The Ha
rtford Income Shares Fund, Inc.
Investment Valuation
Hierarchy Level Summary
January 31, 2010
(Unaudited)
(000
’
s Omitted)
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset & Commercial Mortgage
Backed Securities
|
|
$
|
1,444
|
|
|
$
|
–
|
|
|
$
|
244
|
|
|
$
|
1,200
|
|
|
Comm
on Stocks
‡
|
|
|
181
|
|
|
|
181
|
|
|
|
–
|
|
|
|
–
|
|
|
Corporate Bonds: Investment
Grade
|
|
|
53,773
|
|
|
|
–
|
|
|
|
47,352
|
|
|
|
6,421
|
|
|
Corporate Bonds: Non-Investment
Grade
|
|
|
14,063
|
|
|
|
–
|
|
|
|
13,079
|
|
|
|
984
|
|
|
Municipal
Bonds
|
|
|
145
|
|
|
|
–
|
|
|
|
145
|
|
|
|
–
|
|
|
Preferred Stocks
‡
|
|
|
58
|
|
|
|
58
|
|
|
|
–
|
|
|
|
–
|
|
|
U.S. Government
Agencies
|
|
|
212
|
|
|
|
–
|
|
|
|
212
|
|
|
|
–
|
|
|
U.S. Government
Securities
|
|
|
9,175
|
|
|
|
313
|
|
|
|
8,862
|
|
|
|
–
|
|
|
Warrants
‡
|
|
|
8
|
|
|
|
–
|
|
|
|
8
|
|
|
|
–
|
|
|
Short-Term
Investments
|
|
|
410
|
|
|
|
–
|
|
|
|
410
|
|
|
|
–
|
|
|
Total
|
|
$
|
79,469
|
|
|
$
|
552
|
|
|
$
|
70,312
|
|
|
$
|
8,605
|
|
|
Other Financial Instruments
*
|
|
$
|
55
|
|
|
$
|
55
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial
Instruments
*
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
‡
|
The Fund has all or primarily all
of these equity securities categorized in a single level. Refer to the
Schedule of Investments for further industry breakout.
|
|
*
|
Other financial instruments are
derivative i
nstruments not reflected in the
Schedule of Investments, such as futures, forwards and swap contracts,
which are valued at the unrealized appreciation/depreciation on the
investment.
|
Following is a reconciliation of Level 3
assets for which significant u
nobservable inputs were used to
determine fair value:
|
|
Balance
as of
July
31, 2009
|
|
|
Realized
Gain
(Loss)
|
|
|
Change
in
Unrealized
Appreciation
(Depreciation)
|
|
|
Net
Purchases
(Sales)
|
|
|
Transfers
In
and/or
Out of
Level
3
|
|
|
Balance
as of
January
31,
2010
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
& Commercial Mortgage Backed Securities
|
|
$
|
1,686
|
|
|
$
|
(2,627
|
)
|
|
$
|
2,174
|
*
|
|
$
|
(28
|
)
|
|
$
|
(5
|
)
|
|
$
|
1,200
|
|
|
Corporate
Bonds
|
|
|
8,165
|
|
|
|
(2
|
)
|
|
|
1,054
|
†
|
|
|
(1,812
|
)
|
|
|
—
|
|
|
|
7,405
|
|
|
Total
|
|
$
|
9,851
|
|
|
$
|
(2,629
|
)
|
|
$
|
3,228
|
|
|
$
|
(1,840
|
)
|
|
$
|
(5
|
)
|
|
$
|
8,605
|
|
___________________
*
Change in unrealized
gains or losses in the current period relating to assets still held at January
31, 2010 was $(302).
†
Change in unrealized gains or
losses in the current period relating to assets still held at January 31, 2010
was $1,065.
The accompanying notes
are an integral part of this financial statement.
The H
artford Income Shares Fund,
Inc.
Statement of Assets and
Liabilities
January 31, 2010
(Unaudited)
(000
’
s Omitted)
|
Assets:
|
|
|
|
|
Investments in
securities, at market value (cost $77,021 )
|
|
$
|
79,469
|
|
|
Cash
|
|
|
1,173
|
|
|
Receivables:
|
|
|
|
|
|
Investment
securit
ies
sold
|
|
|
300
|
|
|
Interest and
dividends
|
|
|
1,339
|
|
|
Other
assets
|
|
|
3
|
|
|
Total
assets
|
|
|
82,284
|
|
|
Liabilities:
|
|
|
|
|
|
Dividend payable
(0.032 per share)
|
|
|
418
|
|
|
Payables:
|
|
|
|
|
|
Investment
securities purchased
|
|
|
594
|
|
|
Investment
management fees
|
|
|
9
|
|
|
Variatio
n
margin
|
|
|
107
|
|
|
Accounts payable
and accrued expenses
|
|
|
84
|
|
|
Total
liabilities
|
|
|
1,212
|
|
|
Net assets
|
|
$
|
81,072
|
|
|
Summary of Net
Assets:
|
|
|
|
|
|
Net proceeds of
capital stock, par value $.001 per share-authorized 1,000,000 shares;
13,067 shares outstanding
|
|
$
|
110,349
|
|
|
Unrealized
appreciation of investments
|
|
|
2,503
|
|
|
Accumulated net
realized loss from sale of investments and futures
|
|
|
(31,784
|
)
|
|
Accumulated
undistributed net investment income
|
|
|
4
|
|
|
Total Net
Assets
|
|
$
|
81,072
|
|
|
Net Asset Value Per
Share
|
|
$
|
6.20
|
|
The accomp
anying notes are an
integral part of this financial statement.
The Hartford Income Shares Fund,
Inc.
