed for these securities represents the average coupon as of April 30, 2013.

 

This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.  In addition, cash of $9,598 was received from broker(s) as collateral in connection with swap contracts.  Securities valued at $13,826, held on behalf of the Fund at the custody bank, were designated by broker(s) as collateral in connection with swap contracts.

 

БThis security, or a portion of this security, has unfunded loan commitments.  As of April 30, 2013, the aggregate value of the unfunded commitment was $46,765 , which represents 2.6% of total net assets.

 

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

 

19

 

The Hartford Total Return Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

This security, or a portion of this security, is pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts held at April 30, 2013 as listed in the table below:

 

Description  Number of
Contracts*
   Expiration
Date
  Notional Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
Long position contracts:                       
U.S. Treasury 2-Year Note Future   125   06/28/2013  $27,559   $27,578   $19 
U.S. Treasury 30-Year Bond Future   108   06/19/2013   16,006    16,025    19 
U.S. Treasury 5-Year Note Future   1,325   06/28/2013   164,239    165,149    910 
U.S. Treasury CME Ultra Long Term Bond Future   76   06/19/2013   12,271    12,490    219 
                     $1,167 
Short position contracts:                       
Euro-BUND Future   116   06/06/2013  $21,982   $22,392   $(410)
Japan 10-Year Bond Future   44   06/11/2013   65,313    65,234    79 
U.S. Treasury 10-Year Note Future   839   06/19/2013   110,722    111,889    (1,167)
                     $(1,498)
                     $(331)

 

* The number of contracts does not omit 000's.

 

Securities Sold Short Outstanding at April 30, 2013

 

Description  Principal
Amount
   Maturity Date  Market Value ╪   Unrealized
Appreciation/
Depreciation
 
FHLMC TBA, 5.50%  $18,900   05/15/2043  $20,403   $71 
FNMA TBA, 3.00%   37,900   05/15/2043   39,641    (193)
FNMA TBA, 3.50%   20,000   05/15/2041   21,309    (149)
FNMA TBA, 5.00%   22,400   05/15/2043   24,252     
FNMA TBA, 5.50%   16,800   05/15/2043   18,267    47 
GNMA TBA, 3.00%   22,800   05/15/2042   24,229    (239)
GNMA TBA, 4.00%   24,200   05/15/2043   26,491    53 
GNMA TBA, 4.50%   25,000   05/15/2043   27,379    (66)
           $201,971   $(476)

 

At April 30, 2013, the aggregate value of these securities represents 11.4% of total net assets.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
BRL  Buy  08/02/2013  GSC  $2,183   $2,181   $(2)
EUR  Sell  05/01/2013  JPM   12    12     
JPY  Sell  05/01/2013  JPM   54    54     
NOK  Buy  05/31/2013  MSC   10,846    11,093    247 
SEK  Sell  05/31/2013  UBS   11,023    11,242    (219)
                      $26 

 

Credit Default Swap Contracts Outstanding at April 30, 2013
 
Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices:
Buy protection:                               
ABX.HE.AA.06  BCLY  $694    (0.32)%  07/25/45  $392   $181   $(211)
ABX.HE.AAA.06  BCLY   5,976    (0.18)%  07/25/45   626    96    (530)

 

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

 

20

 

 

 

 

Credit Default Swap Contracts Outstanding at April 30, 2013 - (continued)
 
Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices: - (continued)
Buy protection: - (continued)                               
ABX.HE.AAA.06  GSC  $9,312    (0.18)%  07/25/45  $819   $149   $(670)
ABX.HE.AAA.06  MSC   2,083    (0.18)%  07/25/45   170    33    (137)
ABX.HE.AAA.06-1  MSC   302    (0.18)%  07/25/45   6    5    (1)
ABX.HE.PENAAA.06  GSC   2,751    (0.11)%  05/25/46   688    464    (224)
ABX.HE.PENAAA.06  JPM   3,186    (0.11)%  05/25/46   796    538    (258)
ABX.HE.PENAAA.06  MSC   1,442    (0.11)%  05/25/46   349    243    (106)
ABX.HE.PENAAA.06-2  JPM   76    (0.11)%  05/25/46   14    13    (1)
ABX.HE.PENAAA.07  GSC   2,103    (0.09)%  08/25/37   872    691    (181)
ABX.HE.PENAAA.07-1  JPM   97    (0.09)%  08/25/37   34    32    (2)
CDX.NA.HY.19  JPM   44,690    (5.00)%  12/20/17   (525)   (3,168)   (2,643)
CDX.NA.HY.20  BCLY   4,545    (5.00)%  06/20/18   (213)   (279)   (66)
CDX.NA.HY.20  GSC   37,360    (5.00)%  06/20/18   (1,323)   (2,296)   (973)
CDX.NA.HY.20  JPM   14,620    (5.00)%  06/20/18   (638)   (899)   (261)
CDX.NA.HY.20  MSC   7,945    (5.00)%  06/20/18   (328)   (488)   (160)
CMBX.NA.A.1  DEUT   2,490    (0.35)%  10/12/52   1,151    948    (203)
CMBX.NA.A.1  GSC   1,155    (0.35)%  10/12/52   523    440    (83)
CMBX.NA.A.1  MSC   350    (0.35)%  10/12/52   145    133    (12)
CMBX.NA.AA.1  CSI   3,055    (0.25)%  10/12/52   699    544    (155)
CMBX.NA.AA.1  DEUT   3,050    (0.25)%  10/12/52   645    543    (102)
CMBX.NA.AA.1  UBS   7,940    (0.25)%  10/12/52   1,811    1,412    (399)
CMBX.NA.AA.2  BOA   3,645    (0.15)%  03/15/49   1,385    1,214    (171)
CMBX.NA.AA.2  JPM   350    (0.15)%  03/15/49   132    117    (15)
CMBX.NA.AJ.1  DEUT   655    (0.84)%  10/12/52   46    37    (9)
CMBX.NA.AJ.1  JPM   175    (0.84)%  10/12/52   13    10    (3)
CMBX.NA.AJ.1  MSC   1,170    (0.84)%  10/12/52   82    66    (16)
CMBX.NA.AJ.4  MSC   1,875    (0.96)%  02/17/51   734    500    (234)
CMBX.NA.AM.2  CSI   3,645    (0.50)%  03/15/49   223    142    (81)
CMBX.NA.AM.2  DEUT   3,645    (0.50)%  03/15/49   209    142    (67)
CMBX.NA.AM.2  MSC   705    (0.50)%  03/15/49   34    27    (7)
CMBX.NA.AM.3  CSI   3,420    (0.50)%  12/13/49   342    245    (97)
CMBX.NA.AM.3  MSC   330    (0.50)%  12/13/49   30    24    (6)
CMBX.NA.AM.4  MSC   3,750    (0.50)%  02/17/51   799    310    (489)
ITRX.EUR.19  GSC  EUR  32,350    (1.00)%  06/20/23   2,133    1,557    (576)
ITRX.XOV.19  DEUT  EUR940    (5.00)%  06/20/18   (33)   (56)   (23)
ITRX.XOV.19  GSC  EUR2,340    (5.00)%  06/20/18   (13)   (138)   (125)
ITRX.XOV.19  MSC  EUR11,315    (5.00)%  06/20/18   (264)   (668)   (404)
Total                  $12,565   $2,864   $(9,701)
Sell protection:                               
ABX.HE.AAA.06  CSI  $1,038    0.11%  05/25/46  $(337)  $(272)  $65 
ABX.HE.AAA.06  JPM   1,038    0.11%  05/25/46   (336)   (272)   64 
ABX.HE.AAA.06-2  JPM   199    0.11%  05/25/46   (58)   (52)   6 
CDX.EM.19  CBK   5,960    5.00%  06/20/18   784    763    (21)
CDX.EM.19  DEUT   10,765    5.00%  06/20/18   1,372    1,379    7 
CDX.EM.19  DEUT   25,395    5.00%  06/20/18   3,336    3,254    (82)
CDX.EM.19  GSC   8,140    5.00%  06/20/18   1,073    1,043    (30)
CDX.EM.ex-EU.18  GSC   39,670    5.00%  12/20/17   4,759    4,648    (111)
CDX.NA.HY.20  GSC   26,815    1.00%  06/20/18   148    327    179 
CDX.NA.IG.19  MSC   37,750    1.00%  12/20/17   39    583    544 
CMBX.NA.AA.4  MSC   5,640    1.65%  02/17/51   (3,546)   (3,426)   120 
CMBX.NA.AAA.3  JPM   3,235    0.08%  12/13/49   (178)   (66)   112 
CMBX.NA.AAA.5  MSC   3,184    0.35%  02/15/51   (239)   (79)   160 
CMBX.NA.AAA.6  BOA   1,710    0.50%  05/11/63   (58)   (42)   16 
CMBX.NA.AAA.6  CSI   1,240    0.50%  05/11/63   (43)   (31)   12 
CMBX.NA.AAA.6  JPM   1,195    0.50%  05/11/63   (40)   (30)   10 
CMBX.NA.AAA.6  UBS   7,225    0.50%  05/11/63   (192)   (179)   13 

 

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

 

21

 

The Hartford Total Return Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Credit Default Swap Contracts Outstanding at April 30, 2013 - (continued)
 
Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices: - (continued)
Sell protection: - (continued)                               
CMBX.NA.AAA.6  UBS  $5,145    0.50%  05/11/63  $(119)  $(128)  $(9)
CMBX.NA.AJ.3  CSI   2,830    1.47%  12/13/49   (888)   (727)   161 
CMBX.NA.AJ.3  MSC   1,170    1.47%  12/13/49   (353)   (301)   52 
CMBX.NA.AJ.3  UBS   2,585    1.47%  12/13/49   (1,017)   (664)   353 
CMBX.NA.BB.6  CSI   435    5.00%  05/11/63   (23)   (10)   13 
CMBX.NA.BB.6  CSI   2,790    5.00%  05/11/63   (8)   (61)   (53)
CMBX.NA.BB.6  GSC   770    5.00%  05/11/63   (38)   (17)   21 
CMBX.NA.BB.6  JPM   135    5.00%  05/11/63   3    (3)   (6)
CMBX.NA.BB.6  MSC   1,180    5.00%  05/11/63   (72)   (25)   47 
CMBX.NA.BB.6  MSC   680    5.00%  05/11/63   16    (14)   (30)
CMBX.NA.BB.6  UBS   2,335    5.00%  05/11/63   27    (51)   (78)
CMBX.NA.BB.6  UBS   700    5.00%  05/11/63   (34)   (15)   19 
CMBX.NA.BBB-.6  CSI   1,055    3.00%  05/11/63   (59)   (16)   43 
CMBX.NA.BBB-.6  MSC   770    3.00%  05/11/63   (44)   (11)   33 
ITRX.EUR.19  GSC  EUR32,750    1.00%  06/20/18   (310)   34    344 
PrimeX.ARM.1  MSC   1,501    4.42%  06/25/36   50    161    111 
PrimeX.ARM.2  MSC   4,260    4.58%  06/25/36   (312)   149    461 
PrimeX.ARM.2  MSC   411    4.58%  12/25/37   13    14    1 
Total              $3,316   $5,863   $2,547 
Total traded indices       $15,881   $8,727   $(7,154)

 

(a)The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.  Notional shown in U.S. dollars unless otherwise noted.

 

Interest Rate Swap Contracts Outstanding at April 30, 2013
 
Counterparty  Payments made by Fund  Payments received by Fund  Notional
Amount *
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
BOA  3M CAD BA CDOR  1.59% Fixed  CAD  19,850   04/29/18  $   $19   $19 
CSI  2.75% Fixed  3M LIBOR   7,100   06/19/43   218    124    (94)
DEUT  3M LIBOR  2.82% Fixed   1,450   04/17/43       1    1 
GSC  0.91% Fixed  6M LIBOR GBP  GBP  13,200   04/29/18       9    9 
GSC  1.73% Fixed  6M EURIBOR  EUR  24,350   01/09/23       (852)   (852)
JPM  2.00% Fixed  3M LIBOR   14,700   03/20/23   (86)   (234)   (148)
JPM  3M STIBOR  2.16% Fixed  SEK  199,800   01/09/23       314    314 
                 $132   $(619)  $(751)

 

* Notional shown in U.S. dollars unless otherwise noted.

 

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

 

22

 

 

 

Spreadlock Swap Contracts Outstanding at April 30, 2013
 
Counterparty  Strike   Notional
Amount
   Determination
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
JPM   0.80%*  $136,000   09/20/13  $   $(25)  $(25)

 

*This is a spreadlock swap between the 10-Year interest rate swap curve and the yield to maturity on a 30-Year FNMA.  If the yield to maturity on the 30-Year FNMA minus the 10-Year CMS (constant maturity swap curve) rate is greater than 0.80%, the Fund will receive money from the counterparty based on this differential.  If the yield to maturity on the 30-Year FNMA minus the 10-Year CMS rate is less than 0.80%, the Fund will pay the counterparty.

  

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.

 

23

 

The Hartford Total Return Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
BCLY Barclays  
BOA Banc of America Securities LLC  
CBK Citibank NA  
CSI Credit Suisse International  
DEUT Deutsche Bank Securities, Inc.  
GSC Goldman Sachs & Co.
JPM JP Morgan Chase & Co.  
MSC Morgan Stanley  
UBS UBS AG  
   
Currency Abbreviations:
BRL Brazilian Real  
CAD Canadian Dollar  
EUR EURO  
GBP British Pound  
JPY Japanese Yen  
NOK Norwegian Krone  
SEK Swedish Krona  
 
Index Abbreviations:
ABX.HE Markit Asset Backed Security Home Equity
ABX.HE.PEN Markit Asset Backed Security Home Equity Penultimate
CDX.EM Credit Derivatives Emerging Markets
CDX.NA.HY Credit Derivatives North American High Yield
CDX.NA.IG Credit Derivatives North American Investment Grade
CMBX.NA Markit Commercial Mortgage Backed North American
ITRX.EUR Markit iTraxx - Europe
ITRX.XOV Markit iTraxx Index - Europe Crossover
PrimeX.ARM Markit PrimeX Mortgage Backed Security
 
Municipal Bond Abbreviations:
GO General Obligation  
Rev Revenue  
   
Other Abbreviations:
CAD BA CDOR Canadian Bankers Acceptance Dealer Offered Rate
EURIBOR Euro Interbank Offered Rate
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
LIBOR London Interbank Offered Rate
STIBOR Stockholm Interbank Offer Rate

 

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

 

24

 

The Hartford Total Return Bond Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Asset & Commercial Mortgage Backed Securities  $270,956   $   $225,052   $45,904 
Corporate Bonds   577,445        574,149    3,296 
Foreign Government Obligations   5,415        5,415     
Municipal Bonds   21,033        21,033     
Preferred Stocks   2,090    1,660    430     
Put Options Purchased   881        881     
Senior Floating Rate Interests   77,391        77,391     
U.S. Government Agencies   734,256        734,256     
U.S. Government Securities   433,094    15,851    417,243     
Short-Term Investments   75,029        75,029     
Total  $2,197,590   $17,511   $2,130,879   $49,200 
Credit Default Swaps *   2,967        2,967     
Foreign Currency Contracts *   247        247     
Futures *   1,246    1,246         
Interest Rate Swaps *   343        343     
Total  $4,803   $1,246   $3,557   $ 
Liabilities:                    
Securities Sold Short  $201,971   $   $201,971   $ 
Total  $201,971   $   $201,971   $ 
Credit Default Swaps *   10,121        10,121     
Foreign Currency Contracts *   221        221     
Futures *   1,577    1,577         
Interest Rate Swaps *   1,094        1,094     
Spreadlock Swaps *   25        25     
Total  $13,038   $1,577   $11,461   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3 *
   Transfers
Out of
Level 3 *
   Balance
as of April
30, 2013
 
Assets:                                             
Asset & Commercial Mortgage Backed Securities  $32,083   $4,302   $2,948  $1,698   $25,783   $(20,910)  $   $   $45,904 
Corporate Bonds   3,861    24    35   (1)   16    (639)           3,296 
Options Purchased   2    (238)   236                         
U.S. Government Agencies   18,257                            (18,257)    
Total  $54,203   $4,088   $3,219   $1,697   $25,799   $(21,549)  $   $(18,257)  $49,200 

 

*Investments are transferred into and out of Level 3 for a variety of reasons including, but not limited to:
1)Investments where trading has been halted (transfer into Level 3) or investments where trading has resumed (transfer out of Level 3).
2)Broker quoted investments (transfer into Level 3) or quoted prices in active markets (transfer out of Level 3).
3)Investments that have certain restrictions on trading (transfer into Level 3) or investments where trading restrictions have expired (transfer out of Level 3).
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $4,349.
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $35.

 

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

 

25

 

The Hartford Total Return Bond Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $2,116,415)  $2,197,590 
Unrealized appreciation on foreign currency contracts   247 
Unrealized appreciation on swap contracts   3,310 
Receivables:     
Investment securities sold   537,376 
Fund shares sold   1,749 
Dividends and interest   11,458 
Variation margin   148 
Swap premiums paid   27,740 
Other assets   105 
Total assets   2,779,723 
Liabilities:     
Unrealized depreciation on foreign currency contracts   221 
Unrealized depreciation on swap contracts   11,240 
Bank overdraft   3,901 
Bank overdraft -- foreign cash   77 
Securities sold short, at market value (proceeds $201,495)   201,971 
Payables:     
Investment securities purchased   761,376 
Fund shares redeemed   1,673 
Investment management fees   147 
Dividends   47 
Administrative fees   1 
Distribution fees   53 
Collateral received from broker   9,598 
Variation margin   62 
Accrued expenses   224 
Swap premiums received   11,727 
Other liabilities   91 
Total liabilities   1,002,409 
Net assets  $1,777,314 
Summary of Net Assets:     
Capital stock and paid-in-capital  $1,683,946 
Distributions in excess of net investment loss   (1,852)
Accumulated net realized gain   22,757 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   72,463 
Net assets  $1,777,314 

 

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

 

26

 

 

 

Shares authorized   850,000 
Par value  $   0.001 
Class A: Net asset value per share/Maximum offering price per share   $10.92/$11.43 
Shares outstanding   63,988 
Net assets  $698,522 
Class B: Net asset value per share  $10.84 
Shares outstanding   3,816 
Net assets  $41,353 
Class C: Net asset value per share  $10.93 
Shares outstanding   9,152 
Net assets  $100,069 
Class I: Net asset value per share  $10.93 
Shares outstanding   951 
Net assets  $10,394 
Class R3: Net asset value per share  $11.11 
Shares outstanding   813 
Net assets  $9,032 
Class R4: Net asset value per share  $11.09 
Shares outstanding   1,706 
Net assets  $18,921 
Class R5: Net asset value per share  $11.09 
Shares outstanding   78 
Net assets  $861 
Class Y: Net asset value per share  $11.08 
Shares outstanding   81,065 
Net assets  $898,162 

 

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

 

27

 

The Hartford Total Return Bond Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $52 
Interest   26,159 
Total investment income   26,211 
Expenses:     
Investment management fees   4,533 
Administrative services fees     
Class R3   9 
Class R4   15 
Class R5   1 
Transfer agent fees     
Class A   643 
Class B   69 
Class C   74 
Class I   7 
Class R3   1 
Class R4    
Class R5    
Class Y   9 
Distribution fees     
Class A   868 
Class B   220 
Class C   511 
Class R3   23 
Class R4   25 
Custodian fees   13 
Accounting services fees   180 
Registration and filing fees   70 
Board of Directors' fees   24 
Audit fees   13 
Other expenses   100 
Total expenses (before waivers and fees paid indirectly)   7,408 
Expense waivers   (143)
Transfer agent fee waivers   (1)
Custodian fee offset    
Total waivers and fees paid indirectly   (144)
Total expenses, net   7,264 
Net Investment Income   18,947 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities   28,270 
Net realized gain on purchased options   590 
Net realized loss on securities sold short   (880)
Net realized gain on futures   2,345 
Net realized loss on swap contracts   (4,803)
Net realized gain on foreign currency contracts   27 
Net realized loss on other foreign currency transactions   (36)
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   25,513 
Net Changes in Unrealized Depreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized depreciation of investments   (2,596)
Net unrealized appreciation of purchased options   244 
Net unrealized depreciation of securities sold short   (1,180)
Net unrealized appreciation of futures   389 
Net unrealized depreciation of swap contracts   (5,367)
Net unrealized depreciation of foreign currency contracts   (77)
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies   (1)
Net Changes in Unrealized Depreciation of Investments, Other Financial Instruments and Foreign Currency Transactions   (8,588)
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   16,925 
Net Increase in Net Assets Resulting from Operations  $35,872 

 

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

 

28

 

The Hartford Total Return Bond Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $18,947   $52,013 
Net realized gain on investments, other financial instruments and foreign currency transactions   25,513    63,623 
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions   (8,588)   20,799 
Net Increase in Net Assets Resulting from Operations   35,872    136,435 
Distributions to Shareholders:          
From net investment income          
Class A   (8,172)   (20,654)
Class B   (357)   (1,204)
Class C   (820)   (2,429)
Class I   (145)   (394)
Class R3   (94)   (285)
Class R4   (232)   (744)
Class R5   (12)   (34)
Class Y   (12,503)   (33,861)
Total from net investment income   (22,335)   (59,605)
From net realized gain on investments          
Class A   (20,739)   (3,389)
Class B   (1,382)   (278)
Class C   (3,099)   (521)
Class I   (464)   (68)
Class R3   (289)   (56)
Class R4   (621)   (123)
Class R5   (29)   (5)
Class Y   (27,439)   (4,769)
Total from net realized gain on investments   (54,062)   (9,209)
Total distributions   (76,397)   (68,814)
Capital Share Transactions:          
Class A   17,586    (1,103)
Class B   (4,601)   (9,675)
Class C   (2,919)   (2,816)
Class I   (393)   (1,200)
Class R3   (694)   (2,365)
Class R4   (2,546)   (4,297)
Class R5   (134)   (9)
Class Y   (33,899)   (35,823)
Net decrease from capital share transactions   (27,600)   (57,288)
Net Increase (Decrease) in Net Assets   (68,125)   10,333 
Net Assets:          
Beginning of period   1,845,439    1,835,106 
End of period  $1,777,314   $1,845,439 
Undistributed (distribution in excess of) net investment income (loss)  $(1,852)  $1,536 

 

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

 

29

 

The Hartford Total Return Bond Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the

 

30

 

 

 

Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the Valuation Date.

 

31

 

The Hartford Total Return Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price. For more information on specific valuation techniques and unobservable inputs, please see table below titled "Quantitative Information about Level 3 Fair Value Measurements".

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

32

 

 

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

Quantitative Information about Level 3 Fair Value Measurements:

 

Security Type / Valuation Technique  Unobservable Input(1)  Range
(Weighted Average(2) )
  Fair Value at
April 30, 2013
 
Asset & Commercial Mortgage Backed Securities:           
Cost  Recent trade price  04/17/2013  $2,380 
Evaluated bid  Prior day valuation  Not Applicable   281 
Discounted cash flow  Internal rate of return  1.0% - 50.4% (12.8%)   41,840 
   Life expectancy (in months)  2 – 407 (31)     
Indicative market quotes(3)  Third party indicative quote methodologies can vary significantly  Not Applicable   1,403 
Corporate Bonds:           
Evaluated bid  Prior day valuation  Not Applicable   104 
Indicative market quotes(3)  Third party indicative quote methodologies can vary significantly  Not Applicable   3,192 
Total        $49,200 

 

(1)Significant changes to any unobservable inputs may result in a significant change to fair value.
(2)Unless otherwise noted, inputs were weighted based on the fair value of the investments included in the range.
(3)For investments priced using indicative market quotes, these quotes represent the best available estimate of fair value as of April 30, 2013.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Trade date for senior floating rate interests purchased in the primary loan market is considered the date on which the loan allocations are determined. Trade date for senior floating rate interests purchased in the secondary loan market is the date on which the transaction is entered into.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. Paydown gains and losses on mortgage-related and other asset-backed securities are included in interest income in the Statement of Operations, as applicable.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments held. Exchange

 

33

 

The Hartford Total Return Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Normally, dividends from net investment income are declared daily and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

34

 

 

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

In connection with the Fund’s ability to purchase investments on a when-issued or forward commitment basis, the Fund may enter into to-be announced (“TBA”) commitments. TBA commitments are forward agreements for the purchase or sale of mortgage-backed securities for a fixed price, with payment and delivery on an agreed-upon future settlement date. The specific securities to be delivered are not identified at the trade date; however, delivered securities must meet specified terms, including issuer, rate and mortgage terms. Although the Fund may enter into TBA commitments with the intention of acquiring or delivering securities for its portfolio, the Fund can extend the settlement date, roll the transaction, or dispose of a commitment prior to settlement if deemed appropriate to do so. If the TBA commitment is closed through the acquisition of an offsetting TBA commitment, the Fund realizes a gain or loss. In a TBA roll transaction, the Fund generally purchases or sells the initial TBA commitment prior to the agreed upon settlement date and enters into a new TBA commitment for future delivery or receipt of the mortgage-backed securities. TBA commitments involve a risk of loss if the value of the security to be purchased or sold declines or increases, respectively, prior to settlement date.

 

The Fund may enter into “dollar rolls” in which the Fund sells securities and contracts with the same counterparty to repurchase substantially similar securities (for example, same issuer, coupon and maturity) on a specified future date at an agreed upon price. The Fund gives up the right to receive interest paid on the investments sold. The Fund would benefit to the extent of any differences between the price received for the security and the lower forward price for the future purchase. Dollar rolls involve the risk that the market value of the securities that the Fund is required to purchase may decline below the agreed upon repurchase price of those securities. The Fund records dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions are excluded from the Fund’s portfolio turnover rate. The Fund had open dollar roll transactions as of April 30, 2013.

 

d)Senior Floating Rate Interests – The Fund, as shown on the Schedule of Investments, invests 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. The Fund may invest in multiple series or tranches of a senior floating rate interest, which may have varying terms and carry different associated risks. The Fund may also enter into unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments

 

35

 

The Hartford Total Return Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

represent a future obligation in full. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. In certain circumstances, the Fund may receive various fees upon the restructure of a senior floating rate interest by a borrower. Fees earned/paid may be recorded as a component of income or realized gain/loss in the Statement of Operations.

 

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.

 

e)Mortgage Related and Other Asset Backed Securities The Fund may invest in mortgage related and other asset backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations, commercial mortgage backed securities, stripped mortgage backed securities, asset backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. Mortgage related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. These securities provide a monthly payment that consists of both interest and principal payments. Interest payments may be determined by fixed or adjustable rates. The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. The timely payment of principal and interest of certain mortgage related securities is guaranteed by the full faith and credit of the United States Government. Mortgage related and other asset backed securities created and guaranteed by non-governmental issuers, including government-sponsored corporations, may be supported by various forms of insurance or guarantees, but there can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund, as shown on the  Schedule of Investments, had mortgage related and other asset backed securities as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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

 

36

 

 

 

relative to the U.S. dollar. The Fund had outstanding foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. The Fund, as shown on the  Schedule of Investments, had outstanding futures contracts as of April 30, 2013.

 

c)Options 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) an investment or other financial asset at an agreed-upon price during a specific period of time or on a specific date. The Fund may write (sell) covered call and put options on futures, swaps (“swaptions”), securities, commodities or currencies. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying investments or currency or an option to purchase the same underlying investments 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 investments having a value equal to or greater than the fluctuating market value of the option investment or currency. Writing put options increases the Fund’s exposure to the underlying instrument. Writing call options decreases the Fund’s exposure to the underlying instrument. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options that are exercised or closed are added to the proceeds or offset amounts paid on the underlying futures, swap, investment or currency transaction to determine the realized gain or loss. The Fund as a writer of an option has no control over whether the underlying instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the instrument underlying the written option. There is the risk the Fund may not be able to enter into a closing transaction because of an illiquid market. The Fund may also purchase put and call options. Purchasing call options increases the Fund’s exposure to the underlying instrument. Purchasing put options decreases the Fund’s exposure to the underlying instrument. The Fund pays a premium, which is included on the Fund’s Statement of Assets and Liabilities as an investment and is subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options that expire are treated as realized losses. Certain options may be purchased with premiums to be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. The risk associated with purchasing put and call options is generally limited to the premium paid. Premiums paid for purchasing options that are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss. Entering into over-the-counter options also exposes the Fund to counterparty risk. Counterparty risk is the possibility that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements. The Fund, as shown on the  Schedule of Investments, had outstanding purchased options contracts as of April 30, 2013. The Fund had no outstanding written options contracts as of April 30, 2013 or transactions involving written options contracts for the six-month period ended April 30, 2013.

 

d)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts,

 

37

 

The Hartford Total Return Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

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 investment or index in the event of a credit event, such as payment default or bankruptcy.

 

Under a credit default swap contract, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying investment 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. Although specified events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. These potential amounts would be partially offset by any recovery values of the respective referenced obligations or upfront payments received upon entering into the contract.

 

Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap contracts on corporate issues, sovereign government issues or U.S. municipal issues as of period-end are disclosed in the notes to the Schedule of Investments, as applicable, and serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the contract. Wider credit spreads represent a deterioration of the referenced entity’s soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. For credit default swap contracts on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced equity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of

 

38

 

 

 

the contract. The Fund, as shown on the Schedule of Investments, had outstanding credit default swaps as of April 30, 2013.

 

Interest Rate Swap Contracts 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 or inflation benchmark (e.g. London Interbank Offered Rate (“LIBOR”)), 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 contracts is recorded as a realized gain or loss. 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 contract 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 contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The Fund, as shown on the Schedule of Investments, had outstanding interest rate swaps as of April 30, 2013.

 

Spreadlock Swap ContractsThe Fund may invest in spreadlock swap contracts. These contracts involve commitments to pay or receive a settlement amount calculated as the difference between the swap spread and a fixed spread at a specific forward date. The Fund, as shown on the Schedule of Investments, had outstanding spreadlock swaps as of April 30, 2013.

 

e)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Investments in securities, at value (purchased options), market value  $881   $   $   $   $   $   $881 
Unrealized appreciation on foreign currency contracts       247                    247 
Unrealized appreciation on swap contracts   343        2,967                3,310 
Variation margin receivable *   148                        148 
Total  $1,372   $247   $2,967   $   $   $   $4,586 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $221   $   $   $   $   $221 
Unrealized depreciation on swap contracts   1,119        10,121                11,240 
Variation margin payable *   62                        62 
Total  $1,181   $221   $10,121   $   $   $   $11,523 

 

*Only current day's variation margin is reported within the Statement of Assets and Liabilities. The variation margin is included in the open futures cumulative depreciation of $(331) as reported in the Schedule of Investments.

 

39

 

The Hartford Total Return Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

  

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain (Loss) on Derivatives Recognized as a Result of Operations:
Net realized gain on purchased options  $179   $411   $   $   $   $   $590 
Net realized gain on futures   2,345                        2,345 
Net realized loss on swap contracts   (663)       (4,140)               (4,803)
Net realized gain on foreign currency contracts       27                    27 
Total  $1,861   $438   $(4,140)  $   $   $   $(1,841)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation of purchased options  $244   $   $   $   $   $   $244 
Net change in unrealized appreciation of futures   389                        389 
Net change in unrealized depreciation of swap contracts   (804)       (4,563)               (5,367)
Net change in unrealized depreciation of foreign currency contracts       (77)                   (77)
Total  $(171)  $(77)  $(4,563)  $   $   $   $(4,811)

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. Senior floating rate interests and securities subject to prepayment and extension risk generally offer less potential for gains when interest rates decline. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities, senior floating rate interests, and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by

 

40

 

 

 

U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $59,580   $64,957 
Long-Term Capital Gains ‡   9,209     

 

‡ The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $31,311 
Undistributed Long-Term Capital Gain   24,356 
Unrealized Appreciation *   78,296 
Total Accumulated Earnings    $133,963 

 

*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.

  

41

 

The Hartford Total Return Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $6,625 
Accumulated Net Realized Gain (Loss)   (6,684)
Capital Stock and Paid-in-Capital   59 

  

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment

 

42

 

 

 

objective and policies. The Fund pays a fee to the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 $1.5 billion   0.475%   
On next $2.5 billion   0.465%   
On next $5 billion   0.455%   
Over $10 billion   0.445%   

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.020%   
On next $5 billion   0.018%   
Over $10 billion   0.016%   

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 0.95%     1.70%     1.70%     0.70%     1.25%     0.95%     0.65%     0.60%  

 

43

 

The Hartford Total Return Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

d)Fees Paid Indirectly The Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, this amount, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   0.95%
Class B   1.70 
Class C   1.69 
Class I   0.67 
Class R3   1.25 
Class R4   0.95 
Class R5   0.65 
Class Y   0.55 

  

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $1,426 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

For the six-month period ended April 30, 2013, total sales commissions paid to affiliated broker/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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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

 

44

 

 

 

year for each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R5   13%

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage
of Fund
 
Class Y   40%

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $4,340,698 
Sales Proceeds Excluding U.S. Government Obligations   4,601,738 
Cost of Purchases for U.S. Government Obligations   521,098 
Sales Proceeds for U.S. Government Obligations   342,011 

 

45

 

The Hartford Total Return Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   7,390    2,623    (8,408)       1,605    11,734    2,148    (14,045)       (163)
Amount  $80,471   $28,376   $(91,261)  $   $17,586   $128,474   $23,391   $(152,968)  $   $(1,103)
Class B                                                  
Shares   120    153    (700)       (427)   336    128    (1,358)       (894)
Amount  $1,306   $1,645   $(7,552)  $   $(4,601)  $3,632   $1,386   $(14,693)  $   $(9,675)
Class C                                                  
Shares   915    333    (1,517)       (269)   1,808    240    (2,307)       (259)
Amount  $9,963   $3,610   $(16,492)  $   $(2,919)  $19,749   $2,615   $(25,180)  $   $(2,816)
Class I                                                  
Shares   635    52    (736)       (49)   623    32    (766)       (111)
Amount  $7,023   $563   $(7,979)  $   $(393)  $6,791   $350   $(8,341)  $   $(1,200)
Class R3                                                  
Shares   74    35    (172)       (63)   364    31    (608)       (213)
Amount  $817   $383   $(1,894)  $   $(694)  $4,030   $341   $(6,736)  $   $(2,365)
Class R4                                                  
Shares   120    77    (427)       (230)   533    78    (994)       (383)
Amount  $1,325   $851   $(4,722)  $   $(2,546)  $5,863   $866   $(11,026)  $   $(4,297)
Class R5                                                  
Shares   15    4    (31)       (12)   31    3    (35)       (1)
Amount  $162   $41   $(337)  $   $(134)  $342   $39   $(390)  $   $(9)
Class Y                                                  
Shares   10,057    3,623    (16,752)       (3,072)   25,784    3,494    (32,385)       (3,107)
Amount  $110,889   $39,784   $(184,572)  $   $(33,899)  $284,051   $38,588   $(358,462)  $   $(35,823)
Total                                                  
Shares   19,326    6,900    (28,743)       (2,517)   41,213    6,154    (52,498)       (5,131)
Amount  $211,955   $75,254   $(314,809)  $   $(27,600)  $452,932   $67,576   $(577,796)  $   $(57,288)

  

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   100   $1,093 
For the Year Ended October 31, 2012   211   $2,300 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

12.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.

 

46

 

 

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

47

 

The Hartford Total Return Bond Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
 
For the Six-Month Period Ended April 30, 2013 (Unaudited)
A  $11.16   $0.11   $0.11   $0.22   $(0.13)  $(0.33)  $   $(0.46)  $10.92 
B   11.08    0.06    0.12    0.18    (0.09)   (0.33)       (0.42)   10.84 
C   11.18    0.06    0.11    0.17    (0.09)   (0.33)       (0.42)   10.93 
I   11.17    0.12    0.11    0.23    (0.14)   (0.33)       (0.47)   10.93 
R3   11.35    0.09    0.11    0.20    (0.11)   (0.33)       (0.44)   11.11 
R4   11.33    0.11    0.11    0.22    (0.13)   (0.33)       (0.46)   11.09 
R5   11.33    0.12    0.11    0.23    (0.14)   (0.33)       (0.47)   11.09 
Y   11.32    0.13    0.11    0.24    (0.15)   (0.33)       (0.48)   11.08 
                                              
For the Year Ended October 31, 2012
A   10.76    0.29    0.50    0.79    (0.34)   (0.05)       (0.39)   11.16 
B   10.69    0.20    0.50    0.70    (0.26)   (0.05)       (0.31)   11.08 
C   10.78    0.21    0.50    0.71    (0.26)   (0.05)       (0.31)   11.18 
I   10.77    0.31    0.51    0.82    (0.37)   (0.05)       (0.42)   11.17 
R3   10.94    0.26    0.51    0.77    (0.31)   (0.05)       (0.36)   11.35 
R4   10.92    0.29    0.51    0.80    (0.34)   (0.05)       (0.39)   11.33 
R5   10.92    0.32    0.51    0.83    (0.37)   (0.05)       (0.42)   11.33 
Y   10.91    0.33    0.51    0.84    (0.38)   (0.05)       (0.43)   11.32 
                                              
For the Year Ended October 31, 2011
A   10.70    0.33    0.06    0.39    (0.33)           (0.33)   10.76 
B   10.63    0.25    0.07    0.32    (0.26)           (0.26)   10.69 
C   10.71    0.26    0.07    0.33    (0.26)           (0.26)   10.78 
I   10.70    0.37    0.06    0.43    (0.36)           (0.36)   10.77 
R3   10.87    0.31    0.06    0.37    (0.30)           (0.30)   10.94 
R4   10.85    0.34    0.06    0.40    (0.33)           (0.33)   10.92 
R5   10.85    0.37    0.07    0.44    (0.37)           (0.37)   10.92 
Y   10.84    0.38    0.07    0.45    (0.38)           (0.38)   10.91 
                                              
For the Year Ended October 31, 2010
A   10.21    0.35    0.51    0.86    (0.37)           (0.37)   10.70 
B   10.15    0.27    0.50    0.77    (0.29)           (0.29)   10.63 
C   10.23    0.28    0.49    0.77    (0.29)           (0.29)   10.71 
I   10.22    0.37    0.51    0.88    (0.40)           (0.40)   10.70 
R3   10.36    0.33    0.52    0.85    (0.34)           (0.34)   10.87 
R4   10.35    0.36    0.51    0.87    (0.37)           (0.37)   10.85 
R5   10.35    0.39    0.51    0.90    (0.40)           (0.40)   10.85 
Y   10.34    0.40    0.51    0.91    (0.41)           (0.41)   10.84 
                                              
For the Year Ended October 31, 2009
A   9.20    0.40    1.07    1.47    (0.46)           (0.46)   10.21 
B   9.15    0.33    1.06    1.39    (0.39)           (0.39)   10.15 
C   9.22    0.33    1.06    1.39    (0.38)           (0.38)   10.23 
I   9.21    0.43    1.06    1.49    (0.48)           (0.48)   10.22 
R3   9.32    0.42    1.05    1.47    (0.43)           (0.43)   10.36 
R4   9.32    0.42    1.07    1.49    (0.46)           (0.46)   10.35 
R5   9.32    0.42    1.09    1.51    (0.48)           (0.48)   10.35 
Y   9.31    0.45    1.07    1.52    (0.49)           (0.49)   10.34 
                                              
For the Year Ended October 31, 2008
A   10.52    0.49    (1.29)   (0.80)   (0.52)           (0.52)   9.20 
B   10.47    0.42    (1.29)   (0.87)   (0.45)           (0.45)   9.15 
C   10.54    0.42    (1.30)   (0.88)   (0.44)           (0.44)   9.22 
I   10.52    0.52    (1.28)   (0.76)   (0.55)           (0.55)   9.21 
R3   10.64    0.47    (1.30)   (0.83)   (0.49)           (0.49)   9.32 
R4   10.65    0.51    (1.32)   (0.81)   (0.52)           (0.52)   9.32 
R5   10.64    0.54    (1.31)   (0.77)   (0.55)           (0.55)   9.32 
Y   10.64    0.54    (1.31)   (0.77)   (0.56)           (0.56)   9.31 

 

48

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(D)
 
                      
                            
 2.01%(E)  $698,522    0.98%(F)   0.95%(F)   1.96%(F)   52%
 1.65(E)   41,353    1.86(F)   1.70(F)   1.21(F)    
 1.54(E)   100,069    1.69(F)   1.69(F)   1.21(F)    
 2.16(E)   10,394    0.67(F)   0.67(F)   2.24(F)    
 1.82(E)   9,032    1.27(F)   1.25(F)   1.66(F)    
 1.98(E)   18,921    0.95(F)   0.95(F)   1.96(F)    
 2.13(E)   861    0.66(F)   0.65(F)   2.26(F)    
 2.18(E)   898,162    0.55(F)   0.55(F)   2.35(F)    
                            
                            
 7.50    696,383    0.98    0.89    2.64    77 
 6.66    47,026    1.85    1.64    1.90     
 6.70    105,330    1.69    1.63    1.90     
 7.78    11,177    0.68    0.62    2.92     
 7.14    9,944    1.27    1.19    2.35     
 7.47    21,940    0.95    0.89    2.65     
 7.79    1,018    0.66    0.59    2.94     
 7.91    952,621    0.55    0.49    3.04     
                            
                            
 3.78    673,310    0.98    0.95    3.16    131 
 3.03    54,934    1.85    1.70    2.41     
 3.10    104,382    1.69    1.69    2.42     
 4.15    11,973    0.68    0.68    3.45     
 3.49    11,922    1.26    1.25    2.85     
 3.81    25,330    0.95    0.95    3.16     
 4.12    990    0.66    0.65    3.46     
 4.23    952,265    0.54    0.54    3.56     
                            
                            
 8.57    835,450    0.99(G)   0.98(G)   3.38(G)   201 
 7.72    70,845    1.87(G)   1.74(G)   2.62(G)    
 7.68    118,462    1.71(G)   1.70(G)   2.66(G)    
 8.73    9,395    0.74(G)   0.73(G)   3.62(G)    
 8.36    8,571    1.29(G)   1.24(G)   3.12(G)    
 8.57    25,652    0.97(G)   0.96(G)   3.40(G)    
 8.87    655    0.69(G)   0.67(G)   3.69(G)    
 9.00    994,424    0.57(G)   0.56(G)   3.80(G)    
                            
                            
 16.38    816,191    1.03(G)   1.00(G)   4.18(G)   215 
 15.60    83,760    1.95(G)   1.68(G)   3.51(G)    
 15.48    119,568    1.76(G)   1.75(G)   3.42(G)    
 16.65    10,680    0.77(G)   0.75(G)   4.36(G)    
 16.19    1,836    1.42(G)   1.25(G)   3.65(G)    
 16.39    21,920    0.98(G)   0.98(G)   4.17(G)    
 16.73    408    0.69(G)   0.69(G)   4.35(G)    
 16.87    926,793    0.58(G)   0.58(G)   4.57(G)    
                            
                            
 (7.99)   650,149    1.02    1.00    4.76    184 
 (8.68)   73,557    1.93    1.71    4.05     
 (8.66)   87,277    1.74    1.74    4.01     
 (7.62)   6,128    0.68    0.68    5.10     
 (8.15)   130    1.44    1.25    4.62     
 (7.98)   12,698    0.99    0.99    4.81     
 (7.62)   271    0.70    0.70    5.08     
 (7.62)%  $559,555    0.59%   0.59%   5.19%   %

 

49

 

The Hartford Total Return Bond Fund
Financial Highlights - (continued)

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Not annualized.
(F)Annualized.
(G)Ratios do not include expenses of the Underlying Funds.