Statement of
Operations
For the Six-Month
Period Ended January 31, 2010 (Unaudited)
(000
’
s Omitted)
|
Net Investment
Income
:
|
|
|
|
|
Interest
income
|
|
$
|
3,073
|
|
|
Dividend
income
|
|
|
—
|
|
|
Total investment
income
|
|
|
3,073
|
|
|
Expenses:
|
|
|
|
|
|
Investment management
fees
|
|
|
247
|
|
|
Legal and auditing
fees
|
|
|
47
|
|
|
Custodian
fees
|
|
|
2
|
|
|
Shareholders' notices and
reports
|
|
|
25
|
|
|
Directors' fees and
expenses
|
|
|
2
|
|
|
Exchange l
isting fees
|
|
|
13
|
|
|
Other
|
|
|
3
|
|
|
Total
expenses
|
|
|
339
|
|
|
Expense
offset
|
|
|
(1
|
)
|
|
Total net
expenses
|
|
|
338
|
|
|
Net Investment
Income
|
|
|
2,735
|
|
|
Net Realized and Unrealized Gain
(Loss) on Investments and Futures:
|
|
|
|
|
|
Net realized loss on
investments
|
|
|
(2,278
|
)
|
|
Net realized loss on
futures
|
|
|
(665
|
)
|
|
Net change in unrealized
appreciation of investments
|
|
|
7,494
|
|
|
Net change in unrealized
appreciation of futures
|
|
|
137
|
|
|
Net Gain on Investments and
Futures
|
|
|
4,688
|
|
|
Net Increase (Decrease) in Net
Assets Resulting from Ope
rations
|
|
$
|
7,423
|
|
The Hartford Income Shares Fund,
Inc.
Statement of Changes in
Net Assets
(000
’
s Omitted)
|
|
|
For the
Six-Month
Period Ended
January 31,
2010
(Unaudited)
|
|
|
For the Year
Ended
July 31,
2009
|
|
|
Operations:
|
|
|
|
|
|
|
|
Net
investment
income
|
|
$
|
2,735
|
|
|
$
|
6,430
|
|
|
Net realized loss on investments
and futures
|
|
|
(2,943
|
)
|
|
|
(11,199
|
)
|
|
Net change in unrealized
appreciation of investments and futures
|
|
|
7,631
|
|
|
|
1,810
|
|
|
Net increase (decrease) in net
assets resulting
from
operations
|
|
|
7,423
|
|
|
|
(2,959
|
)
|
|
Distributions to
Shareholders:
|
|
|
|
|
|
|
|
|
|
From net investment
income
|
|
|
(2,803
|
)
|
|
|
(6,505
|
)
|
|
Capital Share
Transactions:
|
|
|
|
|
|
|
|
|
|
Proceeds from
–
and 7 shares issued as a result
of reinvested dividends, respectively
|
|
|
—
|
|
|
|
37
|
|
|
Total
Increase (Decrease) in Net
Assets
|
|
|
4,620
|
|
|
|
(9,427
|
)
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
|
Beginning of
period
|
|
|
76,452
|
|
|
|
85,879
|
|
|
End of
period
|
|
$
|
81,072
|
|
|
$
|
76,452
|
|
|
Accumulated undistributed net
investment income
|
|
$
|
4
|
|
|
$
|
72
|
|
The accompanying
n
otes are
an integral part of this financial statement.
The Hartford Income Shares Fund,
Inc.
Notes to Financial
Statements
January 31, 2010
(Unaudited)
(000
’
s Omitted)
The Hartford Income Shares Fund, Inc.
(the “
Fund”
) is a closed
-end diversified management investment
company. The primary investment objective of the Fund is to seek a high level of
current income through investment in a diversified portfolio of debt securities,
some of which may be privately placed and some of whic
h
may have equity features. Capital
appreciation is a secondary objective.
|
2.
|
Significant Accounting
Policies:
|
The following is a summary of
significant accounting policies of the Fund, which are in accordance with U.S.
Generally Accepted Accounting Princ
iples (“
GAAP”
).
|
|
a)
|
Security
Transactions and Investment Income
–
Security transactions are recorded
on the trade date (the date the order to buy or sell is executed).
Security gains and losses are determined on the basis of identified
cost.
|
Dividend inco
me is accrued as of the ex-dividend
date. Interest income, including amortization of premium and accretion of
discounts, is accrued on a daily basis.
|
|
b)
|
Security
Valuation
–
The Fund generally uses market
prices in valuing portfolio securities. If market
prices are not readily available
or are deemed unreliable, the Fund will use the fair value of the security
as determined in good faith under policies and procedures established by
and under the supervision of the Fund
’
s Board of Directors. Market
prices
m
ay be deemed unreliable, for
example, if a security is thinly traded or if an event has occurred after
the close of the security
’
s primary market, but before the
close of the New York Stock Exchange (the “
Exchange”
) (generally 4:00 p.m.
|
Eastern Time, ref
erred to as the “
Valuation Time”
) that is expected to affect the value
of the portfolio security. The circumstances in which the Fund may use fair
value pricing include, among others: (i) the occurrence of events that are
significant to a particular issue
r
, such as mergers, restructuring or
defaults; (ii) the occurrence of events that are significant to an entire
market, such as natural disasters in a particular region or governmental
actions; (iii) trading restrictions on securities; (iv) thinly traded
se
c
urities and (v) market events such as
trading halts and early market closings.
Exchange-traded equity securities are
valued at the last reported sale price on the exchange or market on which the
security is primarily traded (the “
Primary Market”
) at the V
aluation Time. If the security did not
trade on the Primary Market, it may be valued at the Valuation Time at the last
reported sale price on another exchange where it trades. The value of an equity
security not traded on any exchange but traded on the Na
s
daq Stock Market, Inc. (“
Nasdaq”
) or another over-the-counter market
shall be valued at the last reported sale price or official closing price on the
exchange or market on which the security is traded as of the Valuation
Time.