 

50

 

The Hartford Total Return Bond Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

51

 

The Hartford Total Return Bond Fund
Directors and Officers (Unaudited) – (continued)

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

52

 

 

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

  

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

  

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

53

 

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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,020.10   $4.76   $1,000.00   $1,020.08   $4.76    0.95%  181  365
Class B  $1,000.00   $1,016.50   $8.51   $1,000.00   $1,016.36   $8.51    1.70   181  365
Class C  $1,000.00   $1,015.40   $8.45   $1,000.00   $1,016.40   $8.46    1.69   181  365
Class I  $1,000.00   $1,021.60   $3.35   $1,000.00   $1,021.48   $3.35    0.67   181  365
Class R3  $1,000.00   $1,018.20   $6.26   $1,000.00   $1,018.59   $6.26    1.25   181  365
Class R4  $1,000.00   $1,019.80   $4.76   $1,000.00   $1,020.08   $4.76    0.95   181  365
Class R5  $1,000.00   $1,021.30   $3.26   $1,000.00   $1,021.57   $3.26    0.65   181  365
Class Y  $1,000.00   $1,021.80   $2.75   $1,000.00   $1,022.07   $2.75    0.55   181  365

 

54

 

The Hartford Total Return Bond Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Total Return Bond Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

55

 

The Hartford Total Return Bond Fund
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

56

 

The Hartford Total Return Bond Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early). These risks also apply to the Fund’s investments in U.S. government securities, which may not be guaranteed by the U.S. government.

 

Mortgage-Backed Securities Risk: Mortgage-backed securities are subject to interest rate risk, credit risk, prepayment risk, extension risk, and the risk that an investment’s value may be reduced or become worthless if it receives interest or income payments only after other investments in the same pool.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

57
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-TRB13 4/13 114011 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

51

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD UNCONSTRAINED BOND FUND

 

2013 Semi Annual Report

 

 

 

 

 

 
 

 

The Hartford Unconstrained Bond Fund

  

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 6
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 23
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 24
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 26
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 27
Notes to Financial Statements (Unaudited) 28
Financial Highlights (Unaudited) 46
Directors and Officers (Unaudited) 48
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 50
Quarterly Portfolio Holdings Information (Unaudited) 50
Expense Example (Unaudited) 51
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 52
Principal Risks (Unaudited) 54

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Unconstrained Bond Fund inception 10/31/2002
(sub-advised by Wellington Management Company, LLP)

 

Investment objective – Seeks to maximize long-term total return.

 

Performance Overview 4/30/03 - 4/30/13

 

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

  

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
Unconstrained Bond A#   1.69%       5.36%       6.03%       5.01%    
Unconstrained Bond A##        0.62%       5.06%       4.53%    
Unconstrained Bond B#   1.40%       4.56%       5.25%       4.43%*    
Unconstrained Bond B##        -0.44%       4.93%       4.43%*    
Unconstrained Bond C#   1.40%       4.67%       5.26%       4.26%    
Unconstrained Bond C##        3.67%       5.26%       4.26%    
Unconstrained Bond I#   1.91%       5.71%       6.11%       5.04%    
Unconstrained Bond R3#   1.63%       5.05%       6.20%       5.19%‡    
Unconstrained Bond R4#   1.79%       5.37%       6.30%       5.24%‡    
Unconstrained Bond R5#   1.94%       5.78%       6.41%       5.29%‡    
Unconstrained Bond Y#   1.84%       5.91%       6.37%       5.27%‡    
Barclays U.S. Aggregate Bond Index   0.91%       3.68%       5.73%       5.04%    

 

Not Annualized
#Without sales charge
##With sales charge
*Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

Rates shown are since inception date of  Class Y shares.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 4.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 5/25/12. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 9/30/11. Performance prior to that date is that of the Fund's Class Y shares which had different operating expenses. Class Y shares commenced operations on 11/28/03.

 

Performance information includes performance under the Fund’s previous sub-adviser, Hartford Investment Management Company. As of April 23, 2012, Hartford Investment Management Company no longer serves as the sub-adviser to the Fund.

 

Barclays U.S. Aggregate Bond Index is an unmanaged index and is composed of securities from the Barclays 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 chart and table do not reflect the deductions 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.

 

2

 

The Hartford Unconstrained Bond Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Unconstrained Bond Class A   0.99%       1.09%    
Unconstrained Bond Class B   1.74%       1.96%    
Unconstrained Bond Class C   1.74%       1.79%    
Unconstrained Bond Class I   0.74%       0.83%    
Unconstrained Bond Class R3   1.29%       1.40%    
Unconstrained Bond Class R4   0.99%       1.07%    
Unconstrained Bond Class R5   0.69%       0.77%    
Unconstrained Bond Class Y   0.69%       0.72%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus and reflect contractual expense reimbursements in instances when these reductions reduce the Fund's gross expenses. Contractual reimbursements remain in effect until February 28, 2014 and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers        
Campe Goodman, CFA   Lucius T. Hill III   Joseph F. Marvan, CFA
Vice President and Fixed Income Portfolio Manager   Senior Vice President and Fixed Income Portfolio Manager   Senior Vice President and Fixed Income Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford Unconstrained Bond Fund returned 1.69%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the Barclays U.S. Aggregate Bond Index, which returned 0.91% for the same period. The Fund underperformed the 4.36% average return of the Lipper Multi-Sector Income Funds peer group, a group of funds that seek current income by allocating assets among several different fixed income securities sectors (with no more than 65% in any one sector except for defensive purposes), including U.S. government and foreign governments, with a significant portion of assets in securities rated below investment-grade.

 

Why did the Fund perform this way?

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S. Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02% to 0.08%. All of the major fixed income sectors posted positive absolute returns and most sectors, with the exception of agency Mortgage-Backed Securities (MBS), outperformed Treasuries on a duration-adjusted basis.

 

The Fund’s MBS exposure and an allocation to bank loans were the primary drivers of the Fund’s outperformance of its benchmark. The Fund’s allocation to non-agency MBS was the top contributor to relative results as non-agencies performed strongly amid improved sentiment around U.S. housing, low long-term interest rates and strong investor demand. During the period, we positioned the Fund with an underweight (i.e. the Fund’s position was less than the benchmark position) to investment grade credit in favor of an allocation to lower tier credit sectors, including bank loans. Within bank loans, we emphasized the high and middle

 

3

 

The Hartford Unconstrained Bond Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

quality portions of the market based on compelling valuations and attractive yields. The bank loan sector generated strong performance for the period and added significantly to relative results. The Fund’s commercial MBS exposure was also additive to benchmark-relative performance as was the Fund’s duration positioning. Security selection within the investment grade financial sector, as implemented through credit default swap contracts, and the decision to use credit default swap indices (CDX) to gain exposure to the broader investment grade corporate market, also contributed to relative results. Exposure to emerging markets debt and non-U.S. dollar developed market government bonds, via forwards, swaps, and futures were positive for performance. The Fund’s high yield positioning detracted from performance overall. Positive results from an allocation to BB rated high yield issuers were more than offset by the negative impact of high yield credit default swap index positions, which were used as a source of liquidity and to manage overall portfolio risk.

 

What is the outlook?

In our view, the U.S. economy is less fragile than it has been in a long time. Through bold policy initiatives, we believe the Fed has shown its determination to keep the U.S. out of recession, and corporate and personal balance sheets are in their best shape in years. These reasons for optimism are tempered, nevertheless, by concerns about the ongoing debt crisis in Europe and fiscal challenges in the U.S. Furthermore, we believe that valuations in many fixed income sectors have risen closer to fair value.

 

We still favor credit overall. This view is expressed primarily through an allocation to bank loans. Default rates within bank loans by principal amount and issuer count remain below their historical averages. Moreover, we believe that valuations of bank loans still appear reasonable. The yield premium that investors typically demand for high yield over bank loans (due to higher interest-rate risk and lower positioning on issuers’ capital structure) has diminished, enhancing the relative appeal of bank loans. Non-agency residential MBS are still attractive to us against the backdrop of an improving housing market. We ended the period with a slight overweight to agency MBS and continued to have an overweight to commercial MBS.

 

Our views on interest rates depend on the time frame. Over the long term, we believe rates will revert to levels more consistent with the Fed’s long-run projections of short rates and economic growth, which are higher than those implied by today’s forward curve. In the near term, we believe that yields could stay low for a little longer than now anticipated by markets. At the end of the period, we were underweight duration relative to the benchmark. In addition, we had limited, opportunistic exposure to rates in countries such as Sweden, Canada, and Mexico. We also had an allocation to emerging markets debt as we believe valuations in the sector are attractive.

 

At the end of the period our currency exposure was primarily in U.S. dollars. However, we had limited opportunistic active exposure to several currencies including the Mexican Peso, Polish Zloty, and South African Rand.

 

Distribution by Credit Quality

as of April 30, 2013

Credit Rating *  Percentage of
Net Assets
 
Aaa / AAA   7.3%
Aa / AA   0.9 
A   1.9 
Baa / BBB   5.4 
Ba / BB   12.8 
B   15.9 
Caa / CCC or Lower   8.4 
Unrated   3.1 
U.S. Government Agencies and Securities   83.4 
Non-Debt Securities and Other Short-Term Instruments   3.4 
Other Assets & Liabilities   (42.5)
Total   100.0%

 

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

4

  

 

  

Diversification by Industry

as of April 30, 2013

Industry  Percentage of
Net Assets
 
Fixed Income Securities     
Accommodation and Food Services   0.5%
Administrative Waste Management and Remediation   0.7 
Agriculture, Construction, Mining and Machinery   0.2 
Agriculture, Forestry, Fishing and Hunting   0.0 
Air Transportation   0.5 
Apparel Manufacturing   0.2 
Arts, Entertainment and Recreation   2.2 
Beverage and Tobacco Product Manufacturing   0.1 
Chemical Manufacturing   0.9 
Computer and Electronic Product Manufacturing   1.2 
Construction   0.2 
Electrical Equipment, Appliance Manufacturing   0.2 
Fabricated Metal Product Manufacturing   0.2 
Finance and Insurance   23.9 
Food Manufacturing   0.6 
Food Services   0.5 
Furniture and Related Product Manufacturing   0.2 
Health Care and Social Assistance   2.2 
Information   5.5 
Machinery Manufacturing   0.1 
Media   0.1 
Mining   0.9 
Miscellaneous Manufacturing   0.8 
Motor Vehicle and Parts Manufacturing   0.6 
Nonmetallic Mineral Product Manufacturing   0.2 
Other Services   0.1 
Paper Manufacturing   0.1 
Petroleum and Coal Products Manufacturing   0.9 
Pipeline Transportation   0.9 
Plastics and Rubber Products Manufacturing   0.5 
Primary Metal Manufacturing   0.5 
Printing and Related Support Activities   0.1 
Professional, Scientific and Technical Services   0.9 
Real Estate, Rental and Leasing   0.8 
Retail Trade   3.0 
Soap, Cleaning Compound and Toilet Manufacturing   0.0 
Transportation   0.4 
Transportation Equipment Manufacturing   0.1 
Truck Transportation   0.2 
Utilities   0.7 
Water Transportation   0.0 
Total   51.9%
Equity Securities     
Diversified Financials   0.0 
Total   0.0%
Foreign Government Obligations   3.8 
U.S. Government Agencies   50.1 
U.S. Government Securities   33.3 
Short-Term Investments   3.4 
Other Assets and Liabilities   (42.5)
Total   100.0%

 

5
The Hartford Unconstrained Bond Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 

ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 20.2%

     
     Finance and Insurance - 20.2%     
     Asset Backed Funding Certificates     
$186    0.42%, 01/25/2037 Δ   $107 
     Banc of America Commercial Mortgage, Inc.     
 540    5.17%, 11/10/2042 Δ    577 
 235    5.63%, 07/10/2046 Δ    264 
     Banc of America Mortgage Securities     
 156    3.13%, 09/25/2035 Δ    145 
     BB-UBS Trust     
 145    3.43%, 11/05/2036 ■    149 
     BCAP LLC Trust     
 218    0.37%, 01/25/2037 Δ    166 
 267    0.38%, 03/25/2037 Δ    223 
     Bear Stearns Adjustable Rate Mortgage Trust     
 73    2.37%, 02/25/2036 Δ    71 
     Bear Stearns Alt-A Trust     
 105    0.58%, 05/25/2036 Δ    67 
 347    0.70%, 01/25/2036 Δ    235 
     Bear Stearns Commercial Mortgage Securities, Inc.     
 50    4.93%, 02/13/2042    53 
 375    5.15%, 10/12/2042 Δ    410 
     CFCRE Commercial Mortgage Trust     
 195    3.83%, 12/15/2047 ‡    214 
     Citigroup Commercial Mortgage Trust, Inc.     
 416    0.55%, 03/25/2037 Δ    223 
     Citigroup/Deutsche Bank Commercial Mortgage Trust     
 556    5.22%, 07/15/2044 ‡Δ    608 
 450    5.32%, 12/11/2049 ‡    512 
     Commercial Mortgage Loan Trust     
 370    6.00%, 12/10/2049 Δ    436 
     Commercial Mortgage Pass-Through Certificates     
 1,742    1.82%, 07/10/2046 ■►    133 
 140    2.77%, 12/10/2045 ‡    143 
 25    2.82%, 11/15/2045 ‡    26 
 20    2.85%, 10/15/2045 ‡    21 
 725    4.34%, 12/10/2045 ■‡Δ    548 
 120    4.75%, 11/15/2045 ■‡    100 
 475    4.77%, 11/15/2045 ■‡Δ    474 
 75    5.94%, 06/10/2046 Δ    85 
     Community or Commercial Mortgage Trust     
 195    3.21%, 04/10/2023 ‡    205 
 125    3.42%, 03/10/2031 ■    131 
     Countrywide Alternative Loan Trust     
 186    0.52%, 11/25/2035 ‡Δ    145 
     Countrywide Home Loans, Inc.     
 355    3.08%, 09/25/2047 Δ    297 
     CS First Boston Mortgage Securities Corp.     
 650    4.83%, 04/15/2037 ‡    689 
     CW Capital Cobalt Ltd.     
 260    5.22%, 08/15/2048    290 
     Equity One ABS, Inc.     
 3    2.70%, 07/25/2034 Δ     
 21    5.46%, 12/25/2033    14 
     First Horizon Alternative Mortgage Securities     
 531    2.33%, 04/25/2036 ‡Δ    432 
 726    2.36%, 09/25/2035 ‡Δ    645 
     First Horizon Mortgage Pass-through Trust     
 283    2.52%, 08/25/2037 Δ    236 
     GE Commercial Mortgage Corp. Trust     
 355    5.47%, 03/10/2044 Δ    393 
     GMAC Commercial Mortgage Securities, Inc.     
 55    5.24%, 11/10/2045 Δ    60 
     GMAC Mortgage Corp. Loan Trust     
 158    3.70%, 09/19/2035 Δ    152 
 37    3.87%, 04/19/2036 Δ    33 
     Goldman Sachs Mortgage Securities Corp. II     
 150    2.95%, 11/05/2034 ■‡    153 
 85    3.38%, 05/10/2045 ‡    91 
     Goldman Sachs Mortgage Securities Trust     
 255    2.77%, 11/10/2045 ‡    259 
 175    3.55%, 04/10/2034 ■‡    188 
 545    4.86%, 11/10/2045 ■‡Δ    550 
 380    5.00%, 05/10/2045 ■‡Δ    320 
     Greenwich Capital Commercial Funding Corp.     
 450    5.44%, 03/10/2039 Δ    514 
 300    5.74%, 12/10/2049    350 
 375    6.06%, 07/10/2038 Δ    425 
     GSAA Home Equity Trust     
 27    0.25%, 12/25/2046 Δ    17 
 1,008    0.28%, 02/25/2037 Δ    555 
 144    0.29%, 12/25/2036 ‡Δ    80 
 409    0.30%, 03/25/2037 Δ    218 
 298    0.36%, 07/25/2036 ‡Δ    159 
 37    0.37%, 03/25/2047 Δ    19 
 79    0.43%, 04/25/2047 Δ    50 
 218    0.52%, 04/25/2047 Δ    139 
     GSAMP Trust     
 191    0.29%, 01/25/2037 Δ    108 
 209    0.40%, 11/25/2036 ‡Δ    119 
 214    0.43%, 12/25/2046 Δ    119 
     GSR Mortgage Loan Trust     
 495    2.78%, 01/25/2036 Δ    425 
 496    2.82%, 04/25/2035 ‡Δ    464 
 132    2.95%, 10/25/2035 Δ    116 
     Harborview Mortgage Loan Trust     
 327    0.39%, 01/19/2038 Δ    269 
 381    0.42%, 05/19/2047 Δ    189 
 231    0.56%, 09/19/2035 Δ    185 
 434    3.07%, 01/19/2035 Δ    413 
     Home Equity Loan Trust     
 225    2.87%, 11/25/2035 ╦Δ    203 
     IndyMac Index Mortgage Loan Trust     
 95    0.49%, 01/25/2036 Δ    61 
 488    0.60%, 07/25/2046 Δ    249 
 54    2.91%, 12/25/2036 Δ    46 
     JP Morgan Chase Commercial Mortgage Securities Corp.     
 105    2.75%, 10/15/2045 ■    68 
 390    2.83%, 10/15/2045    398 
 375    2.84%, 12/15/2047 ╦    383 
 100    3.91%, 05/05/2030 ■Δ    109 
 475    4.67%, 10/15/2045 ■Δ    468 
 300    5.20%, 12/15/2044 ╦Δ    329 
 237    5.30%, 01/12/2043 ╦Δ    260 

 

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

 

6

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 

ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 20.2% - (continued)

     
     Finance and Insurance - 20.2% - (continued)     
     JP Morgan Chase Commercial Mortgage Securities Corp. - (continued)     
$320    5.34%, 08/12/2037 ╦   $343 
 375    5.48%, 12/12/2044 ╦Δ    411 
 220    5.71%, 02/12/2049 Δ    254 
 290    6.07%, 02/12/2051    322 
     JP Morgan Mortgage Trust     
 162    2.88%, 04/25/2037 ╦Δ    138 
 150    3.10%, 09/25/2035 Δ    145 
 573    4.13%, 05/25/2036 ╦Δ    516 
     LB-UBS Commercial Mortgage Trust     
 270    4.74%, 07/15/2030 ╦Δ    288 
 300    4.95%, 09/15/2030    323 
 145    5.20%, 11/15/2030 Δ    158 
 322    5.43%, 02/15/2040    366 
 144    5.87%, 09/15/2045 ☼    167 
 55    5.87%, 06/15/2038 Δ    62 
 300    6.15%, 04/15/2041 ╦Δ    361 
     Lehman XS Trust     
 149    0.41%, 07/25/2046 Δ    112 
     Long Beach Asset Holdings Corp.     
 45    0.00%, 04/25/2046 ■●     
     Merrill Lynch Mortgage Investors Trust     
 120    2.88%, 07/25/2035 ╦Δ    101 
     Merrill Lynch Mortgage Trust     
 85    4.75%, 06/12/2043 ╦    90 
 96    5.27%, 11/12/2037 ╦Δ    105 
     Morgan Stanley Capital I     
 25    3.24%, 03/15/2045 ╦    27 
 130    5.68%, 10/15/2042 Δ    144 
 400    5.69%, 04/15/2049 ╦Δ    460 
     Morgan Stanley Capital I Trust     
 55    5.16%, 10/12/2052 Δ    60 
     Morgan Stanley Mortgage Loan Trust     
 742    0.37%, 05/25/2036 - 11/25/2036 Δ    372 
     Nationstar Home Equity Loan Trust     
 22    0.00%, 03/25/2037 ■●†     
     Renaissance Home Equity Loan Trust     
 97    6.16%, 05/25/2036    1 
     Residential Accredit Loans, Inc.     
 365    2.99%, 11/25/2037 Δ    204 
     Residential Asset Securitization Trust     
 111    0.65%, 03/25/2035 Δ    85 
     RFMSI Trust     
 18    3.22%, 04/25/2037 Δ    15 
     Securitized Asset Backed Receivables LLC     
 309    0.29%, 07/25/2036 Δ    150 
     Sequoia Mortgage Trust     
 120    2.60%, 07/20/2037 Δ    99 
     Soundview Home Equity Loan Trust, Inc.     
 1,085    0.44%, 07/25/2036 ╦Δ    610 
 715    1.30%, 09/25/2037 ╦Δ    460 
     Structured Adjustable Rate Mortgage Loan Trust     
 768    2.53%, 02/25/2036 Δ    617 
     Structured Asset Mortgage Investments Trust     
 175    0.42%, 05/25/2046 Δ    102 
     UBS-Barclays Commercial Mortgage Trust     
 475    2.85%, 12/10/2045    483 
 230    2.97%, 02/10/2023 ╦    232 
 250    3.18%, 03/10/2046 ╦Δ    262 
     Wachovia Bank Commercial Mortgage Trust     
 145    4.94%, 04/15/2042    155 
 80    5.08%, 03/15/2042    85 
 385    5.31%, 07/15/2041 Δ    399 
 57    5.42%, 01/15/2045 Δ    63 
     Wells Fargo Commercial Mortgage Trust     
 394    2.92%, 10/15/2045    404 
 85    4.78%, 10/15/2045 ■Δ    85 
     Wells Fargo Mortgage Backed Securities Trust     
 321    2.72%, 04/25/2036 Δ    303 
     WF-RBS Commercial Mortgage Trust     
 4,869    2.67%, 11/15/2044 ■►    575 
 260    2.88%, 12/15/2045 ╦    266 
 400    3.07%, 03/15/2045    415 
 145    3.20%, 03/15/2048    152 
 120    4.19%, 03/15/2045 ■Δ    95 
 570    4.46%, 12/15/2045 ■╦Δ    455 
 775    4.80%, 11/15/2045 ■╦Δ    715 
 90    4.87%, 02/15/2044 ■╦    106 
 25    4.90%, 06/15/2044 ■╦    29 
 145    5.00%, 06/15/2044 ■╦    126 
 65    5.56%, 04/15/2045 ■Δ    70 
         31,923 
           
     Total asset & commercial mortgage backed securities     
     (cost $30,128)   $31,923 
           

CORPORATE BONDS - 9.2%

     
     Accommodation and Food Services - 0.1%     
     Caesars Operating Escrow     
$60   9.00%, 02/15/2020 ■‡   $59 
     Choice Hotels International, Inc.     
 70   5.75%, 07/01/2022 ‡    79 
     Wynn Las Vegas LLC     
 70   7.75%, 08/15/2020    80 
         218 
     Administrative Waste Management and Remediation - 0.1%     
     Casella Waste Systems, Inc.     
 20   7.75%, 02/15/2019 ‡    19 
     Clean Harbors, Inc.     
 5   5.13%, 06/01/2021 ■    5 
 20   5.25%, 08/01/2020    21 
     Equinix, Inc.     
 20   5.38%, 04/01/2023    21 
     Iron Mountain, Inc.     
 20   5.75%, 08/15/2024    21 
         87 
     Agriculture, Forestry, Fishing and Hunting - 0.0%     
     Ainsworth Lumber Ltd.     
 10   7.50%, 12/15/2017 ■    11 

 

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

 

7

 

The Hartford Unconstrained Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 

CORPORATE BONDS - 9.2% - (continued)

     
     Apparel Manufacturing - 0.0%     
     Hanesbrands, Inc.     
$30   6.38%, 12/15/2020   $33 
     Phillips Van-Heusen Corp.     
 30   7.38%, 05/15/2020    34 
     PVH Corp.     
 5   4.50%, 12/15/2022    5 
         72 
     Arts, Entertainment and Recreation - 0.6%     
     AMC Entertainment, Inc.     
 20   8.75%, 06/01/2019    22 
 55   9.75%, 12/01/2020    64 
     CCO Holdings LLC     
 242   5.25%, 09/30/2022    247 
 15   5.75%, 01/15/2024 ☼    16 
 25   7.25%, 10/30/2017    27 
     Cedar Fair L.P.     
 20   5.25%, 03/15/2021 ■‡    20 
     Emdeon, Inc.     
 50   11.00%, 12/31/2019    58 
     Fidelity National Information Services, Inc.     
 50   5.00%, 03/15/2022 ‡    55 
     Greektown Superholdings, Inc.     
 100   13.00%, 07/01/2015    107 
     Isle of Capri Casinos, Inc.     
 11   8.88%, 06/15/2020    12 
     Liberty Media Corp.     
 50   8.50%, 07/15/2029    57 
     NAI Entertainment Holdings LLC     
 22   8.25%, 12/15/2017 ■    24 
     NCR Corp.     
 50   4.63%, 02/15/2021 ■    50 
 5   5.00%, 07/15/2022 ■    5 
     Regal Entertainment Group     
 12   5.75%, 02/01/2025    12 
     Sirius XM Radio, Inc.     
 20   5.25%, 08/15/2022 ■    21 
     Starz Financial Corp     
 10   5.00%, 09/15/2019    10 
     Univision Communications, Inc.     
 30   6.75%, 09/15/2022 ■    33 
     Videotron Ltee     
 25   5.00%, 07/15/2022 ╦    26 
         866 
     Beverage and Tobacco Product Manufacturing - 0.1%     
     Constellation Brands, Inc.     
 10   4.25%, 05/01/2023 ☼    10 
 85   6.00%, 05/01/2022    98 
 60   7.25%, 05/15/2017    70 
         178 
     Chemical Manufacturing - 0.1%     
     Ashland, Inc.     
 20   4.75%, 08/15/2022 ■    21 
     Ferro Corp.     
 25   7.88%, 08/15/2018 ‡    26 
     Hexion Specialty Chemicals     
 35   8.88%, 02/01/2018    37 
     Hexion U.S. Finance Corp.     
 25   6.63%, 04/15/2020    26 
         110 
     Computer and Electronic Product Manufacturing - 0.2%     
     CDW Escrow Corp.     
 55   8.50%, 04/01/2019 ‡    62 
     Esterline Technologies Corp.     
 75   7.00%, 08/01/2020    83 
     Freescale Semiconductor, Inc.     
 15   8.05%, 02/01/2020    16 
     Jabil Circuit, Inc.     
 20   4.70%, 09/15/2022    20 
     Micron Technology, Inc.     
 14   1.63%, 02/15/2033 ۞■    16 
 12   2.13%, 02/15/2033 ۞■    13 
     Seagate HDD Cayman     
 70   6.88%, 05/01/2020    76 
 55   7.00%, 11/01/2021    61 
         347 
     Construction - 0.1%     
     K Hovnanian Enterprises, Inc.     
 65   9.13%, 11/15/2020 ■    74 
     KB Home     
 22   1.38%, 02/01/2019 ۞    25 
 36   7.50%, 09/15/2022    41 
     Lennar Corp.     
 30   4.75%, 12/15/2017    32 
 15   4.75%, 11/15/2022 ■    15 
     Pulte Homes, Inc.     
 10   6.38%, 05/15/2033    10 
     Ryland Group, Inc.     
 25   5.38%, 10/01/2022 ╦    26 
         223 
     Fabricated Metal Product Manufacturing - 0.2%     
     Anixter International, Inc.     
 10   5.63%, 05/01/2019    11 
     Ball Corp.     
 25   5.00%, 03/15/2022    27 
 75   6.75%, 09/15/2020    83 
     Crown Americas, Inc.     
 15   4.50%, 01/15/2023 ■‡    15 
     Masco Corp.     
 80   5.95%, 03/15/2022 ╦    90 
     Ply Gem Industries, Inc.     
 20   9.38%, 04/15/2017    22 
         248 
     Finance and Insurance - 1.8%     
     Ally Financial, Inc.     
 50   5.50%, 02/15/2017    54 
     CIT Group, Inc.     
 80   5.25%, 03/15/2018 ‡    88 
 89   5.50%, 02/15/2019 ■‡    100 
     Community Choice Financial, Inc.     
 50   10.75%, 05/01/2019    49 
     Credit Acceptance Corp.     
 50   9.13%, 02/01/2017 ‡    54 
     DuPont Fabros Technology L.P.     
 40   8.50%, 12/15/2017 ‡    43 
     Felcor Lodging L.P.     
 15   5.63%, 03/01/2023 ■    16 
     Fibria Overseas Finance Ltd.     
 100   6.75%, 03/03/2021 ■‡    112 

  

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

 

8

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 

CORPORATE BONDS - 9.2% - (continued)

     
     Finance and Insurance - 1.8% - (continued)     
     Host Hotels & Resorts L.P.     
$80   6.00%, 11/01/2020   $89 
     ING US, Inc.     
 65   5.50%, 07/15/2022 ■    74 
     Ladder Capital Finance Holdings LLC     
 71   7.38%, 10/01/2017 ■╦    74 
     Lloyds Banking Group plc     
 100   7.88%, 11/01/2020 ■    109 
     Mapfre S.A.     
EUR   300   5.92%, 07/24/2037    369 
     National Money Mart Co.     
 20   10.38%, 12/15/2016    22 
     Nationstar Mortgage LLC     
 5   6.50%, 07/01/2021 ■    5 
 30   7.88%, 10/01/2020 ■    34 
     Natixis     
 1,050   0.53%, 01/15/2019 Δ    1,013 
     Nuveen Investments, Inc.     
 30   9.13%, 10/15/2017 ■    32 
 40   9.50%, 10/15/2020 ■    43 
     Provident Funding Associates L.P.     
 73   10.25%, 04/15/2017 ■    82 
     Royal Bank of Scotland Group plc     
 135   6.13%, 12/15/2022 ╦    145 
     SLM Corp.     
 35   7.25%, 01/25/2022 ╦    39 
 115   8.45%, 06/15/2018 ╦    135 
     TitleMax, Inc.     
 65   13.25%, 07/15/2015    71 
         2,852 
     Food Services - 0.0%     
     ARAMARK Corp.     
 35   5.75%, 03/15/2020 ■    37 
           
     Health Care and Social Assistance - 0.6%     
     Alere, Inc.     
 70   9.00%, 05/15/2016    73 
     Biomet, Inc.     
 40   6.50%, 08/01/2020 - 10/01/2020 ■    43 
     BioScrip, Inc.     
 45   10.25%, 10/01/2015    48 
     Community Health Systems, Inc.     
 122   5.13%, 08/15/2018 ‡    131 
 20   7.13%, 07/15/2020 ‡    22 
     Exelixis, Inc.     
 15   4.25%, 08/15/2019 ۞    16 
     Fresenius Medical Care U.S. Finance II, Inc.     
 25   5.63%, 07/31/2019 ■    28 
     HCA Holdings, Inc.     
 25   6.25%, 02/15/2021    27 
     HCA, Inc.     
 25   4.75%, 05/01/2023    26 
 51   5.88%, 05/01/2023    55 
 75   6.50%, 02/15/2020    87 
 117   7.50%, 11/15/2095    109 
 125   8.50%, 04/15/2019    138 
     Hologic, Inc.     
 50   2.00%, 03/01/2042 ۞    51 
 5   6.25%, 08/01/2020    5 
     Radiation Therapy Services, Inc.     
 20   8.88%, 01/15/2017    19 
     Savient Pharmaceuticals, Inc.     
 60   4.75%, 02/01/2018 ۞    14 
         892 
     Information - 1.9%     
     Brocade Communications Systems, Inc.     
 35   4.63%, 01/15/2023 ■    34 
     CSC Holdings, Inc.     
 35   7.63%, 07/15/2018 ‡    41 
     DISH DBS Corp.     
 25   5.00%, 03/15/2023 ■‡    24 
 276   5.88%, 07/15/2022 ‡    282 
 70   6.75%, 06/01/2021 ‡    76 
     First Data Corp.     
 50   6.75%, 11/01/2020 ■‡    54 
 70   8.25%, 01/15/2021 ■‡    74 
     Harron Communications L.P.     
 25   9.13%, 04/01/2020 ■    28 
     Hughes Satellite Systems Corp.     
 65   6.50%, 06/15/2019    72 
     Intelsat Jackson Holdings S.A.     
 75   8.50%, 11/01/2019    84 
     Intelsat Luxembourg S.A.     
 10   6.75%, 06/01/2018 ■    11 
 80   7.75%, 06/01/2021 ■    84 
     InterActiveCorp     
 15   4.75%, 12/15/2022 ■    15 
     Lawson Software, Inc.     
 20   9.38%, 04/01/2019    23 
     Level 3 Communications, Inc.     
 20   8.88%, 06/01/2019 ■    22 
     Level 3 Escrow, Inc.     
 10   8.13%, 07/01/2019    11 
     Level 3 Financing, Inc.     
 30   7.00%, 06/01/2020 ■    32 
 38   10.00%, 02/01/2018    42 
     MetroPCS Wireless, Inc.     
 40   7.88%, 09/01/2018 ╦    44 
     Netflix, Inc.     
 20   5.38%, 02/01/2021 ■    21 
     NII Capital Corp.     
 25   7.63%, 04/01/2021    22 
 10   8.88%, 12/15/2019    9 
     NII International Telecom Sarl     
 5   11.38%, 08/15/2019 ■    6 
     Rogers Communications, Inc.     
 475   8.75%, 05/01/2032    713 
     SBA Telecommunications, Inc.     
 10   5.75%, 07/15/2020 ■╦    11 
     SBA Tower Trust     
 310   3.60%, 04/16/2043 ■╦    310 
     Softbrands, Inc.     
 28   11.50%, 07/15/2018    33 
     Sprint Nextel Corp.     
 77   7.00%, 03/01/2020 ■╦    88 
 53   9.00%, 11/15/2018 ■╦    65 
     Syniverse Holdings, Inc.     
 65   9.13%, 01/15/2019    72 

 

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

 

9

 

The Hartford Unconstrained Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 

CORPORATE BONDS - 9.2% - (continued)

     
     Information - 1.9% - (continued)     
     TW Telecom Holdings, Inc.     
$11   5.38%, 10/01/2022   $12 
     Vimpelcom Holdings     
 285   5.95%, 02/13/2023 ■╦    289 
     Windstream Corp.     
 10   6.38%, 08/01/2023    10 
 175   7.75%, 10/15/2020    192 
     Zayo Group LLC     
 10   8.13%, 01/01/2020    11 
 5   10.13%, 07/01/2020    6 
         2,923 
     Machinery Manufacturing - 0.1%     
     Case New Holland, Inc.     
 170   7.88%, 12/01/2017 ‡    202 
     Gibraltar Industries, Inc.     
 10   6.25%, 02/01/2021 ■    11 
         213 
     Media - 0.0%     
     Gray Television, Inc.     
 40   7.50%, 10/01/2020    43 
           
     Mining - 0.3%     
     Consol Energy, Inc.     
 15   8.00%, 04/01/2017    16 
     FMG Resources Pty Ltd.     
 115   6.00%, 04/01/2017 ■‡    120 
     Peabody Energy Corp.     
 65   6.25%, 11/15/2021    69 
 80   6.50%, 09/15/2020    87 
 100   7.38%, 11/01/2016    115 
         407 
     Miscellaneous Manufacturing - 0.2%     
     BE Aerospace, Inc.     
 170   5.25%, 04/01/2022    181 
     DigitalGlobe, Inc.     
 35   5.25%, 02/01/2021 ■‡    35 
     TransDigm Group, Inc.     
 70   7.75%, 12/15/2018    78 
         294 
     Motor Vehicle and Parts Manufacturing - 0.2%     
     Meritor, Inc.     
 45   10.63%, 03/15/2018    50 
     Tenneco, Inc.     
 60   6.88%, 12/15/2020    66 
     TRW Automotive, Inc.     
 100   7.25%, 03/15/2017 ■    116 
         232 
     Nonmetallic Mineral Product Manufacturing - 0.2%     
     Grupo Cementos Chihuahua     
 260   8.13%, 02/08/2020 ■    276 
     Silgan Holdings, Inc.     
 85   5.00%, 04/01/2020    89 
         365 
     Other Services - 0.0%     
     Service Corp. International     
 55   4.50%, 11/15/2020    56 
           
     Paper Manufacturing - 0.1%     
     Boise Cascade LLC     
 10   6.38%, 11/01/2020 ■    11 
     Cascades, Inc.     
 25   7.88%, 01/15/2020 ‡    27 
     Clearwater Paper Corp.     
 10   4.50%, 02/01/2023 ■    10 
     P.H. Glatfelter Co.     
 40   5.38%, 10/15/2020    42 
     Rock-Tenn Co.     
 5   3.50%, 03/01/2020    5 
 35   4.00%, 03/01/2023    37 
         132 
     Petroleum and Coal Products Manufacturing - 0.5%     
     Antero Resources Finance Corp.     
 20   7.25%, 08/01/2019    22 
     Chesapeake Energy Corp.     
 59   2.50%, 05/15/2037 ۞‡    57 
     Continental Resources, Inc.     
 30   5.00%, 09/15/2022    33 
     Denbury Resources, Inc.     
 50   4.63%, 07/15/2023 ‡    50 
     EDC Finance Ltd.     
 250   4.88%, 04/17/2020 ■    252 
     Endeavour International Corp.     
 43   12.00%, 03/01/2018    41 
     EPE Holding/EP Energy Bond     
 15   8.13%, 12/15/2017 ■Þ    16 
     Ferrellgas Partners L.P.     
 10   6.50%, 05/01/2021    10 
     Harvest Operations Corp.     
 11   6.88%, 10/01/2017    12 
     Hornbeck Offshore Services, Inc.     
 15   5.88%, 04/01/2020    16 
     MEG Energy Corp.     
 41   6.38%, 01/30/2023 ■╦    43 
     Newfield Exploration Co.     
 50   5.75%, 01/30/2022    55 
 75   6.88%, 02/01/2020    82 
     Range Resources Corp.     
 80   6.75%, 08/01/2020    89 
     Rosetta Resources, Inc.     
 40   9.50%, 04/15/2018    44 
         822 
     Pipeline Transportation - 0.3%     
     El Paso Corp.     
 105   7.00%, 06/15/2017    121 
 95   7.80%, 08/01/2031    107 
     Energy Transfer Equity L.P.     
 150   7.50%, 10/15/2020    176 
     Kinder Morgan Finance Co.     
 75   6.00%, 01/15/2018 ■    83 
     MarkWest Energy Partners L.P.     
 10   5.50%, 02/15/2023 ╦    11 
 19   6.25%, 06/15/2022 ╦    21 
         519 

 

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

 

10

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 

CORPORATE BONDS - 9.2% - (continued)

     
     Plastics and Rubber Products Manufacturing - 0.0%     
     Nortek, Inc.     
$25   8.50%, 04/15/2021   $28 
 15   8.50%, 04/15/2021 ■    17 
         45 
     Printing and Related Support Activities - 0.1%     
     Deluxe Corp.     
 20   6.00%, 11/15/2020 ■‡    21 
 45   7.00%, 03/15/2019 ‡    49 
     Valassis Communications, Inc.     
 65   6.63%, 02/01/2021    69 
         139 
     Professional, Scientific and Technical Services - 0.1%     
     Flextronics International Ltd.     
 10   4.63%, 02/15/2020 ■    10 
 15   5.00%, 02/15/2023 ■    16 
     Lamar Media Corp.     
 55   5.88%, 02/01/2022 ╦    60 
     Lender Processing Services, Inc.     
 20   5.75%, 04/15/2023    22 
     SunGard Data Systems, Inc.     
 30   7.38%, 11/15/2018    32 
 20   7.63%, 11/15/2020    22 
         162 
     Real Estate, Rental and Leasing - 0.5%     
     Air Lease Corp.     
 35   4.50%, 01/15/2016    36 
 105   6.13%, 04/01/2017    115 
     CBRE Services, Inc.     
 20   5.00%, 03/15/2023 ‡    21 
     Hertz Global Holdings, Inc.     
 20   5.88%, 10/15/2020    22 
 11   6.25%, 10/15/2022    12 
     International Lease Finance Corp.     
 40   5.65%, 06/01/2014    42 
 250   5.88%, 04/01/2019    274 
 20   6.25%, 05/15/2019    23 
 75   6.75%, 09/01/2016 ■    85 
     United Rentals North America, Inc.     
 80   5.75%, 07/15/2018 ╦    87 
         717 
     Retail Trade - 0.5%     
     99 Cents Only Stores     
 50   11.00%, 12/15/2019    58 
     AmeriGas Finance LLC     
 65   7.00%, 05/20/2022    73 
     Arcelik AS     
 230   5.00%, 04/03/2023 ■    236 
     Building Materials Corp.     
 60   6.75%, 05/01/2021 ■    66 
 15   7.50%, 03/15/2020 ■    16 
     GRD Holding III Corp.     
 40   10.75%, 06/01/2019 ■    43 
     JC Penney Corp., Inc.     
 10   5.65%, 06/01/2020    9 
 5   6.38%, 10/15/2036    4 
 30   7.40%, 04/01/2037    25 
     Ltd. Brands, Inc.     
 110   5.63%, 02/15/2022    119 
 5   6.95%, 03/01/2033    5 
     Michaels Stores, Inc.     
 60   7.75%, 11/01/2018 ╦    66 
     PC Merger Sub, Inc.     
 45   8.88%, 08/01/2020 ■    51 
     Sally Holdings LLC     
 50   5.75%, 06/01/2022 ╦    54 
     Sotheby's     
 35   5.25%, 10/01/2022 ■    36 
         861 
     Soap, Cleaning Compound and Toilet Manufacturing - 0.0%     
     Avon Products, Inc.     
 15   5.00%, 03/15/2023    16 
           
     Transportation Equipment Manufacturing - 0.1%     
     Huntington Ingalls Industries, Inc.     
 25   6.88%, 03/15/2018    27 
 60   7.13%, 03/15/2021    67 
         94 
     Utilities - 0.2%     
     Calpine Corp.     
 133   7.50%, 02/15/2021 ■‡    150 
     Dolphin Subsidiary II, Inc.     
 50   7.25%, 10/15/2021 ‡    53 
     IPALCO Enterprises, Inc.     
 40   7.25%, 04/01/2016 ■    45 
     Texas Competitive Electric Co.     
 10   11.50%, 10/01/2020 ■    8 
         256 
     Water Transportation - 0.0%     
     Royal Caribbean Cruises Ltd.     
 10   5.25%, 11/15/2022 ╦    10 
           
     Total corporate bonds     
     (cost $13,690)   $14,447 
           

FOREIGN GOVERNMENT OBLIGATIONS - 3.8%

     
     Argentina - 0.5%     
     Argentina (Republic of)     
$950   7.00%, 04/17/2017   $774 
 103   8.28%, 12/31/2033    59 
         833 
     Brazil - 0.2%     
     Brazil (Republic of)     
 100   5.63%, 01/07/2041    126 
 100   5.88%, 01/15/2019    122 
 40   8.25%, 01/20/2034    64 
 50   11.00%, 08/17/2040    61 
         373 
     Colombia - 0.1%     
     Colombia (Republic of)     
 100   7.38%, 09/18/2037    151 
COP   9,000   9.85%, 06/28/2027    8 
 15   11.75%, 02/25/2020    24 
COP   15,000   12.00%, 10/22/2015    10 
         193 

 

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

 

11

 

The Hartford Unconstrained Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 

FOREIGN GOVERNMENT OBLIGATIONS - 3.8% - (continued)

     
     Hungary - 0.1%     
     Hungary (Republic of)     
$36   5.38%, 02/21/2023  $37 
 15   6.25%, 01/29/2020   17 
HUF   21,550   6.75%, 08/22/2014 - 02/24/2017   99 
HUF   6,030   7.50%, 11/12/2020   30 
 24   7.63%, 03/29/2041   28 
         211 
     Indonesia - 0.2%     
     Indonesia (Republic of)     
 100   6.88%, 01/17/2018 §   121 
 100   7.75%, 01/17/2038 §   148 
         269 
     Malaysia - 0.2%     
     Malaysia (Government of)     
MYR   55   3.74%, 02/27/2015   18 
MYR   335   4.26%, 09/15/2016   115 
MYR  155   4.39%, 04/15/2026   55 
MYR  125   5.09%, 04/30/2014   42 
MYR  155   5.73%, 07/30/2019   58 
         288 
     Mexico - 0.7%     
     Mexican Bonos De Desarrollo     
MXN   2,854   6.50%, 06/10/2021   268 
MXN   630   7.75%, 05/29/2031   68 
MXN   673   8.50%, 11/18/2038   80 
MXN   8   10.00%, 12/05/2024   1 
     United Mexican States     
 190   3.63%, 03/15/2022 ╦   207 
 176   4.75%, 03/08/2044 ╦   195 
MXN   204   7.75%, 12/14/2017   19 
MXN   2,290   9.50%, 12/18/2014   205 
         1,043 
     Panama - 0.1%     
     Panama (Republic of)     
 25   7.25%, 03/15/2015   28 
 45   8.88%, 09/30/2027   72 
         100 
     Peru - 0.1%     
     Peru (Republic of)     
PEN15   6.90%, 08/12/2037   7 
PEN25   6.95%, 08/12/2031   12 
PEN65   7.84%, 08/12/2020   31 
 60   8.75%, 11/21/2033   102 
 25   9.88%, 02/06/2015   29 
         181 
     Philippines - 0.2%     
     Philippines (Republic of)     
 165   10.63%, 03/16/2025 ╦   283 
           