Debt securities (other than
short-term obligations) held by the
Fund are valued
using bid
prices or using
of valuations based on a matrix system (which considers
factors such as security prices, yield, maturity and ratings) as provided by
independent pricing services. Securities for which price
s
are not available from an independent
pricing service may be valued using market quotations obtained from one or more
dealers that make markets in the securities in accordance with procedures
established by the Fund
’
s Board of Directors. Generally, the
F
u
nd may use fair valuation in regard to
debt securities when the Fund holds defaulted or distressed securities or
securities in a company in which a reorganization is pending. Short-term
investments with a maturity of more than 60 days when purchased are
v
a
lued based on market quotations until
the remaining days to maturity become less than 61 days. Investments that mature
in 60 days or less are generally valued at amortized cost, which approximates
market value.
The Hartford Income Shares Fund,
Inc.
No
tes to Financial
Statements
–
(continued)
January 31, 2010
(Unaudited)
(000
’
s Omitted)
Financial instruments for which prices
are not available from an independent pricing service are valued using market
quotations obtained from one or more dealers that
make markets in securities in accordance
with procedures established by the Fund
’
s Board of
Directors.
Futures contracts are valued at the most
recent settlement price reported by an exchange on which, over time, they are
traded most extensively. If a set
tlement price is not available, futures
contracts will be valued at the most recent trade price as of the Valuation
Time. If there were no trades, the contract shall be valued at the mean of the
closing bid and asked prices as of the Valuation Time.
Vario
us inputs are used in determining the
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
–
Q
uoted prices in active markets for
identical securities. Level 1 may include exchange-traded instruments such
as domestic equities, some foreign equities, options, futures, mutual
funds, ETF
’
s, and rights and warrants.
|
|
|
●
|
Level 2
–
Observable inputs
othe
r than Level 1
prices, such as quoted prices for similar securities; quoted prices in
markets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of
the security. Level
2
may include debt securities that
are traded less frequently than exchange-traded instruments and which are
valued using third party pricing services; foreign equities, whose value
is determined using a multi-factor regression model with inputs that are
o
b
servable in the market; and money
market instruments, which are carried at amortized cost.
|
|
|
●
|
Level 3
–
Significant unobservable inputs
that are supported by little or no market activity. Level 3 may include
financial instruments whose values are determi
ned using broker quotes or require
significant management judgment or estimation. This category may include
broker quoted securities and securities where trading has been halted or
there are certain restrictions on trading. While these securities are
pric
e
d using unobservable inputs, the
valuation of these securities reflects the best available data and
management believes the prices are a reasonable representation of exit
price.
|
Individual securities within any of the
above mentioned asset classes may be
assigned a different hierarchical level
than those presented above, as individual circumstances
dictate.
For purposes of the roll forward
reconciliation for all Level 3 securities from the beginning of the reporting
period to the end of the reporting per
iod, transfers in and out are shown as
if they occurred at the beginning of the period.
Refer to the Investment Valuation
Hierarchy Level Summary and the Level 3 roll forward reconciliation found
following the Schedule of Investments.
|
|
c)
|
Illiquid
and Re
stricted
Securities
–
“
Illiquid Securities”
are those that may not be sold or
disposed of in the ordinary course of business within seven days, at
approximately the price used to determine the Fund
’
s NAV. The Fund may not be able to
sell illiquid securitie
s or other investments when its
sub-adviser considers it desirable to do so or may have to sell such
securities or investments at a price that is lower than the price that
could be obtained if the securities or investments were more liquid. A
sale of illi
q
uid securities or other
investments may require more time and may result in higher dealer
discounts and other selling expenses than does the sale of those that are
liquid. Illiquid securities and investments also may be more difficult to
value, due to the
unavailability of reliable market
quotations for such securities or investments, and an investment in them
may have an adverse impact on the Fund
’
s NAV. The Fund may also purchase
certain restricted securities, commonly known as Rule 144A securities,
that
can be resold to institutions and
|
which may be determined to be liquid
pursuant to policies and guidelines established by the Fund
’
s Board of Directors. The Fund, as shown
in the Schedule of Investments, had illiquid and/or restricted securities as
of
January 31,
2010.
|
|
d)
|
Securities
Purchased on a When-Issued or Delayed-Delivery Basis
–
Delivery and payment for
securities that have been purchased by the Fund on a forward commitment,
or when-issued or delayed-delivery basis, take place beyond the
custo
mary settlement
period. During this period, such securities are subject to market
fluctuations, and the Fund identifies securities segregated in its records
with value at least equal to the amount of the commitment. As of January
31, 2010, the Fund had no
outstanding when-issued or delayed
delivery securities.
|
|
|
e)
|
Credit
Risk
–
Credit risk depends largely on
the perceived financial health of bond issuers. In general, the credit
rating is inversely related to the credit risk of the issuer. Higher rated
bonds
generally are
deemed to have less credit risk, while lower or unrated bonds are deemed
to have higher risk of default. The share price, yield and total return of
a Fund which holds securities with higher credit risk may fluctuate more
than less aggressiv
e
bond
funds.
|
|
|
f)
|
U.S.
Government Agencies
–
The Fund, as shown in the
Schedule of Investments, may invest in Federal Home Loan Mortgage
Corporation (“
FHLMC”
) and Federal National Mortgage
Association (“
FNMA”
) securities. On September 7,
2008, the Federal H
ousing Finance Agency
(“
FHFA”
) placed the FHLMC and the FNMA,
two government-sponsored enterprises (“
GSEs”
), in conservatorship. As
conservator, the FHFA has full powers to control the assets and operations
of the firms. Dividends to common and preferred
s
hareholders are suspended, but the
U.S. Treasury has put in place a set of financing agreements to ensure
that the GSEs continue to meet their obligations to holders of bonds that
they issued or guaranteed.
|
|
|
g)
|
Prepayment
Risks
–
Certain debt securities
al
low for prepayment
of principal without penalty. Securities subject to prepayment risk
generally offer less potential for gains when interest rates decline, and
may offer a greater potential for loss when interest rates rise. In
addition, with respect to
s
ecurities, rising interest rates
may cause prepayments to occur at a slower than expected rate, thereby
effectively lengthening the maturity of the security and making the
security more sensitive to interest rate changes. Prepayment risk is a
major risk o
f
mortgage-backed securities and
certain asset-backed securities. Accordingly, the potential for the value
of a debt security to increase in response to interest rate declines is
limited. For certain securities, the actual maturity may be less than the
sta
t
ed maturity shown in the Schedule
of
Investments. As a result, the
timing of income recognition relating to these securities may vary based
upon the actual
maturity.
|
|
|
h)
|
Use
of Estimates
–
The preparation
of financial statements in conformity with U.S. G
AAP requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities as of the date of the financial
statements and the reported amounts of income and expenses during the
period. Operating results in the fut
u
re could vary
from the amounts derived from management
’
s
estimates.
|
|
|
i)
|
Additional
Derivative Instrument(s)
Information
|
Derivative Instrument(s) as of January
31, 2010.
|
|
|
Asset
Derivatives
|
|
Liability
Derivatives
|
|
Risk Exposure Cate
gory
|
|
Statement of Assets and
Liabilities Location
|
|
|
Statement
of Assets and Liabilities Location
|
|
|
Interest rate
contracts
|
|
Summary of Net Assets -
Unrealized
|
$
|
55
|
|
Summary of Net
Assets - Unrealized
|
$
|
—
|
|
|
|
appreciation
|
|
|
|
depreciation
|
|
|
The vo
lume of derivatives
that are presented above in the Derivative Instrument table are consistent with
the derivative activity during the six-month period ended January 31,
2010.
The Hartford Income Shares Fund,
Inc.
Notes to Financial
Statements
–
(con
tinued)
January 31, 2010
(Unaudited)
(000
’
s Omitted)
Realized Gain (Loss)
and Change in Unrealized Appreciation (Depreciation) on Derivative Instruments
as of January 31, 2010:
|
Amount of Realized Gain or (Loss)
on Derivatives Recognized in Income
|
|
Risk Exposure
Category
|
|
Written
Options
|
|
Purchased
Options
|
|
Futures
|
|
Forward
Currency
Contracts
|
|
Swaps
|
|
Total
|
|
Interest rate
contracts
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(665 )
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(665 )
|
|
Total
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(665 )
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(665
)
|
|
Change
in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in
Income
|
|
Risk Exposure
Category
|
|
Written
Options
|
|
|
|
Futures
|
|
|
|
Swaps
|
|
Total
|
|
Interest rate
contracts
|
|
|
—
|
|
|
—
|
|
|
137
|
|
|
—
|
|
—
|
|
$
|
137
|
|
Total
|
|
$
|
—
|
|
$
|
—
|
|
$
|
137
|
|
$
|
—
|
|
$
|
—
|
|
$
|
137
|
|
|
j)
|
Indemnifications
–
Under the Fund
’
s organizational documents, the
Fund shall indemnify its officers and directors to the full extent
required or permitted under Maryland General Corporation La
w and the federal securities law.
In addition, the Fund may enter into contracts that contain a variety of
indemnifications. The Fund
’
s maximum exposure under these
arrangements is unknown. However, the Fund has not had prior claims or
losses pursuant to
t
hese contracts and expects the
risk of loss to be remote.
|
The Fund is subject to
equity price risk and interest rate risk in the normal course of pursuing its
investment objectives. The Fund may invest in futures and options
contr
acts
in order to gain exposure to or hedge against changes in the value of equities
or interest rates. A futures contract is an agreement between two parties to buy
and sell a security at a set price on a future date. When the Fund enters into
such future
s
contracts, it is
required to deposit with a futures commission merchant an amount of
“
initial
margin”
of
cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called
variation margin, to and from the broker, are made on a daily basis as
the
price of the underlying
asset fluctuates, making the long and short positions in the futures contract
more or less valuable (i.e., mark-to-market), which results in an unrealized
gain or loss to the Fund.
At any time prior to
the expiration of the future
s contract, the Fund
may close the position by taking an opposite position, which would effectively
terminate the position in the futures contract. A final determination of
variation margin is then made, additional cash is required to be paid by or
releas
e
d to the Fund and the
Fund realizes a gain or loss.
The use of futures contracts involves
elements of market risk, which may exceed the amounts recognized in the
Statement of Assets and Liabilities. Changes in the value of the futures
contracts may decr
ease the
effectiveness of the Fund
’
s strategy and potentially result in
loss. With futures, there is minimal counterparty credit risk to the Fund since
futures are exchange-traded through a clearing house. The clearing house
requires sufficient collateral
to cover margins. The Fund, as shown on
the Schedule of Investments, had outstanding futures contracts as of January 31,
2010.
An option contract is a contract sold by
one party to another party that offers the buyer the right, but not the
obligation, to
buy (call)
or sell (put) a security or other financial asset at an agreed-upon price during
a specific period of time or on a specific date. The premium paid by the Fund
for the purchase of a call or put option is included in the Fund
’
s Statement
of A
ssets and Liabilities as an investment
and subsequently “
marked-to-market”
through net unrealized appreciation
(depreciation) of options to reflect the current market value of the option as
of the end of the reporting period.
The Fund may write
(sell) cov
ered options.
“
Covered”
means that so long as
the Fund is obligated as the writer of an option, it will own either the
underlying securities or currency or an option to purchase the same underlying
securities or currency having an expiration date of the c
o
vered option and an
exercise price equal to or less than the exercise price of the covered option,
or will pledge cash or other liquid securities having a value equal to or
greater than the fluctuating market value of the option securities or
currencies.