     Poland - 0.3%     
     Poland (Republic of)     
PLN   425   5.25%, 10/25/2020   155 
PLN   510   5.50%, 04/25/2015 - 10/25/2019   175 
PLN   400   5.75%, 04/25/2014   130 
         460 
     Russia - 0.2%     
     Russian Federation     
 100   3.63%, 04/29/2015 §    105 
 100   5.00%, 04/29/2020 §    115 
 78   7.50%, 03/31/2030 §    98 
 35   12.75%, 06/24/2028 §    69 
         387 
     South Africa - 0.3%     
     South Africa (Republic of)     
ZAR   325   6.25%, 03/31/2036    31 
ZAR  1,760   6.75%, 03/31/2021    205 
 100   6.88%, 05/27/2019 ╦    125 
ZAR   900   8.25%, 09/15/2017    110 
         471 
     Turkey - 0.4%     
     Turkey (Republic of)     
 200   5.13%, 03/25/2022    229 
 60   7.25%, 03/15/2015    66 
 100   7.50%, 07/14/2017    121 
TRY   100   10.50%, 01/15/2020    69 
TRY300   11.00%, 08/06/2014    179 
         664 
     Venezuela - 0.2%     
     Venezuela (Republic of)     
 125   7.00%, 12/01/2018 §    116 
 90   11.95%, 08/05/2031 §    99 
 85   12.75%, 08/23/2022 §    97 
         312 
     Total foreign government obligations     
     (cost $5,764)   $6,068 
           

MUNICIPAL BONDS - 0.4%

     
     Transportation - 0.4%     
     Alameda, CA, Corridor Transportation Auth     
$1,705   9.20%, 10/01/2028 ○   $592 
           
     Total municipal bonds     
     (cost $455)   $592 
           

SENIOR FLOATING RATE INTERESTS ♦ - 22.1%

     
     Accommodation and Food Services - 0.4%     
     Caesars Entertainment Operating Co., Inc.     
$519   4.45%, 01/28/2018   $464 
 120   5.45%, 01/28/2018    108 
         572 
     Administrative Waste Management and Remediation - 0.6%     
     Acosta, Inc.     
 236   5.00%, 03/02/2018 ☼    239 
     Audio Visual Services Group, Inc.     
 249   6.75%, 11/09/2018    253 
     Brickman Group Holdings, Inc.     
 324   5.50%, 10/14/2016    328 
     ISS A/S     
 115   03/24/2018 ◊☼    115 
         935 
     Agriculture, Construction, Mining and Machinery - 0.2%     
     BOC Edwards, Inc.     
 190   03/22/2020 ◊☼    191 

  

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

 

12

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 

SENIOR FLOATING RATE INTERESTS ♦ - 22.1% - (continued)

     
     Agriculture, Construction, Mining and Machinery - 0.2% - (continued)     
     Pro Mach, Inc.     
$100   5.00%, 07/06/2017   $100 
         291 
     Air Transportation - 0.5%     
     AWAS Finance Luxembourg S.aár.l.     
 127   4.75%, 07/16/2018    127 
     Delta Air Lines, Inc.     
 140   4.00%, 10/18/2018    141 
     Delta Air Lines, Inc., Term Loan     
 322   4.25%, 04/20/2017    326 
     United Airlines, Inc.     
 185   4.00%, 04/01/2019    187 
         781 
     Apparel Manufacturing - 0.2%     
     J. Crew Group, Inc.     
 247   4.00%, 03/07/2018    250 
           
     Arts, Entertainment and Recreation - 1.6%     
     Affinity Gaming LLC     
 226   5.50%, 11/09/2017    230 
     Golden Nugget, Inc.     
 273   3.20%, 06/22/2014 Þ    263 
     Golden Nugget, Inc., Delayed Draw     
 152   3.20%, 06/22/2014 Þ    147 
     Kabel Deutschland Holding AG     
 250   3.25%, 02/01/2019    251 
     MGM Resorts International     
 165   4.25%, 12/20/2019    167 
     ROC Finance LLC     
 110   8.28%, 08/19/2017    113 
     Rock Ohio Caesars LLC     
 25   8.28%, 08/19/2017 ☼Б    26 
     Salem Communications Corp.     
 210   4.50%, 03/13/2020    213 
     Sinclair Television Group, Inc.     
 105   3.00%, 10/28/2016    105 
     Station Casinos LLC     
 500   5.00%, 03/02/2020    506 
     Town Sports International LLC     
 235   5.75%, 04/27/2018    240 
     Tribune Co.     
 224   4.00%, 12/31/2019    227 
         2,488 
     Chemical Manufacturing - 0.8%     
     Cytec Industries, Inc.     
 39   09/20/2019 ◊    40 
     Huntsman International LLC, Extended Term Loan B     
 135   2.74%, 04/19/2017    136 
     Ineos US Finance LLC     
 216   6.50%, 05/04/2018    219 
     Monarch, Inc.     
 76   09/12/2019 ◊    76 
     Pinnacle Operating Corp.     
 280   04/29/2020 ◊☼    281 
 174   6.75%, 11/15/2018    176 
     PQ Corp.     
 204   4.50%, 08/07/2017    207 
     Tronox Pigments Holland     
 175   02/08/2018 ◊☼    177 
         1,312 
     Computer and Electronic Product Manufacturing - 1.0%     
     CDW LLC     
 105   04/30/2020 ◊☼    105 
 485   4.00%, 07/15/2017 ☼    485 
     Ceridian Corp.     
 249   5.95%, 05/09/2017    253 
     Freescale Semiconductor, Inc.     
 500   5.00%, 03/01/2020    507 
     NXP Semiconductors N.V.     
 190   4.75%, 01/10/2020    194 
         1,544 
     Construction - 0.1%     
     Aluma Systems, Inc.     
 30   10/23/2018 ◊    30 
     Brand Energy & Infrastructure Services, Inc.     
 124   6.25%, 10/23/2018    126 
         156 
     Electrical Equipment, Appliance Manufacturing - 0.2%     
     WESCO Distribution, Inc.     
 399   4.50%, 12/12/2019    403 
           
     Finance and Insurance - 1.9%     
     Asurion LLC     
 249   4.50%, 05/24/2019    252 
     Capital Automotvie L.P.     
 278   4.25%, 04/05/2019 ☼    280 
     Chrysler Group LLC     
 253   6.00%, 05/24/2017    256 
     Cooper Gay Swett & Crawford Ltd.     
 100   04/05/2020 ◊☼    101 
     Evertec LLC     
 110   04/11/2020 ◊☼    110 
     Macquarie Aircraft Leasing Finance S.A., Second Lien Term Loan     
 831   4.20%, 11/29/2013    815 
     Nuveen Investments, Inc.     
 870   4.20%, 05/13/2017 ☼    880 
     Walter Investment Management     
 234   5.75%, 11/28/2017    238 
         2,932 
     Food Manufacturing - 0.6%     
     Dole Food Co., Inc.     
 200   04/25/2020 ◊☼    201 
 100   10.50%, 12/07/2018    101 
     H. J. Heinz Co.     
 675   03/27/2020 ◊☼    681 
         983 
     Food Services - 0.5%     
     Dunkin' Brands, Inc.     
 245   3.75%, 02/14/2020    247 
     OSI Restaurant Partners, Inc.     
 519   3.50%, 10/23/2019    522 
         769 
     Furniture and Related Product Manufacturing - 0.2%     
     Tempur-Pedic International, Inc.     
 185   5.00%, 03/18/2020    188 

 

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

 

13

 

The Hartford Unconstrained Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 

SENIOR FLOATING RATE INTERESTS ♦ - 22.1% - (continued)

     
     Furniture and Related Product Manufacturing - 0.2% - (continued)     
     Wilsonart International Holding LLC     
$140   4.00%, 10/31/2019   $140 
         328 
     Health Care and Social Assistance - 1.6%     
     Alkermes, Inc.     
 100   3.50%, 09/25/2019    100 
     American Renal Holdings, Inc.     
 105   8.50%, 02/14/2020    106 
     Bausch & Lomb, Inc.     
 353   5.25%, 05/17/2019    357 
     Catalent Pharma Solutions, Inc.     
 124   4.25%, 09/15/2017    125 
     DaVita, Inc.     
 150   4.00%, 11/01/2019    151 
     HCA, Inc.     
 165   2.95%, 05/01/2018 ☼    165 
     HCA, Inc., Tranche B-3 Term Loan     
 500   2.95%, 05/01/2018    500 
     Health Management Associates, Inc.     
 145   3.50%, 11/16/2018    146 
     Jazz Pharmaceuticals, Inc.     
 96   5.25%, 06/12/2018    98 
     Kinetic Concepts, Inc.     
 99   5.50%, 05/04/2018    101 
     Sheridan Healthcare, Inc.     
 124   4.50%, 06/29/2018    126 
     Truven Health Analytics, Inc.     
 99   4.50%, 06/06/2019    100 
     US Renal Care, Inc.     
 199   6.25%, 07/03/2019    201 
 135   10.25%, 01/03/2020    137 
     Warner Chilcott Corp., Term Loan B-1     
 57   4.25%, 03/15/2018    58 
     Warner Chilcott Corp., Term Loan B-2     
 20   4.25%, 03/15/2018    21 
     Warner Chilcott Corp., Term Loan B-3     
 45   4.25%, 03/15/2018    46 
     Warner Chilcott plc     
 25   4.25%, 03/15/2018    25 
         2,563 
     Information - 3.6%     
     Charter Communications Operating LLC     
 250   04/10/2020 ◊☼    249 
     Crown Castle International Corp.     
 99   3.25%, 01/31/2019    100 
     Epicor Software Corp.     
 247   4.50%, 05/16/2018    251 
     First Data Corp., Extended 1st Lien Term Loan     
 750   4.20%, 03/23/2018    747 
     Intelsat Jackson Holdings S.A.     
 198   4.50%, 04/02/2018    201 
     Kronos, Inc.     
 454   4.50%, 10/30/2019    459 
 130   9.75%, 04/30/2020    137 
     Lawson Software, Inc.     
 224   5.25%, 04/05/2018    227 
     Leap Wireless International, Inc.     
 280   4.75%, 03/01/2020    281 
     Level 3 Financing, Inc.     
 320   5.25%, 08/01/2019    324 
     MetroPCS Wireless, Inc., Term Loan B3     
 222   4.88%, 03/17/2018    223 
     MISYS plc     
 294   7.25%, 12/12/2018    298 
     MModal, Inc.     
 174   6.75%, 08/16/2019    170 
     Novell, Inc.     
 297   7.25%, 11/22/2017    300 
     Sorenson Communications, Inc.     
 290   9.50%, 10/31/2014    295 
     UPC Financing Partnership     
 145   06/10/2021 ◊☼    145 
     Verint Systems, Inc.     
 315   4.00%, 09/06/2019    317 
     Virgin Media Finance plc     
 250   02/15/2020 ◊☼    250 
     Warner Music Group Corp.     
 99   8.28%, 11/01/2018    100 
     Web.com Group, Inc.     
 237   4.50%, 10/27/2017    239 
     West Corp.     
 286   4.25%, 06/30/2018    291 
         5,604 
     Media - 0.1%     
     Univision Communications, Inc.     
 200   4.75%, 03/01/2020    202 
           
     Mining - 0.6%     
     American Rock Salt Co. LLC     
 247   5.50%, 04/25/2017    248 
     Arch Coal, Inc.     
 382   5.75%, 05/16/2018    387 
     Fortescue Metals Group Ltd.     
 303   5.25%, 10/18/2017    309 
         944 
     Miscellaneous Manufacturing - 0.6%     
     DigitalGlobe, Inc.     
 325   3.75%, 01/31/2020    328 
     Doncasters plc     
 160   5.50%, 04/05/2020    161 
     Reynolds Group Holdings, Inc.     
 328   4.75%, 09/28/2018    334 
     Sequa Automotive Group     
 100   6.25%, 11/15/2018    101 
         924 
     Motor Vehicle and Parts Manufacturing - 0.4%     
     Allison Transmission, Inc.     
 124   4.25%, 08/23/2019    126 
     Federal Mogul Corp., Tranche B Term Loan     
 82   2.14%, 12/29/2014    78 
     Federal Mogul Corp., Tranche C Term Loan     
 42   2.14%, 12/28/2015    40 
     Navistar, Inc.     
 81   5.75%, 08/17/2017    82 

  

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

 

14

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 

SENIOR FLOATING RATE INTERESTS ♦ - 22.1% - (continued)

     
     Motor Vehicle and Parts Manufacturing - 0.4% - (continued)     
     SRAM LLC     
$228   4.00%, 06/07/2018   $230 
     Tower International, Inc.     
 105   04/16/2020 ◊☼    106 
         662 
     Other Services - 0.1%     
     Alliance Laundry Systems LLC     
 109   4.50%, 12/10/2018    110 
           
     Petroleum and Coal Products Manufacturing - 0.4%     
     Dynegy Power LLC     
 307   08/05/2016 - 04/16/2020 ◊☼    307 
     Dynegy, Inc.     
 38   04/15/2020 ◊☼    38 
     Ruby Western Pipeline Holdings LLC     
 190   3.50%, 03/31/2020    192 
     Samson Investment Co.     
 100   6.00%, 09/25/2018    101 
         638 
     Pipeline Transportation - 0.6%     
     EMG Utica LLC     
 130   4.75%, 03/07/2020    130 
     EP Energy LLC     
 380   4.50%, 04/30/2019    384 
     NGPL Pipeco LLC     
 310   6.75%, 09/15/2017    314 
     Philadelphia Energy Solutions LLC     
 100   04/03/2018 ◊☼    102 
         930 
     Plastics and Rubber Products Manufacturing - 0.5%     
     Consolidated Container Co.     
 284   5.00%, 07/03/2019    287 
     Goodyear (The) Tire & Rubber Co.     
 250   4.75%, 04/30/2019    252 
     Tricorbraun, Inc.     
 189   5.50%, 05/03/2018    189 
         728 
     Primary Metal Manufacturing - 0.5%     
     Novelis, Inc.     
 711   3.75%, 03/10/2017    723 
     WireCo WorldGroup, Inc.     
 144   6.00%, 02/15/2017    146 
         869 
     Professional, Scientific and Technical Services - 0.8%     
     Advantage Sales & Marketing, Inc.     
 123   8.25%, 06/17/2018    123 
     AlixPartners LLP     
 199   4.50%, 06/30/2019    201 
 105   10.75%, 12/27/2019    108 
     Getty Images, Inc.     
 130   4.75%, 10/18/2019    131 
     MoneyGram International, Inc.     
 445   4.25%, 03/27/2020    448 
     Paradigm Ltd., Term Loan B1     
 224   4.75%, 07/30/2019    226 
     Paradigm Ltd., Term Loan B2     
 106   10.50%, 07/30/2020    108 
         1,345 
     Real Estate, Rental and Leasing - 0.3%     
     Fly Leasing Ltd.     
 258   5.75%, 08/08/2018    262 
     Realogy Corp., Extended 1st Lien Term Loan B     
 139   4.01%, 03/05/2020    141 
     Realogy Corp., Extended Credit Linked Deposit     
 9   4.49%, 10/10/2016    9 
         412 
     Retail Trade - 2.5%     
     Armstrong World Industries, Inc.     
 560   3.50%, 02/26/2020    563 
     August LUXUK Holding Co.     
 56   6.25%, 04/27/2018    57 
 57   10.50%, 04/26/2019    57 
     August U.S. Holding Co., Inc.     
 43   6.25%, 04/27/2018    43 
 44   10.50%, 04/26/2019    44 
     BJ's Wholesale Club, Inc.     
 119   4.25%, 09/26/2019    120 
     EB Sports Corp.     
 1,439   11.50%, 12/31/2015 Þ    1,425 
     FleetPride, Inc.     
 160   5.25%, 11/19/2019    159 
     KAR Auction Services, Inc.     
 118   3.75%, 05/19/2017    120 
     Michaels Stores, Inc.     
 115   3.75%, 01/28/2020    116 
     Neiman (The) Marcus Group, Inc.     
 300   4.00%, 05/16/2018    302 
     Party City Holdings, Inc.     
 194   4.25%, 07/27/2019    195 
     Sprouts Farmers Markets Holdings LLC     
 100   04/12/2020 ◊☼    100 
     TI Automotive Ltd.     
 115   5.50%, 03/14/2019    117 
     Weight Watchers International, Inc.     
 535   3.75%, 04/02/2020    533 
         3,951 
     Truck Transportation - 0.2%     
     Nexeo Solutions LLC     
 209   5.00%, 09/09/2017    210 
     Swift Transportation Co., Inc.     
 143   4.00%, 12/21/2017    146 
         356 
     Utilities - 0.5%     
     Calpine Corp.     
 105   4.00%, 10/09/2019    107 
     Energy Transfer Equity L.P.     
 113   3.75%, 03/24/2017    113 
     LSP Madison Funding LLC     
 114   5.50%, 06/28/2019    115 
     Star West Generation LLC     
 320   5.00%, 03/13/2020    326 

  

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

 

15

 

The Hartford Unconstrained Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS ♦ - 22.1% - (continued)     
     Utilities - 0.5% - (continued)     
     Texas Competitive Electric Holdings Co. LLC     
$200   4.73%, 10/10/2017  $147 
         808 
     Total senior floating rate interests     
     (cost $34,301)   $34,790 
           
U.S. GOVERNMENT AGENCIES - 50.1%     
     FHLMC - 16.6%     
$471   0.48%, 01/15/2039 ►   $73 
 4,700   3.50%, 05/15/2043 ☼    4,996 
 6,300   4.00%, 05/15/2043 ☼    6,726 
 2,400   4.50%, 05/15/2043 ☼    2,570 
 1,454   4.77%, 05/15/2037 ►    252 
 2,600   5.00%, 05/15/2043 ☼    2,791 
 6,445   5.50%, 10/01/2036 - 01/01/2039 ‡    6,960 
 1,600   6.00%, 05/15/2040 ☼    1,741 
         26,109 
           
     FNMA - 8.2%     
 596   2.14%, 11/01/2022 ‡    601 
 446   2.15%, 10/01/2022 ‡    451 
 204   2.20%, 12/01/2022 ‡    206 
 119   2.28%, 11/01/2022 ‡    121 
 104   2.34%, 11/01/2022 ‡    107 
 91   2.40%, 10/01/2022 ‡    93 
 79   2.42%, 11/01/2022 ‡    81 
 85   2.47%, 11/01/2022 ‡    87 
 1,500   2.50%, 05/12/2028 ☼    1,568 
 502   2.72%, 06/25/2042 ►    83 
 800   3.50%, 05/15/2028 ☼    850 
 2,722   4.00%, 05/15/2028 - 01/01/2042 ‡☼    2,911 
 3,500   5.00%, 05/15/2043 ☼    3,789 
 900   5.50%, 05/15/2043    979 
 953   5.70%, 07/25/2040 ►    180 
 841   6.00%, 09/01/2039 - 05/15/2043 ‡☼    919 
         13,026 
     GNMA - 25.3%     
 6,600   3.00%, 05/15/2043 ☼    7,023 
 14,050   3.50%, 05/15/2043 ☼    15,294 
 6,433   4.00%, 01/15/2041 - 05/15/2043 ‡☼    7,043 
 4,900   4.50%, 05/15/2043 ☼    5,358 
 1,300   5.00%, 05/15/2043 ☼    1,421 
 2,866   6.00%, 08/15/2032 - 12/15/2040 ‡    3,241 
 100   6.00%, 04/15/2043    113 
 301   6.50%, 11/15/2038 ‡    343 
         39,836 
     Total U.S. government agencies     
      (cost $78,786)   $78,971 
           
U.S. GOVERNMENT SECURITIES - 33.3%     
  U.S. Treasury Securities - 33.3%     
     U.S. Treasury Bonds - 5.1%     
$2,100    3.13%, 11/15/2041 - 02/15/2042 ‡   $2,208 
 125    3.50%, 02/15/2039 ‡    141 
 50    4.38%, 05/15/2040 ‡    65 
 3,655    5.38%, 02/15/2031 ‡    5,223 
 175    6.25%, 08/15/2023 ‡    251 
         7,888 
     U.S. Treasury Notes - 28.2%     
 1,775    0.13%, 04/15/2016 - 07/15/2022 ◄‡    1,953 
 550    0.50%, 04/15/2015 ◄‡    610 
 300    0.63%, 07/15/2021 ◄‡    353 
 200    0.75%, 10/31/2017 ‡    202 
 2,225    0.88%, 01/31/2018 ‡    2,250 
 300    1.13%, 01/15/2021 ◄‡    374 
 700    1.25%, 04/15/2014 - 07/15/2020 ◄‡    820 
 300    1.38%, 07/15/2018 - 01/15/2020 ◄‡    378 
 600    1.63%, 01/15/2015 - 01/15/2018 ◄‡    766 
 125    1.63%, 11/15/2022 ‡    125 
 375    1.88%, 07/15/2015 - 07/15/2019 ◄‡    486 
 6,205    2.00%, 11/15/2021 - 02/15/2022 ‡    6,486 
 700    2.00%, 01/15/2014 - 01/15/2016 ◄‡    898 
 125    2.13%, 01/15/2019 ◄‡    163 
 225    2.38%, 01/15/2017 ◄‡    298 
 225    2.50%, 07/15/2016 ◄‡    295 
 14,420    2.50%, 04/30/2015 ‡    15,072 
 200    2.63%, 07/15/2017 ◄‡    266 
 11,130    3.25%, 03/31/2017 □    12,334 
 175    3.50%, 02/15/2018 ‡    199 
 175    4.25%, 11/15/2017 ‡    204 
         44,532 
         52,420 
     Total U.S. government securities     
     (cost $51,622)   $52,420 
           
PREFERRED STOCKS - 0.0%     
     Diversified Financials - 0.0%     
 2   Citigroup Capital XIII   $50 
 2   GMAC Capital Trust I ۞    59 
         109 
     Total preferred stocks     
     (cost $103)   $109 
           
     Total long-term investments     
     (cost $214,849)   $219,320 
           
SHORT-TERM INVESTMENTS - 3.4%     
Repurchase Agreements - 3.4%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $210,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $214)
     
$210    0.17%, 4/30/2013   $210 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $571, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015
- 2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$583)
     
 571    0.15%, 4/30/2013    571 

  

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

 

16

 

 

 

Shares or Principal Amount ╬        Market Value ╪ 
SHORT-TERM INVESTMENTS - 3.4% - (continued)           
Repurchase Agreements - 3.4% - (continued)           
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $1,100, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 -
2021, value of $1,122)
          
$1,100   0.15%, 4/30/2013        $1,100 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $1,528,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $1,559)
          
 1,528   0.14%, 4/30/2013         1,528 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $275,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value of
$280)
          
 275   0.17%, 4/30/2013         275 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $931, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 -
2022, value of $950)
          
 931   0.14%, 4/30/2013         931 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $655, collateralized by U.S.
Treasury Note 0.25% - 1.88%, 2014 -
2019, value of $668)
          
 655   0.17%, 4/30/2013         655 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$12, collateralized by U.S. Treasury Note
3.88%, 2018, value of $12)
          
 12   0.13%, 4/30/2013         12 
               5,282 
     Total short-term investments           
     (cost $5,282)        $5,282 
                 
     Total investments             
     (cost $220,131) ▲   142.5 %  $224,602 
     Other assets and liabilities   (42.5 )%   (67,038)
     Total net assets   100.0 %  $157,564 

  

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

 

17

  

The Hartford Unconstrained Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

  

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $220,699 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation   $4,910 
Unrealized Depreciation    (1,007)
Net Unrealized Appreciation   $3,903 

 

These securities are valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value and percentage of net assets of these securities rounds to zero.  

 

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.

 

This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.  In addition, cash of $1,475 was received from broker(s) as collateral in connection with swap contracts.  Securities valued at $1,843, held on behalf of the Fund at the custody bank, were designated by broker(s) as collateral in connection with swap contracts.

 

ΔVariable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

ÞThis security may pay interest in additional principal instead of cash.

 

The interest rate disclosed for these securities represents the effective yield on the date of the acquisition.

 

Securities disclosed are interest-only strips.  The interest rates represent effective yields based upon estimated future cash flows at April 30, 2013.

 

The principal amount for this security is adjusted for inflation and the interest payments equal a fixed percentage of the inflation-adjusted principal amount.

 

All or a portion of this position represents unsettled loan commitment.  The coupon rate will be determined at time of settlement.

 

Senior floating rate interests 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 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.  Unless otherwise noted, the interest rate disclosed for these securities represents the average coupon as of April 30, 2013.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $9,759, which represents 6.2% of total net assets.

 

§These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $968, which represents 0.6% of total net assets.

 

۞Convertible security.

 

All principal or contract amounts are in U.S. dollars unless otherwise indicated.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $63,391 at April 30, 2013.

 

БThis security, or a portion of this security, has unfunded loan commitments. As of April 30, 2013, the aggregate value of the unfunded commitment was $1,005, which represents 0.6% of total net assets.

 

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

 

18

 

 

 

This security, or a portion of this security, is pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts held at April 30, 2013 as listed in the table below:

 

Description  Number of
Contracts*
   Expiration
Date
  Notional Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
Long position contracts:                       
Euro BUXL 30-Year Bond Future   3   06/06/2013  $539   $548   $9 
U.S. Treasury 5-Year Note Future   91   06/28/2013   11,278    11,342    64 
U.S. Treasury CME Ultra Long Term Bond Future   64   06/19/2013   10,223    10,518    295 
                     $368 
Short position contracts:                       
Euro-BOBL Future   12   06/06/2013  $2,002   $2,003   $(1)
Euro-BUND Future   16   06/06/2013   3,035    3,089    (54)
Japan 10-Year Bond Future   8   06/11/2013   11,875    11,861    14 
U.S. Treasury 10-Year Note Future   78   06/19/2013   10,403    10,402    1 
U.S. Treasury 2-Year Note Future   4   06/28/2013   881    882    (1)
U.S. Treasury 30-Year Bond Future   20   06/19/2013   2,898    2,967    (69)
                     $(110)
                     $258 

 

* The number of contracts does not omit 000's.

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty  Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
BRL  Buy  08/02/2013  GSC  $586   $586   $ 
CAD  Buy  05/22/2013  CSFB   21    21     
CAD  Sell  05/22/2013  BCLY   20    20     
CAD  Sell  05/02/2013  CSFB   21    21     
EUR  Sell  05/01/2013  JPM   6    6     
EUR  Sell  06/19/2013  JPM   358    364    (6)
JPY  Sell  05/01/2013  JPM   10    10     
NGN  Buy  11/25/2013  CBK   1,391    1,453    62 
NOK  Buy  05/31/2013  MSC   2,335    2,388    53 
PEN  Buy  05/09/2013  BOA   1,001    1,002    1 
PEN  Buy  05/09/2013  CBK   994    1,002    8 
PEN  Sell  05/09/2013  CBK   2,005    2,004    1 
SEK  Sell  05/31/2013  UBS   2,356    2,403    (47)
                      $72 

 

Credit Default Swap Contracts Outstanding at April 30, 2013

 

Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate /
Implied Credit
Spread (b)
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices:
Buy protection:                               
ABX.HE.AAA.06  BCLY  $223    (0.18)%  07/25/45  $20   $3   $(17)
ABX.HE.AAA.06  BOA   389    (0.18)%  07/25/45   21    6    (15)
ABX.HE.AAA.06  GSC   867    (0.18)%  07/25/45   77    14    (63)
ABX.HE.AAA.06  MSC   991    (0.18)%  07/25/45   58    16    (42)
ABX.HE.AAA.06-1  MSC   248    (0.18)%  07/25/45   5    4    (1)
ABX.HE.PENAAA.06  BCLY   80    (0.11)%  05/25/46   22    13    (9)
ABX.HE.PENAAA.06  GSC   256    (0.11)%  05/25/46   64    43    (21)
ABX.HE.PENAAA.06  JPM   269    (0.11)%  05/25/46   70    45    (25)

 

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

 

19

 

The Hartford Unconstrained Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Credit Default Swap Contracts Outstanding at April 30, 2013 - (continued)

 

Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate /
Implied Credit
Spread (b)
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices: - (continued)
Buy protection: - (continued)                               
ABX.HE.PENAAA.06  MSC  $277    (0.11)%  05/25/46  $61   $47   $(14)
ABX.HE.PENAAA.06-2  JPM   61    (0.11)%  05/25/46   11    10    (1)
ABX.HE.PENAAA.07  BCLY   438    (0.09)%  08/25/37   187    144    (43)
ABX.HE.PENAAA.07-1  JPM   80    (0.09)%  08/25/37   27    26    (1)
CDX.NA.HY.19  BCLY   145    (5.00)%  12/20/17   1    (10)   (11)
CDX.NA.HY.19  CSI   4,575    (5.00)%  12/20/17   22    (324)   (346)
CDX.NA.HY.19  JPM   10,660    (5.00)%  12/20/17   (179)   (756)   (577)
CDX.NA.HY.20  BCLY   825    (5.00)%  06/20/18   (39)   (51)   (12)
CDX.NA.HY.20  GSC   4,055    (5.00)%  06/20/18   (148)   (249)   (101)
CDX.NA.HY.20  JPM   2,925    (5.00)%  06/20/18   (128)   (179)   (51)
CDX.NA.HY.20  MSC   1,420    (5.00)%  06/20/18   (58)   (87)   (29)
CMBX.NA.A.1  DEUT   290    (0.35)%  10/12/52   135    111    (24)
CMBX.NA.A.1  GSC   135    (0.35)%  10/12/52   61    51    (10)
CMBX.NA.A.1  MSC   290    (0.35)%  10/12/52   120    110    (10)
CMBX.NA.AA.1  CSI   320    (0.25)%  10/12/52   73    57    (16)
CMBX.NA.AA.1  DEUT   360    (0.25)%  10/12/52   76    64    (12)
CMBX.NA.AA.1  JPM   480    (0.25)%  10/12/52   95    85    (10)
CMBX.NA.AA.1  UBS   655    (0.25)%  10/12/52   142    117    (25)
CMBX.NA.AA.2  BOA   425    (0.15)%  03/15/49   162    142    (20)
CMBX.NA.AA.2  JPM   290    (0.15)%  03/15/49   110    97    (13)
CMBX.NA.AJ.1  DEUT   75    (0.84)%  10/12/52   5    4    (1)
CMBX.NA.AJ.1  JPM   145    (0.84)%  10/12/52   10    8    (2)
CMBX.NA.AJ.1  MSC   140    (0.84)%  10/12/52   10    8    (2)
CMBX.NA.AJ.4  MSC   335    (0.96)%  02/17/51   120    89    (31)
CMBX.NA.AM.2  CSI   425    (0.50)%  03/15/49   26    17    (9)
CMBX.NA.AM.2  DEUT   425    (0.50)%  03/15/49   25    17    (8)
CMBX.NA.AM.2  MSC   575    (0.50)%  03/15/49   28    22    (6)
CMBX.NA.AM.3  CSI   400    (0.50)%  12/13/49   40    29    (11)
CMBX.NA.AM.3  MSC   270    (0.50)%  12/13/49   24    19    (5)
CMBX.NA.AM.4  GSC   500    (0.50)%  02/17/51   78    41    (37)
CMBX.NA.AM.4  MSC   170    (0.50)%  02/17/51   17    14    (3)
ITRX.EUR.19  GSC  EUR 6,260    (1.00)%  06/20/23   413    301    (112)
ITRX.XOV.19  DEUT  EUR 185    (5.00)%  06/20/18   (6)   (11)   (5)
ITRX.XOV.19  GSC  EUR445    (5.00)%  06/20/18   (2)   (26)   (24)
ITRX.XOV.19  MSC  EUR2,150    (5.00)%  06/20/18   (50)   (127)   (77)
Total                  $1,806   $(46)  $(1,852)
Sell protection:                               
ABX.HE.AAA.06  CSI  $120    0.11%  05/25/46  $(40)  $(32)  $8 
ABX.HE.AAA.06  JPM   120    0.11%  05/25/46   (39)   (32)   7 
ABX.HE.AAA.06-2  JPM   162    0.11%  05/25/46   (48)   (43)   5 
CDX.EM.19  DEUT   2,330    5.00%  06/20/18   298    299    1 
CDX.EM.19  DEUT   5,160    5.00%  06/20/18   678    662    (16)
CDX.EM.19  GSC   880    5.00%  06/20/18   118    113    (5)
CDX.NA.HY.20  GSC   4,835    1.00%  06/20/18   27    59    32 
CDX.NA.IG.19  GSC   6,200    1.00%  12/20/17   3    96    93 
CMBX.NA.AA.4  MSC   1,000    1.65%  02/17/51   (648)   (607)   41 
CMBX.NA.AAA.3  JPM   575    0.08%  12/13/49   (27)   (12)   15 
CMBX.NA.AAA.5  MSC   569    0.35%  02/15/51   (37)   (14)   23 
CMBX.NA.AAA.6  BOA   245    0.50%  05/11/63   (8)   (6)   2 
CMBX.NA.AAA.6  CSI   180    0.50%  05/11/63   (6)   (4)   2 
CMBX.NA.AAA.6  JPM   975    0.50%  05/11/63   (32)   (24)   8 
CMBX.NA.AAA.6  UBS   840    0.50%  05/11/63   (23)   (21)   2 
CMBX.NA.AAA.6  UBS   595    0.50%  05/11/63   (14)   (15)   (1)
CMBX.NA.AJ.3  CSI   335    1.47%  12/13/49   (105)   (86)   19 
CMBX.NA.AJ.3  MSC   835    1.47%  12/13/49   (278)   (215)   63 

 

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

 

20

 

 

 

Credit Default Swap Contracts Outstanding at April 30, 2013 - (continued)

 

Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate /
Implied Credit
Spread (b)
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices: - (continued)                        
Sell protection: - (continued)                        
CMBX.NA.BB.6  CSI  $325    5.00%  05/11/63  $(1)  $(7)  $(6)
CMBX.NA.BB.6  CSI   50    5.00%  05/11/63   (2)   (1)   1 
CMBX.NA.BB.6  GSC   90    5.00%  05/11/63   (4)   (2)   2 
CMBX.NA.BB.6  JPM   15    5.00%  05/11/63   1        (1)
CMBX.NA.BB.6  MSC   80    5.00%  05/11/63   2    (2)   (4)
CMBX.NA.BB.6  MSC   700    5.00%  05/11/63   (45)   (15)   30 
CMBX.NA.BB.6  UBS   80    5.00%  05/11/63   (4)   (2)   2 
CMBX.NA.BB.6  UBS   265    5.00%  05/11/63   3    (6)   (9)
CMBX.NA.BBB-.6  CSI   120    3.00%  05/11/63   (7)   (2)   5 
CMBX.NA.BBB-.6  MSC   90    3.00%  05/11/63   (5)   (1)   4 
ITRX.EUR.19  GSC  EUR 6,345    1.00%  06/20/18   (60)   6    66 
PrimeX.ARM.1  MSC   237    4.42%  06/25/36   13    25    12 
PrimeX.ARM.2  MSC   847    4.58%  12/25/37   (28)   30    58 
Total                  $(318)  $141   $459 
Total traded indices           $1,488   $95   $(1,393)
Credit default swaps on single-name issues:                        
Sell protection:                               
Bank of America Corp.  CSI  $945    1.00% / 1.08%  12/20/17  $(21)  $(4)  $17 
Bank of America Corp.  GSC   2,200    1.00% / 1.03%  09/20/17   (153)   (2)   151 
Citigroup, Inc.  GSC   2,350    1.00% / 0.88%  09/20/17   (152)   13    165 
Citigroup, Inc.  GSC   785    1.00% / 0.93%  12/20/17   (15)   2    17 
Goldman Sachs Group, Inc.  CSI   495    1.00% / 1.10%  12/20/17   (15)   (2)   13 
Goldman Sachs Group, Inc.  UBS   1,100    1.00% / 1.04%  09/20/17   (81)   (2)   79 
Morgan Stanley  BCLY   1,100    1.00% / 1.21%  09/20/17   (123)   (10)   113 
Morgan Stanley  GSC   520    1.00% / 1.27%  12/20/17   (26)   (6)   20 
Total                  $(586)  $(11)  $575 
                   $902   $84   $(818)

 

(a)The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.  Notional shown in U.S. dollars unless otherwise noted.

 

(b)Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues, U.S. municipal issues or sovereign government issues as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood of risk of default for the credit derivative.  The implied credit spread of a particular entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement.  Wider credit spreads represent a deterioration of the reference entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.  The percentage shown is the implied credit spread on April 30, 2013.  For credit default swap agreements on indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk.

 

Interest Rate Swap Contracts Outstanding at April 30, 2013

 

Counterparty  Payments made by Fund  Payments received by Fund  Notional
Amount *
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
BOA  3M CAD BA CDOR  1.59% Fixed  CAD 3,525   04/29/18  $   $4   $4 
GSC  0.91% Fixed  6M LIBOR GBP  GBP 2,350   04/29/18       2    2 
GSC  1.73% Fixed  6M EURIBOR  EUR 2,700   01/09/23       (95)   (95)
JPM  2.00% Fixed  3M LIBOR   1,600   03/20/23   (9)   (25)   (16)
JPM  3M STIBOR  2.16% Fixed  SEK 22,500   01/09/23       35    35 
                 $(9)  $(79)  $(70)

 

* Notional shown in U.S. dollars unless otherwise noted.

 

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

 

21

 

The Hartford Unconstrained Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Spreadlock Swap Contracts Outstanding at April 30, 2013

 

Counterparty  Strike   Notional
Amount
   Determination
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
JPM   0.80%*      15,000   09/20/13       (3)   (3)

 

*This is a spreadlock swap between the 10-Year constant maturity swap curve ("CMS") and the yield to maturity on a 30-Year FNMA.  If the yield to maturity on the 30-Year FNMA minus the 10-Year CMS rate is greater than 0.80%, the Fund will receive money from the counterparty based on this differential.  If the yield to maturity on the 30-Year FNMA minus the 10-Year CMS rate is less than 0.80%, the Fund will pay the counterparty.

 

Securities Sold Short Outstanding at April 30, 2013

 

Description  Principal
Amount
   Maturity Date  Market Value ╪   Unrealized
Appreciation/
Depreciation
 
FHLMC TBA, 5.50%  $4,800   05/15/2043  $5,182   $18 
FNMA TBA, 3.00%   9,200   05/15/2043   9,623    (52)
FNMA TBA, 5.50%   1,400   05/15/2043   1,522    3 
GNMA TBA, 3.00%   3,800   05/15/2042   4,038    (39)
GNMA TBA, 4.00%   3,400   05/15/2043   3,722    8 
           $24,087   $(62)

 

At April 30, 2013, the aggregate value of these securities represents 15.3% of total net assets.

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)
 
Counterparty Abbreviations:
BCLY Barclays  
BOA Banc of America Securities LLC  
CBK Citibank NA  
CSFB Credit Suisse First Boston Corp.
CSI Credit Suisse International  
DEUT Deutsche Bank Securities, Inc.  
GSC Goldman Sachs & Co.
JPM JP Morgan Chase & Co.  
MSC Morgan Stanley  
UBS UBS AG  
   
Currency Abbreviations:
BRL Brazilian Real  
CAD Canadian Dollar  
COP Colombian Peso  
EUR EURO  
GBP British Pound  
HUF Hungarian Forint  
JPY Japanese Yen  
MXN Mexican New Peso  
MYR Malaysian Ringgit  
NGN Nigerian Naira  
NOK Norwegian Krone  
PEN Peruvian New Sol  
PLN Polish New Zloty  
SEK Swedish Krona  
TRY Turkish New Lira  
ZAR South African Rand  

 

Index Abbreviations:
ABX.HE Markit Asset Backed Security Home Equity
ABX.HE.PEN Markit Asset Backed Security Home Equity Penultimate
CDX.EM Credit Derivatives Emerging Markets
CDX.NA.HY Credit Derivatives North American High Yield
CDX.NA.IG Credit Derivatives North American Investment Grade
CMBX.NA Markit Commercial Mortgage Backed North American
ITRX.EUR Markit iTraxx - Europe
ITRX.XOV Markit iTraxx Index - Europe Crossover
PrimeX.ARM Markit PrimeX Mortgage Backed Security
 
Other Abbreviations:
CAD BA CDOR Canadian Bankers Acceptance Dealer Offered Rate
EURIBOR Euro Interbank Offered Rate
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
LIBOR London Interbank Offered Rate
STIBOR Stockholm Interbank Offer Rate

 

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

 

22

 

The Hartford Unconstrained Bond Fund
Investment Valuation Hierarchy Level Summary
April 30, 2013 (Unaudited)
(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Asset & Commercial Mortgage Backed Securities  $31,923   $   $27,227   $4,696 
Corporate Bonds   14,447        14,447     
Foreign Government Obligations   6,068    268    5,800     
Municipal Bonds   592        592     
Preferred Stocks   109    109         
Senior Floating Rate Interests   34,790        34,790     
U.S. Government Agencies   78,971        78,971     
U.S. Government Securities   52,420        52,420    

 
Short-Term Investments   5,282        5,282     
Total  $224,602   $377   $219,529   $4,696 
Credit Default Swaps *   1,076        1,076     
Foreign Currency Contracts *   125        125     
Futures *   383    383         
Interest Rate Swaps *   41        41     
Total  $1,625   $383   $1,242   $ 
Liabilities:                    
Securities Sold Short  $24,087   $   $24,087   $ 
Total  $24,087   $   $24,087   $ 
Credit Default Swaps *   1,894        1,894     
Foreign Currency Contracts *   53        53     
Futures *   125    125         
Interest Rate Swaps *   111        111     
Spreadlock Swaps *   3        3     
Total  $2,186   $125   $2,061   $ 

 

For the six-month period ended April 30, 2013, investments valued at $549 were transferred from Level 1 to Level 2, and there were no transfers from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).

*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3 *
   Transfers
Out of
Level 3 *
   Balance
as of
April 30,
2013
 
Assets:                                             
Asset & Commercial Mortgage Backed Securities  $3,701   $443   $502  $181   $2,706   $(2,486)  $   $(351)  $4,696 
U.S. Government Agencies    1,703                            (1,703)    
Total   $5,404   $443   $502   $181   $2,706   $(2,486)  $   $(2,054)  $4,696 

 

*Investments are transferred into and out of Level 3 for a variety of reasons including, but not limited to:
1)Investments where trading has been halted (transfer into Level 3) or investments where trading has resumed (transfer out of Level 3).
2)Broker quoted investments (transfer into Level 3) or quoted prices in active markets (transfer out of Level 3).
3)Investments that have certain restrictions on trading (transfer into Level 3) or investments where trading restrictions have expired (transfer out of Level 3).
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $532.