T
he Fund receives a
premium for writing a call or put option, which is recorded on the
Fund
’
s Statement of Assets
and Liabilities and subsequently “
marked-to-market”
through net unrealized
appreciation (depreciation) of options. There is a risk of loss fro
m
a change in the value
of such options, which may exceed the related premiums received. The maximum
amount of loss with respect to the Fund
’
s written put option is
the cost of buying the underlying security or currency. The maximum loss may be
offset by p
r
oceeds received from
selling the underlying securities or currency. As of January 31, 2010, there
were no outstanding option contracts.
|
|
a)
|
Federal
Income Taxes
–
For federal income tax purposes,
the Fund intends 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 require
m
ents of RICs. The Fund has
distributed substantially all of its income and capital gains in the prior
year and intends to distribute substantially all of its income and gains
during the calendar year ending December 31, 2010. 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)
–
Net investment
income (loss) and net realized gains (losses) may differ for financial
statement and tax purposes primarily because of wash sale transactions,
amortization adjustments, and differing tax treatment for investments in
derivati
ves. The
character of distributions made during the year from net investment income
or realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to the timing of dividend
distributions, the fiscal year in wh
i
ch 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
ind
icated is as
follows (as adjusted for dividends payable):
|
|
|
|
For the Year
Ended
|
|
|
For the Year
Ended
|
|
|
|
|
July 31,
2009
|
|
|
July 31,
2008
|
|
|
Ordinary
Income
|
|
$
|
6,726
|
|
|
$
|
7,066
|
|
As of July 31, 2009,
the Fund
’
s components of
distributable earnings (deficit) on a tax b
asis were as follows:
|
|
|
Amount
|
|
|
Undistributed Long-Term Capital
Gain
|
|
$
|
583
|
|
|
Accumulated Capital Losses
*
|
|
|
(28,864
|
)
|
|
Unrealized Depreciation
†
|
|
|
(5,106
|
)
|
|
Total Accumulated
Deficit
|
|
$
|
(33,387
|
)
|
|
|
*
|
The Fund has capital loss
carryforwards that ar
e identified in the Capital Loss
Carryforward note that follows.
|
|
|
†
|
The differences between book-basis
and tax-ba
sis
unrealized appreciation (depreciation) are attributable to the tax
deferral of
wash sale losses and the
mark-to-market adjustment for certain derivatives in accordance with IRC
Sec. 1256.
|
The Hartford Income Shares Fund,
Inc.
Notes to Financial
Statements
–
(continued)
January 31, 2010
(Unaudited)
(000
’
s Omitted)
|
|
|
Reclassification
of Capital Accounts
–
The Fund may
record r
eclassifications
in its capital accounts. These reclassifications have no impact on the
total net assets of the Fund. The reclassifications are a result of
permanent differences between GAAP and tax accounting for such items as
net operating losses that r
e
duce distribution
requirements. Adjustments are made to reflect the impact these items have
on current and future distributions to shareholders. Therefore, the source
of the Fund
’
s distributions
may be shown in the accompanying Statement of Changes in Net
Assets as from
net investment income, from net realized gains on investments or from
capital depending on the type of book and tax differences that exist. As
of July 31, 2009, the Fund recorded reclassifications to decrease
accumulated realized loss by $5
,
061 and decrease
paid-in-capital by $5,061.
|
|
|
e)
|
Capital
Loss Carryforward
–
At July 31, 2009 (tax-year-end),
the Fund had capital loss carryforwards for U.S. federal income tax
purposes of approximately:
|
|
Year of
Expiration
|
|
Amount
|
|
|
2010
|
|
$
|
4,710
|
|
|
2011
|
|
|
1,710
|
|
|
2012
|
|
|
5,026
|
|
|
2013
|
|
|
1,768
|
|
|
2014
|
|
|
524
|
|
|
2016
|
|
|
613
|
|
|
2017
|
|
|
5,253
|
|
|
Total
|
|
$
|
19,604
|
|
As of July 31, 2009,
the Fund elected to defer post October 2008 losses of $9,260.
For the tax year ended July 31, 2009,
the Fund expired $5,061 of capital loss carryfor
wards.
|
|
f)
|
Accounting
for Uncertainty in Income Taxes
–
Management has evaluated all open
tax years and has determined there is no impact to the Fund
’
s financial statements related to
uncertain tax positions. Generally, tax authorities can examine all tax
returns filed for the
last three years.
|
|
|
a)
|
Payments
to Related Parties
–
Hartford Investment Financial
Services, LLC (“
HIFSCO”
) is the investment manager for
the Fund. Investment management fees are computed at an annual rate of
0.45% for th
e first
$100 million of average monthly net assets and at an annual rate of 0.40%
of average monthly net assets over $100 million, plus 2% of investment
income. Fees are accrued daily and paid monthly.
|
As investment manager for the Fund,
HIFSCO has reta
ined
Hartford Investment Management Company (“
Hartford Investment
Management”
) to provide
investment advice and, in general, to conduct the management investment program
of the Fund, subject to the general oversight of HIFSCO and the Fund
’
s Board of Direc
t
ors. Pursuant to the sub-advisory
agreement, Hartford Investment Management will regularly provide the Fund with
investment research, advice and supervision and furnish an investment program
consistent with the Fund
’
s investment objectives and policies,
i
n
cluding the purchase, retention and
disposition of securities. As compensation for such services, HIFSCO pays
Hartford Investment Management a portion of the investment management
fee.
The Hartford Financial Services Group,
Inc. (“
The
Hartford”
) and
i
ts subsidiaries provide
facilities and office equipment and perform certain services for the Fund,
including fund accounting and financial reporting. Certain officers of the Fund
are directors and/or officers of HIFSCO and/or The Hartford or its
subsidiar
i
es. For the six-month period ended
January 31, 2010, a portion of the Fund
’
s chief compliance officer
’
s salary was paid by the Fund to The
Hartford in an amount, which rounds to zero. Hartford Administrative Services
Company (“
HASCO”
), an indirect wholly
o
wned subsidiary of The Hartford,
provides transfer agent services to the Fund. Transfer agent fees are paid by
HIFSCO.
|
|
b)
|
Expense
Offset
–
The Fund
’
s custodian bank has agreed to
reduce its fees when the Fund maintains cash on deposit in a
non-interest-bea
ring
account. For the six-month period ended January 31, 2010, the custodian
fee offset arrangement reduced expenses by $1. The total expense reduction
represents an effective annual rate of 0.001% of the Fund
’
s average daily net assets. This
amount is sh
o
wn in the expense offset line of
the Fund
’
s Statement of
Operations.
|
|
6.
|
Investment
Transactions:
|
For the six-month period ended January
31, 2010, the cost of purchases and proceeds from sales of investment securities
(excluding short-term investments) w
ere as follows:
|
|
|
Amount
|
|
|
Cost of Purchases Excluding U.S.