 

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

 

23

 

The Hartford Unconstrained Bond Fund
Statement of Assets and Liabilities
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $220,131)  $224,602 
Cash   308 
Foreign currency on deposit with custodian (cost $1)   1 
Unrealized appreciation on foreign currency contracts   125 
Unrealized appreciation on swap contracts   1,117 
Receivables:     
Investment securities sold   50,083 
Fund shares sold   241 
Dividends and interest   812 
Variation margin   28 
Swap premiums paid   3,559 
Other assets   80 
Total assets   280,956 
Liabilities:     
Unrealized depreciation on foreign currency contracts   53 
Unrealized depreciation on swap contracts   2,008 
Securities sold short, at market value (proceeds $24,025)   24,087 
Payables:     
Investment securities purchased   92,547 
Fund shares redeemed   433 
Investment management fees   14 
Dividends   15 
Administrative fees    
Distribution fees   10 
Collateral received from broker   1,475 
Variation margin   32 
Accrued expenses   50 
Swap premiums received   2,666 
Other liabilities   2 
Total liabilities   123,392 
Net assets  $157,564 
Summary of Net Assets:     
Capital stock and paid-in-capital  $167,627 
Distributions in excess of net investment loss   (298)
Accumulated net realized loss   (13,613)
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   3,848 
Net assets  $157,564 

 

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

 

24

 

 

 

Shares authorized   500,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   $10.59/$11.09 
Shares outstanding   10,231 
Net assets  $108,376 
Class B: Net asset value per share  $10.59 
Shares outstanding   424 
Net assets  $4,495 
Class C: Net asset value per share  $10.62 
Shares outstanding   2,654 
Net assets  $28,179 
Class I: Net asset value per share  $10.60 
Shares outstanding   176 
Net assets  $1,860 
Class R3: Net asset value per share  $10.58 
Shares outstanding   17 
Net assets  $184 
Class R4: Net asset value per share  $10.58 
Shares outstanding   14 
Net assets  $148 
Class R5: Net asset value per share  $10.58 
Shares outstanding   15 
Net assets  $162 
Class Y: Net asset value per share  $10.56 
Shares outstanding   1,341 
Net assets  $14,160 

 

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

 

25
The Hartford Unconstrained Bond Fund
Statement of Operations
For the Six-Month Period Ended April 30, 2013 (Unaudited)
(000’s Omitted)

 

Investment Income:     
Dividends  $5 
Interest   2,466 
Less: Foreign tax withheld    
Total investment income   2,471 
      
Expenses:     
Investment management fees   423 
Administrative services fees     
Class R3    
Class R4    
Class R5    
Transfer agent fees     
Class A   96 
Class B   7 
Class C   16 
Class I   1 
Class R3    
Class R5    
Class Y    
Distribution fees     
Class A   140 
Class B   24 
Class C   145 
Class R3    
Class R4    
Custodian fees   8 
Accounting services fees   16 
Registration and filing fees   54 
Board of Directors' fees   4 
Audit fees   7 
Other expenses   23 
Total expenses (before waivers)   964 
Expense waivers   (86)
Total waivers   (86)
Total expenses, net   878 
Net Investment Income   1,593 
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities   884 
Net realized gain on purchased options   588 
Net realized loss on securities sold short   (40)
Net realized loss on futures   (224)
Net realized gain on written options   725 
Net realized loss on swap contracts   (2,204)
Net realized loss on foreign currency contracts   (14)
Net realized gain on other foreign currency transactions   13 
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions   (272)
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   2,494 
Net unrealized depreciation of securities sold short   (188)
Net unrealized appreciation of futures   180 
Net unrealized depreciation of written options   (84)
Net unrealized depreciation of swap contracts   (479)
Net unrealized appreciation of foreign currency contracts   47 
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies    
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions   1,970 
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   1,698 
Net Increase in Net Assets Resulting from Operations  $3,291 

 

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

 

26

 

The Hartford Unconstrained Bond Fund
Statement of Changes in Net Assets
 
(000’s Omitted)

 

  

For the Six-Month

Period Ended

April 30, 2013
(Unaudited)

   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $1,593   $7,800 
Net realized gain (loss) on investments, other financial instruments and foreign currency transactions   (272)   12,124 
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions   1,970    (2,214)
Net Increase in Net Assets Resulting from Operations   3,291    17,710 
Distributions to Shareholders:          
From net investment income          
Class A   (1,572)   (4,914)
Class B   (50)   (196)
Class C   (297)   (846)
Class I   (27)   (6)
Class R3   (2)   (4)
Class R4   (2)   (4)
Class R5   (2)   (4)
Class Y   (92)   (2,212)
Total distributions   (2,044)   (8,186)
Capital Share Transactions:          
Class A   (12,881)   (12,141)
Class B   (729)   (2,415)
Class C   (1,769)   1,425 
Class I   721    1,125 
Class R3   42    34 
Class R4   36    4 
Class R5   50    4 
Class Y   13,919    (104,107)
Net decrease from capital share transactions   (611)   (116,071)
Net Increase (Decrease) in Net Assets   636    (106,547)
Net Assets:          
Beginning of period   156,928    263,475 
End of period  $157,564   $156,928 
Undistributed (distribution in excess of) net investment income (loss)  $(298)  $153 

 

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

 

27

 

The Hartford Unconstrained Bond Fund
Notes to Financial Statements
April 30, 2013 (Unaudited)
(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford Unconstrained 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the

 

28

 

 

 

Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the Valuation Date.

 

29

 

The Hartford Unconstrained Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price. For more information on specific valuation techniques and unobservable inputs, please see table below titled "Quantitative Information about Level 3 Fair Value Measurements".

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

30

 

 

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

Quantitative Information about Level 3 Fair Value Measurements:

 

Security Type / Valuation Technique  Unobservable Input(1) 

Range

(Weighted Average(2) )

  Fair Value at
April 30, 2013
 
Asset & Commercial Mortgage Backed Securities:           
Cost  Recent trade price  4/11/2013  $232 
Discounted cash flow  Internal rate of return  0.8% - 50.4%  (3.5%)   4,464 
   Life expectancy (in months)  2 - 407 (31)     
Total        $4,696 

 

(1) Significant increases and decreases in these inputs may result in a significant change to fair value.

(2) Unless otherwise noted, inputs were weighted based on the fair value of the investments included in the range.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Trade date for senior floating rate interests purchased in the primary loan market is considered the date on which the loan allocations are determined. Trade date for senior floating rate interests purchased in the secondary loan market is the date on which the transaction is entered into.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. Paydown gains and losses on mortgage-related and other asset-backed securities are included in interest income in the Statement of Operations, as applicable.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

31

 

The Hartford Unconstrained Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Normally, dividends from net investment income are declared daily and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase

 

32

 

 

 

certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

In connection with the Fund’s ability to purchase investments on a when-issued or forward commitment basis, the Fund may enter into to-be announced (“TBA”) commitments. TBA commitments are forward agreements for the purchase or sale of mortgage-backed securities for a fixed price, with payment and delivery on an agreed-upon future settlement date. The specific securities to be delivered are not identified at the trade date; however, delivered securities must meet specified terms, including issuer, rate and mortgage terms. Although the Fund may enter into TBA commitments with the intention of acquiring or delivering securities for its portfolio, the Fund can extend the settlement date, roll the transaction, or dispose of a commitment prior to settlement if deemed appropriate to do so. If the TBA commitment is closed through the acquisition of an offsetting TBA commitment, the Fund realizes a gain or loss. In a TBA roll transaction, the Fund generally purchases or sells the initial TBA commitment prior to the agreed upon settlement date and enters into a new TBA commitment for future delivery or receipt of the mortgage-backed securities. TBA commitments involve a risk of loss if the value of the security to be purchased or sold declines or increases, respectively, prior to settlement date.

 

The Fund may enter into “dollar rolls” in which the Fund sells securities and contracts with the same counterparty to repurchase substantially similar securities (for example, same issuer, coupon and maturity) on a specified future date at an agreed upon price. The Fund gives up the right to receive interest paid on the investments sold. The Fund would benefit to the extent of any differences between the price received for the security and the lower forward price for the future purchase. Dollar rolls involve the risk that the market value of the securities that the Fund is required to purchase may decline below the agreed upon repurchase price of those securities. The Fund records dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions are excluded from the Fund’s portfolio turnover rate. The Fund had open dollar roll transactions as of April 30, 2013.

 

d)Senior Floating Rate Interests – The Fund, as shown on the Schedule of Investments, invests 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. The Fund may invest in multiple series or tranches of a senior floating rate interest, which may have varying terms and carry different associated risks. The Fund may also enter into unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. In certain circumstances, the Fund may receive various fees upon the restructure of a senior floating rate interest by a borrower. Fees earned/paid may be recorded as a component of income or realized gain/loss in the Statement of Operations.

 

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

 

33

 

The Hartford Unconstrained Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

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.

 

e)Mortgage Related and Other Asset Backed Securities The Fund may invest in mortgage related and other asset backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations, commercial mortgage backed securities, stripped mortgage backed securities, asset backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. Mortgage related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. These securities provide a monthly payment that consists of both interest and principal payments. Interest payments may be determined by fixed or adjustable rates. The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. The timely payment of principal and interest of certain mortgage related securities is guaranteed by the full faith and credit of the United States Government. Mortgage related and other asset backed securities created and guaranteed by non-governmental issuers, including government-sponsored corporations, may be supported by various forms of insurance or guarantees, but there can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund, as shown on the  Schedule of Investments, had mortgage related and other asset backed securities as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange.

 

34

 

 

 

Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. The Fund, as shown on the  Schedule of Investments, had outstanding futures contracts as of April 30, 2013.

 

c)Options 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) an investment or other financial asset at an agreed-upon price during a specific period of time or on a specific date. The Fund may write (sell) covered call and put options on futures, swaps (“swaptions”), securities, commodities or currencies. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying investments or currency or an option to purchase the same underlying investments 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 investments having a value equal to or greater than the fluctuating market value of the option investment or currency. Writing put options increases the Fund’s exposure to the underlying instrument. Writing call options decreases the Fund’s exposure to the underlying instrument. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options that are exercised or closed are added to the proceeds or offset amounts paid on the underlying futures, swap, investment or currency transaction to determine the realized gain or loss. The Fund as a writer of an option has no control over whether the underlying instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the instrument underlying the written option. There is the risk the Fund may not be able to enter into a closing transaction because of an illiquid market. The Fund may also purchase put and call options. Purchasing call options increases the Fund’s exposure to the underlying instrument. Purchasing put options decreases the Fund’s exposure to the underlying instrument. The Fund pays a premium, which is included on the Fund’s Statement of Assets and Liabilities as an investment and is subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options that expire are treated as realized losses. Certain options may be purchased with premiums to be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. The risk associated with purchasing put and call options is generally limited to the premium paid. Premiums paid for purchasing options that are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss. Entering into over-the-counter options also exposes the Fund to counterparty risk. Counterparty risk is the possibility that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements. As of April 30, 2013 the Fund had no outstanding purchased options or written options contracts. Transactions involving written options contracts during the six-month period ended April 30, 2013, are summarized below:

 

35

 

The Hartford Unconstrained Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Options Contract Activity During the Six-Month Period Ended April 30, 2013:        
Call Options Written During the Period  Number of Contracts*   Premium Amounts 
Beginning of the period   36,520,000   $210 
Written   49,240,448    303 
Expired   (85,760,000)   (451)
Closed   (448)   (62)
Exercised        
End of Period      $ 

 

Put Options Written During the Period  Number of Contracts*   Premium Amounts 
Beginning of the period   36,520,000   $191 
Written   49,241,464    360 
Expired   (85,760,000)   (394)
Closed   (1,464)   (157)
Exercised        
End of Period      $ 

 

*The number of contracts does not omit 000's.

 

d)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

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 investment or index in the event of a credit event, such as payment default or bankruptcy.

 

36

 

 

 

Under a credit default swap contract, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying investment 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. Although specified events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. These potential amounts would be partially offset by any recovery values of the respective referenced obligations or upfront payments received upon entering into the contract.

 

Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap contracts on corporate issues, sovereign government issues or U.S. municipal issues as of period-end are disclosed in the notes to the Schedule of Investments, as applicable, and serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the contract. Wider credit spreads represent a deterioration of the referenced entity’s soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. For credit default swap contracts on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced equity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. The Fund, as shown on the Schedule of Investments, had outstanding credit default swaps as of April 30, 2013.

 

Interest Rate Swap Contracts 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 or inflation benchmark (e.g. London Interbank Offered Rate (“LIBOR”)), 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 contracts is recorded as a realized gain or loss. 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 contract 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 contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The Fund, as shown on the Schedule of Investments, had outstanding interest rate swaps as of April 30, 2013.

 

Spreadlock Swap ContractsThe Fund may invest in spreadlock swap contracts. These contracts involve commitments to pay or receive a settlement amount calculated as the difference between the swap spread and a fixed spread at a specific forward date. The Fund, as shown on the Schedule of Investments, had outstanding spreadlock swaps as of April 30, 2013.

 

37

 

The Hartford Unconstrained Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

e)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:
 
   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Assets:                                   
Unrealized appreciation on foreign currency contracts  $   $125   $   $   $   $   $125 
Unrealized appreciation on swap contracts   41        1,076                1,117 
Variation margin receivable *   28                        28 
Total  $69   $125   $1,076   $   $   $   $1,270 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $53   $   $   $   $   $53 
Unrealized depreciation on swap contracts   114        1,894                2,008 
Variation margin payable *   32                        32 
Total  $146   $53   $1,894   $   $   $   $2,093 

 

*Only current day's variation margin is reported within the Statement of Assets and Liabilities. The variation margin is included in the open futures cumulative appreciation of $258 as reported in the Schedule of Investments.

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain (Loss) on Derivatives Recognized as a Result of Operations:
Net realized gain on purchased options  $503   $85   $   $   $   $   $588 
Net realized loss on futures   (205)           (19)           (224)
Net realized gain (loss) on written options   (121)       846                725 
Net realized loss on swap contracts   (31)       (2,173)               (2,204)
Net realized loss on foreign currency contracts       (14)                   (14)
Total  $146   $71   $(1,327)  $(19)  $   $   $(1,129)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation of futures  $180   $   $   $   $   $   $180 
Net change in unrealized depreciation of written options           (84)               (84)
Net change in unrealized depreciation of swap contracts   (76)       (403)               (479)
Net change in unrealized appreciation of foreign currency contracts       47                    47 
Total  $104   $47   $(487)  $—     $   $   $(336)

 

38

 

 

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. Senior floating rate interests and securities subject to prepayment and extension risk generally offer less potential for gains when interest rates decline. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities, senior floating rate interests, and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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.

 

39

 

The Hartford Unconstrained Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

b)Net Investment Income (Loss), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $8,199   $13,521 

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $190 
Accumulated Capital Losses *   (12,695)
Unrealized Appreciation †   1,216 
Total Accumulated Deficit  $(11,289)

 

*The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows.
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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $370 
Accumulated Net Realized Gain (Loss)   (433)
Capital Stock and Paid-in-Capital   63 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss

 

40

 

 

 

carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

At October 31, 2012 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes as follows:

 

Year of Expiration  Amount 
2017  $12,695 
Total  $12,695 

 

During the year ended October 31, 2012, the Fund utilized $11,090 of prior year capital loss carryforwards.

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; 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 $1.5 billion   0.475% 
On next $2.5 billion   0.465% 
On next $5 billion   0.455% 
Over $10 billion   0.445% 

 

41

 

The Hartford Unconstrained Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.020%  
On next $5 billion   0.018%  
Over $10 billion   0.016%  

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class B   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 0.99%      1.74%      1.74%      0.74%      1.29%      0.99%      0.69%      0.69%   

 

d)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $45 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class 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 the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class.

 

42

 

 

 

For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R3   65%
Class R4   79 
Class R5   73 
Class Y   1 

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $531,615 
Sales Proceeds Excluding U.S. Government Obligations   538,319 
Cost of Purchases for U.S. Government Obligations   13,628 
Sales Proceeds for U.S. Government Obligations   19,671 

 

43

 

The Hartford Unconstrained Bond Fund
Notes to Financial Statements – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   696    142    (2,060)       (1,222)   3,298    455    (4,896)       (1,143)
Amount  $7,309   $1,491   $(21,681)  $   $(12,881)  $33,926   $4,672   $(50,739)  $   $(12,141)
Class B                                                  
Shares   11    4    (85)       (70)   55    16    (306)       (235)
Amount  $126   $44   $(899)  $   $(729)  $558   $167   $(3,140)  $   $(2,415)
Class C                                                  
Shares   402    25    (596)       (169)   864    71    (798)       137 
Amount  $4,251   $266   $(6,286)  $   $(1,769)  $8,923   $732   $(8,230)  $   $1,425 
Class I                                                  
Shares   198    2    (132)       68    107    1            108 
Amount  $2,079   $24   $(1,382)  $   $721   $1,120   $6   $(1)  $   $1,125 
Class R3                                                  
Shares   4                4    3                3 
Amount  $46   $2   $(6)  $   $42   $30   $4   $   $   $34 
Class R4                                                  
Shares   3                3        1            1 
Amount  $34   $2   $   $   $36   $   $4   $   $   $4 
Class R5                                                  
Shares   4                4        1            1 
Amount  $48   $2   $   $   $50   $   $4   $   $   $4 
Class Y                                                  
Shares   1,421    9    (100)       1,330    2,035    204    (12,404)       (10,165)
Amount  $14,875   $92   $(1,048)  $   $13,919   $20,740   $2,062   $(126,909)  $   $(104,107)
Total                                                  
Shares   2,739    182    (2,973)       (52)   6,362    749    (18,404)       (11,293)
Amount  $28,768   $1,923   $(31,302)  $   $(611)  $65,297   $7,651   $(189,019)  $   $(116,071)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   11   $111 
For the Year Ended October 31, 2012   50   $514 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

44

 

 

 

12.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

13.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

14.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

45

 

The Hartford Uncontrained Bond Fund
Financial Highlights
- Selected Per-Share Data (A) -

 

Class  Net Asset Value at
Beginning of
Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (D)
A  $10.51   $0.12   $0.11   $0.23   $(0.15)  $   $   $(0.15)  $10.59 
B   10.51    0.08    0.11    0.19    (0.11)           (0.11)   10.59 
C   10.53    0.08    0.12    0.20    (0.11)           (0.11)   10.62 
I   10.51    0.13    0.12    0.25    (0.16)           (0.16)   10.60 
R3   10.50    0.10    0.11    0.21    (0.13)           (0.13)   10.58 
R4   10.50    0.12    0.11    0.23    (0.15)           (0.15)   10.58 
R5   10.50    0.13    0.11    0.24    (0.16)           (0.16)   10.58 
Y   10.48    0.14    0.10    0.24    (0.16)           (0.16)   10.56 
                                              
For the Year Ended October 31, 2012 (D)
A   10.06    0.37    0.47    0.84    (0.39)           (0.39)   10.51 
B   10.05    0.30    0.47    0.77    (0.31)           (0.31)   10.51 
C   10.07    0.29    0.48    0.77    (0.31)           (0.31)   10.53 
I(G)   10.30    0.13    0.21    0.34    (0.13)           (0.13)   10.51 
R3   10.04    0.33    0.49    0.82    (0.36)           (0.36)   10.50 
R4   10.04    0.37    0.48    0.85    (0.39)           (0.39)   10.50 
R5   10.04    0.40    0.48    0.88    (0.42)           (0.42)   10.50 
Y   10.04    0.48    0.38    0.86    (0.42)           (0.42)   10.48 
                                              
For the Year Ended October 31, 2011
A   9.98    0.46    0.10    0.56    (0.48)           (0.48)   10.06 
B   9.98    0.38    0.09    0.47    (0.40)           (0.40)   10.05 
C   10.00    0.38    0.09    0.47    (0.40)           (0.40)   10.07 
R3(H)   9.89    0.03    0.15    0.18    (0.03)           (0.03)   10.04 
R4(H)   9.89    0.04    0.14    0.18    (0.03)           (0.03)   10.04 
R5(H)   9.89    0.04    0.15    0.19    (0.04)           (0.04)   10.04 
Y   9.97    0.49    0.09    0.58    (0.51)           (0.51)   10.04 
                                              
For the Year Ended October 31, 2010
A   9.54    0.37    0.45    0.82    (0.38)           (0.38)   9.98 
B   9.53    0.29    0.47    0.76    (0.31)           (0.31)   9.98 
C   9.55    0.30    0.46    0.76    (0.31)           (0.31)   10.00 
Y   9.52    0.40    0.47    0.87    (0.42)           (0.42)   9.97 
                                              
For the Year Ended October 31, 2009
A   8.28    0.48    1.27    1.75    (0.49)           (0.49)   9.54 
B   8.28    0.42    1.26    1.68    (0.43)           (0.43)   9.53 
C   8.30    0.42    1.25    1.67    (0.42)           (0.42)   9.55 
Y   8.27    0.51    1.25    1.76    (0.51)           (0.51)   9.52 
                                              
For the Year Ended October 31, 2008
A   10.14    0.54    (1.87)   (1.33)   (0.53)           (0.53)   8.28 
B   10.14    0.47    (1.87)   (1.40)   (0.46)           (0.46)   8.28 
C   10.16    0.47    (1.87)   (1.40)   (0.46)           (0.46)   8.30 
Y   10.12    0.57    (1.86)   (1.29)   (0.56)           (0.56)   8.27 

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(D)Per share amounts have been calculated using average shares outstanding method.
(E)Not annualized.
(F)Annualized.
(G)Commenced operations on May 25, 2012.
(H)Commenced operations on September 30, 2011.

 

46

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio
Turnover
Rate(C)
 
  
                            
 2.17%(E)  $108,376    1.12%(F)   0.99%(F)   2.21%(F)   29%
 1.78(E)   4,495    2.00(F)   1.74(F)   1.46(F)    
 1.88(E)   28,179    1.81(F)   1.74(F)   1.46(F)    
 2.40(E)   1,860    0.76(F)   0.74(F)   2.45(F)    
 2.02(E)   184    1.42(F)   1.29(F)   1.94(F)    
 2.17(E)   148    1.09(F)   0.99(F)   2.23(F)    
 2.33(E)   162    0.81(F)   0.69(F)   2.51(F)    
 2.33(E)   14,160    0.70(F)   0.69(F)   2.65(F)    
                            
 
 8.47    120,395    1.09    0.77    3.59    134 
 7.77    5,187    1.96    1.53    2.92     
 7.76    29,736    1.79    1.52    2.83     
 3.35(E)   1,132    0.83(F)   0.62(F)   2.93(F)    
 8.27    141    1.40    1.06    3.20     
 8.60    111    1.07    0.77    3.57     
 8.92    111    0.77    0.47    3.87     
 8.73    115    0.72    0.69    4.70     
                            
 
 5.71    126,654    1.06    0.95    4.56    207 
 4.82    7,324    1.88    1.70    3.82     
 4.81    27,057    1.74    1.70    3.80     
 1.81(E)   102    1.34(F)   1.25(F)   4.29(F)    
 1.84(E)   102    1.04(F)   0.95(F)   4.58(F)    
 1.87(E)   102    0.74(F)   0.65(F)   4.87(F)    
 5.96    102,134    0.63    0.63    4.90     
                            
 
 8.82    138,388    1.04    1.00    3.75    210 
 8.13    10,007    1.87    1.75    3.02     
 8.14    26,778    1.72    1.72    3.03     
 9.37    147,197    0.62    0.62    4.13     
                            
 
 21.83    111,456    1.08    0.95    5.46    178 
 20.85    10,389    1.96    1.67    4.74     
 20.76    23,237    1.76    1.70    4.66     
 22.07    109,639    0.64    0.64    5.88     
                            
 
 (13.71)   81,569    1.02    0.95    5.53    177 
 (14.36)   7,779    1.91    1.70    4.79     
 (14.34)   13,007    1.76    1.70    4.79     
 (13.37)   139,935    0.63    0.63    5.85     

 

47

 

The Hartford Unconstrained Bond Fund
Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

48

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

49

 

The Hartford Unconstrained Bond Fund
Directors and Officers (Unaudited) – (continued)

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

50

 

The Hartford Unconstrained 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
  

Beginning

Account Value
October 31, 2012

  

Ending Account

Value
April 30, 2013

  

Expenses paid

during the period
October 31, 2012
through
April 30, 2013

   Beginning
Account Value
October 31, 2012
  

Ending Account

Value
April 30, 2013

  

Expenses paid

during the

period
October 31, 2012
through
April 30, 2013

   Annualized
 expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A   $1,000.00   $1,016.90   $4.96   $1,000.00   $1,019.88   $4.96    0.99%  181  365
Class B   $1,000.00   $1,014.00   $8.70   $1,000.00   $1,016.16   $8.71    1.74   181  365
Class C   $1,000.00   $1,014.00   $8.70   $1,000.00   $1,016.16   $8.71    1.74   181  365
Class I   $1,000.00   $1,019.10   $3.26   $1,000.00   $1,018.55   $3.26    0.74   159  365
Class R3   $1,000.00   $1,016.30   $6.46   $1,000.00   $1,018.39   $6.46    1.29   181  365
Class R4   $1,000.00   $1,017.90   $4.96   $1,000.00   $1,019.88   $4.96    0.99   181  365
Class R5   $1,000.00   $1,019.40   $3.46   $1,000.00   $1,021.37   $3.46    0.69   181  365
Class Y   $1,000.00   $1,018.40   $3.46   $1,000.00   $1,021.37   $3.46    0.69   181  365

 

51

 

The Hartford Unconstrained Bond Fund
Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Unconstrained Bond Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with

 

52

 

 

 

the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

53

 

The Hartford Unconstrained Bond Fund
Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early). These risks also apply to the Fund’s investments in U.S. government securities, which may not be guaranteed by the U.S. government.

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

Loan Risk: The Fund’s investments in loans may at times become difficult to value and highly illiquid; they are subject to credit risk such as nonpayment of principal or interest, and risks of bankruptcy and insolvency.

 

Foreign Investment and Emerging Markets Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Mortgage-Backed Securities Risk: Mortgage-backed securities are subject to interest rate risk, credit risk, prepayment risk, extension risk, and the risk that an investment’s value may be reduced or become worthless if it receives interest or income payments only after other investments in the same pool.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

54
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-UB13 4/13 114012 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

52

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD VALUE FUND

 

2013 Semi Annual Report

 

 

 

 

 

 
 

 

 

The Hartford Value Fund

 

Table of Contents

 

Fund Performance (Unaudited) 2
Manager Discussion (Unaudited) 3
Financial Statements  
Schedule of Investments at April 30, 2013 (Unaudited) 5
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited) 8
Statement of Assets and Liabilities at April 30, 2013 (Unaudited) 9
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited) 10
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012 11
Notes to Financial Statements (Unaudited) 12
Financial Highlights (Unaudited) 24
Directors and Officers (Unaudited) 27
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited) 29
Quarterly Portfolio Holdings Information (Unaudited) 29
Expense Example (Unaudited) 30
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited) 31
Principal Risks (Unaudited) 33

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford Value Fund inception 04/30/2001
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks long-term total return.

 

Performance Overview 4/30/03 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   5 year   10 year 
Value A#   15.32%       17.64%       4.15%       8.50%    
Value A##        11.17%       2.98%       7.88%    
Value B#   14.90%       16.79%       3.41%       7.89%*    
Value B##        11.79%       3.06%       7.89%*    
Value C#   15.00%       16.80%       3.39%       7.69%    
Value C##        15.80%       3.39%       7.69%    
Value I#   15.49%       17.93%       4.43%       8.69%    
Value R3#   15.23%       17.42%       3.89%       8.43%    
Value R4#   15.34%       17.70%       4.19%       8.63%    
Value R5#   15.55%       18.09%       4.53%       8.85%    
Value Y#   15.61%       18.15%       4.63%       8.92%    
Russell 1000 Value Index   16.31%       21.80%       4.17%       8.42%    

 

Not Annualized
# Without sales charge
## With sales charge
* Class B shares convert to Class A shares after 8 years.  The return shown reflects Class A shares, which had different operating expenses, for the period after conversion.

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 5.50% and returns for Classes B and C reflect a contingent deferred sales charge of 5.00% and 1.00%, respectively.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Effective 9/30/09, Class B shares of The Hartford Mutual Funds were closed to new investments.

 

Class I shares commenced operations on 5/31/07. Performance prior to that date is that of the Fund’s Class A shares (excluding sales charges), which had different operating expenses. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to that date is that of the Fund’s Class Y shares which had different operating expenses.

 

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. The Russell 1000 Index is an unmanaged index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, which measures the performance of the 3,000 largest U.S. companies, based on total market capitalizations.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford Value Fund

Manager Discussion

April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
Value Class A   1.15%       1.22%    
Value Class B   1.90%       2.24%    
Value Class C   1.90%       1.92%    
Value Class I   0.88%       0.88%    
Value Class R3   1.35%       1.49%    
Value Class R4   1.05%       1.19%    
Value Class R5   0.80%       0.87%    
Value Class Y   0.75%       0.75%    

 

* As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses as of the date of the Fund's most recent prospectus and reflect contractual expense waivers/reimbursements in instances when these reductions reduce the Fund's gross expenses. Certain contractual waivers/reimbursements remain in effect until February 28, 2014. Other contractual waivers/reimbursements remain in effect until February 28, 2014, and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers    
Karen H. Grimes, CFA W. Michael Reckmeyer, III, CFA Ian R. Link, CFA
Senior Vice President and Equity Portfolio Manager Senior Vice President and Equity Portfolio Manager Director and Equity Portfolio Manager
     

 

How did the Fund perform?

The Class A shares of The Hartford Value Fund returned 15.32%, before sales charge, for the six-month period ended April 30, 2013, underperforming the Fund’s benchmark, the Russell 1000 Value Index, which returned 16.31% for the same period. The Fund outperformed the 15.19% average return 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?

U.S. equities surged during the period, ending at an all-time high. Favorable global liquidity dynamics and accommodative monetary policy from central banks around the globe provided a tailwind for stocks. The Bank of Japan’s (BOJ) announcement of radical measures to jump-start the Japanese economy and an improving U.S. economy also fueled the extension of the now four-year-old market rally. U.S. housing data continued to provide evidence that the sector at the epicenter of the financial crisis could be a key engine of economic recovery in 2013. Bullish sentiment was tempered somewhat by mixed Chinese economic data and renewed European sovereign debt fears. Political uncertainty in Italy and the drama surrounding the banking crisis in Cyprus once again reminded investors of the eurozone’s precarious situation. However, the credible backstop provided by the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) eased fears of an extreme event. In April, investors’ risk aversion also eased amid the formation of a new coalition government in Italy and growing expectations of further monetary easing by the ECB.

 

All ten sector returns within the Russell 1000 Value Index were positive, with Information Technology (+28%), Consumer Discretionary (+22%), and Consumer Staples (+20%) performing strongest. Materials (+4%), Energy (+8%), and Telecommunication Services (+11%) lagged on a relative basis during the period.

 

The Fund’s underperformance versus its benchmark was primarily due to sector allocation, which is a result of bottom-up stock selection decisions. The Fund’s overweight (i.e. the Fund’s sector position was greater than the benchmark position) to Materials detracted, as did a modest cash position in an upward trending market. Stock selection modestly detracted as weak selection in Consumer Discretionary, Information Technology, and Health Care offset strong selection in Materials, Financials, and Energy.

 

Kohl’s (Consumer Discretionary), Barrick Gold (Materials), and Bank of America (Financials) detracted most from benchmark-relative returns during the period. Shares of Kohl’s, a national department store retailer, declined after the company reported disappointing same-store sales figures due to weak store traffic and weather-related issues. Shares of Barrick Gold, a Canada-based gold exploration and mining company, underperformed following a large-write down in February, mostly tied to its struggling copper mine in Zambia. Weak gold prices during the period also weighed on the stock. We eliminated our position during the period. Shares of Bank of America, a large U.S. diversified financial services company, rallied strongly during the period as market confidence in the housing recovery reduced fears around future asset writedowns. Not holding this stock during the period hurt relative results. St. Jude Medical (Health Care) was also among top absolute detractors during the period.

 

3

 

The Hartford Value Fund

Manager Discussion – (continued)

April 30, 2013 (Unaudited)

 

Top contributors to benchmark-relative returns were Exxon Mobil (Energy), BlackRock (Financials), and Roche Holdings (Health Care). Shares of Exxon Mobil, a U.S.-based energy company, declined during the period due to disappointing results related to its oil and gas production volumes. Our underweight position helped relative performance. Shares of BlackRock, an investment management firm, surged after the company reported better-than-expected revenue and earnings, in part due to strong markets. Shares of Roche Holdings, a large Swiss biotechnology and pharmaceutical company, outperformed as investors began to appreciate the company’s near-term product roll out and future drug pipeline, particularly from Roche’s innovative oncology portfolio. Top absolute contributors for the period also included JPMorgan Chase (Financials) and Cisco (information technology).

 

What is the outlook?

We believe that medium-term growth prospects in the U.S. are favorable. We expect the consumer to be resilient this year, helped by improving net worth from rising house and equity market prices as well as steady job gains. The key drivers of U.S. growth are expected to be capital spending and the housing and automotive sectors over the course of the next year. We believe that capital investment spending should finally rise as capacity utilization levels normalize, while vehicle sales and new home constructions, despite their strong recent advance, still have a lot of pent-up demand behind them. An improving economy and healing labor market notwithstanding, we believe the U.S. Federal Reserve Board seems unlikely to abandon its quantitative easing program any time soon.

 

The world economy is slowly but steadily emerging from a post-bubble overhang. Looking into 2014, we expect all regions to strengthen economically while inflation is still subdued in parts of the world. Overall, we expect to return to a world economy that is determined by regional macro fundamentals rather than by swings in global risk sentiment. Based on bottom-up stock decisions, we ended the period most overweight the Information Technology, Materials, and Industrials sectors relative to the Russell 1000 Value Index; our largest underweights were in Utilities, Energy, and Financials.

 

Diversification by Industry

as of April 30, 2013

 

Industry (Sector)  Percentage of
Net Assets
 
Automobiles and Components (Consumer Discretionary)   0.8%
Banks (Financials)   6.6 
Capital Goods (Industrials)   10.6 
Consumer Durables and Apparel (Consumer Discretionary)   1.4 
Diversified Financials (Financials)   10.9 
Energy (Energy)   12.6 
Food and Staples Retailing (Consumer Staples)   1.4 
Food, Beverage and Tobacco (Consumer Staples)   4.8 
Health Care Equipment and Services (Health Care)   3.8 
Insurance (Financials)   7.7 
Materials (Materials)   5.4 
Media (Consumer Discretionary)   2.9 
Pharmaceuticals, Biotechnology and Life Sciences (Health Care)   8.9 
Retailing (Consumer Discretionary)   4.6 
Semiconductors and Semiconductor Equipment (Information Technology)   3.3 
Software and Services (Information Technology)   1.4 
Technology Hardware and Equipment (Information Technology)   4.7 
Telecommunication Services (Services)   2.2 
Utilities (Utilities)   3.2 
Short-Term Investments   1.5 
Other Assets and Liabilities   1.3 
Total   100.0%

 

4

 

The Hartford Value Fund

Schedule of Investments

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 97.2% 
     Automobiles and Components - 0.8%     
 24   General Motors Co. ●  $747 
 71   Goodyear (The) Tire & Rubber Co. ●   893 
         1,640 
     Banks - 6.6%     
 70   BB&T Corp.   2,154 
 61   PNC Financial Services Group, Inc.   4,173 
 175   Wells Fargo & Co.   6,651 
         12,978 
     Capital Goods - 10.6%     
 19   3M Co.   1,980 
 22   Boeing Co.   2,043 
 43   Eaton Corp. plc   2,639 
 150   General Electric Co.   3,352 
 31   Illinois Tool Works, Inc.   1,969 
 35   Ingersoll-Rand plc   1,864 
 26   PACCAR, Inc.   1,298 
 79   Spirit Aerosystems Holdings, Inc. ●   1,581 
 28   Stanley Black & Decker, Inc.   2,084 
 22   United Technologies Corp.   1,997 
         20,807 
     Consumer Durables and Apparel - 1.4%     
 69   Newell Rubbermaid, Inc.   1,812 
 9   PVH Corp.   1,027 
         2,839 
     Diversified Financials - 10.9%     
 24   Ameriprise Financial, Inc.   1,753 
 12   BlackRock, Inc.   3,170 
 74   Citigroup, Inc.   3,438 
 36   Credit Suisse Group ADR   1,029 
 18   Goldman Sachs Group, Inc.   2,696 
 14   IntercontinentalExchange, Inc. ●   2,240 
 146   JP Morgan Chase & Co.   7,164 
         21,490 
     Energy - 12.6%     
 23   Anadarko Petroleum Corp.   1,915 
 54   Chevron Corp.   6,633 
 12   EOG Resources, Inc.   1,496 
 43   Exxon Mobil Corp.   3,870 
 64   Halliburton Co.   2,717 
 52   Marathon Oil Corp.   1,696 
 26   Noble Corp.   970 
 29   Occidental Petroleum Corp.   2,620 
 22   Royal Dutch Shell plc ADR   1,504 
 39   Southwestern Energy Co. ●   1,449 
         24,870 
     Food and Staples Retailing - 1.4%     
 47   CVS Caremark Corp.   2,755 
           
     Food, Beverage and Tobacco - 4.8%     
 21   Anheuser-Busch InBev N.V.   1,977 
 37   General Mills, Inc.   1,870 
 16   Kraft Foods Group, Inc.   826 
 25   PepsiCo, Inc.   2,080 
 29   Philip Morris International, Inc.   2,773 
         9,526 
     Health Care Equipment and Services - 3.8%     
 31   Baxter International, Inc.   2,199 
 41   Covidien plc   2,635 
 42   UnitedHealth Group, Inc.   2,538 
         7,372 
     Insurance - 7.7%     
 45   ACE Ltd.   4,023 
 56   American International Group, Inc. ●   2,300 
 20   Chubb Corp.   1,729 
 82   Marsh & McLennan Cos., Inc.   3,117 
 41   Principal Financial Group, Inc.   1,493 
 7   Swiss Re Ltd.   586 
 66   Unum Group   1,838 
         15,086 
     Materials - 5.4%     
 30   Barrick Gold Corp.   599 
 53   Dow Chemical Co.   1,792 
 30   E.I. DuPont de Nemours & Co.   1,641 
 42   International Paper Co.   1,980 
 38   Mosaic Co.   2,327 
 24   Nucor Corp.   1,063 
 87   Steel Dynamics, Inc.   1,310 
         10,712 
     Media - 2.9%     
 29   CBS Corp. Class B   1,328 
 58   Comcast Corp. Class A   2,402 
 56   Thomson Reuters Corp.   1,869 
         5,599 
     Pharmaceuticals, Biotechnology and Life Sciences - 8.9%     
 22   Amgen, Inc.   2,307 
 29   Johnson & Johnson   2,497 
 99   Merck & Co., Inc.   4,656 
 131   Pfizer, Inc.   3,817 
 11   Roche Holding AG   2,757 
 39   Teva Pharmaceutical Industries Ltd. ADR   1,488 
         17,522 
     Retailing - 4.6%     
 5   AutoZone, Inc. ●   2,008 
 27   Home Depot, Inc.   1,995 
 24   Kohl's Corp.   1,121 
 62   Lowe's Co., Inc.   2,381 
 29   Nordstrom, Inc.   1,627 
         9,132 
     Semiconductors and Semiconductor Equipment - 3.3%     
 43   Analog Devices, Inc.   1,904 
 105   Intel Corp.   2,527 
 53   Xilinx, Inc.   2,001 
         6,432 
     Software and Services - 1.4%     
 81   Microsoft Corp.   2,691 
           
     Technology Hardware and Equipment - 4.7%     
 259   Cisco Systems, Inc.   5,415 
 135   EMC Corp. ●   3,032 
 36   Hewlett-Packard Co.   748 
         9,195 
     Telecommunication Services - 2.2%     
 63   AT&T, Inc.   2,376 
 37   Verizon Communications, Inc.   1,984 
         4,360 

 

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

 

5

 

The Hartford Value Fund

Schedule of Investments – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Shares or Principal Amount  Market Value ╪ 
COMMON STOCKS - 97.2% - (continued)     
     Utilities - 3.2%     
 33   Edison International  $1,796 
 20   Entergy Corp.   1,451 
 15   NextEra Energy, Inc.   1,232 
 40   Northeast Utilities   1,809 
         6,288 
     Total common stocks      
     (cost $156,175)  $191,294 
           
     Total long-term investments     
     (cost $156,175)  $191,294 
           
SHORT-TERM INVESTMENTS - 1.5% 
    Repurchase Agreements - 1.5%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $120,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%, 2028,
value of $123)
     
$120    0.17%, 4/30/2013  $120 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $328, collateralized by FHLMC
3.50%, 2042, FNMA 0.80% - 2.13%, 2015 -
2018, U.S. Treasury Bond 11.25%, 2015,
U.S. Treasury Note 0.75%, 2013, value of
$334)
     
 327    0.15%, 4/30/2013   327 
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $631, collateralized by U.S.
Treasury Note 0.88% - 3.13%, 2017 - 2021,
value of $643)
     
 631    0.15%, 4/30/2013   631 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $876,
collateralized by U.S. Treasury Note 0.75%
- 2.13%, 2015 - 2019, value of $894)
     
 876    0.14%, 4/30/2013   876 
     Deutsche Bank Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $158, collateralized by FHLMC
3.00% - 5.50%, 2037 - 2043, FNMA 3.00%,
2043, value of $161)
     
 158    0.17%, 4/30/2013   158 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in the
amount of $534, collateralized by U.S.
Treasury Note 1.00% - 2.25%, 2016 - 2022,
value of $545)
     
 534    0.14%, 4/30/2013   534 
     TD Securities TriParty Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$375, collateralized by U.S. Treasury Note
0.25% - 1.88%, 2014 - 2019, value of $383)
     
 375    0.17%, 4/30/2013   375 

     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$7, collateralized by U.S. Treasury Note
3.88%, 2018, value of $7)
        
 7    0.13%, 4/30/2013       7 
             3,028 
     Total short-term investments         
     (cost $3,028)      $3,028 
              
     Total investments          
     (cost $159,203) ▲   98.7%  $194,322 
     Other assets and liabilities   1.3%   2,604 
     Total net assets  100.0%  $196,926 

 

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

 

6

 

 

 

Note: Percentage of investments as shown is the ratio of the total market value to total net assets.
   
  Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $162,578 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $36,853 
Unrealized Depreciation   (5,109)
Net Unrealized Appreciation  $31,744 

 

Non-income producing. 

 

Foreign Currency Contracts Outstanding at April 30, 2013

Currency  Buy / Sell  Delivery Date   

Counterparty

    

Contract Amount

    

Market Value ╪

    

Unrealized
Appreciation/
(Depreciation)

 
CHF  Sell  05/06/2013   

DEUT

   $1,245   $1,245   $ 

 

See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities.

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)  
   
Counterparty Abbreviations:  
DEUT Deutsche Bank Securities, Inc.  
   
Currency Abbreviations:  
CHF Swiss Franc  
   
Other Abbreviations:  
ADR American Depositary Receipt  
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.  
FNMA Federal National Mortgage Association  

 

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

 

7

 

The Hartford Value Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Common Stocks ‡  $191,294   $187,951   $3,343   $ 
Short-Term Investments   3,028        3,028     
Total  $194,322   $187,951   $6,371   $ 
Liabilities:                    
Foreign Currency Contracts *                
Total  $   $   $   $ 

 

For the six-month period ended April 30, 2013, there were no transfers between Level 1 and Level 2.
The Fund has all or primarily all of the equity securities categorized in a particular level. Refer to the Schedule of Investments for further industry breakout.
* Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

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

 

8

 

The Hartford Value Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

Assets:     
Investments in securities, at market value (cost $159,203)  $194,322 
Cash    
Receivables:     
Investment securities sold   4,355 
Fund shares sold   292 
Dividends and interest   243 
Other assets   97 
Total assets   199,309 
Liabilities:     
Unrealized depreciation on foreign currency contracts    
Bank overdraft — foreign cash    
Payables:     
Investment securities purchased   2,047 
Fund shares redeemed   256 
Investment management fees   23 
Administrative fees   1 
Distribution fees   7 
Accrued expenses   49 
Total liabilities   2,383 
Net assets  $196,926 
Summary of Net Assets:     
Capital stock and paid-in-capital  $135,037 
Undistributed net investment income   1,071 
Accumulated net realized gain   25,699 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   35,119 
Net assets  $196,926 
      
Shares authorized   550,000 
Par value  $0.001 
Class A: Net asset value per share/Maximum offering price per share   

$13.42/$14.20

 
Shares outstanding   6,017 
Net assets  $80,745 
Class B: Net asset value per share  $13.17 
Shares outstanding   178 
Net assets  $2,345 
Class C: Net asset value per share  $13.09 
Shares outstanding   1,396 
Net assets  $18,273 
Class I: Net asset value per share  $13.32 
Shares outstanding   1,070 
Net assets  $14,255 
Class R3: Net asset value per share  $13.10 
Shares outstanding   196 
Net assets  $2,574 
Class R4: Net asset value per share  $13.24 
Shares outstanding   813 
Net assets  $10,761 
Class R5: Net asset value per share  $13.29 
Shares outstanding   1,870 
Net assets  $24,846 
Class Y: Net asset value per share  $13.33 
Shares outstanding   3,236 
Net assets  $43,127 

 

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

 

9

 

The Hartford Value Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

Investment Income:     
Dividends  $3,318 
Interest   3 
Less: Foreign tax withheld   (25)
Total investment income   3,296 
      
Expenses:     
Investment management fees   841 
Administrative services fees     
Class R3   3 
Class R4   9 
Class R5   8 
Transfer agent fees     
Class A   73 
Class B   6 
Class C   12 
Class I   13 
Class R3    
Class R4    
Class R5    
Class Y   1 
Distribution fees     
Class A   91 
Class B   12 
Class C   84 
Class R3   6 
Class R4   14 
Custodian fees   4 
Accounting services fees   17 
Registration and filing fees   42 
Board of Directors' fees   7 
Audit fees   7 
Other expenses   22 
Total expenses (before waivers and fees paid indirectly)   1,272 
Expense waivers   (74)
Transfer agent fee waivers   (2)
Commission recapture   (1)
Total waivers and fees paid indirectly   (77)
Total expenses, net   1,195 
Net Investment Income   2,101 
Net Realized Gain on Investments and Foreign Currency Transactions:     
Net realized gain on investments in securities   29,083 
Net realized loss on foreign currency contracts   (1)
Net realized loss on other foreign currency transactions   (7)
Net Realized Gain on Investments and Foreign Currency Transactions   29,075 
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   4,866 
Net unrealized appreciation of foreign currency contracts    
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies    
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions   4,866 
Net Gain on Investments and Foreign Currency Transactions   33,941 
Net Increase in Net Assets Resulting from Operations  $36,042 

 

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

 

10

 

The Hartford Value Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $2,101   $9,022 
Net realized gain on investments and foreign currency transactions   29,075    52,260 
Net unrealized appreciation (depreciation) of investments and foreign currency transactions   4,866    (9,995)
Net Increase in Net Assets Resulting from Operations   36,042    51,287 
Distributions to Shareholders:          
From net investment income          
Class A   (1,773)   (230)
Class B   (37)   (7)
Class C   (298)   (38)
Class I   (389)   (44)
Class R3   (65)   (7)
Class R4   (195)   (29)
Class R5   (518)   (11)
Class Y   (4,425)   (2,024)
Total from net investment income   (7,700)   (2,390)
From net realized gain on investments          
Class A   (3,840)    
Class B   (133)    
Class C   (899)    
Class I   (782)    
Class R3   (148)    
Class R4   (1,259)    
Class R5   (160)    
Class Y   (8,181)    
Total from net realized gain on investments   (15,402)    
Total distributions   (23,102)   (2,390)
Capital Share Transactions:          
Class A   5,259    (8,061)
Class B   (299)   (1,323)
Class C   1,084    (1,516)
Class I   (707)   3,091 
Class R3   (223)   9 
Class R4   (11,621)   12,574 
Class R5   19,768    89 
Class Y   (107,994)   (348,979)
Net decrease from capital share transactions   (94,733)   (344,116)
Net Decrease in Net Assets   (81,793)   (295,219)
Net Assets:          
Beginning of period   278,719    573,938 
End of period  $196,926   $278,719 
Undistributed (distribution in excess of) net investment income (loss)  $1,071   $6,670 

 

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

 

11

 

The Hartford Value Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty 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 primarily through advisory fee-based wrap programs. Class 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.

 

No new or additional investments are allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). 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. 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 in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The NAV of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current

 

12

 

 

 

or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments 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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.
·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure,

 

13

 

The Hartford Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis.

 

d)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 investments, income, and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions.

 

14

 

 

 

The Fund does not isolate that portion of portfolio investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. The policy of the Fund is to pay dividends from net investment income and realized capital gains, if any, at least once a year.

 

Distributions from net investment income, net 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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

15

 

The Hartford Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:

 

  Risk Exposure Category 
  Interest Rate
Contracts
   Foreign
Exchange
Contracts
   Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
                     
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $   $   $   $   $   $ 
Total  $   $   $   $   $   $   $ 

 

The volume of derivative activity was minimal during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:

 

   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
    Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Loss on Derivatives Recognized as a Result of Operations:                   
Net realized loss on foreign currency contracts  $   $(1)  $   $   $   $   $(1)
Total  $   $(1)  $   $   $   $   $(1)
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation of foreign currency contracts  $   $   $   $   $   $   $ 
Total  $   $   $   $   $   $   $ 

 

16

 

 

 

5.Principal Risks:

 

a)Counterparty Risk – The Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net 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, if applicable):

 

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011
 
Ordinary Income  $2,390   $8,174 

 

17

 

The Hartford Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

  

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $6,670 
Undistributed Long-Term Capital Gain   15,401 
Unrealized Appreciation *   26,878 
Total Accumulated Earnings  $48,949 

 

*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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $(201)
Accumulated Net Realized Gain (Loss)   201 

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

During the year ended October 31, 2012, the Fund utilized $37,093 of prior year capital loss carryforwards.

  

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

18

 

 

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets Annual Fee 
On first $500 million   0.7000%  
On next $500 million   0.6000%  
On next $1.5 billion   0.5900%  
On next $2.5 billion   0.5850%  
On next $5 billion   0.5800%  
Over $10 billion   0.5750%  

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. 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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 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%      1.35%      1.05%      0.80%      0.75%   

 

19

 

The Hartford Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

  

d)Fees Paid Indirectly The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended
April 30, 2013
 
Class A   1.15%
Class B   1.90 
Class C   1.90 
Class I   0.90 
Class R3   1.35 
Class R4   1.05 
Class R5   0.80 
Class Y   0.75

  

e)Distribution and Service Plan for Class A, B, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $161 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 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class 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 0.25% of average daily net assets. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class.

  

20

 

 

 

   For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R5   1%
Class Y    

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $25,964 
Sales Proceeds Excluding U.S. Government Obligations   143,308 

 

21

 

The Hartford Value Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   654    458    (675)       437    990    20    (1,704)       (694)
Amount  $8,258   $5,434   $(8,433)  $   $5,259   $11,779   $219   $(20,059)  $   $(8,061)
Class B                                                  
Shares   11    13    (47)       (23)   15        (129)       (114)
Amount  $137   $144   $(580)  $   $(299)  $174   $6   $(1,503)  $   $(1,323)
Class C                                                  
Shares   132    81    (119)       94    223    3    (352)       (126)
Amount  $1,599   $928   $(1,443)  $   $1,084   $2,548   $30   $(4,094)  $   $(1,516)
Class I                                                  
Shares   235    53    (336)       (48)   786    3    (524)       265 
Amount  $2,868   $618   $(4,193)  $   $(707)  $9,306   $34   $(6,249)  $   $3,091 
Class R3                                                  
Shares   32    18    (67)       (17)   53    1    (53)       1 
Amount  $399   $213   $(835)  $   $(223)  $623   $7   $(621)  $   $9 
Class R4                                                  
Shares   301    19    (1,311)       (991)   1,359    1    (344)       1,016 
Amount  $3,662   $223   $(15,506)  $   $(11,621)  $16,515   $8   $(3,949)  $   $12,574 
Class R5                                                  
Shares   1,749    21    (142)       1,628    27    1    (21)       7 
Amount  $21,310   $247   $(1,789)  $   $19,768   $318   $11   $(240)  $   $89 
Class Y                                                  
Shares   1,202    1,068    (10,757)       (8,487)   4,818    184    (35,737)       (30,735)
Amount  $14,733   $12,606   $(135,333)  $   $(107,994)  $57,875   $2,024   $(408,878)  $   $(348,979)
Total                                                  
Shares   4,316    1,731    (13,454)       (7,407)   8,271    213    (38,864)       (30,380)
Amount  $52,966   $20,413   $(168,112)  $   $(94,733)  $99,138   $2,339   $(445,593)  $   $(344,116)

 

The following reflects the conversion of Class B shares into Class A shares (reflected as Class A shares sold) for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   Shares   Dollars 
For the Six-Month Period Ended April 30, 2013   11   $138 
For the Year Ended October 31, 2012   42   $492 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

22

 

 

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

23

 

The Hartford Value Fund

Financial Highlights

- Selected Per-Share Data (A) -

  

Class  Net Asset Value at
Beginning of
 Period
   Net Investment
Income (Loss)
   Net Realized and
Unrealized Gain
(Loss) on
Investments
   Total from
Investment
Operations
   Dividends from Net
Investment Income
   Distributions from
Realized Capital
Gains
   Distributions from
Capital
   Total Distributions   Net Asset Value at
End of Period
 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $12.64   $0.10   $1.68   $1.78   $(0.30)  $(0.70)  $   $(1.00)  $13.42 
B   12.35    0.06    1.65    1.71    (0.19)   (0.70)       (0.89)   13.17 
C   12.30    0.05    1.66    1.71    (0.22)   (0.70)       (0.92)   13.09 
I   12.57    0.12    1.67    1.79    (0.34)   (0.70)       (1.04)   13.32 
R3   12.35    0.09    1.64    1.73    (0.28)   (0.70)       (0.98)   13.10 
R4   12.46    0.12    1.64    1.76    (0.28)   (0.70)       (0.98)   13.24 
R5   12.55    0.12    1.67    1.79    (0.35)   (0.70)       (1.05)   13.29 
Y   12.58    0.12    1.68    1.80    (0.35)   (0.70)       (1.05)   13.33 
                                              
For the Year Ended October 31, 2012 (E)
A   11.00    0.20    1.48    1.68    (0.04)           (0.04)   12.64 
B   10.82    0.10    1.45    1.55    (0.02)           (0.02)   12.35 
C   10.78    0.11    1.44    1.55    (0.03)           (0.03)   12.30 
I   10.92    0.23    1.47    1.70    (0.05)           (0.05)   12.57 
R3   10.77    0.17    1.44    1.61    (0.03)           (0.03)   12.35 
R4   10.84    0.20    1.46    1.66    (0.04)           (0.04)   12.46 
R5   10.89    0.23    1.48    1.71    (0.05)           (0.05)   12.55 
Y   10.91    0.25    1.47    1.72    (0.05)           (0.05)   12.58 
                                              
For the Year Ended October 31, 2011 (E)
A   10.65    0.14    0.33    0.47    (0.12)           (0.12)   11.00 
B   10.46    0.04    0.34    0.38    (0.02)           (0.02)   10.82 
C   10.44    0.05    0.33    0.38    (0.04)           (0.04)   10.78 
I   10.58    0.17    0.33    0.50    (0.16)           (0.16)   10.92 
R3   10.45    0.11    0.32    0.43    (0.11)           (0.11)   10.77 
R4   10.51    0.14    0.34    0.48    (0.15)           (0.15)   10.84 
R5   10.56    0.15    0.35    0.50    (0.17)           (0.17)   10.89 
Y   10.57    0.19    0.32    0.51    (0.17)           (0.17)   10.91 
                                              
For the Year Ended October 31, 2010 (E)
A   9.63    0.09    1.01    1.10    (0.08)           (0.08)   10.65 
B   9.47    0.01    0.99    1.00    (0.01)           (0.01)   10.46 
C   9.45    0.02    0.98    1.00    (0.01)           (0.01)   10.44 
I   9.59    0.12    0.99    1.11    (0.12)           (0.12)   10.58 
R3   9.47    0.06    1.00    1.06    (0.08)           (0.08)   10.45 
R4   9.52    0.09    1.01    1.10    (0.11)           (0.11)   10.51 
R5   9.55    0.12    1.01    1.13    (0.12)           (0.12)   10.56 
Y   9.55    0.14    1.01    1.15    (0.13)           (0.13)   10.57 
                                              
For the Year Ended October 31, 2009 (E)
A   8.95    0.11    0.78    0.89    (0.21)           (0.21)   9.63 
B   8.73    0.06    0.77    0.83    (0.09)           (0.09)   9.47 
C   8.72    0.04    0.77    0.81    (0.08)           (0.08)   9.45 
I   8.97    0.10    0.81    0.91    (0.29)           (0.29)   9.59 
R3   8.87    0.07    0.77    0.84    (0.24)           (0.24)   9.47 
R4   8.89    0.11    0.77    0.88    (0.25)           (0.25)   9.52 
R5   8.92    0.14    0.77    0.91    (0.28)           (0.28)   9.55 
Y   8.93    0.15    0.77    0.92    (0.30)           (0.30)   9.55 
                                              
For the Year Ended October 31, 2008
A   14.13    0.16    (4.60)   (4.44)   (0.10)   (0.64)       (0.74)   8.95 
B   13.78    0.08    (4.49)   (4.41)       (0.64)       (0.64)   8.73 
C   13.78    0.06    (4.48)   (4.42)       (0.64)       (0.64)   8.72 
I   14.15    0.17    (4.56)   (4.39)   (0.15)   (0.64)       (0.79)   8.97 
R3   14.00    0.03    (4.46)   (4.43)   (0.06)   (0.64)       (0.70)   8.87 
R4   14.03    0.08    (4.48)   (4.40)   (0.10)   (0.64)       (0.74)   8.89 
R5   14.07    0.19    (4.56)   (4.37)   (0.14)   (0.64)       (0.78)   8.92 
Y   14.09    0.21    (4.57)   (4.36)   (0.16)   (0.64)       (0.80)   8.93 

 

24

 

- Ratios and Supplemental Data -

 

Total Return(B)   Net Assets at End of Period
(000's)
   Ratio of Expenses to Average Net Assets
Before Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Expenses to Average Net Assets
After Waivers and Reimbursements and
Including Expenses not Subject to Cap(C)
   Ratio of Net Investment
Income to Average Net Assets
   Portfolio Turnover
Rate(D)
                      
                           
 15.32%(F)  $80,745    1.24%(G)   1.15%(G)   1.64%(G)   11%
 14.90(F)   2,345    2.31(G)   1.90(G)   0.90(G)    
 15.00(F)   18,273    1.93(G)   1.90(G)   0.89(G)    
 15.49(F)   14,255    0.96(G)   0.90(G)   1.89(G)    
 15.23(F)   2,574    1.51(G)   1.35(G)   1.42(G)    
 15.34(F)   10,761    1.19(G)   1.05(G)   1.92(G)    
 15.55(F)   24,846    0.89(G)   0.80(G)   1.89(G)    
 15.61(F)   43,127    0.78(G)   0.75(G)   1.94(G)    
                            
                            
 15.31    70,506    1.22    1.15    1.64    24 
 14.38    2,488    2.24    1.92    0.89     
 14.38    16,019    1.92    1.88    0.90     
 15.59    14,059    0.88    0.86    1.93     
 15.04    2,636    1.49    1.37    1.42     
 15.37    22,478    1.19    1.06    1.71     
 15.73    3,031    0.87    0.80    1.98     
 15.82    147,502    0.75    0.73    2.15     
                            
                            
 4.41    69,016    1.20    1.15    1.20    16 
 3.59    3,409    2.15    1.95    0.39     
 3.67    15,395    1.91    1.86    0.49     
 4.75    9,310    0.86    0.81    1.53     
 4.09    2,288    1.47    1.40    0.98     
 4.54    8,543    1.15    1.10    1.27     
 4.73    2,563    0.86    0.80    1.47     
 4.86    463,414    0.74    0.69    1.65     
                            
                            
 11.41    65,915    1.30    1.28    0.88    33 
 10.59    5,467    2.22    2.09    0.08     
 10.63    13,276    2.02    2.00    0.15     
 11.57    4,604    0.92    0.90    1.26     
 11.22    1,024    1.53    1.50    0.62     
 11.51    564    1.21    1.19    0.94     
 11.86    101    0.89    0.87    1.21     
 12.02    375,692    0.82    0.80    1.36     
                            
                            
 10.29    57,687    1.41    1.40    1.27    50 
 9.61    7,286    2.43    1.89    0.77     
 9.47    10,591    2.18    2.14    0.49     
 10.60    2,534    1.00    1.00    1.24     
 9.92    248    1.63    1.63    0.86     
 10.26    163    1.29    1.29    1.36     
 10.65    8    0.97    0.97    1.67     
 10.74    296,799    0.88    0.88    1.73     
                            
                            
 (33.00)   56,864    1.32    1.32    1.32    57 
 (33.43)   7,211    2.27    2.06    0.57     
 (33.50)   9,160    2.10    2.10    0.54     
 (32.67)   598    0.96    0.96    1.66     
 (33.14)   122    1.73    1.65    0.87     
 (32.93)   166    1.31    1.31    1.29     
 (32.71)   8    0.98    0.98    1.65     
 (32.65)   211,366    0.88    0.88    1.76     

  

25

 

The Hartford Value Fund

Financial Highlights  - (continued)

  

(A) Information presented relates to a share outstanding throughout the indicated period.
(B) Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C) Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D) Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E) Per share amounts have been calculated using average shares outstanding method.
(F) Not annualized.
(G) Annualized.

 

26

  

The Hartford Value Fund

Directors and Officers (Unaudited)

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

27

 

The Hartford Value Fund

Directors and Officers (Unaudited) – (continued)

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1) Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

28

 

 

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2) Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)           
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
  Days
in the
full
year
Class A  $1,000.00   $1,153.20   $6.15   $1,000.00   $1,019.08   $5.76     1.15%  181  365
Class B  $1,000.00   $1,149.00   $10.14   $1,000.00   $1,015.36   $9.51     1.90   181  365
Class C  $1,000.00   $1,150.00   $10.14   $1,000.00   $1,015.36   $9.51     1.90   181  365
Class I  $1,000.00   $1,154.90   $4.81   $1,000.00   $1,020.33   $4.51     0.90   181  365
Class R3  $1,000.00   $1,152.30   $7.21   $1,000.00   $1,018.09   $6.76     1.35   181  365
Class R4  $1,000.00   $1,153.40   $5.61   $1,000.00   $1,019.58   $5.26     1.05   181  365
Class R5  $1,000.00   $1,155.50   $4.28   $1,000.00   $1,020.82   $4.01     0.80   181  365
Class Y  $1,000.00   $1,156.10   $4.01   $1,000.00   $1,021.07   $3.76     0.75   181  365

  

30

 

The Hartford Value Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford Value Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard, the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the

 

31

 

The Hartford Value Fund

Approval of Investment Management and Investment Sub-Advisory Agreements (Unaudited) – (continued)

  

following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

  

32

 

The Hartford Value Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Value Investing Risk: Value investments are considered to be undervalued, but they may never attain their potential value. Value-style investing falls in and out of favor, which may result in periods of underperformance.

 

Foreign Investment Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets.

 

33
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-V13 4/13 114013 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

53

 

 

 
 

 

HARTFORDFUNDS

 

 

THE HARTFORD WORLD BOND FUND

 

2013 Semi Annual Report

 

 

 

 

 
 

 

The Hartford World Bond Fund

 

Table of Contents

 

Fund Performance (Unaudited)   2
Manager Discussion (Unaudited)   3
Financial Statements    
Schedule of Investments at April 30, 2013 (Unaudited)   6
Investment Valuation Hierarchy Level Summary at April 30, 2013 (Unaudited)   25
Statement of Assets and Liabilities at April 30, 2013 (Unaudited)   26
Statement of Operations for the Six-Month Period Ended April 30, 2013 (Unaudited)   28
Statement of Changes in Net Assets for the Six-Month Period Ended April 30, 2013 (Unaudited), and the Year Ended October 31, 2012   29
Notes to the Financial Statements (Unaudited)   30
Financial Highlights (Unaudited)   48
Directors and Officers (Unaudited)   50
How to Obtain a Copy of the Fund’s Proxy Voting Policies and Voting Records (Unaudited)   52
Quarterly Portfolio Holdings Information (Unaudited)   52
Expense Example (Unaudited)   53
Approval of New Investment Management and Investment Sub-Advisory Agreements (Unaudited)   54
Principal Risks (Unaudited)   56

 

The views expressed in the Fund’s Manager Discussion under ‘‘Why did the Fund perform this way?’’ and ‘‘What is the outlook?’’ are views of the Fund’s sub-adviser and portfolio management team through the end of the period and are subject to change based on market and other conditions.

 

 

 

The Hartford World Bond Fund inception 05/31/2011
(sub-advised by Wellington Management Company, LLP)
 
Investment objective – Seeks capital appreciation with income as a secondary goal.

 

Performance Overview 5/31/11 - 4/30/13

 

 

The chart above represents the hypothetical growth of a $10,000 investment in Class A which includes a sales charge. Growth results in classes other than Class A will vary from what is seen above due to differences in the expenses charged to those share classes.

 

Average Annual Total Returns (as of 4/30/13)

 

   6 Month†   1 Year   Since
Inception▲
 
World Bond A#   2.88%       6.25%       7.06%    
World Bond A##        1.46%       4.52%    
World Bond C#   2.54%       5.60%       6.31%    
World Bond C##        4.60%       6.31%    
World Bond I#   2.99%       6.56%       7.34%    
World Bond R3#   2.70%       6.06%       6.73%    
World Bond R4#   2.91%       6.44%       7.07%    
World Bond R5#   3.10%       6.68%       7.35%    
World Bond Y#   3.05%       6.75%       7.41%    
Citigroup World Government Bond Index   -2.80%       -0.51%       0.74%    

 

Not Annualized
Inception: 05/31/2011
#Without sales charge
##With sales charge

 

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The investment return and principal value of the investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month-end, please visit our website www.hartfordfunds.com.

 

The initial investment in Class A shares reflects the maximum sales charge of 4.50% and returns for Class C reflect a contingent deferred sales charge of 1.00%.

 

Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2013, which may exclude investment transactions as of this date. All share class returns assume the reinvestment of all distributions at net asset value and the deduction of all fund expenses.

 

Citigroup World Government Bond Index includes the most significant and liquid government bond markets globally that carry at least an investment grade rating. Index weights are based on the market capitalization of qualifying outstanding debt stocks.

 

You cannot invest directly in an index.

 

The chart and table do not reflect the deductions 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.

 

2

 

The Hartford World Bond Fund
Manager Discussion
April 30, 2013 (Unaudited)

 

Operating Expenses*
   Net   Gross 
World Bond Class A   0.95%       1.11%    
World Bond Class C   1.70%       1.83%    
World Bond Class I   0.70%       0.86%    
World Bond Class R3   1.25%       1.51%    
World Bond Class R4   0.95%       1.21%    
World Bond Class R5   0.65%       0.91%    
World Bond Class Y   0.60%       0.73%    

 

*As of the Fund's current prospectus dated March 1, 2013. Actual expenses may be higher. Please see accompanying Financial Highlights for expense ratios for the six-month period ended April 30, 2013.

 

Gross expenses are the Fund's total annual operating expenses shown in the Fund's most recent prospectus. Net expenses are the Fund's total annual operating expenses as of the date of the Fund's most recent prospectus and reflect contractual expense waivers/reimbursements in instances when these reductions reduce the Fund's gross expenses. Certain contractual waivers/reimbursements remain in effect until February 28, 2014. Other contractual waivers/reimbursements remain in effect until February 28, 2014, and automatically renew for one-year terms unless terminated.

 

All investments are subject to risk including the possible loss of principal. For a discussion of the Fund’s risks, please see the Principal Risks section. For more detailed information on the risks associated with an investment in the Fund, please see the prospectus.

 

Portfolio Managers  
Robert L. Evans Mark H. Sullivan, CFA
Director and Fixed Income Portfolio Manager Senior Vice President and Fixed Income Portfolio Manager

 

How did the Fund perform?

The Class A shares of The Hartford World Bond Fund returned 2.88%, before sales charge, for the six-month period ended April 30, 2013, outperforming the Fund’s benchmark, the Citigroup World Government Bond Index, which returned -2.80% for the same period. The Fund also outperformed the 2.37% average return of the Lipper Global Income Funds peer group, a group of funds that invests primarily in U.S. dollar and non-U.S. dollar debt securities of issuers located in at least three countries, one of which may be the United States.

 

Why did the Fund perform this way?

During the semi-annual period, fixed income assets held up relatively well as central bank easing and signs of a gradual global economic recovery offset heightened global political uncertainty and renewed worries about Europe’s debt crisis. In the U.S., the White House and congressional leaders reached a last-minute deal to keep the U.S. from falling off a fiscal cliff. Later, lawmakers passed legislation to keep government agencies and programs funded through September, but left in place the U.S. $85 billion in automatic spending cuts under sequestration.

 

Europe remained in the headlines with a revised bailout deal for Greece, although the rise of social and political discontent related to austerity measures kept markets on edge later in the period.

 

Major central banks reiterated their commitment to easy monetary policy. In particular, the U.S Federal Reserve Open Market Committee (FOMC) announced additional outright Treasury purchases, bringing its total bond-buying program up to U.S. $85 billion a month. The Fed also adopted inflation and unemployment-rate thresholds in place of its specific date-based guidance.

 

U.S. economic data released throughout the period was largely upbeat, highlighted by further improvement in the labor market and housing sector. Home prices continued to climb and the unemployment rate declined to 7.6%, owing in part to a shrinking labor force. However, tax hikes and sequestration fears started to weigh on economic activity toward the end of the period.

 

The Treasury yield curve steepened slightly over the period as the 30-year yield rose 0.02% while shorter term yields declined anywhere between 0.02% to 0.08%. Global government bond performance was positive as major government bond yields continued to grind lower over the period. Peripheral sovereign yields tightened further amid growing expectations that central banks from China to Europe and the U.S. will all maintain monetary stimulus plans to bolster growth. The U.S. dollar performance was mixed over the period. The currency declined vs. the Mexican Peso, the Euro (EUR), the Swedish Krona (SEK), and the New Zealand Dollar, but appreciated versus the Norwegian Krone (NOK), the British Pound, and especially the Japanese Yen. The yen was a major decliner as the markets priced in aggressive monetary easing by the Japanese policy authorities.

 

For the six-month period, benchmark-relative outperformance was primarily driven by our currency positioning. Particularly beneficial to benchmark-relative returns was our close-to-zero exposure to the Japanese yen, which continued its depreciation based on expectations of aggressive monetary stimulus. Our tactical increase in non-U.S. dollar currency exposures added to total returns, as the Fed announced its commitment towards balance sheet expansion to combat employment weakness and the U.S. dollar experienced a broad-based decline versus most currencies. Our tactical

 

3

 

The Hartford World Bond Fund
Manager Discussion – (continued)
April 30, 2013 (Unaudited)

 

positions favoring European currencies like the EUR, NOK and SEK contributed strongly to absolute results. Most European currencies gained versus the dollar as the European Central Bank’s credible backstop eased fears of an extreme event in the euro area. Our currency positioning is primarily implemented through the use of currency forward contracts.

 

Our overall cautious duration positioning and significant exposure to high quality global government bond markets like Australia, Germany, Denmark, Sweden, and Norway were also additive to relative performance. Our opportunistic allocation to credit sectors, particularly high yield corporate credit and securitized debt was also additive to relative performance. Note that the Fund is managed in a benchmark-agnostic, total return approach. On an absolute basis, the main driver of return was our allocation to high quality global government bonds and currencies. Other positive contributors to absolute return included active duration and credit strategies.

 

Within our active duration positioning, our tactical underweight positions in U.S. 10-year debt based on the potential for a U.S. ‘fiscal cliff’ solution and upside growth surprises marginally contributed to results. Our overweight positions in Germany 10-year debt contributed to absolute results as concerns over Greece’s next aid disbursement and policy officials’ downgrade of economic growth outlooks in Europe pushed German bund yields to the historic lows. However, our underweight position in U.K. 10-year debt based on our view that over the medium-term, a soft growth outlook, sticky inflation and a deteriorating fiscal picture continue to suggest a tricky growth/inflation tradeoff, detracted from relative results as U.K. 10-year government bond prices rallied. Our country (duration and yield curve) positioning is primarily implemented through the use of exchange-traded government bond futures and cash bonds.

 

Credit strategies had a positive impact on both absolute and relative performance during the period, despite our limited and very selective exposure to these sectors. Our opportunistic allocation to the high yield sector, particularly within industrial issues, was additive to relative performance during the period as the high yield sector continued to benefit from strong investor inflows driven by the search for yield. Our credit positioning is primarily implemented through the use of cash bonds, credit default swaps (index and single name), and interest rate swaps.

 

Within our country rotation strategies, we continued to build the contrarian long U.S. relative value positions as our models identified the U.S. as attractive/cheap relative to Germany and U.K. However, long U.S. 10-year versus short Germany 10-year detracted as U.S./Germany 10-year government bond spreads widened throughout the period. In addition, long U.S. 10-year versus short U.K. 10-year also detracted from performance as U.K. 10-year government bond yields continued to move lower. Our country rotation strategies are primarily implemented through the use of exchange-traded government bond futures. 

 

What is the outlook?

We believe that the U.S. continues to cyclically outperform most advanced economies based on a broadening recovery in housing and the likelihood of continued declines in unemployment. Market focus appears ready to shift to the tapering off and unwinding of extremely loose monetary conditions in the U.S. In Europe, we are witnessing what we believe to be increasing signs of ‘austerity fatigue’ as evidenced by the rise of anti-establishment parties in the recent Italian elections. Similarly, ‘bailout fatigue’ among creditor nations like Germany and Netherlands has likely led to a reversal of the earlier banking union proposals. Germany and Japan are examples of countries where official policy is encouraging domestic growth stimulus and wage inflation so we will watch if these trends result in increased consumer spending and retail sales. Currently, our cyclical indicators are pointing to signs of a slower momentum in global growth. As countries try to gain share from their competitors, we believe that unconventional monetary and fiscal easing measures could lead to an unstable fiscal and competitive environment. We will tactically manage duration around a low range as global economic conditions evolve.

 

Given this outlook, we ended the period with a relatively low duration bias with the aggregate effective duration of the Fund at 2.1 years. At the end of the period, we continued to favor core duration exposure to high quality government bonds in the U.S., Australia, Canada, Singapore, the Nordic countries, and Mexico.

 

4

 

 

 

Distribution by Credit Quality
as of April 30, 2013
Credit Rating *  Percentage of
Net Assets
 
Aaa / AAA   57.8%
Aa / AA   0.4 
A   1.7 
Baa / BBB   4.1 
Ba / BB   3.9 
B   5.0 
Caa / CCC or Lower   3.2 
Unrated   0.3 
U.S. Government Agencies and Securities   14.5 
Non-Debt Securities and Other Short-Term Instruments   6.8 
Other Assets & Liabilities   2.3 
Total   100.0%

 

*Does not apply to the Fund itself. Based upon Moody’s and S&P long-term credit ratings for the Fund’s holdings as of the date noted. If Moody's and S&P assign different ratings to a holding, the lower rating is used. "Unrated" includes fixed-income securities (other than cash-like short-term instruments and U.S. Government securities) for which Moody’s and S&P have not issued long-term credit ratings.

 

Diversification by Industry    
as of April 30, 2013    
Industry  Percentage of
Net Assets
 
Fixed Income Securities     
Accommodation and Food Services   0.0%
Administrative Waste Management and Remediation   0.2 
Agriculture, Forestry, Fishing and Hunting   0.1 
Arts, Entertainment and Recreation   1.1 
Beverage and Tobacco Product Manufacturing   0.0 
Chemical Manufacturing   0.1 
Computer and Electronic Product Manufacturing   0.7 
Construction   0.2 
Fabricated Metal Product Manufacturing   0.1 
Finance and Insurance   9.7 
Food Manufacturing   0.2 
Food Services   0.1 
Furniture and Related Product Manufacturing   0.0 
Health Care and Social Assistance   1.1 
Information   1.7 
Machinery Manufacturing   0.0 
Media   0.0 
Mining   0.2 
Miscellaneous Manufacturing   0.1 
Motor Vehicle and Parts Manufacturing   0.0 
Nonmetallic Mineral Product Manufacturing   0.2 
Other Services   0.1 
Paper Manufacturing   0.0 
Petroleum and Coal Products Manufacturing   0.1 
Pipeline Transportation   0.1 
Plastics and Rubber Products Manufacturing   0.2 
Primary Metal Manufacturing   0.0 
Printing and Related Support Activities   0.2 
Professional, Scientific and Technical Services   0.0 
Real Estate, Rental and Leasing   0.3 
Retail Trade   0.7 
Soap, Cleaning Compound and Toilet Manufacturing   0.1 
Support Activities For Transportation   0.0 
Transportation Equipment Manufacturing   0.1 
Utilities   0.2 
Water Transportation   0.1 
Wholesale Trade   0.3 
Total   18.3%
Equity Securities     
Diversified Financials   0.1 
Telecommunication Services   0.0 
Total   0.1%
Call Options Purchased   0.0 
Foreign Government Obligations   58.1 
Put Options Purchased   0.0 
U.S. Government Agencies   0.0 
U.S. Government Securities   12.2 
Short-Term Investments   9.0 
Other Assets and Liabilities   2.3 
Total   100.0%

 

5

 

The Hartford World Bond Fund
Schedule of Investments
April 30, 2013 (Unaudited)
(000’s Omitted)

  

Shares or Principal Amount ╬  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 6.6%     
     United Kingdom - 0.1%     
     Granite Master Issuer plc     
$1,085   0.28%, 12/20/2054 Δ  $1,066 
 758   0.38%, 12/17/2054 Δ   745 
     Motor plc     
 315   1.29%, 02/25/2020 ■   316 
         2,127 
     United States - 6.5%     
     Ally Master Owner Trust     
 1,245   1.54%, 09/15/2019   1,255 
     American Credit Acceptance Receivables     
 2,035   1.64%, 11/15/2016 ■   2,036 
     American Home Mortgage Assets LLC     
 1,012   0.39%, 10/25/2046 Δ   733 
     AmeriCredit Automobile Receivables Trust     
 465   1.69%, 11/08/2018   470 
 170   3.34%, 04/08/2016   176 
     Apidos CDO     
 2,900   1.38%, 04/15/2025 ■Δ   2,900 
     Banc of America Funding Corp.     
 493   5.77%, 05/25/2037   436 
     Bear Stearns Adjustable Rate Mortgage Trust     
 416   2.32%, 08/25/2035 Δ   422 
     Bear Stearns Alt-A Trust     
 2,498   0.70%, 01/25/2036 Δ   1,694 
     Bear Stearns Alt-A Trust II     
 1,278   2.81%, 09/25/2047 Δ   789 
     Bear Stearns Commercial Mortgage Securities, Inc.     
 7   5.33%, 01/12/2045   7 
     Cal Funding II Ltd.     
 627   3.47%, 10/25/2027 ■   642 
     Carlyle Global Market Strategies     
 875   1.46%, 04/18/2025 ■Δ   875 
     CFCRE Commercial Mortgage Trust     
 1,935   3.83%, 12/15/2047   2,126 
     Citigroup Commercial Mortgage Trust     
 1,800   3.09%, 03/10/2023 Δ   1,854 
     Citigroup/Deutsche Bank Commercial Mortgage Trust     
 10   5.89%, 11/15/2044   12 
     CNH Equipment Trust     
 58   1.20%, 05/16/2016   59 
     Commercial Mortgage Pass-Through Certificates     
 1,595   4.34%, 12/10/2045 ■Δ   1,206 
 1,060   4.75%, 11/15/2045 ■   882 
     Commercial Mortgage Trust     
 1,835   3.21%, 04/10/2023   1,926 
 2,175   3.42%, 03/10/2031 ■   2,284 
     Consumer Portfolio Services, Inc.     
 144   2.78%, 06/17/2019 ■   147 
     Countrywide Alternative Loan Trust     
 661   0.52%, 11/25/2035 Δ   517 
     Countrywide Home Loans, Inc.     
 1,252   3.08%, 09/25/2047 Δ   1,046 
     Credit Acceptance Automotive Loan Trust     
 1,360   1.21%, 10/15/2020 ■   1,360 
     DBUBS Mortgage Trust     
3,075   2.05%, 01/01/2021 ■►  140 
     Fieldstone Mortgage Investment Corp.     
 145   0.54%, 04/25/2047 Δ   91 
     First Horizon Alternative Mortgage Securities     
 497   2.33%, 04/25/2036 Δ   404 
     First Investors Automotive Owner Trust     
 1,205   0.90%, 10/15/2018 ■   1,206 
     GMAC Mortgage Corp. Loan Trust     
 930   3.70%, 09/19/2035 Δ   898 
 1,273   3.87%, 04/19/2036 Δ   1,113 
     Goldman Sachs Mortgage Securities Corp. II     
 635   2.95%, 11/05/2034 ■   646 
     Goldman Sachs Mortgage Securities Trust     
 510   4.86%, 11/10/2045 ■Δ   515 
     Greenwich Capital Commercial Funding Corp.     
 150   6.06%, 07/10/2038 Δ   170 
     GSAA Home Equity Trust     
 343   0.25%, 12/25/2046 Δ   221 
 1,943   0.27%, 03/25/2047 Δ   1,302 
 556   0.28%, 02/25/2037 Δ   306 
 52   0.30%, 03/25/2037 Δ   28 
 2,593   0.38%, 11/25/2036 Δ   1,438 
 2,000   0.40%, 03/25/2037 Δ   1,080 
 911   0.43%, 04/25/2047 Δ   574 
 2,427   0.52%, 04/25/2047 Δ   1,545 
     GSAMP Trust     
 3,187   0.30%, 02/25/2037 Δ   1,737 
 1,634   0.40%, 11/25/2036 Δ   931 
     GSR Mortgage Loan Trust     
 2,019   2.78%, 01/25/2036 Δ   1,733 
 392   3.01%, 05/25/2047 Δ   322 
     Harborview Mortgage Loan Trust     
 1,207   0.39%, 01/19/2038 Δ   993 
 748   0.42%, 05/19/2047 Δ   370 
 297   0.56%, 09/19/2035 Δ   237 
     HLSS Servicer Advance Receivables Backed Notes     
 1,765   1.50%, 01/16/2046 ■   1,779 
 1,365   1.99%, 10/15/2015 ■   1,391 
 140   3.47%, 01/15/2048 ■   144 
 3,726   3.96%, 10/15/2045 ■   3,861 
     Honda Automotive Receivables Owner Trust     
 18   0.67%, 04/21/2014   18 
     IMPAC Commercial Mortgage Backed Trust     
 1,150   1.00%, 10/25/2034 Δ   1,044 
     IndyMac Index Mortgage Loan Trust     
 1,677   0.60%, 07/25/2046 Δ   856 
 676   2.56%, 08/25/2035 Δ   538 
 1,246   2.91%, 12/25/2036 Δ   1,059 
 410   2.92%, 09/25/2036 Δ   307 

 

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

 

6

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 6.6% - (continued)     
     United States - 6.5% - (continued)     
     JP Morgan Chase Commercial Mortgage Securities Corp.     
$540   2.75%, 10/15/2045 ■  $352 
 1,735   2.84%, 12/15/2047   1,770 
 1,040   4.67%, 10/15/2045 ■Δ   1,025 
 3,000   6.07%, 02/12/2051   3,328 
     JP Morgan Mortgage Trust     
 1,525   4.13%, 05/25/2036 Δ   1,389 
 399   6.00%, 01/25/2037   356 
     LB-UBS Commercial Mortgage Trust     
 310   5.43%, 02/15/2040   352 
     Merrill Lynch Mortgage Investors Trust     
 897   2.88%, 07/25/2035 Δ   754 
     Merrill Lynch Mortgage Trust     
 100   5.69%, 05/12/2039 Δ   113 
     Merrill Lynch/Countrywide Commercial Mortgage Trust     
 400   5.73%, 06/12/2050 Δ   459 
 105   6.09%, 06/12/2046 Δ   119 
     Morgan Stanley Capital I     
 100   5.25%, 01/15/2021 ■Δ   118 
 50   5.65%, 06/11/2017 Δ   59 
 625   6.28%, 01/11/2043 Δ   756 
     Morgan Stanley Capital I Trust     
 40   5.16%, 10/12/2052 Δ   44 
     Morgan Stanley Capital, Inc.     
 840   0.43%, 12/05/2016 Δ   435 
     Morgan Stanley Dean Witter Capital I     
 778   1.85%, 03/25/2033 Δ   718 
     Morgan Stanley Mortgage Loan Trust     
 2,139   0.37%, 11/25/2036 Δ   1,060 
     Morgan Stanley Re-Remic Trust     
 1,100   5.79%, 08/15/2045 ■Δ   1,268 
     Nationstar Agency Advance Funding Trust     
 250   3.23%, 02/15/2018 ■Δ   256 
     Oaktree Real Estate Investments/Sabal     
 951   4.00%, 09/25/2044 ■   951 
     OHA Intrepid Leveraged Loan Fund Ltd.     
 4,325   1.18%, 04/20/2021 ■†Δ   4,325 
     Prestige Automotive Receivables Trust     
 2,735   1.09%, 02/15/2018 ■   2,736 
 175   1.23%, 12/15/2015 ■   176 
     Race Point CLO Ltd.     
 2,040   1.54%, 02/20/2025 ■Δ   2,043 
     Residential Accredit Loans, Inc.     
 524   2.99%, 11/25/2037 Δ   293 
     RFMSI Trust     
 1,155   3.22%, 04/25/2037 Δ   996 
     Santander Consumer USA, Inc.     
 165   2.32%, 04/15/2015 ■   166 
     Sheridan Square CLO     
 2,435   1.38%, 04/15/2025 ■Δ   2,435 
     SMA Issuer LLC     
 510   3.50%, 08/20/2025 ■   512 
     SNAAC Automotive Receivables Trust     
 1,835   1.14%, 07/16/2018 ■   1,836 
     Soundview Home Equity Loan Trust, Inc.     
 1,750   0.38%, 07/25/2037 Δ   831 
 309   0.49%, 06/25/2037 Δ   163 
     Springleaf Mortgage Loan Trust     
 816   1.57%, 12/25/2059 ■   820 
 2,536   2.22%, 10/25/2057 ■   2,567 
 510   2.66%, 12/25/2059 ■   518 
 1,725   3.14%, 06/25/2058 ■   1,730 
     Structured Adjustable Rate Mortgage Loan Trust     
 1,313   0.50%, 09/25/2034 Δ   1,152 
     Structured Asset Mortgage Investments Trust     
 249   0.42%, 05/25/2046 Δ   144 
     TAL Advantage LLC     
 1,273   2.83%, 02/22/2038 ■   1,277 
     UBS-Barclays Commercial Mortgage Trust     
 2,050   3.18%, 03/10/2046 Δ   2,146 
     Wells Fargo Mortgage Backed Securities Trust     
 1,103   2.91%, 12/28/2037 Δ   991 
 131   5.15%, 10/25/2035 Δ   129 
     WF-RBS Commercial Mortgage Trust     
 1,925   3.07%, 03/15/2045   1,998 
 1,060   4.19%, 03/15/2045 ■Δ   835 
 1,195   4.46%, 12/15/2045 ■Δ   953 
 830   4.90%, 06/15/2044 ■   980 
 515   5.00%, 06/15/2044 ■   447 
         103,732 
     Total asset & commercial mortgage backed securities     
     (cost $102,768)  $105,859 
           
CORPORATE BONDS - 10.0%     
     Australia - 0.0%     
     FMG Resources Pty Ltd.     
$35   6.00%, 04/01/2017 ■  $36 
 560   7.00%, 11/01/2015 ■   587 
         623 
     Brazil - 0.0%     
     Fibria Overseas Finance Ltd.     
 125   7.50%, 05/04/2020 ■   142 
           
     Canada - 0.4%     
     Harvest Operations Corp.     
 41   6.88%, 10/01/2017   46 
     Kinder Morgan Finance Co.     
 290   5.70%, 01/05/2016   317 
     National Money Mart Co.     
 3,495   10.38%, 12/15/2016   3,761 
     Novelis, Inc.     
 385   8.75%, 12/15/2020   437 
     Quebecor Media, Inc.     
 98   7.75%, 03/15/2016   100 
     Telesat LLC     
 1,300   6.00%, 05/15/2017 ■   1,385 

 

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

 

7

 