Government Obligations
|
|
$
|
15,731
|
|
|
Sales Proceeds Excluding U.S.
Government Obligations
|
|
|
21,603
|
|
|
Cost of Purchases for U.S.
Government Obligations
|
|
|
11,111
|
|
|
Sales Proceeds for U.S. Government
Obligat
ions
|
|
|
3,265
|
|
|
7.
|
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
w
as developed by and is the
exclusive property and service mark of MSCI, Inc. and Standard &
Poor
’
s.
At a meeting held on March 17, 2010, the
Fund
’
s Board of Directors approved the
reorganization of the Fund with and into the Rivus
Bond Fund (the “
Reorganization”
), a closed end investment company
managed by Cutwater Asset Management. The Fund and the Rivus Bond Fund each is
traded on the New York Stock Exchange. The Fund
’
s Board of Directors has called a
Special Meeting of Sharehold
e
rs for the purpose of seeking the
approval of the Reorganization by the Fund
’
s shareholders. If approved, the
Reorganization is expected to occur during the third quarter of 2010.
Management has
evaluated subsequent events through March 19, 2010, the da
te of issuance of the
Funds
’
Financial Statements
and has determined that no additional items require disclosure.
The Hartford Income Shares Fund,
Inc.
Financial Highlights
|
|
|
|
|
|
Year
Ended July 31,
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
♦
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Selected Per-Share Data
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of
period
|
|
$
|
5.85
|
|
|
$
|
6.58
|
|
|
$
|
7.82
|
|
|
$
|
7.70
|
|
|
$
|
8.16
|
|
|
$
|
7.93
|
|
|
Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
0.21
|
|
|
|
0
.49
|
|
|
|
0.55
|
|
|
|
0.55
|
|
|
|
0.56
|
|
|
|
0.56
|
|
|
Net realized and unrealized
gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(loss) on
investments
|
|
|
0.36
|
|
|
|
(0.72
|
)
|
|
|
(1.24
|
)
|
|
|
0.12
|
|
|
|
(0.47
|
)
|
|
|
0.22
|
|
|
Total from
operations
|
|
|
0.57
|
|
|
|
(0.23
|
)
|
|
|
(0.69
|
)
|
|
|
0.67
|
|
|
|
0.09
|
|
|
|
0.78
|
|
|
Distributions to
shareholder
s:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From net investment
income
|
|
|
(0.22
|
)
|
|
|
(0.50
|
)
|
|
|
(0.55
|
)
|
|
|
(0.55
|
)
|
|
|
(0.55
|
)
|
|
|
(0.55
|
)
|
|
Net asset value, end of
period
|
|
$
|
6.20
|
|
|
$
|
5.85
|
|
|
$
|
6.58
|
|
|
$
|
7.82
|
|
|
$
|
7.70
|
|
|
$
|
8.16
|
|
|
Per-share market value, end of
period
|
|
$
|
5.69
|
|
|
$
|
5.50
|
|
|
$
|
6.09
|
|
|
$
|
7.43
|
|
|
$
|
7.23
|
|
|
$
|
7.88
|
|
|
Ratios and Supplemental
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment
return, market value(b)
.
|
|
|
7.38
|
%
|
|
|
(0.60
|
)%
|
|
|
(11.28
|
)%
|
|
|
10.13
|
%
|
|
|
(1.40
|
)%
|
|
|
15.42
|
%
|
|
Total investment return, net asset
value(c)
|
|
|
9.96
|
%
|
|
|
(2.19
|
)%
|
|
|
(8.98
|
)%
|
|
|
8.77
|
%
|
|
|
1.36
|
%
|
|
|
10
.46
|
%
|
|
Net assets end of year (000's
omitted)
|
|
$
|
81,072
|
|
|
$
|
76,452
|
|
|
$
|
85,879
|
|
|
$
|
102,096
|
|
|
$
|
100,241
|
|
|
$
|
106,034
|
|
|
Ratio of gross expenses to
average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
monthly net
assets
|
|
|
0.84
|
%(d)
|
|
|
0.92
|
%
|
|
|
0.96
|
%
|
|
|
0.76
|
%
|
|
|
0.78
|
%
|
|
|
0.76
|
%
|
|
Rat
io of net expenses (includes
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
offset) to average monthly net
assets
|
|
|
0.84
|
%(d)
|
|
|
0.92
|
%
|
|
|
0.96
|
%
|
|
|
0.76
|
%
|
|
|
0.77
|
%
|
|
|
0.75
|
%
|
|
Ratio of net investment income to
average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
monthly net
assets
|
|
|
6.82
|
%(d)
|
|
|
8 .97
|
%
|
|
|
7 .69
|
%
|
|
|
6
.80
|
%
|
|
|
7.12
|
%
|
|
|
6.89
|
%
|
|
Portfolio turnover
rate
|
|
|
32
|
%
|
|
|
31
|
%
|
|
|
23
|
%
|
|
|
39
|
%
|
|
|
20
|
%
|
|
|
17
|
%
|
|
♦
|
For the six-month period ended
January 31, 2010.
|
|
(a)
|
Information
presented relates to a share of capital stock outstanding throughout the
period.
|
|
(b)
|
Total
investment return, market value, is based on the change in market price of
a share during the period and assumes reinvestment of distributions at
actual prices pursuant to the Fund's dividend reinvestment
plan.
|
|
(c)
|
Total
investment return, net asset value, is based on the change in net asset
value of a share during the period and assumes reinvestment of
distributions at actual prices pursuant to the Fund's dividend
reinvestment plan.
|
The Hartford Income Shares Fund,
Inc.