The Hartford World Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 10.0% - (continued)     
     Canada - 0.4% - (continued)     
     Videotron Ltee     
$36   5.00%, 07/15/2022  $37 
 40   9.13%, 04/15/2018   42 
         6,125 
     Cayman Islands - 0.0%     
     Agile Property Holdings Ltd.     
 675   8.88%, 04/28/2017 ■   727 
           
     France - 0.2%     
     Banque PSA Finance S.A.     
EUR900    4.25%, 02/25/2016   1,212 
EUR350    4.88%, 09/25/2015 §   480 
     BPCE S.A.     
EUR1,250    9.00%, 03/17/2015 ♠Δ   1,753 
     Caisse D'Amortissement de la Dette Sociale     
GBP75    0.66%, 06/17/2013 Δ   116 
         3,561 
     Germany - 0.2%     
     Unitymedia Hessen GmbH & Co.     
EUR2,000    9.63%, 12/01/2019 §   2,969 
           
     Ireland - 0.3%     
     Ardagh Glass Finance     
EUR375   7.13%, 06/15/2017 §   508 
     Ardagh Packaging Finance plc     
 1,395   4.88%, 11/15/2020 ■   1,426 
EUR850   9.25%, 10/15/2020 §   1,243 
     Nara Cable Funding     
EUR700   8.88%, 12/01/2018 §   991 
         4,168 
     Italy - 0.1%     
     Intesa Sanpaolo     
EUR850   9.50%, 10/29/2049   1,189 
           
     Japan - 0.1%     
     Softbank Corp.     
 1,230   4.50%, 04/15/2020 ■   1,274 
           
     Luxembourg - 0.3%     
     Aguila 3 S.A.     
 925   7.88%, 01/31/2018 ■   997 
     Altice Financing S.A.     
 610   9.88%, 12/15/2020 ■   695 
     NII International Telecom Sarl     
 85   11.38%, 08/15/2019 ■   98 
     Ontex IV S.A.     
EUR625   7.50%, 04/15/2018 §   881 
EUR245   7.50%, 04/15/2018 ■   345 
     Wind Acquisition Finance S.A.     
EUR1,250   7.38%, 02/15/2018 ■   1,741 
         4,757 
     Mexico - 0.0%     
     Cemex S.A.B. de C.V.     
 185   3.75%, 03/15/2018   244 
           
     Netherlands - 0.4%     
     AerCap Aviation Solutions B.V.     
 200   6.38%, 05/30/2017   216 
     Conti-Gummi Finance B.V.     
EUR50   7.13%, 10/15/2018 §  70 
     ING Groep N.V.     
EUR1,645   8.00%, 04/29/2049   2,251 
     Portugal Telecom SGPS S.A.     
EUR375   5.63%, 02/08/2016   528 
     Sensata Technologies B.V.     
 550   6.50%, 05/15/2019 ■   600 
 300   6.50%, 05/15/2019 §   327 
     UPC Holding B.V.     
EUR2,075   8.38%, 08/15/2020 §   3,046 
         7,038 
     Spain - 0.1%     
     Santander Finance Preferred     
GBP700    11.30%, 07/29/2049   1,153 
           
     Sweden - 0.1%     
     TVN Finance Corp II AB     
EUR675   10.75%, 11/15/2017 §   969 
           
     Switzerland - 0.0%     
     UBS AG Jersey Bank     
EUR15   4.28%, 04/15/2015   20 
           
     United Kingdom - 0.9%     
     Bank of Scotland Capital Funding L.P.     
GBP850    6.06%, 05/31/2015 §♠   1,279 
     Barclays Bank plc     
GBP550   14.00%, 06/15/2019 ♠   1,181 
     British Telecommunications plc     
 1,120   1.41%, 12/20/2013 Δ   1,127 
     FCE Bank plc     
EUR300   7.25%, 07/15/2013 §   400 
     HSBC Holdings plc     
EUR825   0.51%, 09/30/2020 Δ   1,046 
 2,620   0.75%, 09/30/2013 ♠Δ   1,521 
     Ineos Group Holdings plc     
EUR1,125   7.88%, 02/15/2016 §   1,506 
     Intelsat Luxembourg S.A.     
 215   6.75%, 06/01/2018 ■   226 
 1,940   7.75%, 06/01/2021 ■   2,047 
     Lloyds Banking Group plc     
 1,270   0.57%, 08/29/2013 ♠Δ   654 
     National Westminster Bank plc     
 1,270   0.78%, 07/11/2013 ♠Δ   654 
EUR725   2.36%, 10/29/2049 Δ   706 
     Royal Bank of Scotland Group plc     
 2,075   9.50%, 03/16/2022 §   2,465 
         14,812 
     United States - 6.9%     
     99 Cents Only Stores     
 425   11.00%, 12/15/2019   491 
     AbbVie, Inc.     
 2,070   1.75%, 11/06/2017 ■   2,101 
 2,395   2.00%, 11/06/2018 ■   2,435 
     AES (The) Corp.     
 270   7.75%, 10/15/2015   309 
 50   8.00%, 10/15/2017   60 

 

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

 

8

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 10.0% - (continued)     
     United States - 6.9% - (continued)     
     Air Lease Corp.     
$365   4.75%, 03/01/2020  $378 
 346   6.13%, 04/01/2017   379 
     Alere, Inc.     
 400   9.00%, 05/15/2016   420 
     Ally Financial, Inc.     
 550   4.63%, 06/26/2015   580 
 185   6.75%, 12/01/2014   199 
 35   8.00%, 03/15/2020   44 
     AMC Entertainment, Inc.     
 686   8.75%, 06/01/2019   755 
 734   9.75%, 12/01/2020   853 
     American Builders & Contractors Supply Co., Inc.     
 220   5.63%, 04/15/2021 ■   229 
     American Electric Power Co., Inc.     
 880   1.65%, 12/15/2017   889 
     American Rock Salt Co. LLC     
 10   8.25%, 05/01/2018 ■   10 
     AmeriGas Finance LLC     
 10   7.00%, 05/20/2022   11 
     Anixter International, Inc.     
 20   5.63%, 05/01/2019   21 
     Antero Resources Finance Corp.     
 10   7.25%, 08/01/2019   11 
 110   9.38%, 12/01/2017   120 
     ARAMARK Corp.     
 1,790   5.75%, 03/15/2020 ■   1,875 
     Associated Materials LLC     
 25   9.13%, 11/01/2017   27 
 220   9.13%, 11/01/2017 ■☼   237 
     Audatex North America, Inc.     
 501   6.75%, 06/15/2018 ■   539 
     Avon Products, Inc.     
 85   4.60%, 03/15/2020   91 
 340   5.00%, 03/15/2023   370 
     Ball Corp.     
 20   7.13%, 09/01/2016   21 
     Bank of America Corp.     
 1,505   3.30%, 01/11/2023   1,524 
     BE Aerospace, Inc.     
 275   6.88%, 10/01/2020   309 
     Biomet, Inc.     
 1,210   6.50%, 08/01/2020 - 10/01/2020 ■   1,316 
     BioScrip, Inc.     
 125   10.25%, 10/01/2015   132 
     Building Materials Corp.     
 430   6.88%, 08/15/2018 ■   464 
     Caesars Entertainment Operating Co., Inc.     
 110   8.50%, 02/15/2020   106 
     Calpine Corp.     
 351   7.25%, 10/15/2017 ■   372 
     Case Corp.     
 95   7.25%, 01/15/2016   107 
     CC Holdings GS V LLC     
 1,235   2.38%, 12/15/2017 ■   1,249 
     CCO Holdings LLC     
 95   5.25%, 09/30/2022   97 
 195   7.25%, 10/30/2017   211 
 1,300   7.38%, 06/01/2020   1,459 
 425   8.13%, 04/30/2020   480 
     CDW Escrow Corp.     
 3,705   8.50%, 04/01/2019   4,154 
     Cedar Fair L.P.     
 710   5.25%, 03/15/2021 ■   726 
     Chesapeake Energy Corp.     
 65   2.50%, 05/15/2037 ۞   62 
 60   9.50%, 02/15/2015   68 
     Cinemark USA, Inc.     
 760   5.13%, 12/15/2022 ■   787 
     CIT Group, Inc.     
 30   5.00%, 05/15/2017   33 
 30   5.25%, 04/01/2014 ■   31 
 65   5.25%, 03/15/2018   72 
     Clean Harbors, Inc.     
 640   5.13%, 06/01/2021 ■   670 
     CNH Capital LLC     
 3,205   3.63%, 04/15/2018 ■   3,261 
 205   3.88%, 11/01/2015   212 
 230   6.25%, 11/01/2016   255 
     Community Choice Financial, Inc.     
 225   10.75%, 05/01/2019   219 
     Community Health Systems, Inc.     
 515   5.13%, 08/15/2018   551 
 1,930   7.13%, 07/15/2020   2,157 
     ConAgra Foods, Inc.     
 1,295   1.90%, 01/25/2018   1,319 
     Constellation Brands, Inc.     
 195   4.25%, 05/01/2023 ☼   195 
     Continental Rubber of America Corp.     
 1,445   4.50%, 09/15/2019 ■   1,500 
     Credit Acceptance Corp.     
 905   9.13%, 02/01/2017   986 
     Cricket Communications, Inc.     
 260   7.75%, 05/15/2016   270 
     Crown Americas, Inc.     
 20   6.25%, 02/01/2021   22 
     DaVita, Inc.     
 1,120   5.75%, 08/15/2022   1,193 
     Deluxe Corp.     
 395   7.00%, 03/15/2019   433 
     Deutsche Postbank IV     
EUR200   5.98%, 06/29/2017 Δ   251 
     DigitalGlobe, Inc.     
 330   5.25%, 02/01/2021 ■   333 
     DISH DBS Corp.     
 1,735   6.75%, 06/01/2021   1,874 
     Easton-Bell Sports, Inc.     
 1,375   9.75%, 12/01/2016   1,480 
     Emdeon, Inc.     
 25   11.00%, 12/31/2019   29 
     Endeavour International Corp.     
 390   12.00%, 03/01/2018   370 
     Enterprise Products Operating LLC     
 860   1.25%, 08/13/2015   867 

 

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

 

9

 

The Hartford World Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 10.0% - (continued)     
     United States - 6.9% - (continued)     
     EPE Holding/EP Energy Bond     
$700   8.13%, 12/15/2017 ■Þ  $725 
     Equinix, Inc.     
 70   4.88%, 04/01/2020   73 
     Everest Acquisition LLC     
 80   9.38%, 05/01/2020   93 
     Exelixis, Inc.     
 195   4.25%, 08/15/2019 ۞   203 
     Ferrellgas Partners L.P.     
 6   6.50%, 05/01/2021   6 
 350   9.13%, 10/01/2017   374 
     Ferro Corp.     
 335   7.88%, 08/15/2018   353 
     Freescale Semiconductor, Inc.     
 350   10.13%, 03/15/2018 ■   388 
     Fresenius Medical Care U.S. Finance II, Inc.     
 435   5.63%, 07/31/2019 ■   486 
 610   5.88%, 01/31/2022 ■   698 
 60   9.00%, 07/15/2015 ■   69 
     Gibraltar Industries, Inc.     
 170   6.25%, 02/01/2021 ■   182 
     Goldman Sachs Group, Inc.     
 9,425   2.38%, 01/22/2018   9,605 
     Gray Television, Inc.     
 335   7.50%, 10/01/2020   363 
     GRD Holding III Corp.     
 390   10.75%, 06/01/2019 ■   419 
     Greektown Superholdings, Inc.     
 425   13.00%, 07/01/2015   456 
     Harrah's Operating Co., Inc.     
 120   11.25%, 06/01/2017   127 
     HCA, Inc.     
 286   5.88%, 05/01/2023   311 
 120   6.38%, 01/15/2015   129 
 220   7.50%, 11/15/2095   204 
     Hertz Corp.     
 430   7.50%, 10/15/2018   476 
     Hertz Global Holdings, Inc.     
 50   5.88%, 10/15/2020   55 
 35   6.25%, 10/15/2022   39 
     Hexion U.S. Finance Corp.     
 55   6.63%, 04/15/2020   57 
     Hologic, Inc.     
 300   2.00%, 03/01/2042 ۞   306 
 2,250   6.25%, 08/01/2020   2,430 
     Intel Corp.     
 1,475   3.25%, 08/01/2039 ۞   1,892 
     International Lease Finance Corp.     
 215   5.65%, 06/01/2014   225 
 75   6.50%, 09/01/2014 ■   80 
 190   8.63%, 09/15/2015   217 
     Iron Mountain, Inc.     
 30   7.75%, 10/01/2019   34 
 610   8.38%, 08/15/2021   682 
     Isle of Capri Casinos, Inc.     
 850   7.75%, 03/15/2019   935 
 255   8.88%, 06/15/2020   281 
     J.M. Huber Corp.     
 10   9.88%, 11/01/2019 ■   12 
     JC Penney Corp., Inc.     
205   5.65%, 06/01/2020  176 
 215   6.38%, 10/15/2036   172 
 195   7.40%, 04/01/2037   164 
     K Hovnanian Enterprises, Inc.     
 176   9.13%, 11/15/2020 ■   200 
     KB Home     
 235   1.38%, 02/01/2019 ۞   272 
 75   7.50%, 09/15/2022   85 
 175   8.00%, 03/15/2020   206 
     KB Home & Broad Home Corp.     
 420   6.25%, 06/15/2015   454 
     Ladder Capital Finance Holdings LLC     
 450   7.38%, 10/01/2017 ■   467 
     Lawson Software, Inc.     
 380   9.38%, 04/01/2019   433 
     Lender Processing Services, Inc.     
 205   5.75%, 04/15/2023   219 
     Lennar Corp.     
 90   5.60%, 05/31/2015   97 
     Level 3 Communications, Inc.     
 500   11.88%, 02/01/2019   588 
     Level 3 Financing, Inc.     
 825   4.21%, 02/15/2015 Δ   825 
 700   8.63%, 07/15/2020   791 
     MarkWest Energy Partners L.P.     
 13   6.25%, 06/15/2022   14 
     Masco Corp.     
 140   4.80%, 06/15/2015   147 
     Mediacom LLC     
 315   9.13%, 08/15/2019   352 
     MetroPCS Wireless, Inc.     
 110   7.88%, 09/01/2018   121 
     Michaels Stores, Inc.     
 945   7.75%, 11/01/2018   1,038 
     Micron Technology, Inc.     
 856   1.63%, 02/15/2033 ۞■   969 
 945   2.13%, 02/15/2033 ۞■   1,054 
     MPM Escrow LLC/MPM Finance Corp.     
 200   8.88%, 10/15/2020   218 
     Nationstar Mortgage LLC     
 456   7.88%, 10/01/2020 ■   511 
     NBC Universal Enterprise     
 680   5.25%, 12/19/2049 ■   686 
     NCR Corp.     
 470   4.63%, 02/15/2021 ■   470 
     Newmont Mining Corp.     
 62   1.63%, 07/15/2017 ۞   70 
     NII Capital Corp.     
 260   7.63%, 04/01/2021   230 
 70   8.88%, 12/15/2019   66 
     Nortek, Inc.     
 550   8.50%, 04/15/2021   615 
 100   8.50%, 04/15/2021 ■   111 
     Nuveen Investments, Inc.     
 1,400   9.13%, 10/15/2017 ■   1,494 
     ON Semiconductor Corp.     
 620   2.63%, 12/15/2026 ۞   705 
     Owens-Brockway Glass Container, Inc.     
 85   7.38%, 05/15/2016   97 

 

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

 

10

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
CORPORATE BONDS - 10.0% - (continued)     
     United States - 6.9% - (continued)     
     P.H. Glatfelter Co.     
$30   5.38%, 10/15/2020  $32 
     PC Merger Sub, Inc.     
 290   8.88%, 08/01/2020 ■   328 
     Peabody Energy Corp.     
 540   7.38%, 11/01/2016   618 
     Pinnacle Foods Finance LLC     
 1,885   4.88%, 05/01/2021 ■   1,939 
     Pioneer Natural Resources Co.     
 40   5.88%, 07/15/2016   45 
     Ply Gem Industries, Inc.     
 1,575   8.25%, 02/15/2018   1,725 
     Provident Funding Associates L.P.     
 55   10.25%, 04/15/2017 ■   61 
     Pulte Homes, Inc.     
 45   6.38%, 05/15/2033   46 
     Radiation Therapy Services, Inc.     
 50   8.88%, 01/15/2017   48 
 70   9.88%, 04/15/2017   42 
     Range Resources Corp.     
 15   6.75%, 08/01/2020   17 
     Realogy Corp.     
 75   7.63%, 01/15/2020 ■   86 
     Reynolds Group Issuer, Inc.     
 100   7.13%, 04/15/2019 Δ   108 
     Rosetta Resources, Inc.     
 85   9.50%, 04/15/2018   94 
     Royal Caribbean Cruises Ltd.     
 630   5.25%, 11/15/2022   652 
 200   7.25%, 06/15/2016   227 
     RSC Equipment Rental, Inc./RSC Holdings     
 510   10.25%, 11/15/2019   590 
     SABMiller Holdings, Inc.     
 800   2.45%, 01/15/2017 ■   838 
     Savient Pharmaceuticals, Inc.     
 205   4.75%, 02/01/2018 ۞   49 
     SBA Telecommunications, Inc.     
 170   8.25%, 08/15/2019   188 
     Service Corp. International     
 775   7.00%, 05/15/2019   848 
     Sinclair Television Group, Inc.     
 400   8.38%, 10/15/2018   446 
 1,645   9.25%, 11/01/2017 ■   1,785 
     SLM Corp.     
 235   6.25%, 01/25/2016   256 
 100   8.45%, 06/15/2018   117 
     Softbrands, Inc.     
 475   11.50%, 07/15/2018   561 
     Sovereign Capital Trust IV     
 125   7.91%, 06/13/2036   132 
     Spectrum Brands Holdings, Inc.     
 950   6.38%, 11/15/2020 ■   1,038 
 940   6.63%, 11/15/2022 ■   1,036 
     Speedway Motorsports, Inc.     
 1,375   6.75%, 02/01/2019   1,476 
     Sprint Nextel Corp.     
 75   7.00%, 03/01/2020 ■   85 
 75   9.00%, 11/15/2018 ■   92 
     Syniverse Holdings, Inc.     
 350   9.13%, 01/15/2019   388 
     Tempur-Pedic International, Inc.     
395   6.88%, 12/15/2020 ■   431 
     Tenet Healthcare Corp.     
 465   9.25%, 02/01/2015   525 
     Texas Competitive Electric Co.     
 925   11.50%, 10/01/2020 ■   728 
     TitleMax, Inc.     
 285   13.25%, 07/15/2015   311 
     TransDigm Group, Inc.     
 50   7.75%, 12/15/2018   55 
     TRW Automotive, Inc.     
 96   8.88%, 12/01/2017 ■   104 
     United Rentals North America, Inc.     
 10   5.75%, 07/15/2018   11 
     UR Merger Sub Corp.     
 775   8.38%, 09/15/2020   876 
     Valassis Communications, Inc.     
 3,290   6.63%, 02/01/2021   3,487 
     Warner Chilcott plc     
 745   7.75%, 09/15/2018   808 
     Weekley Homes LLC     
 50   6.00%, 02/01/2023 ■   52 
     Windstream Corp.     
 410   6.38%, 08/01/2023   424 
     Wynn Las Vegas LLC     
 20   7.75%, 08/15/2020   23 
     XM Satellite Radio, Inc.     
 490   7.63%, 11/01/2018 ■   544 
     Yankee Acquisition Corp.     
 695   9.75%, 02/15/2017   720 
     Zoetis, Inc.     
 1,560   1.88%, 02/01/2018 ■   1,578 
         109,433 
     Total corporate bonds     
     (cost $155,508)   $159,204 
           
FOREIGN GOVERNMENT OBLIGATIONS - 58.1%     
     Australia - 4.3%     
     Australian Government     
AUD13,100   4.25%, 07/21/2017  $14,436 
AUD9,610   5.25%, 03/15/2019   11,260 
AUD23,730   5.75%, 07/15/2022   29,865 
AUD12,000   6.25%, 04/15/2015   13,306 
         68,867 
     Brazil - 0.1%     
     Brazil (Republic of)     
BRL2,555   10.00%, 01/01/2017   1,319 
           
     Canada - 6.3%     
     Canada (Government of)     
CAD57,000   1.50%, 08/01/2015 - 09/01/2017   57,378 
CAD42,720   2.25%, 08/01/2014   43,067 
         100,445 

 

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

 

11

 

The Hartford World Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
FOREIGN GOVERNMENT OBLIGATIONS - 58.1% - (continued) 
     Denmark - 6.0%     
     Denmark (Kingdom of)     
DKK67,000   2.50%, 11/15/2016  $12,832 
DKK136,500   3.00%, 11/15/2021   28,160 
DKK209,330   4.00%, 11/15/2017 - 11/15/2019   43,615 
DKK36,995   7.00%, 11/10/2024   10,536 
         95,143 
     Finland - 8.2%     
     Finland (Republic of)     
EUR21,840   1.75%, 04/15/2016   30,106 
EUR7,340   3.13%, 09/15/2014   10,075 
EUR24,440   3.50%, 04/15/2021   37,992 
EUR24,580   3.88%, 09/15/2017   37,178 
EUR10,700   4.25%, 07/04/2015   15,360 
         130,711 
     France - 0.2%     
     France (Government of)     
EUR1,490   4.50%, 04/25/2041   2,594 
           
     Germany - 4.1%     
     Bundesobligation     
EUR21,000   0.50%, 02/23/2018   27,885 
EUR6,555   2.25%, 04/10/2015   9,007 
     Bundesrepublik Deutschland     
EUR9,810   1.50%, 09/04/2022 - 02/15/2023   13,322 
EUR10,650   2.00%, 01/04/2022   15,204 
         65,418 
     Mexico - 2.7%     
     Mexican Bonos De Desarrollo     
MXN453,307   6.50%, 06/09/2022   42,915 
           
     Norway - 7.2%     
     Norway (Kingdom of)     
NOK120,515   3.75%, 05/25/2021   23,900 
NOK157,665   4.25%, 05/19/2017   30,525 
NOK132,625   4.50%, 05/22/2019   26,951 
NOK159,060   5.00%, 05/15/2015   29,678 
NOK23,425   6.50%, 05/15/2013   4,069 
         115,123 
     Singapore - 8.7%     
     Singapore (Government of)     
SGD15,385   2.38%, 04/01/2017   13,481 
SGD6,000   2.88%, 07/01/2015   5,151 
SGD6,215   3.13%, 09/01/2022   5,827 
SGD26,245   3.25%, 09/01/2020   24,595 
SGD52,960   3.63%, 07/01/2014   44,715 
SGD49,830   3.75%, 09/01/2016   45,153 
         138,922 
     Sweden - 10.3%     
     Sweden (Kingdom of)     
SEK113,515   1.50%, 11/13/2023   17,345 
SEK114,900   3.00%, 07/12/2016   18,888 
SEK179,000   3.50%, 06/01/2022   32,250 
SEK149,930   3.75%, 08/12/2017   25,757 
SEK100,855   4.25%, 03/12/2019   18,217 
SEK311,000   6.75%, 05/05/2014   50,787 
         163,244 
     Venezuela - 0.0%     
     Venezuela (Republic of)     
$575   8.50%, 10/08/2014   586 
           
     Total foreign government obligations     
     (cost $901,790)  $925,287 
           
SENIOR FLOATING RATE INTERESTS ♦ - 1.7%     
     Australia - 0.0%     
     Fortescue Metals Group Ltd.     
$284   5.25%, 10/18/2017  $289 
           
     Denmark - 0.1%     
     ISS A/S     
 1,180   03/24/2018 ◊☼   1,185 
           
     France - 0.1%     
     Alcatel-Lucent     
EUR1,387   7.50%, 01/30/2019   1,845 
           
     Germany - 0.0%     
     Kabel Deutschland Holding AG     
 100   3.25%, 02/01/2019   100 
           
     United States - 1.5%     
     AMC Entertainment, Inc.     
 880   04/23/2020 ◊☼   886 
     American Builders & Contractors Supply Co.     
 1,305   3.50%, 04/05/2020   1,315 
     Apex Tool Group LLC     
 260   4.50%, 01/31/2020   263 
     Arch Coal, Inc.     
 1,049   5.75%, 05/16/2018   1,063 
     Asurion LLC     
 1,149   4.50%, 05/24/2019   1,162 
     Bausch & Lomb, Inc.     
 134   5.25%, 05/17/2019   135 
     Calpine Corp.     
 716   4.00%, 10/09/2019   725 
     Capital Automotvie L.P.     
 501   4.25%, 04/05/2019 ☼   505 
     Chrysler Group LLC     
 99   6.00%, 05/24/2017   100 
     Cumulus Media, Inc.     
 99   4.50%, 09/17/2018   100 
     Epicor Software Corp.     
 186   4.50%, 05/16/2018   188 
     First Data Corp.     
 2,685   4.20%, 09/30/2018   2,673 
     First Data Corp., Extended 1st Lien Term Loan     
 290   4.20%, 03/23/2018   289 
     Fly Leasing Ltd.     
 531   5.75%, 08/08/2018   538 
     Freescale Semiconductor, Inc.     
 1,149   5.00%, 03/01/2020   1,165 
     Gray Television, Inc.     
 178   4.75%, 10/12/2019   181 

 

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

 

12

 

 

 

Shares or Principal Amount ╬  Market Value ╪ 
SENIOR FLOATING RATE INTERESTS ♦ - 1.7% - (continued)
     United States - 1.5% - (continued)     
     Houghton International, Inc.     
$195   5.25%, 12/20/2019  $197 
     Lawson Software, Inc.     
 100   5.25%, 04/05/2018   101 
     Leap Wireless International, Inc.     
 995   4.75%, 03/01/2020   999 
     Light Tower Fiber LLC     
 1,105   4.50%, 04/01/2020   1,116 
     MGM Resorts International     
 529   4.25%, 12/20/2019   536 
     Nuveen Investments, Inc.     
 1,776   4.20%, 05/13/2017 ☼   1,796 
     Realogy Corp., Extended 1st Lien Term Loan B     
 213   4.01%, 03/05/2020   216 
     Sprouts Farmers Markets Holdings LLC     
 1,545   04/12/2020 ◊☼   1,549 
     Star West Generation LLC     
 780   5.00%, 03/13/2020   795 
     Syniverse Holdings, Inc.     
 199   5.00%, 04/23/2019   200 
     Walter Investment Management     
 1,169   5.75%, 11/28/2017   1,188 
     Weight Watchers International, Inc.     
 2,875   3.75%, 04/02/2020   2,865 
         22,846 
     Total senior floating rate interests     
     (cost $25,950)  $26,265 
           
U.S. GOVERNMENT AGENCIES - 0.0%
     United States - 0.0%     
     FHLMC     
$1,518   0.60%, 08/25/2016 ►  $65 
           
     Total U.S. government agencies     
     (cost $64)  $65 
           

U.S. GOVERNMENT SECURITIES - 12.2%    
     United States - 12.2%     
     U.S. Treasury Bonds     
$5,365   3.13%, 02/15/2043  $5,621 
           
     U.S. Treasury Notes     
 60,000   0.13%, 08/31/2013 - 09/30/2013   60,007 
 38,990   0.25%, 08/31/2014 - 05/15/2015 ‡   39,019 
 30,000   0.50%, 10/15/2013   30,056 
 43,265   0.75%, 12/31/2017 - 02/28/2018 ╦   43,534 
 10,405   1.63%, 08/15/2022   10,435 
 5,435   2.00%, 02/15/2022 - 02/15/2023 ØΘ   5,639 
         188,690 
     Total U.S. government securities     
     (cost $193,445)  $194,311 
           
Contracts      Market Value ╪ 
CALL OPTIONS PURCHASED - 0.0%     
     Foreign Exchange Contracts - 0.0%     
     USD Call/CNY Put     
 11,362   Expiration: 06/23/2013  $ 
           
Shares or Principal Amount ╬  Market Value ╪ 
CALL OPTIONS PURCHASED - 0.0% - (continued)     
     Interest Rate Contracts - 0.0%     
     U.S. Treasury 30-Year Bond Future Option     
    Expiration: 05/28/2013, Exercise Price: $150.00  $236 
         236 
     Total call options purchased     
     (cost $297)  $236 
           
Contracts      Market Value ╪ 
PUT OPTIONS PURCHASED - 0.0% 
     Foreign Exchange Contracts - 0.0%     
     AUD Put/USD Call     
AUD8,493   Expiration: 05/09/2013  $ 
     CAD Put/JPY Call     
CAD2,627   Expiration: 07/11/2013   32 
     EUR Put/USD Call     
EUR9,380   Expiration: 08/01/2013   184 
     GBP Put/USD Call     
GBP239   Expiration: 09/17/2013 æ   18 
GBP238   Expiration: 09/24/2013 Є   29 
         263 
     Total put options purchased     
     (cost $364)  $263 
           
Shares or Principal Amount ╬  Market Value ╪ 
PREFERRED STOCKS - 0.1%     
     United States - 0.1%     
 7   Citigroup Capital XIII  $196 
 42   GMAC Capital Trust I ۞   1,150 
 7   Intelsat S.A., 5.75%  ۞   383 
         1,729 
     Total preferred stocks     
     (cost $1,649)  $1,729 
           
     Total long-term investments     
     (cost $1,381,835)  $1,413,219 
           
Shares or Principal Amount ╬  Market Value ╪ 
SHORT-TERM INVESTMENTS - 9.0%     
     Repurchase Agreements - 6.7%     
     Bank of America Merrill Lynch TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $4,267,
collateralized by FHLB 1.93%, 2021,
FHLMC 0.38%, 2013, FNMA 3.00%,
2028, value of $4,352)
     
$4,267   0.17%, 4/30/2013   $4,267 
     Bank of Montreal TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $11,625, collateralized by
FHLMC 3.50%, 2042, FNMA 0.80% -
2.13%, 2015 - 2018, U.S. Treasury Bond
11.25%, 2015, U.S. Treasury Note
0.75%, 2013, value of $11,858)
     
 11,625   0.15%, 4/30/2013   11,625 

 

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

 

13

 

The Hartford World Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Shares or Principal Amount ╬  Market Value ╪ 
SHORT-TERM INVESTMENTS - 9.0% - (continued)  
     Repurchase Agreements - 6.7% - (continued)     
     Barclays Capital TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $22,391, collateralized by
U.S. Treasury Note 0.88% - 3.13%, 2017
- 2021, value of $22,838)
     
$22,391   0.15%, 4/30/2013  $22,391 
     Citigroup Global Markets, Inc. TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $31,098,
collateralized by U.S. Treasury Note
0.75% - 2.13%, 2015 - 2019, value of
$31,720)
     
 31,098   0.14%, 4/30/2013   31,098 
     Deutsche Bank Securities TriParty
Repurchase Agreement (maturing on
05/01/2013 in the amount of $5,592,
collateralized by FHLMC 3.00% - 5.50%,
2037 - 2043, FNMA 3.00%, 2043, value
of $5,704)
     
 5,592   0.17%, 4/30/2013   5,592 
     RBS Securities, Inc. TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $18,950, collateralized by
U.S. Treasury Note 1.00% - 2.25%, 2016
- 2022, value of $19,329)
     
 18,949   0.14%, 4/30/2013   18,949 
     TD Securities TriParty Repurchase
Agreement (maturing on 05/01/2013 in
the amount of $13,323, collateralized by
U.S. Treasury Note 0.25% - 1.88%, 2014
- 2019, value of $13,589)
     
 13,323   0.17%, 4/30/2013   13,323 
     UBS Securities, Inc. Repurchase Agreement
(maturing on 05/01/2013 in the amount of
$238, collateralized by U.S. Treasury
Note 3.88%, 2018, value of $243)
     
 237   0.13%, 4/30/2013   237 
         107,482 
     U.S. Treasury Bills - 2.3%     
 35,800   0.05%, 05/09/2013 - 07/25/2013 ○  $35,796 
           
     Total short-term investments     
     (cost $143,278)  $143,278 
           
     Total investments      
     (cost $1,525,113) ▲   97.7 %  $1,556,497 
    Other assets and liabilities   2.3 %   36,930 
     Total net assets   100.0 %  $1,593,427 

 

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

 

14

 

 

 

Note:Percentage of investments as shown is the ratio of the total market value to total net assets.

 

Prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of certain foreign markets but before the close of the New York Stock Exchange.

 

At April 30, 2013, the cost of securities for federal income tax purposes was $1,525,180 and the aggregate gross unrealized appreciation and depreciation based on that cost were:

 

Unrealized Appreciation  $32,719 
Unrealized Depreciation   (1,402)
Net Unrealized Appreciation  $31,317 

 

These securities were valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Company's Board of Directors.  At April 30, 2013, the aggregate value of these securities was $4,325, which represents 0.3% of total net assets.  

 

This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future.

 

ΔVariable rate securities; the rate reported is the coupon rate in effect at April 30, 2013.

 

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. Unless otherwise indicated, these holdings are determined to be liquid. At April 30, 2013, the aggregate value of these securities was $100,863, which represents 6.3% of total net assets.  

 

§These securities were sold to the Fund under Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933.  The Fund may only be able to resell these securities in the United States if an exemption from registration under the federal and state securities laws is available, or the Fund may only be able to sell these securities outside of the United States (such as on a foreign exchange) to a non-U.S. person. Unless otherwise indicated, these holdings are determined to be liquid.  At April 30, 2013, the aggregate value of these securities was $17,134, which represents 1.1% of total net assets.  

 

Perpetual maturity security.  Maturity date shown is the first call date.

 

۞Convertible security.

 

Securities disclosed are interest-only strips.  The interest rates represent effective yields based upon estimated future cash flows at April 30, 2013.

 

The interest rate disclosed for these securities represents the effective yield on the date of the acquisition.

 

This security, or a portion of this security, was purchased on a when-issued, delayed-delivery or delayed-draw basis. The cost of these securities was $5,463 at April 30, 2013.

 

All or a portion of this position represents unsettled loan commitment.  The coupon rate will be determined at time of settlement.

 

æThis security has limitations.  If the U.S. Dollar per British Pound exchange rate is less than or equal to the barrier level of 1.39 at any point during the contract period, the counterparty will be required to pay the Fund the equivalent of par on the number of contracts traded.

 

ЄThis security has limitations.  If the U.S. Dollar per British Pound exchange rate is less than or equal to the barrier level of 1.41 at any point during the contract period, the counterparty will be required to pay the Fund the equivalent of par on the number of contracts traded.

 

ÞThis security may pay interest in additional principal instead of cash.

 

All principal amounts are in U.S. dollars unless otherwise indicated.

 

Senior floating rate interests 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 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.  Unless otherwise noted, the interest rate disclosed for these securities represents the average coupon as of April 30, 2013.

 

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

 

15

 

The Hartford World Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

This security, or a portion of this security, has been pledged as collateral in connection with swap contracts.  In addition, cash of $4,937 was received from broker(s) as collateral in connection with swap contracts.  Securities valued at $4,124, held on behalf of the Fund at the custody bank, were designated by broker(s) as collateral in connection with swap contracts.

 

ΘAt April 30, 2013, this security, or a portion of this security, is designated to cover written call options in the table below:

 

Description (Counterparty)  Option Type  Exercise
Price/ Rate
   Expiration
Date
  Number of
Contracts*
   Market
Value ╪
   Premiums
Received
   Unrealized
Appreciation
(Depreciation)
 
USD Call/CNY Put (SCB)  Foreign Exchange   6.78 CNY   06/23/2013  CNY11,362,000   $   $40   $40 

 

* The number of contracts does not omit 000's.  Number of contracts shown in  U.S. dollars unless otherwise noted.

 

ØAt April 30, 2013, this security, or a portion of this security, collateralized the written put options in the table below:

 

Description  Option Type  Exercise
Price/ Rate
   Expiration
Date
  Number of
Contracts*
   Market
Value ╪
   Premiums
Received
   Unrealized
Appreciation
(Depreciation)
 
CAD Put/JPY Call Ҹ  Foreign Exchange   103.00 CAD   07/11/2013  CAD68,000   $15   $31   $16 

 

*The number of contracts does not omit 000's.  Number of contracts shown in U.S. dollars unless otherwise noted.
ҸThis security has limitations.  If the Japanese Yen per Canadian Dollar exchange rate is less than or equal to the barrier level of  103.00 at any point during the contract period, the Fund will be required to pay the counterparty the equivalent of par on the number of contracts traded.

 

Futures Contracts Outstanding at April 30, 2013

 

Description  Number of
Contracts*
   Expiration
Date
  Notional Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
Long position contracts:                       
Australian 10-Year Bond Future   593   06/17/2013  $74,588   $76,795   $2,207 
Australian 3-Year Bond Future   569   06/17/2013   64,736    64,830    94 
Canadian Government 10-Year Bond Future   109   06/19/2013   14,781    14,794    13 
Euro-Schatz Future   196   06/06/2013   28,587    28,587     
U.S. Treasury 10-Year Note Future   213   06/19/2013   28,363    28,406    43 
U.S. Treasury 2-Year Note Future   741   06/28/2013   163,342    163,483    141 
U.S. Treasury 30-Year Bond Future   640   06/19/2013   93,969    94,960    991 
U.S. Treasury CME Ultra Long Term Bond Future   117   06/19/2013   18,295    19,228    933 
                     $4,422 
Short position contracts:                       
Euro BUXL 30-Year Bond Future   176   06/06/2013  $31,629   $32,130   $(501)
Euro-BOBL Future   855   06/06/2013   142,726    142,697    29 
Euro-BTP Future   83   06/06/2013   12,375    12,674    (299)
Euro-BUND Future   341   06/06/2013   65,870    65,826    44 
Euro-OAT Future   358   06/06/2013   64,892    65,906    (1,014)
Japan 10-Year Bond Future   50   06/11/2013   74,308    74,129    179 
Long Gilt Future   860   06/26/2013   158,566    160,319    (1,753)
U.S. Treasury 5-Year Note Future   282   06/28/2013   35,052    35,149    (97)
                     $(3,412)
                     $1,010 

 

* The number of contracts does not omit 000's.

 

Cash of $13,628 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

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

 

16

 

 

 

Foreign Currency Contracts Outstanding at April 30, 2013

 

Currency  Buy / Sell  Delivery Date  Counterparty   Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
AUD  Buy  05/31/2013  BCLY   $3,321   $3,321   $ 
AUD  Buy  05/31/2013  NAB    74,214    74,999    785 
AUD  Buy  05/31/2013  UBS    1,175    1,178    3 
AUD  Buy  05/31/2013  WEST    27,937    28,251    314 
AUD  Sell  05/31/2013  CBA    1,141    1,153    (12)
AUD  Sell  05/31/2013  CBK    4,730    4,736    (6)
AUD  Sell  05/01/2013  JPM    99    99     
AUD  Sell  05/31/2013  MSC    2,373    2,373     
AUD  Sell  05/31/2013  MSC    31,480    31,572    (92)
AUD  Sell  05/31/2013  NAB    2,288    2,314    (26)
AUD  Sell  05/31/2013  WEST    150,131    151,816    (1,685)
BRL  Sell  06/04/2013  UBS    1,311    1,299    12 
CAD  Buy  05/31/2013  BCLY    13,085    13,204    119 
CAD  Buy  05/31/2013  BCLY    3,504    3,504     
CAD  Buy  05/31/2013  RBC    27,751    28,264    513 
CAD  Buy  05/31/2013  SSG    2,349    2,380    31 
CAD  Buy  05/31/2013  UBS    5,774    5,775    1 
CAD  Sell  05/01/2013  BCLY    13,093    13,214    (121)
CAD  Sell  05/31/2013  BCLY    27,867    28,388    (521)
CAD  Sell  05/31/2013  BMO    72,679    73,542    (863)
CAD  Sell  05/31/2013  BNP    27,866    28,384    (518)
CAD  Sell  05/01/2013  JPM    6    6     
CAD  Sell  05/31/2013  RBC    27,865    28,380    (515)
CAD  Sell  05/31/2013  WEST    941    952    (11)
CHF  Buy  05/31/2013  GSC    1,119    1,137    18 
CHF  Buy  05/31/2013  RBS    1,123    1,138    15 
CHF  Sell  05/31/2013  CSFB    4,515    4,545    (30)
CHF  Sell  05/31/2013  GSC    1,177    1,194    (17)
CHF  Sell  05/31/2013  JPM    3,608    3,609    (1)
CHF  Sell  05/31/2013  UBS    1,176    1,194    (18)
CZK  Buy  05/31/2013  JPM    182    184    2 
CZK  Buy  06/19/2013  JPM    369    371    2 
CZK  Buy  05/31/2013  RBS    2,176    2,204    28 
CZK  Sell  05/31/2013  JPM    48    49    (1)
DKK  Sell  05/31/2013  DEUT    1,431    1,430    1 
DKK  Sell  05/31/2013  RBC    94,066    95,098    (1,032)
EUR  Buy  05/31/2013  BCLY    44,971    45,555    584 
EUR  Buy  05/31/2013  BNP    5,967    5,967     
EUR  Buy  05/31/2013  CBK    6,439    6,461    22 
EUR  Buy  05/31/2013  DEUT    4,166    4,169    3 
EUR  Buy  05/31/2013  DEUT    5,714    5,707    (7)
EUR  Buy  05/31/2013  GSC    1,173    1,187    14 
EUR  Buy  05/31/2013  GSC    5,707    5,706    (1)
EUR  Buy  05/01/2013  JPM    84    84     
EUR  Buy  05/22/2013  JPM    286    290    4 
EUR  Buy  05/31/2013  JPM    121,696    121,829    133 
EUR  Buy  05/31/2013  RBS    1,137    1,145    8 
EUR  Buy  05/31/2013  UBS    2,481    2,508    27 
EUR  Sell  05/22/2013  BCLY    24,527    24,587    (60)
EUR  Sell  05/31/2013  BCLY    54,517    55,268    (751)
EUR  Sell  05/31/2013  BNP    46,660    47,305    (645)
EUR  Sell  05/31/2013  CBK    47,810    48,447    (637)
EUR  Sell  05/31/2013  DEUT    3,430    3,462    (32)
EUR  Sell  05/31/2013  GSC    1,135    1,146    (11)
EUR  Sell  05/31/2013  JPM    1,227    1,237    (10)
EUR  Sell  05/31/2013  RBC    46,682    47,308    (626)
EUR  Sell  05/31/2013  RBS    2,167    2,195    (28)
EUR  Sell  05/21/2013  SCB    719    724    (5)
                           

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

 

17

 

The Hartford World Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Foreign Currency Contracts Outstanding at April 30, 2013 - (continued)

 

Currency  Buy / Sell  Delivery Date  Counterparty   Contract Amount   Market Value ╪   Unrealized
Appreciation/
(Depreciation)
 
EUR  Sell  05/31/2013  UBS   $1,042   $1,041   $1 
EUR  Sell  05/31/2013  UBS    229    231    (2)
EUR  Sell  05/31/2013  WEST    46,678    47,308    (630)
GBP  Buy  05/31/2013  BNP    56,998    56,996    (2)
GBP  Buy  05/31/2013  CBK    5,724    5,769    45 
GBP  Sell  05/22/2013  BCLY    3,679    3,732    (53)
GBP  Sell  05/01/2013  JPM    135    135     
GBP  Sell  05/31/2013  JPM    1,297    1,305    (8)
GBP  Sell  05/31/2013  UBS    9,207    9,376    (169)
HUF  Buy  05/31/2013  CBK    1,193    1,204    11 
HUF  Sell  05/31/2013  BNP    2,210    2,237    (27)
ILS  Sell  06/19/2013  JPM    215    221    (6)
INR  Buy  05/31/2013  BNP    1,149    1,146    (3)
INR  Buy  05/31/2013  JPM    3,378    3,401    23 
INR  Buy  05/31/2013  MSC    2,393    2,376    (17)
JPY  Buy  05/31/2013  CBK    4,760    4,772    12 
JPY  Buy  05/31/2013  MSC    1,163    1,183    20 
JPY  Buy  05/31/2013  NAB    10,076    10,276    200 
JPY  Buy  05/31/2013  RBS    1,161    1,183    22 
JPY  Sell  05/31/2013  CBK    3,451    3,463    (12)
JPY  Sell  05/01/2013  JPM    58    58     
JPY  Sell  05/31/2013  JPM    1,135    1,140    (5)
KRW  Buy  05/31/2013  JPM    97,067    97,182    115 
KRW  Sell  05/31/2013  BCLY    11,204    11,396    (192)
MXN  Buy  05/31/2013  BCLY    1,851    1,849    (2)
MXN  Buy  05/31/2013  RBC    37,067    37,550    483 
MXN  Sell  05/31/2013  CBK    31,364    31,455    (91)
MXN  Sell  05/31/2013  DEUT    1,207    1,208    (1)
MXN  Sell  05/31/2013  RBC    41,830    42,375    (545)
MYR  Buy  05/31/2013  CBK    45,201    45,161    (40)
MYR  Buy  05/31/2013  UBS    45,231    45,161    (70)
NOK  Buy  05/31/2013  GSC    2,229    2,272    43 
NOK  Buy  05/31/2013  JPM    57,356    57,343    (13)
NOK  Sell  05/31/2013  DEUT    847    845    2 
NOK  Sell  05/31/2013  GSC    143    146    (3)
NOK  Sell  05/31/2013  MSC    117,963    120,651    (2,688)
NZD  Buy  05/31/2013  BCLY    2,559    2,558    (1)
NZD  Buy  05/31/2013  CBA    28,443    29,007    564 
NZD  Sell  05/31/2013  NAB    31,530    31,565    (35)
PLN  Sell  05/31/2013  BNP    3,509    3,508    1 
PLN  Sell  05/31/2013  UBS    1,146    1,152    (6)
SEK  Buy  05/31/2013  CSFB    2,245    2,277    32 
SEK  Buy  05/31/2013  DEUT    3,343    3,404    61 
SEK  Buy  05/31/2013  DEUT    2,017    2,014    (3)
SEK  Buy  05/31/2013  JPM    57,566    57,453    (113)
SEK  Sell  05/02/2013  CSFB    2,246    2,278    (32)
SEK  Sell  05/31/2013  DEUT    90,481    92,459    (1,978)
SEK  Sell  05/31/2013  JPM    90,487    92,458    (1,971)
SEK  Sell  05/31/2013  WEST    921    934    (13)
SGD  Buy  05/31/2013  GSC    45,549    45,551    2 
SGD  Buy  05/31/2013  MSC    45,484    45,551    67 
SGD  Sell  05/31/2013  JPM    143,656    144,715    (1,059)
ZAR  Buy  05/31/2013  CSFB    4,453    4,613    160 
ZAR  Sell  05/31/2013  CBK    2,402    2,400    2 
                        $(13,567)
                           

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

 

18

 

 

 

Credit Default Swap Contracts Outstanding at April 30, 2013

  

Reference Entity  Counterparty   Notional
Amount (a)
   (Pay)/Receive
Fixed Rate /
Implied Credit
Spread (b)
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices:                   
Buy protection:                                 
ABX.HE.AA.06  BCLY   $940    (0.32)%   07/25/45  $532   $246   $(286)
ABX.HE.AAA.06  BCLY    983    (0.18)%   07/25/45   70    16    (54)
ABX.HE.AAA.06  BOA    5,357    (0.18)%   07/25/45   295    85    (210)
ABX.HE.AAA.06  GSC    4,210    (0.18)%   07/25/45   372    68    (304)
ABX.HE.AAA.06  MSC    2,016    (0.18)%   07/25/45   205    33    (172)
ABX.HE.AAA.06-1  CBK    344    (0.18)%   07/25/45   7    6    (1)
ABX.HE.AAA.06-1  MSC    741    (0.18)%   07/25/45   15    12    (3)
ABX.HE.PENAAA.06  BCLY    1,148    (0.11)%   05/25/46   328    193    (135)
ABX.HE.PENAAA.06  GSC    327    (0.11)%   05/25/46   82    55    (27)
ABX.HE.PENAAA.06  JPM    1,689    (0.11)%   05/25/46   414    284    (130)
ABX.HE.PENAAA.06  MSC    1,987    (0.11)%   05/25/46   528    336    (192)
ABX.HE.PENAAA.06-2  JPM    271    (0.11)%   05/25/46   49    46    (3)
ABX.HE.PENAAA.07  BCLY    2,759    (0.76)%   01/25/38   938    938     
ABX.HE.PENAAA.07  JPM    4,471    (0.09)%   08/25/37   1,839    1,470    (369)
ABX.HE.PENAAA.07-1  JPM    345    (0.09)%   08/25/37   120    113    (7)
CDX.NA.HY.19  BCLY    2,320    (5.00)%   12/20/17   16    (164)   (180)
CDX.NA.HY.19  BOA    3,945    (5.00)%   12/20/17   (8)   (279)   (271)
CDX.NA.HY.20  JPM    11,925    (5.00)%   06/20/18   (350)   (733)   (383)
CMBX.NA.A.1  CBK    705    (0.35)%   10/12/52   302    268    (34)
CMBX.NA.A.1  DEUT    1,520    (0.35)%   10/12/52   685    578    (107)
CMBX.NA.A.1  GSC    365    (0.35)%   10/12/52   165    139    (26)
CMBX.NA.A.1  MSC    865    (0.35)%   10/12/52   358    329    (29)
CMBX.NA.AA.1  CSI    1,560    (0.25)%   10/12/52   339    278    (61)
CMBX.NA.AA.1  DEUT    1,850    (0.25)%   10/12/52   391    329    (62)
CMBX.NA.AA.1  JPM    1,445    (0.25)%   10/12/52   286    257    (29)
CMBX.NA.AA.1  UBS    925    (0.25)%   10/12/52   195    165    (30)
CMBX.NA.AA.2  BOA    2,180    (0.15)%   03/15/49   828    726    (102)
CMBX.NA.AA.2  CSI   410    (0.15)%   03/15/49   158    137    (21)
CMBX.NA.AA.2  JPM    865    (0.15)%   03/15/49   326    288    (38)
CMBX.NA.AJ.1  DEUT    470    (0.84)%   10/12/52   33    26    (7)
CMBX.NA.AJ.1  JPM    430    (0.84)%   10/12/52   30    24    (6)
CMBX.NA.AJ.1  MSC    825    (0.84)%   10/12/52   57    46    (11)
CMBX.NA.AJ.4  CSI    1,215    (0.96)%   02/17/51   483    324    (159)
CMBX.NA.AJ.4  MSC    405    (0.96)%   02/17/51   120    108    (12)
CMBX.NA.AM.2  CSI    2,180    (0.50)%   03/15/49   133    85    (48)
CMBX.NA.AM.2  DEUT    2,180    (0.50)%   03/15/49   125    85    (40)
CMBX.NA.AM.2  GSC    815    (0.50)%   03/15/49   38    32    (6)
CMBX.NA.AM.2  MSC    1,730    (0.50)%   03/15/49   86    68    (18)
CMBX.NA.AM.3  CBK    2,050    (0.50)%   12/13/49   206    147    (59)
CMBX.NA.AM.3  CSI    375    (0.50)%   12/13/49   32    27    (5)
CMBX.NA.AM.3  MSC    810    (0.50)%   12/13/49   73    58    (15)
CMBX.NA.AM.4  BCLY    970    (0.50)%   02/17/51   159    80    (79)
CMBX.NA.AM.4  CSI    175    (0.50)%   02/17/51   16    14    (2)
CMBX.NA.AM.4  GSC    5,085    (0.50)%   02/17/51   798    421    (377)
CMBX.NA.AM.4  JPM    790    (0.50)%   02/17/51   179    65    (114)
CMBX.NA.AM.4  MSC    810    (0.50)%   02/17/51   82    67    (15)
ITRX.SUB.FIN.16  JPM   EUR  155    (5.00)%   12/20/16   2    (18)   (20)
Total                    $12,137   $7,878   $(4,259)
Sell protection:                                 
ABX.HE.AAA.06  CSI   $621    0.11%   05/25/46  $(202)  $(163)  $39 
ABX.HE.AAA.06  JPM    621    0.11%   05/25/46   (201)   (163)   38 
ABX.HE.AAA.06-2  JPM    491    0.11%   05/25/46   (144)   (129)   15 
ABX.HE.AAA.06-2  MSC    232    0.11%   05/25/46   (71)   (61)   10 
CMBX.NA.AA.4  CSI    2,035    1.65%   02/17/51   (1,287)   (1,236)   51 
CMBX.NA.AA.4  CSI    190    1.65%   02/17/51   (108)   (115)   (7)

 

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

 

19

 

The Hartford World Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Credit Default Swap Contracts Outstanding at April 30, 2013 - (continued)

 

Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate /
Implied Credit
Spread (b)
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on traded indices: - (continued)              
Sell protection: - (continued)
CMBX.NA.AA.4  DEUT  $65    1.65%  02/17/51  $(37)  $(39)  $(2)
CMBX.NA.AA.4  MSC   40    1.65%   02/17/51   (23)   (24)   (1)
CMBX.NA.AA.4  MSC   2,090    1.65%   02/17/51   (1,335)   (1,269)   66 
CMBX.NA.AA.4  UBS   250    1.65%   02/17/51   (155)   (152)   3 
CMBX.NA.AAA.3  CSI   2,095    0.08%   12/13/49   (136)   (43)   93 
CMBX.NA.AAA.3  JPM   700    0.08%   12/13/49   (19)   (14)   5 
CMBX.NA.AAA.5  CSI   324    0.35%   02/15/51   (10)   (8)   2 
CMBX.NA.AAA.5  DEUT   30    0.35%   02/15/51   (3)   (1)   2 
CMBX.NA.AAA.5  GSC   279    0.35%   02/15/51   (28)   (8)   20 
CMBX.NA.AAA.5  JPM   15    0.35%   02/15/51   (1)       1 
CMBX.NA.AAA.5  MSC   2,101    0.35%   02/15/51   (120)   (52)   68 
CMBX.NA.AAA.6  CSI   1,345    0.50%   05/11/63   (39)   (33)   6 
CMBX.NA.AAA.6  JPM   2,930    0.50%   05/11/63   (97)   (73)   24 
CMBX.NA.AAA.6  UBS   4,340    0.50%   05/11/63   (116)   (108)   8 
CMBX.NA.AAA.6  UBS   3,095    0.50%   05/11/63   (72)   (77)   (5)
CMBX.NA.AJ.3  BCLY   770    1.47%   12/13/49   (278)   (198)   80 
CMBX.NA.AJ.3  CBK   355    1.47%   12/13/49   (111)   (91)   20 
CMBX.NA.AJ.3  CSI   2,335    1.47%   12/13/49   (709)   (599)   110 
CMBX.NA.AJ.3  GSC   125    1.47%   12/13/49   (47)   (32)   15 
CMBX.NA.AJ.3  JPM   250    1.47%   12/13/49   (77)   (64)   13 
CMBX.NA.AJ.3  MSC   1,855    1.47%   12/13/49   (588)   (477)   111 
CMBX.NA.BB.5  GSC   885    5.00%   05/11/63   (47)   (19)   28 
CMBX.NA.BB.6  CBK   345    5.00%   05/11/63   2    (8)   (10)
CMBX.NA.BB.6  CBK   260    5.00%   05/11/63   (14)   (6)   8 
CMBX.NA.BB.6  CSI   1,385    5.00%   05/11/63   (7)   (30)   (23)
CMBX.NA.BB.6  GSC   460    5.00%   05/11/63   (23)   (10)   13 
CMBX.NA.BB.6  JPM   80    5.00%   05/11/63   1    (2)   (3)
CMBX.NA.BB.6  MSC   410    5.00%   05/11/63   9    (9)   (18)
CMBX.NA.BB.6  MSC   2,200    5.00%   05/11/63   (139)   (48)   91 
CMBX.NA.BB.6  UBS   430    5.00%   05/11/63   (21)   (9)   12 
CMBX.NA.BB.6  UBS   1,410    5.00%   05/11/63   16    (31)   (47)
PrimeX.ARM.1  CBK   158    4.42%   06/25/36   17    17     
PrimeX.ARM.1  CSI   482    4.42%   06/25/36   35    52    17 
PrimeX.ARM.1  MSC   521    4.42%   06/25/36   30    56    26 
PrimeX.ARM.2  BCLY   1,303    4.58%   12/25/37   (18)   45    63 
PrimeX.ARM.2  BCLY   443    4.58%   12/25/37   17    15    (2)
PrimeX.ARM.2  CBK   353    4.58%   12/25/37   (62)   13    75 
PrimeX.ARM.2  CSI   65    4.58%   12/25/37   (9)   2    11 
PrimeX.ARM.2  JPM   33    4.58%   12/25/37   (5)   1    6 
PrimeX.ARM.2  MSC   1,839    4.58%   12/25/37   (36)   64    100 
Total                 $(6,268)  $(5,136)  $1,132 
Total traded indices     $5,869   $2,742   $(3,127)
Credit default swaps on single-name issues:
Buy protection:                               
Australia & New Zealand Banking Group Ltd.  DEUT  $3,450    (1.00)% / 0.82%   06/20/18  $83   $41   $(42)
Avis Budget Group, Inc.  BOA   75    (5.00)% / 1.78%   03/20/17   3    (9)   (12)
Commonwealth Bank of Australia  DEUT   3,450    (1.00)% / 1.22%   06/20/18   84    38    (46)
Credit Agricole SA  CBK  EUR  710    (3.00)% / 1.58%   12/20/17   (31)   (60)   (29)
Credit Agricole SA  JPM  EUR1,340    (3.00)% / 1.58%   12/20/17   (59)   (112)   (53)
Domtar Corp.  GSC   55    (1.00)% / 1.53%   12/20/16   3    1    (2)
Frontier Communications  BOA   625    (5.00)% / 3.21%   09/20/17   19    (46)   (65)
Lafarge S.A.  CBK  EUR70    (1.00)% / 1.52%   12/20/16   14    2    (12)
National Australia Bank  DEUT   3,450    (1.00)% / 1.24%   06/20/18   83    42    (41)
Peugeot S.A.  CBK  EUR70    (1.00)% / 5.12%   12/20/16   17    12    (5)

 

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

 

20

 

 

 

Credit Default Swap Contracts Outstanding at April 30, 2013 - (continued)

 

Reference Entity  Counterparty  Notional
Amount (a)
   (Pay)/Receive
Fixed Rate /
Implied Credit
Spread (b)
  Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
Credit default swaps on single-name issues: - (continued)
Buy protection: - (continued)
Rite Aid Corp.  GSC  $40   (5.00)% / 2.81%  03/20/17  $6   $(3)  $(9)
Rite Aid Corp.  GSC   105   (5.00)% / 3.01%  06/20/17   9    (8)   (17)
UBS AG  MSC  EUR2,760   (1.00)% / 0.90%  06/20/18   10    (18)   (28)
Westpac Banking Corp.  DEUT   3,450   (1.00)% / 1.25%  06/20/18   83    43    (40)
Total                $324   $(77)  $(401)
Sell protection:                             
Australia & New Zealand Banking Group Ltd.  DEUT  $3,450   1.00% / 0.82%  06/20/18  $11   $32   $21 
Commonwealth Bank of Australia  DEUT   3,450   1.00% / 0.82%  06/20/18   10    31    21 
National Australia Bank  DEUT   3,450   1.00% / 0.82%  06/20/18   11    31    20 
Westpac Banking Corp.  DEUT   3,450   1.00% / 0.82%  06/20/18   11    31    20 
Zurich Insurance Co., Ltd.  MSC  EUR3,445   1.00% / 1.03%  06/20/18   (40)   (6)   34 
Total                $3   $119   $116 
Total single name issues         $327   $42   $(285)
                 $6,196   $2,784   $(3,412)

 

(a)The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.  Notional shown in U.S. dollars unless otherwise noted.

 

(b)Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues, U.S. municipal issues or sovereign government issues as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood of risk of default for the credit derivative.  The implied credit spread of a particular entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement.  Wider credit spreads represent a deterioration of the reference entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.  The percentage shown is the implied credit spread on April 30, 2013.  For credit default swap agreements on indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk.

 

Interest Rate Swap Contracts Outstanding at April 30, 2013

 

Counterparty  Payments made by Fund  Payments received by Fund  Notional
Amount *
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
BCLY  1.88% Fixed  6M CZK PRIBOR Reference Banks  CZK  28,270   12/19/22  $   $(18)  $(18)
BCLY  1.88% Fixed  6M GBP LIBOR  GBP2,740   11/08/22       (47)   (47)
BCLY  2.99% Fixed  KRW CD KSDA  KRW  516,034   07/31/22       (11)   (11)
BCLY  3M TELBOR  3.70% Fixed  ILS1,335   03/22/17       25    25 
BCLY  6M WIBOR PLN  3.86% Fixed  PLN  4,605   12/19/22       30    30 
BOA  2.65% Fixed  6M JPY LIBOR  JPY  438,880   03/08/43       (84)   (84)
BOA  CLICP Camara  5.05% Fixed  CLP 1,279,575   06/19/18       22    22 
CBK  3.16% Fixed  6M WIBOR PLN  PLN  18,220   06/19/15       (56)   (56)
CBK  3M TELBOR  3.24% Fixed  ILS  2,365   05/17/17       32    32 
CBK  3M TELBOR  3.24% Fixed  ILS  2,870   06/01/17       33    33 
CBK  3M TELBOR  3.45% Fixed  ILS  1,320   04/16/17       21    21 
CBK  3M TELBOR  3.77% Fixed  ILS  4,700   11/05/22       71    71 
CBK  3M TELBOR  3.78% Fixed  ILS  4,417   03/20/23       64    64 
CBK  3M TELBOR  3.92% Fixed  ILS  5,130   10/02/22       97    97 
CBK  3M TELBOR  4.02% Fixed  ILS  20,475   12/19/22       425    425 
CBK  4.60% Fixed  MXIBTIIE  MXN  26,625   06/14/18       (3)   (3)
CBK  4.92% Fixed  MXIBTIIE  MXN  85,055   03/14/18       (124)   (124)
CBK  6M WIBOR PLN  3.50% Fixed  PLN  5,043   03/20/18       50    50 
CBK  6M WIBOR PLN  3.80% Fixed  PLN6,575   12/19/17       91    91 

 

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

 

21

 

The Hartford World Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

Interest Rate Swap Contracts Outstanding at April 30, 2013  - (continued)

 

Counterparty  Payments made by Fund  Payments received by Fund  Notional
Amount *
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
CBK  6M WIBOR PLN  4.33% Fixed  PLN4,212   07/31/17  $   $82   $82 
CBK  CLICP Camara  5.44% Fixed  CLP3,069,790   03/20/18       162    162 
CSI  0.82% Fixed  6M JPY LIBOR  JPY494,415   02/18/23       (39)   (39)
DEUT  0.40% Fixed  3M USD LIBOR   41,280   03/20/15   2    (51)   (53)
DEUT  0.50% Fixed  3M LIBOR   109,175   06/19/15   (81)   (314)   (233)
DEUT  0.51% Fixed  3M USD LIBOR   95,220   02/05/15       (140)   (140)
DEUT  0.82% Fixed  6M JPY LIBOR  JPY494,410   02/18/23       (38)   (38)
DEUT  3M TELBOR  3.25% Fixed  ILS13,490   02/20/17       183    183 
DEUT  3M TELBOR  3.47% Fixed  ILS1,580   03/05/17       25    25 
DEUT  4.89% Fixed  MXIBTIIE  MXN143,125   03/14/18       (190)   (190)
DEUT  CLICP Camara  5.40% Fixed  CLP5,451,940   03/20/18       265    265 
GSC  0.54% Fixed  3M USD LIBOR   45,600   02/05/15       (81)   (81)
GSC  1.77% Fixed  6M CZK PRIBOR Reference Banks  CZK53,790   06/20/23       (8)   (8)
GSC  1.86% Fixed  6M CZK PRIBOR Reference Banks  CZK51,665   06/20/23       (18)   (18)
GSC  2.06% Fixed  6M CZK PRIBOR Reference Banks  CZK55,325   06/20/23       (46)   (46)
GSC  2.07% Fixed  6M CZK PRIBOR Reference Banks  CZK120,975   03/20/23       (119)   (119)
GSC  2.21% Fixed  6M CZK PRIBOR Reference Banks  CZK33,110   10/16/22       (50)   (50)
GSC  2.75% Fixed  6M WIBOR PLN  PLN22,885   06/19/15       (13)   (13)
GSC  3.00% Fixed  3M LIBOR   5,660   06/19/43   47    (207)   (254)
GSC  3M TELBOR  3.48% Fixed  ILS3,265   06/19/23       20    20 
GSC  3M TELBOR  3.59% Fixed  ILS5,395   03/20/23       53    53 
GSC  3M TELBOR  3.83% Fixed  ILS1,662   10/16/22       28    28 
GSC  4.94% Fixed  MXIBTIIE  MXN143,125   03/14/18       (219)   (219)
GSC  4.97% Fixed  MXIBTIIE  MXN23,555   03/14/18       (39)   (39)
GSC  5.00% Fixed  MXIBTIIE  MXN16,610   06/14/18       (27)   (27)
GSC  6M EURIBOR  0.39% Fixed  EUR5,395   06/19/15       (3)   (3)
GSC  6M WIBOR PLN  4.09% Fixed  PLN6,085   06/20/23       55    55 
GSC  6M WIBOR PLN  4.47% Fixed  PLN7,491   07/16/17       158    158 
GSC  6M WIBOR PLN  4.47% Fixed  PLN5,281   10/16/22       79    79 
GSC  6M WIBOR PLN  4.70% Fixed  PLN2,640   06/21/17       63    63 
GSC  CLICP Camara  5.39% Fixed  CLP735,395   03/20/18       35    35 
GSC  CLICP Camara  5.42% Fixed  CLP 5,451,940   03/20/18       279    279 
JPM  0.40% Fixed  3M USD LIBOR   42,885   03/20/15   3    (53)   (56)
JPM  0.54% Fixed  3M USD LIBOR   49,625   02/05/15       (89)   (89)
JPM  1.99% Fixed  6M CZK PRIBOR Reference Banks  CZK27,320   12/20/22       (25)   (25)
JPM  2.04% Fixed  6M CZK PRIBOR Reference Banks  CZK43,910   12/19/22       (44)   (44)
JPM  2.14% Fixed  6M CZK PRIBOR Reference Banks  CZK254,035   12/20/22       (321)   (321)
JPM  2.15% Fixed  6M CZK PRIBOR Reference Banks  CZK94,134   03/20/23       (111)   (111)
JPM  2.18% Fixed  6M CZK PRIBOR Reference Banks  CZK72,850   08/21/22       (111)   (111)
JPM  2.23% Fixed  6M CZK PRIBOR Reference Banks  CZK190,595   08/21/22       (313)   (313)
JPM  2.25% Fixed  6M CZK PRIBOR Reference Banks  CZK109,275   08/21/22       (185)   (185)
JPM  2.30% Fixed  6M CZK PRIBOR Reference Banks  CZK94,250   08/21/22       (171)   (171)
JPM  2.31% Fixed  6M CZK PRIBOR Reference Banks  CZK  32,225   10/09/22       (57)   (57)

 

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

 

22

 

 

 

Interest Rate Swap Contracts Outstanding at April 30, 2013  - (continued)

 

Counterparty  Payments made by Fund   Payments received by Fund  Notional
Amount *
   Expiration
Date
  Upfront
Premiums
Paid/
(Received)
   Market
Value ╪
   Unrealized
Appreciation/
(Depreciation)
 
JPM  2.34% Fixed  6M CZK PRIBOR Reference Banks  CZK17,795    05/21/22  $   $(36)  $(36)
JPM  2.39% Fixed  6M CZK PRIBOR Reference Banks  CZK13,010    05/21/22       (28)   (28)
JPM  3.16% Fixed  6M WIBOR PLN  PLN36,200    06/19/15       (112)   (112)
JPM  3M TELBOR  3.47% Fixed  ILS1,265    04/27/17       20    20 
JPM  3M TELBOR  3.53% Fixed  ILS1,135    03/12/17       19    19 
JPM  3M TELBOR  3.55% Fixed  ILS925   04/02/17       16    16 
JPM  3M TELBOR  3.68% Fixed  ILS3,130   12/19/22       40    40 
JPM  3M TELBOR  3.71% Fixed  ILS2,535    06/20/23       30    30 
JPM  3M TELBOR  3.89% Fixed  ILS3,380    12/19/22       59    59 
JPM  6M EURIBOR  0.48% Fixed  EUR8,420    06/19/15       15    15 
JPM  6M EURIBOR  0.51% Fixed  EUR4,245    06/19/15       19    19 
JPM  6M WIBOR PLN  3.57% Fixed  PLN11,255    03/20/18       124    124 
JPM  6M WIBOR PLN  3.91% Fixed  PLN1,815    12/20/22       13    13 
JPM  6M WIBOR PLN  3.99% Fixed  PLN3,890    03/20/23       31    31 
JPM  6M WIBOR PLN  4.55% Fixed  PLN19,540    08/21/22       320    320 
JPM  6M WIBOR PLN  4.64% Fixed  PLN13,860    08/21/22       244    244 
JPM  6M WIBOR PLN  4.77% Fixed  PLN20,955    06/12/17       515    515 
MSC  2.59% Fixed  6M JPY LIBOR  JPY551,940    03/22/43       (67)   (67)
                 $(29)  $245   $274 

 

* Notional shown in U.S. dollars unless otherwise noted.

 

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.

 

23

 

The Hartford World Bond Fund
Schedule of Investments – (continued)
April 30, 2013 (Unaudited)
(000’s Omitted)

 

GLOSSARY: (abbreviations used in preceding Schedule of Investments)

 

Counterparty Abbreviations:
BCLY Barclays  
BMO Bank of Montreal
BNP BNP Paribas Securities  
BOA Banc of America Securities LLC  
CBA Commonwealth Bank of Australia
CBK Citibank NA  
CSFB Credit Suisse First Boston Corp.
CSI Credit Suisse International  
DEUT Deutsche Bank Securities, Inc.  
GSC Goldman Sachs & Co.
JPM JP Morgan Chase & Co.  
MSC Morgan Stanley  
NAB National Australia Bank
RBC RBC Dominion Securities  
RBS RBS Greenwich Capital
SCB Standard Chartered Bank  
SSG State Street Global Markets LLC  
UBS UBS AG  
WEST Westpac International  

 

Currency Abbreviations:
AUD Australian Dollar  
BRL Brazilian Real  
CAD Canadian Dollar  
CHF Swiss Franc  
CLP Chilean Peso  
CNY Chinese Yuan Renminbi  
CZK Czech Koruna  
DKK Danish Krone  
EUR EURO  
GBP British Pound  
HUF Hungarian Forint  
ILS Israeli New Shekel  
INR Indian Rupee  
JPY Japanese Yen  
KRW South Korean Won  
MXN Mexican New Peso  
MYR Malaysian Ringgit  
NOK Norwegian Krone  
NZD New Zealand Dollar  
PLN Polish New Zloty  
SEK Swedish Krona  
SGD Singapore Dollar  
USD U.S. Dollar  
ZAR South African Rand  
   
Index Abbreviations:
ABX.HE Markit Asset Backed Security Home Equity
ABX.HE.PEN Markit Asset Backed Security Home Equity Penultimate
CDX.NA.HY Credit Derivatives North American High Yield
CMBX.NA Markit Commercial Mortgage Backed North American
ITRX.SUB.FIN Markit iTraxx - Europe Sub Financials
PrimeX.ARM Markit PrimeX Mortgage Backed Security
   
Other Abbreviations:
CLICP Sinacofi Chile Interbank Offered Rate
EURIBOR Euro Interbank Offered Rate
FHLB Federal Home Loan Bank  
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
KSDA Korea Securities Dealers Association
LIBOR London Interbank Offered Rate
MXIBTIIE Mexico Interbank Equilibrium Interest Rate
PRIBOR Prague Interbank Offered Rate
TELBOR Tel Aviv Interbank Offered Rate
WIBOR Warsaw Interbank Offered Rate

 

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

 

24

 

The Hartford World Bond Fund

Investment Valuation Hierarchy Level Summary

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

   Total   Level 1 ♦   Level 2 ♦   Level 3 
Assets:                    
Asset & Commercial Mortgage Backed Securities  $105,859   $   $75,867   $29,992 
Call Options Purchased   236    236         
Corporate Bonds   159,204        159,204     
Foreign Government Obligations   925,287        925,287     
Preferred Stocks   1,729    1,729         
Put Options Purchased   263        263     
Senior Floating Rate Interests   26,265        26,265     
U.S. Government Agencies   65        65     
U.S. Government Securities   194,311    7,679    186,632     
Short-Term Investments   143,278        143,278     
Total  $1,556,497   $9,644   $1,516,861   $29,992 
Credit Default Swaps *   1,366        1,366     
Foreign Currency Contracts *   4,505        4,505     
Futures *   4,674    4,674         
Interest Rate Swaps *   3,913        3,913     
Written Options *   56        56     
Total  $14,514   $4,674   $9,840   $ 
Liabilities:                    
Credit Default Swaps *   4,778        4,778     
Foreign Currency Contracts *   18,072        18,072     
Futures *   3,664    3,664         
Interest Rate Swaps *   3,639        3,639     
Total  $30,153   $3,664   $26,489   $ 

 

For the six-month period ended April 30, 2013, investments valued at $10,911 were transferred from Level 1 to Level 2, and there were no transfers from Level 2 to Level 1. Investments are transferred between Level 1 and Level 2 for a variety of reasons including, but not limited to:
1)Foreign equities for which a fair value price is more representative of exit value than the local market close (transfer into Level 2). Foreign equities for which the local market close is more representative of exit value (transfer into Level 1).
2)U.S. Treasury securities that no longer represent the most recent issue (transfer into Level 2).
3)Equity investments with no observable trading but a bid or close price is used (transfer into Level 2). Equity investments using observable quoted prices in an active market (transfer into Level 1).
*Derivative instruments not reflected in the Schedule of Investments are valued at the unrealized appreciation/depreciation on the investments.

 

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

   Balance
as of
October
31, 2012
   Realized
Gain
(Loss)
   Change in
Unrealized
Appreciation
(Depreciation)
   Net
Amortization
   Purchases   Sales   Transfers
Into
Level 3 *
   Transfers
Out of
Level 3 *
   Balance as
of April
30, 2013
 
Assets:                                             
Asset & Commercial Mortgage Backed Securities  $4,847   $328   $701  $128   $26,751   $(2,254)  $   $(509)  $29,992 
Total  $4,847   $328   $701   $128   $26,751   $(2,254)  $   $(509)  $29,992 

 

*Investments are transferred into and out of Level 3 for a variety of reasons including, but not limited to:
1)Investments where trading has been halted (transfer into Level 3) or investments where trading has resumed (transfer out of Level 3).
2)Broker quoted investments (transfer into Level 3) or quoted prices in active markets (transfer out of Level 3).
3)Investments that have certain restrictions on trading (transfer into Level 3) or investments where trading restrictions have expired (transfer out of Level 3).
Change in unrealized appreciation (depreciation) in the current period relating to assets still held at April 30, 2013 was $822.

 

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

 

25

 

The Hartford World Bond Fund

Statement of Assets and Liabilities

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

Assets:     
Investments in securities, at market value (cost $1,525,113)  $1,556,497 
Cash   13,628*
Foreign currency on deposit with custodian (cost $1)   1 
Unrealized appreciation on foreign currency contracts   4,505 
Unrealized appreciation on swap contracts   5,279 
Receivables:     
Investment securities sold   18,286 
Fund shares sold   13,821 
Dividends and interest   19,555 
Variation margin   703 
Swap premiums paid   13,131 
Other assets   108 
Total assets   1,645,514 
Liabilities:     
Unrealized depreciation on foreign currency contracts   18,072 
Unrealized depreciation on swap contracts   8,417 
Bank overdraft   635 
Payables:     
Investment securities purchased   6,825 
Fund shares redeemed   5,026 
Investment management fees   162 
Dividends   181 
Administrative fees    
Distribution fees   45 
Collateral received from broker   4,937 
Variation margin   656 
Accrued expenses   149 
Swap premiums received   6,964 
Written options (proceeds $71)   15 
Other liabilities   3 
Total liabilities   52,087 
Net assets  $1,593,427 
Summary of Net Assets:     
Capital stock and paid-in-capital  $1,559,337 
Distributions in excess of net investment loss   (9,951)
Accumulated net realized gain   27,928 
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency   16,113 
Net assets  $1,593,427 

 

*Cash of $13,628 was pledged as initial margin deposit and collateral for daily variation margin loss on open futures contracts at April 30, 2013.

 

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

 

26

 

 

 

Shares authorized   650,000 
Par value  $ 0.001 
Class A: Net asset value per share/Maximum offering price per share   $10.83/$11.34 
Shares outstanding   40,145 
Net assets  $434,868 
Class C: Net asset value per share  $10.82 
Shares outstanding   15,609 
Net assets  $168,826 
Class I: Net asset value per share  $10.84 
Shares outstanding   69,813 
Net assets  $757,010 
Class R3: Net asset value per share  $10.85 
Shares outstanding   46 
Net assets  $494 
Class R4: Net asset value per share  $10.85 
Shares outstanding   56 
Net assets  $606 
Class R5: Net asset value per share  $10.84 
Shares outstanding   35 
Net assets  $374 
Class Y: Net asset value per share  $10.84 
Shares outstanding   21,328 
Net assets  $231,249 

 

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

 

27

 

The Hartford World Bond Fund

Statement of Operations

For the Six-Month Period Ended April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

Investment Income:     
Dividends  $19 
Interest   11,198 
Less: Foreign tax withheld    
Total investment income   11,217 
      
Expenses:     
Investment management fees   4,031 
Administrative services fees     
Class R3   1 
Class R4   1 
Class R5    
Transfer agent fees     
Class A   183 
Class C   59 
Class I   358 
Class R3    
Class R4    
Class R5    
Class Y   2 
Distribution fees     
Class A   425 
Class C   667 
Class R3   1 
Class R4   1 
Custodian fees   31 
Accounting services fees   128 
Registration and filing fees   69 
Board of Directors' fees   11 
Audit fees   9 
Other expenses   69 
Total expenses (before waivers and fees paid indirectly)   6,046 
Expense waivers   (641)
Custodian fee offset    
Total waivers and fees paid indirectly   (641)
Total expenses, net   5,405 
Net Investment Income   5,812 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net realized gain on investments in securities   6,818 
Net realized loss on purchased options   (828)
Net realized gain on futures   143 
Net realized gain on written options   377 
Net realized loss on swap contracts   (2,879)
Net realized gain on foreign currency contracts   22,993 
Net realized gain on other foreign currency transactions   1,852 
Net Realized Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   28,476 
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions:     
Net unrealized appreciation of investments   15,436 
Net unrealized appreciation of purchased options   28 
Net unrealized appreciation of futures   1,072 
Net unrealized depreciation of written options   (13)
Net unrealized depreciation of swap contracts   (2,044)
Net unrealized depreciation of foreign currency contracts   (13,439)
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies   266 
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions   1,306 
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions   29,782 
Net Increase in Net Assets Resulting from Operations  $35,594 

 

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

 

28

 

The Hartford World Bond Fund

Statement of Changes in Net Assets

 

(000’s Omitted)

 

  

   For the Six-Month
Period Ended
April 30, 2013
(Unaudited)
   For the
Year Ended
October 31, 2012
 
Operations:          
Net investment income  $5,812   $3,741 
Net realized gain on investments, other financial instruments and foreign currency transactions   28,476    10,685 
Net unrealized appreciation of investments, other financial instruments and foreign currency transactions   1,306    14,071 
Net Increase in Net Assets Resulting from Operations   35,594    28,497 
Distributions to Shareholders:          
From net investment income          
Class A   (3,839)   (1,203)
Class C   (1,063)   (239)
Class I   (7,558)   (1,838)
Class R3   (3)   (33)
Class R4   (6)   (36)
Class R5   (5)   (41)
Class Y   (2,751)   (949)
Total from net investment income   (15,225)   (4,339)
From net realized gain on investments          
Class A   (2,916)   (157)
Class C   (1,137)   (44)
Class I   (4,780)   (112)
Class R3   (14)   (8)
Class R4   (16)   (8)
Class R5   (14)   (8)
Class Y   (2,063)   (35)
Total from net realized gain on investments   (10,940)   (372)
Total distributions   (26,165)   (4,711)
Capital Share Transactions:          
Class A   181,387    212,029 
Class C   70,619    85,469 
Class I   331,030    387,492 
Class R3   (806)   (844)
Class R4   (742)   (795)
Class R5   (903)   (865)
Class Y   32,199    182,305 
Net increase from capital share transactions   612,784    864,791 
Net Increase in Net Assets   622,213    888,577 
Net Assets:          
Beginning of period   971,214    82,637 
End of period  $1,593,427   $971,214 
Undistributed (distribution in excess of) net investment income (loss)  $(9,951)  $(538)

 

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

 

29

 

The Hartford World Bond Fund

Notes to Financial Statements

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

1.Organization:

 

The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty portfolios. Financial statements for The Hartford World 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 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 primarily through advisory fee-based wrap programs. Class 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.

 

2.Significant Accounting Policies:

 

The following is a summary of significant accounting policies of the Fund in the preparation of its financial statements, which are in accordance with the United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

a)Determination of Net Asset Value – The per share net asset value (“NAV”) of each class of the Fund’s shares is determined as of the close of regular trading (normally 4:00 p.m. Eastern Time) (the “NYSE Close”) on each day that the New York Stock Exchange (the “Exchange”) is open (“Valuation Date”). Information that becomes known to the Fund after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the NAV determined earlier that day.

 

b)Investment Valuation and Fair Value Measurements – For purposes of calculating the NAV, portfolio investments and other assets held by the Fund's portfolio for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices or official close price. If no sales are reported, market value is based on quotes obtained from a quotation reporting system, established market makers, or independent pricing services. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the investment as determined in good faith under policies and procedures established by and under the supervision of the Company’s Board of Directors. Market quotes are considered not readily available where there is an absence of current or reliable market-based data (e.g., trade information or indicative market quotes), including where events occur after the close of the relevant market, but prior to the NYSE Close that materially affect the values of the Fund’s portfolio investments or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the investments trade do not open for trading for the entire day and no other market prices are available. In addition, prices of foreign equities that are principally traded on certain foreign markets may be adjusted daily pursuant to a fair value pricing service approved by the Board of Directors in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close. Investments that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign investments in which the Fund invests may change on days when a shareholder will not be able to

 

30

 

 

 

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 investment is primarily traded. There can be no assurance that the Fund could obtain the fair market value assigned to an investment if the Fund were to sell the investment at approximately the time at which the Fund determines its NAV.

 

Fixed income investments (other than short term obligations) and non-exchange traded derivatives held by the Fund are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services in accordance with procedures established by the Company’s Board of Directors. Prices obtained from independent pricing services use information provided by market makers or estimates of market values through accepted market modeling and trading and pricing conventions. Inputs to the models may include, but are not limited to, prepayment speeds, pricing spread, yield, trade information, dealer quotes, market color, cash flow models and the bond’s terms and conditions. Generally, the Fund may use fair valuation in regard to fixed income investments when the Fund holds defaulted or distressed investments or investments in a company in which a reorganization is pending. Senior floating rate interests generally trade in over-the-counter (“OTC”) markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. A composite bid price is used, which averages the dealer marks and dealer runs. Short-term investments maturing in 60 days or less are generally valued at amortized cost, if their original term to maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days.

 

Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange as of the NYSE Close. In the case of OTC options and such instruments that do not trade on an exchange, values may be supplied by a pricing service using a formula or other objective method that may take into consideration the style, direction, expiration, strike price, notional value and volatility or other special adjustments.

 

Investments valued in currencies other than U.S. dollars are converted to U.S. dollars using exchange rates obtained from independent pricing services for calculation of the NAV. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and the market value may change on days when an investor is not able to purchase, redeem or exchange shares of the Fund.

 

Foreign currency contracts represent agreements to exchange currencies on specific future dates at predetermined rates. Foreign currency contracts are valued using foreign currency exchange rates and forward rates as provided by an independent pricing service on the Valuation Date.

 

Financial instruments 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 respective financial instrument in accordance with procedures established by the Company’s Board of Directors.

 

U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants. The U.S. GAAP fair value measurement standards require disclosure of a fair value hierarchy for each major category of assets and liabilities. Various inputs are used in determining the fair value of the Fund’s investments. 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 investments. Level 1 may include exchange traded instruments, such as domestic equities, some foreign equities, options, futures, mutual funds, exchange traded funds, rights and warrants.

 

31

 

The Hartford World Bond Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

·Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar investments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 2 may include debt investments that are traded less frequently than exchange traded instruments and which are valued using independent pricing services; foreign equities, which are principally traded on certain foreign markets and are adjusted daily pursuant to a fair value pricing service in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE Close; and short-term investments, which are valued at amortized cost.
·Level 3 – Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or require significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 

The Board of Directors of the Company generally reviews and approves the “Procedures for Valuation of Portfolio Securities” on an annual basis. These procedures define how investments are to be valued, including the formation and activities of a Valuation Committee. The Valuation Committee is responsible for determining in good faith the fair value of investments when the value cannot be obtained from primary pricing services or alternative sources or if the valuation of an investment as provided by the primary pricing service or alternative source is believed not to reflect the investment’s fair value as of the Valuation Date. Members of the Valuation Committee include the Fund’s Treasurer or designee, a Vice President of the Fund with legal expertise or designee, and a Vice President of the investment manager or designee. In addition, the Fund’s Chief Compliance Officer shall designate a member of the compliance group to attend Valuation Committee meetings as a non-voting resource, to monitor for and provide guidance with respect to compliance with these procedures. Two members of the Valuation Committee or their designees, representing different departments, shall constitute a quorum for purposes of permitting the Valuation Committee to take action. The Valuation Committee will consider all relevant factors in determining an investment’s fair value, and may seek the advice of the Fund’s sub-adviser, knowledgeable brokers, and legal counsel in making such determination. The Valuation Committee reports to the Audit Committee of the Company’s Board of Directors. The Audit Committee receives quarterly written reports which include details of all fair-valued investments, including the reason for the fair valuation, and an indication, when possible, of the accuracy of the valuation by disclosing the next available reliable public price quotation or the disposition price of such investments (the “look-back” test). The Board of Directors then must consider for ratification all of the fair value determinations made during the previous quarter.

 

Valuation levels are not necessarily indicative of the risk associated with investing in such investments. Individual investments within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate.

 

For additional information, refer to the Investment Valuation Hierarchy Level Summary and the Level 3 roll-forward reconciliation, if applicable, which follow the Schedule of Investments.

 

For purposes of reporting transfers between different hierarchy levels, both transfers in and out of each level, as applicable, are shown as if they occurred at the beginning of the period.

 

c)Investment Transactions and Investment Income – Investment transactions are recorded as of the trade date (the date the order to buy or sell is executed) for financial reporting purposes. Investments purchased or sold on a when-issued or

 

32

 

 

 

delayed-delivery basis may be settled a month or more after the trade date. Realized gains and losses are determined on the basis of identified cost.

 

Dividend income from domestic securities is accrued on the ex-dividend date. In general, dividend income from foreign securities is recorded on the ex-date; however, dividend notifications in certain foreign jurisdictions may not be available in a timely manner and as a result, the Fund will record the dividend as soon as the relevant details (i.e., rate per share, payment date, shareholders of record, etc.) are publicly available. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. Paydown gains and losses on mortgage-related and other asset-backed securities are included in interest income in the Statement of Operations, as applicable.

 

d)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 investments, 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 investment valuation resulting from fluctuations in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of investments 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.

 

e)Joint Trading Account – The Fund may invest cash balances into a joint trading account that may be invested in one or more repurchase agreements.

 

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 business on each business day of the Exchange. The NAV is determined separately for each class of shares of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Each class of shares offered by the Fund has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets of the class. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of shares of the Fund.

 

Orders for the purchase of the Fund’s shares received prior to the close of the Exchange on any day the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders received 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.