Directors and Officers (U
naudited)
The Board of Directors appoints officers
who are responsible for the day-to-day operations of the Fund and who execute
policies formulated by the Directors. Each director serves until his or her
death, resignation, or retirement or until the ne
xt 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
I
nvestment Company Act of
1940, as amended. Each officer and two of the Fund's directors, as noted in the
chart below, are “
interested”
persons of the Fund. Each director
serves as a director for The Hartford Mutual Funds, Inc., The Hartford Mutual
Funds I
I
, Inc., The Hartford Income Shares Fund,
Inc., Hartford Series Fund, Inc., and Hartford HLS Series Fund II, Inc., which,
as of
January 31,
2010
, collectively consist
of 93 funds. Correspondence may be sent to directors and officers c/o Hartford
Mutual Fund
s, P.O. Box
2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely
may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each
director and officer, his or her name, year of birth, curren
t position with the Fund and date first
elected or appointed, principal occupation, and, for directors, other
directorships held.
Information on the aggregate
remuneration paid to the directors of the Fund can be found in the Statement of
Operations herei
n. 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 officers or directors who are employed by
The Hartford.
Non-Interested
Directors
Lynn
S. Birdsong
(1946)
Director since 2003,
Co-Chairman of the Investment Committee
Mr. Birdsong is a private investor.
Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising
specialty firm. Since 2003, Mr. Birdsong has been an independent director of
The Japan Fund. From 2003
to March 2005, Mr. Birdsong was an independent director of the Atlantic
Whitehall Funds. From 1979 to 2002, Mr. Birdsong was a managing director of
Zurich Scudder Investments, an investment management firm. During his employment
w
ith Scudder, Mr. Birdsong was an
interested director of The Japan Fund.
Robert
M. Gavin, Jr.
(1940)
Director since 1986, Chairman of the Board since 2004
Dr. Gavin is an educational consultant.
Prior to September 1, 2001, he was President of Cranbrook E
ducation Community and prior to July
1996, he was President of Macalester College, St. Paul,
Minnesota.
Duane
E. Hill
(1945) Director
since 2001, Chairman of the Nominating Committee
Mr. Hill is Partner of TSG Ventures
L.P., a private equity investment
company. He has served for over thirty
years as a financial services executive in banking, venture capital and private
equity.
Sandra
S. Jaffee
(1941) Director
since 2005
Ms. Jaffee served as
Chairman (2008-2009) and Chief Executive Officer of Fortent (
formerly Searchspace
Group), a leading provider of compliance/regulatory technology to financial
institutions from August 2005 to August 2009. From August 2004 to August 20005,
Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a
priva
t
e equity firm. From
September 1995 to July 2004, Ms. Jaffee served as Executive Vice President at
Citigroup, where she was President and Chief Executive Officer of
Citibank
’
s Global Securities
Services (1995-2003).
William
P. Johnston
(1944) Director
sin
ce 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. Joh
nston
was elected to the Board of Directors of MultiPlan, Inc. In June 2006, Mr.
Johnston was appointed as Senior Advisor to The Carlyle Group, a global private
equity investment firm. In May 2006, Mr. Johnston was elected to the Supervisory
Board of Fres
e
nius Medical Care AG & Co. KGaA,
after its acquisition of Renal Care Group, Inc. in March 2006. Mr. Johnston
joined Renal Care Group in November 2002 as a member of the Board of Directors
and served as Chairman of the Board from March 2003 through March 2
0
06. From September 1987 to
December 2002, Mr. Johnston was with Equitable Securities Corporation (and its
successors, SunTrust Equitable Securities and SunTrust Robinson Humphrey)
serving in various investment banking and managerial positions, including
M
anaging Director and Head of Investment
Banking, Chief Executive Officer and Vice Chairman.
The Hartford Income Shares Fund,
Inc.
Directors and Officers (Unaudited)
–
(continued)
Phillip
O. Peterson
(1944) Director
since 2000, Chairman of the Audit
Committee
Mr. Peterson is a
mutual fund industry consultant. He was a partner of KPMG LLP (an accounting
firm) until July 1999. Mr. Peterson joined William Blair Funds in February 2007
as a member of the Board of Trustees. From January 2004 to April
2005
, Mr.
Peterson served as Independent President of the Strong Mutual Funds.
Lemma
W. Senbet
(1946) Director
since 2005
Dr. Senbet is the William E. Mayer Chair
Professor of Finance at the University of Maryland, Robert H. Smith School of
Business. He wa
s chair of
the Finance Department during 1998-2006. Previously he was an endowed professor
of finance at the University of Wisconsin-Madison. Also, he was director of the
Fortis Funds from March 2000-July 2002. Dr. Senbet served the finance profession
in
v
arious 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 scho
l
arship and professional
service.
Interested Directors and
Officers
Lowndes
A. Smith
(1939) Director
since 1996 (MF) and 2002 (MF2), Co-Chairman of the Investment
Committee
Mr. Smith served as
Vice Chairman of The Hartford from February 1997 to Januar
y 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
Dire
c
tor of White Mountains
Insurance Group, Ltd., One Beacon Insurance, Symetra Financial and as a Managing
Director of Whittington Gray Associates.
John
C. Walters*
(1962) Director
since 2008
Mr. Walters currently serves as
President, Chief Executive Offi
cer and Director for Hartford Life, Inc.
(“
HL, Inc.”
). Mr. Walters also serves as President,
Chairman of the Board, Chief Executive Officer and Director for Hartford Life
Insurance Company (“
Hartford Life”
), and as Executive Vice President of
The Hartford
Financial Services Group, Inc.
(“
The Hartford”
). In addition, Mr. Walters is Manager
of HL Investment Advisors, LLC (“
HL Advisors”
). Mr. Walters previously served as
Co-Chief Operating Officer of Hartford Life (2007-2008), and as President of the
U.S. Wea
l
th Management Division of HL, Inc.