 

Dividends are declared pursuant to a policy adopted by the Company’s Board of Directors based upon the investment performance of the Fund. Dividends from net investment income are declared and paid monthly. Dividends from realized capital gains, if any, are paid at least once a year.

 

Distributions from net investment income, net 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

 

33

 

The Hartford World Bond Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

(“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 note).

 

3.Securities and Other Investments:

 

a)Repurchase Agreements – A repurchase agreement is an agreement by which a counterparty agrees to sell an investment and agrees to repurchase the investment sold from the buyer at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral, including accrued interest, will be equal to or exceed the value of the repurchase agreement. Repurchase agreements expose the Fund to counterparty risk - that is, the risk that the counterparty will not fulfill its obligations. To minimize counterparty risk, the investments 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, which approximates fair value. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2013.

 

b)Illiquid and Restricted Investments – The Fund is permitted to invest up to 15% of its net assets in illiquid investments. Illiquid investments 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 investments when its sub-adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. A sale of illiquid 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 investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and an investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted investments that can only be resold to certain qualified investors and may be determined to be liquid pursuant to policies and guidelines established by the Company’s Board of Directors. The Fund, as shown on the  Schedule of Investments, had illiquid and/or restricted investments as of April 30, 2013.

 

c)Investments Purchased on a When-Issued or Delayed-Delivery Basis – Delivery and payment for investments 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. A fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery investments before they are delivered, which may result in a realized gain or loss. During this period, such investments are subject to market fluctuations, and the Fund identifies investments segregated in its records with a 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 investments as of April 30, 2013.

 

d)Senior Floating Rate Interests – The Fund, as shown on the Schedule of Investments, invests 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. The Fund may invest in multiple series or tranches of a senior floating rate interest, which may have varying terms and carry different associated risks. The Fund may also enter into unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. In certain circumstances, the Fund may receive various fees upon the restructure of a senior floating rate interest by a borrower. Fees earned/paid may be recorded as a component of income or realized gain/loss in the Statement of Operations.

 

34

 

 

 

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.

 

e)Mortgage Related and Other Asset Backed Securities The Fund may invest in mortgage related and other asset backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations, commercial mortgage backed securities, stripped mortgage backed securities, asset backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. Mortgage related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. These securities provide a monthly payment that consists of both interest and principal payments. Interest payments may be determined by fixed or adjustable rates. The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. The timely payment of principal and interest of certain mortgage related securities is guaranteed by the full faith and credit of the United States Government. Mortgage related and other asset backed securities created and guaranteed by non-governmental issuers, including government-sponsored corporations, may be supported by various forms of insurance or guarantees, but there can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund, as shown on the  Schedule of Investments, had mortgage related and other asset backed securities as of April 30, 2013.

 

4.Financial Derivative Instruments:

 

The following disclosures contain information on how and why the Fund uses derivative instruments, the credit-risk-related contingent features in certain derivative instruments, and how derivative instruments affect the Fund’s financial position and results of operations. The location and fair value amounts of these instruments on the Statement of Assets and Liabilities and the realized gains and losses and changes in unrealized gains and losses on the Statement of Operations, each categorized by type of derivative contract, are included in the following Additional Derivative Instrument Information footnote. The derivative instruments outstanding as of period-end are disclosed in the notes to or within the Schedule of Investments for purchased options, if applicable. The amounts of realized gains and losses and changes in unrealized gains and losses on derivative instruments during the period are disclosed in the Statement of Operations.

 

a)Foreign Currency Contracts – The Fund may enter into foreign currency contracts that obligate the Fund to purchase or sell currencies at specified future dates. Foreign currency contracts are used to hedge the currency exposure associated with some or all of the Fund’s investments and/or as part of an investment strategy. Foreign currency contracts are marked to market daily and the change in value is recorded by the Fund as an unrealized gain or loss. The Fund will record a realized gain or loss when the foreign currency contract is settled.

 

Foreign currency contracts involve elements of market risk in excess of the amounts 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 foreign currency contracts as shown on the  Schedule of Investments as of April 30, 2013.

 

b)Futures Contracts – The Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a set price on a future date. The Fund uses futures contracts to manage or obtain exposure to the investment markets, commodities, or movements in interest rates and currency values. The primary risks associated with

 

35

 

The Hartford World Bond Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

the use of futures contracts are the imperfect correlation between the change in market value of the investments held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a futures commission merchant (“FCM”) an amount of cash or U.S. Government or Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively, and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities; however, the Fund seeks to reduce this risk through the use of an FCM. The Fund, as shown on the  Schedule of Investments, had outstanding futures contracts as of April 30, 2013.

 

c)Options 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) an investment or other financial asset at an agreed-upon price during a specific period of time or on a specific date. The Fund may write (sell) covered call and put options on futures, swaps (“swaptions”), securities, commodities or currencies. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying investments or currency or an option to purchase the same underlying investments 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 investments having a value equal to or greater than the fluctuating market value of the option investment or currency. Writing put options increases the Fund’s exposure to the underlying instrument. Writing call options decreases the Fund’s exposure to the underlying instrument. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options that are exercised or closed are added to the proceeds or offset amounts paid on the underlying futures, swap, investment or currency transaction to determine the realized gain or loss. The Fund as a writer of an option has no control over whether the underlying instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the instrument underlying the written option. There is the risk the Fund may not be able to enter into a closing transaction because of an illiquid market. The Fund may also purchase put and call options. Purchasing call options increases the Fund’s exposure to the underlying instrument. Purchasing put options decreases the Fund’s exposure to the underlying instrument. The Fund pays a premium, which is included on the Fund’s Statement of Assets and Liabilities as an investment and is subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options that expire are treated as realized losses. Certain options may be purchased with premiums to be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. The risk associated with purchasing put and call options is generally limited to the premium paid. Premiums paid for purchasing options that are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss. Entering into over-the-counter options also exposes the Fund to counterparty risk. Counterparty risk is the possibility that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements. The Fund, as shown on the  Schedule of Investments, had outstanding purchased options and written options contracts as of April 30, 2013. Transactions involving written options contracts during the six-month period ended April 30, 2013, are summarized below:

 

 

36

 

 

 

Options Contract Activity During the Six-Month Period Ended April 30, 2013:      
Call Options Written During the Period   Number of Contracts*    Premium Amounts 
Beginning of the period   11,362,000   $40 
Written   17,160,000    23 
Expired   (17,160,000)   (23)
Closed        
Exercised        
End of Period   11,362,000   $40 
           
Put Options Written During the Period   Number of Contracts*    Premium Amounts 
Beginning of the period   9,000,000   $38 
Written   46,248,000    358 
Expired   (26,800,000)   (211)
Closed   (28,380,000)   (154)
Exercised        
End of Period   68,000   $31 

 

*The number of contracts does not omit 000's.

 

d)Swap Contracts – The Fund may invest in swap contracts. Swap contracts are privately negotiated agreements between the Fund and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified future intervals. The Fund may enter into credit default, total return, cross-currency, interest rate, inflation and other forms of swap contracts to manage its exposure to credit, currency, interest rate, commodity and inflation risk. Swap contracts are also used to gain exposure to certain markets. In connection with these contracts, investments or cash may be identified as collateral in accordance with the terms of the respective swap contracts to provide assets of value and recourse in the event of default or bankruptcy/insolvency. 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 Company’s Board of Directors, and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of Assets and Liabilities. Payments received or made at the beginning of the measurement period are reflected as such on the Statement of Assets and Liabilities and represent payments made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap contract and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap and net periodic payments received or paid by the Fund are recorded as realized gains or losses on the Statement of Operations. Entering into these contracts involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these contracts, that the counterparty to the contracts may default on its obligation to perform or disagree as to the meaning of contractual terms in the contracts, and that there may be unfavorable changes in interest rates. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the Fund and the counterparty, which allows for the netting of payments made or received (although such amounts are presented on a gross basis within the Statement of Assets and Liabilities, as applicable) as well as the posting of collateral to the Fund to cover the Fund’s exposure to the counterparty.

 

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 investment or index in the event of a credit event, such as payment default or bankruptcy.

 

37

 

The Hartford World Bond Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

Under a credit default swap contract, one party acts as guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying investment 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. Although specified events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. These potential amounts would be partially offset by any recovery values of the respective referenced obligations or upfront payments received upon entering into the contract.

 

Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap contracts on corporate issues, sovereign government issues or U.S. municipal issues as of period-end are disclosed in the notes to the Schedule of Investments, as applicable, and serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the contract. Wider credit spreads represent a deterioration of the referenced entity’s soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. For credit default swap contracts on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced equity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. The Fund, as shown on the Schedule of Investments, had outstanding credit default swaps as of April 30, 2013.

 

Interest Rate Swap Contracts 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 or inflation benchmark (e.g. London Interbank Offered Rate (“LIBOR”)), 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 contracts is recorded as a realized gain or loss. 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 contract 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 contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life, to the extent that amount is positive. The Fund, as shown on the Schedule of Investments, had outstanding interest rate swaps as of April 30, 2013.

 

38

 

 

 

e)Additional Derivative Instrument Information:

 

Fair Value of Derivative Instruments on the Statement of Assets and Liabilities as of April 30, 2013:
 
    Risk Exposure Category 
    Interest Rate
Contracts
    Foreign
Exchange
Contracts
    Credit
Contracts
    Equity
Contracts
    Commodity
Contracts
    Other
Contracts
    Total 
Assets:                                   
Investments in securities, at value (purchased options), market value  $236   $263   $   $   $   $   $499 
Unrealized appreciation on foreign currency contracts       4,505                    4,505 
Unrealized appreciation on swap contracts   3,913        1,366                5,279 
Variation margin receivable *   703                        703 
Total  $4,852   $4,768   $1,366   $   $   $   $10,986 
                                    
Liabilities:                                   
Unrealized depreciation on foreign currency contracts  $   $18,072   $   $   $   $   $18,072 
Unrealized depreciation on swap contracts   3,639        4,778                8,417 
Variation margin payable *   656                        656 
Written options, market value       15                    15 
Total  $4,295   $18,087   $4,778   $   $   $   $27,160 

 

*Only current day's variation margin is reported within the Statement of Assets and Liabilities. The variation margin is included in the open futures cumulative appreciation of $1,010 as reported in the Schedule of Investments.

 

The volume of derivatives that is presented in the Schedule of Investments is consistent with the derivative activity during the six-month period ended April 30, 2013.

 

The Effect of Derivative Instruments on the Statement of Operations for the six-month period ended April 30, 2013:
 
   Risk Exposure Category 
   Interest Rate
Contracts
   Foreign
Exchange
Contracts
  
Credit
Contracts
   Equity
Contracts
   Commodity
Contracts
   Other
Contracts
   Total 
Realized Gain (Loss) on Derivatives Recognized as a Result of Operations:
Net realized loss on purchased options  $(37)  $(288)  $(503)  $   $   $   $(828)
Net realized gain on futures   143                        143 
Net realized gain on written options           377                377 
Net realized loss on swap contracts   (630)       (2,249)               (2,879)
Net realized gain on foreign currency contracts       22,993                    22,993 
Total  $(524)  $22,705   $(2,375)  $   $   $   $19,806 
                                    
Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized as a Result of Operations:
Net change in unrealized appreciation (depreciation) of purchased options  $35   $(66)  $59   $   $   $   $28 
Net change in unrealized appreciation of futures   1,072                        1,072 
Net change in unrealized appreciation (depreciation) of written options       24    (37)               (13)
Net change in unrealized appreciation (depreciation) of swap contracts   257        (2,301)               (2,044)
Net change in unrealized depreciation of foreign currency contracts       (13,439)                   (13,439)
Total  $1,364   $(13,481)  $(2,279)  $   $   $   $(14,396)

 

39

  

The Hartford World Bond Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

5.Principal Risks:

 

a)Credit and Counterparty Risks – 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 that holds securities with higher credit risk may be more volatile than those of a fund that holds bonds with lower credit risk. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will default.

 

b)Market Risks – The Fund’s investments expose the Fund to various risks including, but not limited to, interest rate, prepayment, extension, foreign currency, and equity risks. Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the values of certain fixed income securities held by the Fund are likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income security’s market price to interest rate (i.e., yield) movements. In addition, securities are subject to extension risk. 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 and extension risk are major risks of mortgage backed securities and certain asset backed securities. For certain asset backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments, if applicable. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities, such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund. The market values of equity securities, such as common stocks and preferred stocks, or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. The market value of equity securities may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

 

6.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 the IRC. The Fund has distributed substantially all of its income and capital gains in prior years, if applicable, and intends to distribute substantially all of its income and capital gains during the calendar year ending December 31, 2013. 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), Net Realized Gains (Losses), and Distributions 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 net realized gains

 

40

 

 

 

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, if applicable):

  

   For the Year Ended
October 31, 2012
   For the Year Ended
October 31, 2011 *
 
Ordinary Income  $4,521   $186 
Long-Term Capital Gains ‡   93     

 

*The Fund commenced operations on May 31, 2011
The Fund designates these distributions as long-term capital gain dividends pursuant to IRC Sec. 852(b)(3)(C).

 

As of October 31, 2012, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows:

 

   Amount 
Undistributed Ordinary Income  $17,609 
Undistributed Long-Term Capital Gain   3,681 
Unrealized Appreciation *   3,470 
Total Accumulated Earnings  $24,760 

 

*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 U.S. GAAP and tax accounting for such items as foreign currency, PFICs, expiration or utilization of capital loss carryforwards or net operating losses. 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 undistributed net investment income, from accumulated 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, 2012, the Fund recorded reclassifications to increase (decrease) the accounts listed below:

 

   Amount 
Undistributed Net Investment Income  $269 
Accumulated Net Realized Gain (Loss)   (269)

 

e)Capital Loss Carryforward – On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which made changes to the capital loss carryforward rules. The changes are effective for taxable years beginning after the date of enactment. Under the Act, funds are permitted to carry forward capital losses for an unlimited period. Additionally, capital loss carryforwards retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under prior regulation.

 

The Fund had no capital loss carryforward for U.S. federal income tax purposes as of October 31, 2012.

 

41

 

The Hartford World Bond Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

f)Accounting for Uncertainty in Income Taxes – The Fund has adopted financial reporting rules that require the Fund to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions. Generally, tax authorities can examine all tax returns filed for the last three years. The Fund does not have an examination in progress.

 

The Fund has reviewed all open tax years and major jurisdictions and concluded that these financial reporting rules had no effect on the Fund’s financial position or results of operations. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on the tax return for the fiscal year ended October 31, 2012. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

7.Expenses:

 

a)Investment Management Agreement – Effective January 1, 2013, Hartford Funds Management Company, LLC (“HFMC”) replaced Hartford Investment Financial Services, LLC (“HIFSCO”) as the Fund’s investment manager. HFMC and HIFSCO are both indirect wholly owned subsidiaries of The Hartford Financial Services Group, Inc. (“The Hartford”). As of January 1, 2013, HFMC serves as investment manager to the Fund pursuant to an Investment Management Agreement with the Company. For the calendar year ended December 31, 2012, HIFSCO served as the Fund’s investment manager pursuant to a separate agreement between HIFSCO and the Company. The replacement of HIFSCO with HFMC did not result in any change to (i) the contractual terms of, including the fees payable under, the Fund’s investment management agreements; or (ii) the day-to-day management of the Fund. The investment manager has overall investment supervisory responsibility for the Fund. In addition, the investment manager provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HFMC has contracted with Wellington Management Company, LLP (“Wellington Management”) under a sub-advisory agreement 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 the investment manager, a portion of which may be used to compensate Wellington Management.

 

The schedule below reflects the rates of compensation paid to the investment manager for investment management services rendered as of April 30, 2013; the rates are accrued daily and paid monthly:

 

Average Daily Net Assets  Annual Fee 
On first $250 million   0.7000% 
On next $250 million   0.6500% 
On next $4.5 billion   0.6000% 
On next $5 billion   0.5750% 
Over $10 billion   0.5725% 

 

The investment manger contractually agreed to waive investment management fees of 0.10% of average daily net assets until February 28, 2014.

 

42

 

 

 

b)Accounting Services Agreement – Effective January 1, 2013, HFMC replaced Hartford Life Insurance Company (“HLIC”) as provider of accounting services to the Fund. HLIC provided accounting services for the Fund for the calendar year ended December 31, 2012. The replacement of HLIC with HFMC did not result in any changes to the fund accounting services provided to the Fund or the fees charged to the Fund for such services. Pursuant to the Fund Accounting Agreement between HFMC and the Company, on behalf of the Fund, HFMC provides accounting services to the Fund and receives monthly compensation based on the Fund’s average daily net assets at the rates set forth below. The Fund’s accounting services fees are accrued daily and paid monthly.

 

Average Daily Net Assets  Annual Fee 
On first $5 billion   0.020% 
On next $5 billion   0.018% 
Over $10 billion   0.016% 

 

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. As of April 30, 2013, HFMC contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, through February 28, 2014 as follows:

 

Class A   Class C   Class I   Class R3   Class R4   Class R5   Class Y 
 0.95%      1.70%      0.70%      1.25%      0.95%      0.65%      0.60%   

  

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 banks have agreed to reduce its fees when the Fund maintains cash on deposit in a non-interest-bearing custody account. For the six-month period ended April 30, 2013, these amounts, if any, 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. The annualized expense ratio after waivers for the period listed below reflecting the reduction for fees paid indirectly is as follows:

 

   Annualized Six-
Month Period
Ended 
April 30, 2013
 
Class A   0.93%
Class C   1.66 
Class I   0.70 
Class R3   1.25 
Class R4   0.95 
Class R5   0.65 
Class Y   0.58 

 

e)Distribution and Service Plan for Class A, C, R3 and R4 Shares HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker/dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2013, HIFSCO received front-end load sales charges of $1,125 and contingent deferred sales charges of $28 from the Fund.

 

43

 

The Hartford World Bond Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

The Fund has adopted a Distribution and Service Plan in accordance with Rule 12b-1 of the 1940 Act to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Class A, 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 0.25% of average daily net assets. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. 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% of average daily net assets and Class R4 shares have a distribution fee of 0.25% of average daily net assets. For Class R3 and R4 shares, some or the entire fee may be remitted to broker/dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly.

 

f)Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of the investment manager and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2013, a portion of the Fund’s chief compliance officer’s compensation was paid by all of 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 each class. For providing such services, HASCO is compensated on a per account basis that varies by account type, except with respect to Class Y, for which it is compensated based on average daily net assets. The amount paid to HASCO and any related contractual reimbursement amounts, if applicable, can be found in the Statement of Operations. 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.

 

8.Affiliate Holdings:

 

As of April 30, 2013, affiliates of The Hartford had ownership of shares in the Fund as follows:

 

   Percentage
of Class
 
Class R3   28%
Class R4   25 
Class R5   40 

 

As of April 30, 2013, the Fund's shares were owned in aggregate by affiliated fund of funds.  Therefore, the Fund may experience relatively large purchases or redemptions from affiliated fund of funds. Affiliated fund of funds owned shares in the Fund as follows:

 

   Percentage
of Fund
 
Class Y   12%

 

44

 

 

 

9.Investment Transactions:

 

For the six-month period ended April 30, 2013, 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  $1,030,609 
Sales Proceeds Excluding U.S. Government Obligations   507,115 
Cost of Purchases for U.S. Government Obligations   208,991 
Sales Proceeds for U.S. Government Obligations   128,862 

 

10.Capital Share Transactions:

 

The following information is for the six-month period ended April 30, 2013, and the year ended October 31, 2012:

 

   For the Six-Month Period Ended April 30, 2013   For the Year Ended October 31, 2012 
   Shares
Sold
   Shares
Issued for
Reinvested
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
   Shares
Sold
   Shares
Issued for
Reinvested 
Dividends
   Shares
Redeemed
   Shares
Issued
from
Merger
   Net Increase
(Decrease) of
Shares
 
Class A                                                  
Shares   23,473    589    (7,207)       16,855    24,020    125    (4,087)       20,058 
Amount  $252,550   $6,332   $(77,495)  $   $181,387   $253,311   $1,295   $(42,577)  $   $212,029 
Class C                                                  
Shares   7,692    168    (1,288)       6,572    8,822    25    (700)       8,147 
Amount  $82,650   $1,807   $(13,838)  $   $70,619   $92,550   $252   $(7,333)  $   $85,469 
Class I                                                  
Shares   47,436    881    (17,591)       30,726    41,842    154    (5,288)       36,708 
Amount  $511,205   $9,479   $(189,654)  $   $331,030   $441,796   $1,611   $(55,915)  $   $387,492 
Class R3                                                  
Shares   17    2    (93)       (74)   16    4    (101)       (81)
Amount  $183   $17   $(1,006)  $   $(806)  $161   $41   $(1,046)  $   $(844)
Class R4                                                  
Shares   23    1    (93)       (69)   20    4    (100)       (76)
Amount  $243   $15   $(1,000)  $   $(742)  $207   $44   $(1,046)  $   $(795)
Class R5                                                  
Shares   22    2    (107)       (83)   14    5    (102)       (83)
Amount  $233   $19   $(1,155)  $   $(903)  $148   $49   $(1,062)  $   $(865)
Class Y                                                  
Shares   6,209    446    (3,655)       3,000    19,997    94    (2,669)       17,422 
Amount  $66,763   $4,794   $(39,358)  $   $32,199   $209,587   $984   $(28,266)  $   $182,305 
Total                                                  
Shares   84,872    2,089    (30,034)       56,927    94,731    411    (13,047)       82,095 
Amount  $913,827   $22,463   $(323,506)  $   $612,784   $997,760   $4,276   $(137,245)  $   $864,791 

 

11.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 funds are 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 commitment fee is allocated to all of the funds participating in the line of credit based on the average net assets of the funds. During the six-month period ended April 30, 2013, the Fund did not have any borrowings under this facility.

 

45

 

The Hartford World Bond Fund

Notes to Financial Statements – (continued)

April 30, 2013 (Unaudited)

(000’s Omitted)

 

 

12.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.

 

13.Pending Legal Proceedings:

 

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that HIFSCO, an indirect subsidiary of The Hartford Financial Services Group, Inc., received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the 1940 Act.  HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund (now known as The Hartford Healthcare Fund), The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisers Fund (now known as The Hartford Balanced Fund), and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. HIFSCO disputes the allegations and intends to defend vigorously.

 

Although this action was purportedly filed on behalf of certain of the Hartford Mutual Funds, none of the Hartford Mutual Funds is itself a party to the suit. For this reason, no accrual for litigation relating to this matter has been recorded in the financial statements of the Fund because the Fund is not party to the suit.

 

14.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 laws. 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, as of the date of these financial statements, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

15.Recent Accounting Pronouncement:

 

Disclosures about Offsetting Assets and Liabilities - In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The objective of the ASU is to enhance current disclosure requirements on offsetting of certain assets and liabilities and to enable financial statement users to compare financial statements prepared under U.S. GAAP and International Financial Reporting Standards.

 

Specifically, ASU No. 2011-11 requires an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar agreement. The standard requires disclosure of collateral received in connection with the master netting agreements or similar agreements. The effective date of ASU No. 2011-11 is for interim and annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.

 

46

 

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47

 

The Hartford World Bond Fund

Financial Highlights

 

- Selected Per-Share Data (A) -

 

 

Class 

Net Asset Value at

Beginning of

Period

  

Net Investment

Income (Loss)

  

Net Realized and

Unrealized Gain

(Loss) on

Investments

  

Total from

Investment

Operations

  

Dividends from Net

Investment Income

  

Distributions from

Realized Capital

Gains

  

Distributions from

Capital

   Total Distributions  

Net Asset Value at

End of Period

 
                                     
For the Six-Month Period Ended April 30, 2013 (Unaudited) (E)
A  $10.77   $0.04   $0.27   $0.31   $(0.13)  $(0.12)   $   $(0.25)  $10.83 
C   10.76        0.27    0.27    (0.09)   (0.12)       (0.21)   10.82 
I   10.78    0.06    0.26    0.32    (0.14)   (0.12)       (0.26)   10.84 
R3   10.78    0.03    0.26    0.29    (0.10)   (0.12)       (0.22)   10.85 
R4   10.78    0.04    0.27    0.31    (0.12)   (0.12)       (0.24)   10.85 
R5   10.77    0.06    0.27    0.33    (0.14)   (0.12)       (0.26)   10.84 
Y   10.78    0.06    0.26    0.32    (0.14)   (0.12)       (0.26)   10.84 
                                              
For the Year Ended October 31, 2012 (E)
A   10.32    0.10    0.59    0.69    (0.20)   (0.04)       (0.24)   10.77 
C   10.31    0.02    0.60    0.62    (0.13)   (0.04)       (0.17)   10.76 
I   10.32    0.12    0.60    0.72    (0.22)   (0.04)       (0.26)   10.78 
R3   10.32    0.09    0.57    0.66    (0.16)   (0.04)       (0.20)   10.78 
R4   10.32    0.12    0.57    0.69    (0.19)   (0.04)       (0.23)   10.78 
R5   10.32    0.15    0.56    0.71    (0.22)   (0.04)       (0.26)   10.77 
Y   10.32    0.12    0.61    0.73    (0.23)   (0.04)       (0.27)   10.78 
                                              
From May 31, 2011 (commencement of operations), through October 31, 2011 (E)
A(H)   10.00    0.09    0.28    0.37    (0.05)           (0.05)   10.32 
C(H)   10.00    0.05    0.28    0.33    (0.02)           (0.02)   10.31 
I(H)   10.00    0.09    0.29    0.38    (0.06)           (0.06)   10.32 
R3(H)   10.00    0.07    0.29    0.36    (0.04)           (0.04)   10.32 
R4(H)   10.00    0.09    0.28    0.37    (0.05)           (0.05)   10.32 
R5(H)   10.00    0.10    0.28    0.38    (0.06)           (0.06)   10.32 
Y(H)   10.00    0.10    0.28    0.38    (0.06)           (0.06)   10.32 

 

(A)Information presented relates to a share outstanding throughout the indicated period.
(B)Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge.  Total return would be reduced if sales charges were taken into account.
(C)Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements).
(D)Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.
(E)Per share amounts have been calculated using average shares outstanding method.
(F)Not annualized.
(G)Annualized.
(H)Commenced operations on May 31, 2011.

 

48

 

 

- Ratios and Supplemental Data -

 

Total Return(B)  

Net Assets at End of Period

(000's)

  

Ratio of Expenses to Average Net Assets

Before Waivers and Reimbursements and

Including Expenses not Subject to Cap(C)

  

Ratio of Expenses to Average Net Assets

After Waivers and Reimbursements and

Including Expenses not Subject to Cap(C)

  

Ratio of Net Investment

Income to Average Net Assets

  

Portfolio

Turnover

Rate(D)

 
                      
                            
 2.88%(F)  $434,868    1.03%(G)   0.93%(G)   0.81%(G)   56%
 2.54(F)   168,826    1.76(G)   1.66(G)   0.08(G)    
 2.99(F)   757,010    0.80(G)   0.70(G)   1.05(G)    
 2.70(F)   494    1.40(G)   1.25(G)   0.48(G)    
 2.91(F)   606    1.08(G)   0.95(G)   0.78(G)    
 3.10(F)   374    0.78(G)   0.65(G)   1.07(G)    
 3.05(F)   231,249    0.68(G)   0.58(G)   1.16(G)    
                            
                            
 6.79    250,916    1.11    0.95    0.95    191 
 6.12    97,235    1.83    1.67    0.19     
 7.11    421,508    0.86    0.70    1.14     
 6.51    1,297    1.51    1.25    0.85     
 6.82    1,345    1.21    0.95    1.15     
 7.03    1,276    0.91    0.65    1.45     
 7.18    197,637    0.73    0.57    1.12     
                            
                            
 3.74(F)   33,346    1.27(G)   0.85(G)   1.93(G)   50 
 3.33(F)   9,175    2.03(G)   1.61(G)   1.18(G)    
 3.84(F)   24,552    1.01(G)   0.59(G)   2.10(G)    
 3.58(F)   2,071    1.72(G)   1.25(G)   1.64(G)    
 3.70(F)   2,073    1.42(G)   0.95(G)   1.94(G)    
 3.83(F)   2,076    1.12(G)   0.65(G)   2.24(G)    
 3.85(F)   9,344    1.02(G)   0.60(G)   2.29(G)    

 

49

 

The Hartford World Bond Fund

Directors and Officers (Unaudited)

 

 

The Board of Directors of the Company 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 1940 Act. Each officer and two of the Company’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual Funds II, Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., and as a trustee for The Hartford Alternative Strategies Fund, which, as of April 30, 2013, collectively consist of 90 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 Mr. Annoni, Mr. Dressen, Ms. Fagely and Ms. Quade may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125 and correspondence to Mr. Davey and Mr. Melcher may be sent to 5 Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, Pennsylvania 19087.

 

The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Company 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 Company 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. Mr. Birdsong currently serves as a Director of the Sovereign High Yield Investment Company (April 2010 to current). Mr. Birdsong currently serves as an Independent Director of Nomura Partners Funds, Inc. (formerly, The Japan Fund) (March 2003 to current). 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. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm.

 

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. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that served as sponsor and lead investor in leveraged buyouts of middle market companies.

 

Sandra S. Jaffee (1941) Director since 2005

Ms. Jaffee is the founder and Chief Executive Officer of a private company, Homeworks Concierge, LLC, which provides residential property management services in Westchester County, New York (January 2012 to present). Ms. Jaffee served as Chairman (2008 to 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. Ms. Jaffee currently serves as a member of the Board of Directors of Broadridge Financial Solutions as well as a Trustee of Muhlenberg College.

 

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. and served as a director (July 2006 to August 2010). In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity and alternative asset 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.

 

50

 

 

 

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. Mr. Peterson also joined the Board of Trustees of Symetra Variable Mutual Funds Trust as a trustee in February 2012.

 

Lemma W. Senbet (1946) Director since 2005

Dr. Senbet is the William E. Mayer Chair Professor of Finance and Director, Center for Financial Policy, at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department from 1998 to 2006. Previously he was a chaired professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000 to 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

 

James E. Davey (1964) Director since 2012, President and Chief Executive Officer since 2010

Mr. Davey serves as Executive Vice President of Hartford Life Insurance Company (“HLIC”) and The Hartford Financial Services Group, Inc. Additionally, Mr. Davey serves as Chairman of the Board and Manager of HIFSCO and Hartford Administrative Services Company (“HASCO”). Mr. Davey also serves as Manager, President and Chairman of the Board for Hartford Funds Management Company, LLC (“HFMC”). Mr. Davey joined The Hartford in 2002.

 

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 and Symetra Financial and as Managing Director of Whittington Gray Associates.

 

Other Officers

 

Mark A. Annoni (1964) Vice President, Controller and Treasurer since 2012

Mr. Annoni serves as the Assistant Vice President of HLIC (February 2004 to present). Mr. Annoni joined The Hartford in April 2001 as part of The Hartford’s acquisition of Fortis Financial Group (“Fortis”). Prior to joining The Hartford, Mr. Annoni served as Manager of Mutual Fund Accounting at Fortis (July 1997 to April 2001).

 

Michael R. Dressen (1963) AML Compliance Officer since 2011

Mr. Dressen currently serves as Assistant Vice President of HLIC. He also serves as Chief Compliance Officer and AML Compliance Officer of HASCO and as AML Officer of HIFSCO. Mr. Dressen joined The Hartford in 2005 from State Farm Insurance Companies where he held various positions related to mutual funds, variable products, and property casualty insurance.

 

Tamara L. Fagely (1958) Vice President since 2002 (MF) and 1993 (MF2)

Currently, Ms. Fagely is President and a Director of HASCO, Chief Administrative Officer and Manager of HFMC and a Vice President of HLIC. Ms. Fagely served as a Vice President of HASCO (1998-2013) and Chief Financial Officer of HASCO (2006-2013). She served as Assistant Vice President of HLIC from December 2001 through March 2005. In addition, Ms. Fagely is Manager and Chief Operating Officer of HIFSCO.

 

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

Mr. Macdonald serves as Vice President of HLIC and Vice President, Chief Legal Officer and Secretary of HIFSCO and HASCO. Mr. Macdonald also serves as Manager, Vice President, Chief Legal Officer and Secretary of HFMC. Mr. Macdonald joined The Hartford in 2005.

 

51

 

The Hartford World Bond Fund

Directors and Officers (Unaudited) – (continued)

 

 

Joseph G. Melcher (1973) Vice President and Chief Compliance Officer since 2013(1)

Mr. Melcher currently serves as Vice President of HFMC and HIFSCO. Mr. Melcher joined The Hartford in 2012 from Touchstone Investments, a member of the Western & Southern Financial Group, where he held the position of Vice President and Chief Compliance Officer from 2010 through 2012 and Assistant Vice President, Compliance from 2005 to 2010.

(1)Mr. Melcher was named Vice President and Chief Compliance Officer of the Fund on February 6, 2013. Prior to February 6, 2013, Colleen Pernerewski served as the Fund’s Chief Compliance Officer.

 

Vernon J. Meyer (1964) Vice President since 2006

Mr. Meyer serves as Senior Vice President of HLIC. He also serves as Senior Vice President of HFMC and HIFSCO. Mr. Meyer joined The Hartford in 2004.

 

Laura S. Quade (1969) Vice President since 2012(2)

Ms. Quade currently serves as Vice President of HASCO and is a Director of Mutual Fund Service Operations. She also serves as Director, Enterprise Operations of HIFSCO and HLIC. Ms. Quade joined The Hartford in 2001 as part of The Hartford’s acquisition of Fortis.

(2)Ms. Quade was named a Vice President of the Fund on November 8, 2012.

 

Elizabeth L. Schroeder (1966) Vice President since 2010

Ms. Schroeder currently serves as Assistant Vice President of HLIC. Ms. Schroeder joined HLIC in 1991. She is also an Assistant Vice President of HFMC and HASCO.

 

Martin Swanson (1962) Vice President since 2010

Mr. Swanson is a Vice President of HLIC. Mr. Swanson also serves as Chief Marketing Officer for HIFSCO. Prior to joining HLIC in 1998, Mr. Swanson was a Vice President at PaineWebber, Inc.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND VOTING RECORDS (UNAUDITED)

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 are available (1) without charge, upon request, by calling 888-843-7824 and (2) on the SEC’s website at http://www.sec.gov.

  

QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)

 

The Fund files a complete schedule of portfolio holdings with the SEC 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 SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’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.

 

52

 

The Hartford World 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, if any, and contingent deferred sales charges (CDSC), if any, and (2) ongoing costs, including investment management fees, distribution fees, if any, 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 October 31, 2012 through April 30, 2013.

 

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 181/365 (to reflect the one-half year period).

 

   Actual return   Hypothetical (5% return before expenses)             
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the period
October 31, 2012
through
April 30, 2013
   Beginning
Account Value
October 31, 2012
   Ending Account
Value
April 30, 2013
   Expenses paid
during the
period
October 31, 2012
through
April 30, 2013
   Annualized
expense
ratio
   Days in
the
current
1/2
year
   Days
in the
full
year
 
Class A  $1,000.00   $1,028.80   $4.70   $1,000.00   $1,020.16   $4.68    0.93   181    365 
Class C  $1,000.00   $1,025.40   $8.35   $1,000.00   $1,016.55   $8.32    1.66    181    365 
Class I  $1,000.00   $1,029.90   $3.50   $1,000.00   $1,021.34   $3.49    0.70    181    365 
Class R3  $1,000.00   $1,027.00   $6.29   $1,000.00   $1,018.59   $6.26    1.25    181    365 
Class R4  $1,000.00   $1,029.10   $4.79   $1,000.00   $1,020.08   $4.76    0.95    181    365 
Class R5  $1,000.00   $1,031.00   $3.28   $1,000.00   $1,021.57   $3.26    0.65    181    365 
Class Y  $1,000.00   $1,030.50   $2.91   $1,000.00   $1,021.93   $2.90    0.58    181    365 

 

53

 

The Hartford World Bond Fund

Approval of New 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”), approve the mutual fund’s investment advisory and sub-advisory agreements. In connection with a proposed corporate restructuring plan (the “Restructuring”), at its meeting held on November 8, 2012, the Board of Directors (the “Board”) of The Hartford Mutual Funds, Inc., including each of the Independent Directors, unanimously voted to terminate the existing investment management and investment sub-advisory agreements for The Hartford World Bond Fund (the “Fund”) and approve a new investment management agreement for the Fund with Hartford Funds Management Company, LLC (“HFMC”), a newly formed registered investment adviser, and a new investment sub-advisory agreement between HFMC and the Fund’s existing sub-adviser, Wellington Management Company, LLP (the “Sub-adviser,” and together with HFMC, the “Post-Restructuring Advisers”).

 

Prior to the November 8, 2012 meeting, the Board received and reviewed written materials regarding the Restructuring, which contemplated that HFMC replace Hartford Investment Financial Services, LLC (“HIFSCO”) as investment manager to the Fund. In order to implement the Restructuring, the Fund would terminate the existing investment management and investment sub-advisory agreements and enter into a new investment management agreement with HFMC, with HFMC also entering into a new investment sub-advisory agreement with the Sub-adviser (collectively, the “New Agreements”).

 

The Board considered information furnished to the Board at its meetings throughout the year, as well as information specifically prepared in connection with the Restructuring and the approval of the New Agreements at the Board’s meeting held on November 8, 2012. 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 HIFSCO and the Sub-adviser and their affiliates. In addition, the Board received in-person presentations by Fund officers and representatives of HIFSCO and HFMC at the Board’s meeting on November 8, 2012 concerning the Restructuring and the New Agreements.

 

In determining to approve the New 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 through the exercise of its reasonable business judgment. While individual members of the Board may have weighed certain factors differently, the Board’s determination to approve the New Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically with respect to the Restructuring and the approval of the New Agreements.

 

Specifically, the Board considered that the Restructuring is solely organizational in nature and is unrelated to the actual management of the Fund and the performance of investment management personnel to the Fund. The Board noted that, after the Restructuring, the investment management operations performed by HFMC will be functionally indistinguishable from those performed by HIFSCO prior to the Restructuring as the personnel primarily responsible for providing investment advisory or management services to the Fund prior to the Restructuring would continue to provide such services to the Fund, as employees of HFMC, immediately after the Restructuring. The Board also considered that the Restructuring and the New Agreements would involve no changes to (i) the contractual terms of, including the management fees payable under, the Fund’s investment management and investment sub-advisory agreements; (ii) the investment processes and strategies employed in the management of the Fund’s assets; (iii) the nature and level of services provided under the Fund’s investment management and investment sub-advisory agreements; and (iv) the day-to-day management of the Fund and the individuals primarily responsible for that management. The Board also noted that, although HFMC is a newly formed company, HFMC, like HIFSCO, is an indirect subsidiary of The Hartford Financial Services Group, Inc. and is expected to have sufficient capital to provide the services to the Fund.

 

The Board also considered HFMC’s Code of Ethics and Compliance Program and noted that there are no material changes as compared to the codes of ethics and compliance programs, respectively, currently in effect for the Fund.

 

Lastly, the Board considered that, because the Restructuring is unrelated to the actual management of the Fund, the investment management arrangement for the Fund following the Restructuring will be identical (but for the name of the entity providing investment management services) to the arrangement approved by the Board at its July 31-August 1, 2012 meeting. In this regard,

 

54

 

 

 

the Board noted that there have been no material changes with respect to the information provided to the Board in connection with the 2012 contract renewal process. Accordingly, the Board determined that the information it had considered with respect to the following factors in connection with the 2012 contract renewal process and its conclusions regarding those factors were applicable to its decision to approve the New Agreements: (i) nature, extent and quality of services provided by HIFSCO and the Sub-adviser; (ii) performance of the Fund, HIFSCO and the Sub-adviser; (iii) costs of the services and profitability of HIFSCO and the Sub-adviser; (iv) comparative services rendered and comparative investment management and sub-advisory fee rates and total expense ratios; and (v) the realization of economies of scale by HIFSCO and the Sub-adviser with respect to the Fund and whether the fee levels reflect these economies of scale for the benefit of the Fund’s shareholders. With respect to the other benefits to the Post-Restructuring Advisers and their affiliates from their relationships with the Fund, the Board noted that the Restructuring will not result in any material changes to such other benefits that were considered during the 2012 contract renewal process, except that, following the Restructuring, HFMC, and not Hartford Life Insurance Company, will provide and receive fees for fund accounting and related services from the Fund.

 

* * * *

 

Based upon its review of these various factors, among others, the Board concluded that it is in the best interests of the Fund and its shareholders for the Board to approve the New Agreements. 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, with independent legal counsel, to review the relevant materials and consider their responsibilities under relevant laws and regulations.

 

55

 

The Hartford World Bond Fund

Principal Risks (Unaudited)

 

The principal risks of investing in the Fund are described below.

 

Market, Selection, and Strategy Risk: The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the sub-adviser’s investment strategy does not perform as expected, the Fund could underperform its peers or lose money. There is no guarantee the Fund will achieve its stated objective.

 

Fixed Income Risk: The Fund is subject to interest rate risk (the risk that the value of an investment decreases when interest rates rise) and credit risk (the risk that the issuing company of a security is unable to pay interest and principal when due) and call risk (the risk that an investment may be redeemed early). These risks also apply to the Fund’s investments in U.S. government securities, which may not be guaranteed by the U.S. government.

 

Foreign Investment, Emerging Markets and Sovereign Debt Risk: Foreign investments can be riskier than U.S. investments. Potential risks include currency risk that may result from unfavorable exchange rates, liquidity risk if decreased demand for a security makes it difficult to sell at the desired price, and risks that stem from substantially lower trading volume on foreign markets. These risks are generally greater for investments in emerging markets, which are also subject to greater price volatility, and custodial and regulatory risks. Sovereign debt investments are subject to credit risk and the risk of default.

 

Junk Bond Risk: Investments in junk bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities.

 

Derivatives Risk: Investments in derivatives can be volatile. Potential risks include currency risk, leverage risk (the risk that small market movements may result in large changes in the value of an investment), liquidity risk, index risk, pricing risk, and counterparty risk (the risk that the counterparty may be unwilling or unable to honor its obligations).

 

Mortgage-Backed Securities Risk: Mortgage-backed securities are subject to interest rate risk, credit risk, prepayment risk, extension risk, and the risk that an investment’s value may be reduced or become worthless if it receives interest or income payments only after other investments in the same pool.

 

Active Trading Risk: Actively trading investments may result in higher costs and higher taxable income.

 

Non-Diversified Risk: The Fund is non-diversified, so it may be more exposed to the risks associated with individual issuers than a diversified fund.

 

56
 

 

 

 

HARTFORDFUNDS

 

hartfordfunds.com

 

 

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 Hartford Funds before investing. This and other information can be found in the Fund’s prospectus or summary prospectus, which can be obtained from your investment

representative or by calling 888-843-7824. Please read them carefully before you invest or send money.

 

Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC (f/k/a Hartford Investment Financial Services, LLC).

 

MFSAR-WB13 4/13 114015 Printed in U.S.A. ©2013 The Hartford, Hartford, CT 06155

 

55

 

 

 
 

 

Item 2. Code of Ethics.

 

Not applicable to this semi-annual filing.

 

Item 3. Audit Committee Financial Expert.

 

Not applicable to this semi-annual filing.

 

Item 4. Principal Accountant Fees and Services.

 

Not applicable to this semi-annual filing.

 

Item 5. Audit Committee of Listed Registrants.

 

Not applicable to this semi-annual filing.

 

Item 6. Investments.

 

(a)The Schedule of Investments is included as part of the semi-annual report filed under Item 1 of this form.
(b)Not applicable.

 

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)The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

 

(b)There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that have materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12. Exhibits.

 

(a)(1)Not applicable.

 

(a)(2)Section 302 certifications of the principal executive officer and principal financial officer of Registrant.

 

(a)(3)Not applicable.

 

(b)Section 906 certification.
 
 

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: June 11, 2013   By: /s/ James E. Davey
        James E. Davey
        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: June 11, 2013   By: /s/ James E. Davey
        James E. Davey
        Its: President

 

 

Date: June 11, 2013   By: /s/ Mark A. Annoni
        Mark A. Annoni
        Its: Vice President, Controller and Treasurer