(2006-2007). Mr. Walters joined Hartford Life in April 2000 from First Union
Securities, the brokerage subsidiary of First Union Corp.
* Mr. Walters previously served as
President and Chief Executive Officer of the Fund
(2007
–
2009).
Other Officers
Robert
M. Arena, Jr.
(1968) President and
Chief Executive Officer since 2009 (served as Vice President of the Fund (2006
–
2009))
Mr. Arena serves as
Executive Vice President of Hartford Life. Additionally, Mr. Arena is
Se
nior
Vice President and Director of Hartford Administrative Services Company,
(“
HASCO”
), President, Chief
Executive Officer and Manager of Hartford Investment Financial Services, LLC
(“
HIFSCO”
) and President, Chief
Executive Officer and Manager of HL Advi
s
ors. Prior to joining
The Hartford in 2004, he was Senior Vice President in charge of Product
Management for American Skandia/Prudential in the individual annuities division.
Tamara
L. Fagely
(1958) Vice
President, Treasurer and Controller since 1993
Ms. Fagely has been a
Vice President of HASCO since 1998 and Chief Financial Officer since 2006.
Currently Ms. Fagely is a Vice President of Hartford Life. In addition, Ms.
Fagely is Controller and Chief Financial Officer of HIFSCO. She served as
Assistan
t
Vice President of
Hartford Life from December 2001 through March 2005.
Brian
Ferrell
(1962) AML
Compliance Officer since 2008
Mr. Ferrell has served
as Assistant Vice President and AML Compliance Officer for The Hartford since
2006, and as AML Compli
ance Officer for HASCO
and Hartford Investor Services Company, LLC (“
HISC”
) since 2008. Prior to
joining The Hartford in 2006, Mr. Ferrell held various positions at the U.S.
Department of the Treasury (the “
Treasury”
) from 2001 to 2006,
where he served as
Chief Counsel for the
Treasury
’
s Financial Crimes
Enforcement Network from 2005
–
2006.
Dr.
Robert J. Froehlich
(1953)
Senior Managing Director since 2009
Dr. Froehlich joined
The Hartford as Senior Managing Director in September 2009. Prior to
joinin
g
The Hartford, Dr. Froehlich served as Vice Chairman of Deutsche Asset Management
from 1997
–
2009.
Thomas
D. Jones, III
(1965) Vice
President and Chief Compliance Officer since 2006
Mr. Jones serves as Chief Compliance
Officer for the Hartford Mu
tual Funds and Vice President and
Director of Securities Compliance for The Hartford. He is also Vice President of
HIFSCO, HL Advisors, and Hartford Life. Mr. Jones joined The Hartford in 2006
from SEI Investments, where he served as Chief Compliance Offi
c
er for its mutual funds and investment
advisers. Prior to joining SEI, Mr. Jones was First Vice President and
Compliance Director for Merrill Lynch Investment Managers (Americas)
(“
MLIM”
), where he worked from 1992-2004. At
MLIM, Mr. Jones was responsible
for the compliance oversight of various
investment products, including mutual funds, wrap accounts, institutional
accounts and alternative investments.
Edward
P. Macdonald
(1967) Vice
President, Secretary and Chief Legal Officer since 2005
Mr.
Macdonald
serves as Assistant Vice President of Hartford Life and Chief Legal Officer,
Secretary and Vice President of HIFSCO. He also serves as Vice President and
Secretary of HASCO, and Chief Legal Officer, Secretary and Vice President of HL
Advisors. Prior to j
o
ining The Hartford in
2005, Mr. Macdonald was Chief Counsel, Investment Management for Prudential
Financial (formerly American Skandia Investment Services, Inc.). He joined
Prudential in April 1999.
Vernon
J. Meyer
(1964) Vice
President since 2006
Mr.
Meyer serves as Senior
Vice President of Hartford Life. He also serves as Senior Vice President of
HIFSCO and HL Advisors. Mr. Meyer joined The Hartford in 2004 from MassMutual
which he joined in 1987.
D.
Keith Sloane
(1960) Vice
President since 2009
Mr. Sloane is a Senior
Vice President of Hartford Life. Additionally, Mr. Sloane currently serves as
Senior Vice President of HIFSCO, HL Advisors, and HASCO. Prior to joining The
Hartford in 2007, Mr. Sloane was Director of product marketing and led the
m
u
tual fund business for
Wachovia Securities (“
Wachovia”
) in their investment
products group. Mr. Sloane joined Wachovia in 1995.
Jane
Wolak
(1961) Vice President
since 2009
Ms. Wolak currently
serves as Vice President of Hartford Life. Ms. Wolak joined
Hartford Life as Vice
President, Retail Product Services in May 2007. She is also Vice President of
HASCO. Previously, Ms. Wolak was with Sun Life Financial where she held the
position of Vice President, Service Center Operations from 2001
–
2007.
|
In
vestment
Manager
|
Hartford
Investment Financial Services, LLC
|
|
|
P.O.
Box 1744, Hartford, CT 06144-1744
|
|
|
|
|
Investment
Sub-Adviser
|
Hartford
Investment Management Company
|
|
|
55
Farmington Avenue, Hartford, CT 06105
|
|
|
|
|
Transfer
Agent
|
Hartford
Administrativ
e Services
Company
|
|
|
P.O.
Box 64387, St. Paul, MN 55164
|
|
|
|
|
Dividend Disbursing Agent,
Registrar
|
DST Systems,
Inc
.
|
|
and
Sub-Transfer
Agent
|
Kansas
City, Missouri
|
|
|
|
|
Custodian
|
State Street Bank
and Trust Company
|
|
|
Boston,
Massachusetts
|
|
|
|
|
Independent Re
gistered
Public
|
Ernst & Young
LLP
|
|
Accounting
Firm
|
Minneapolis,
Minnesota
|
|
Market
Price
|
The Hartford
Income Shares Fund, Inc. is listed on the New York Stock Exchange with the
ticker symbol “
HSF”
. The market
price is carried
daily in
the financial
pages of most newspapers and carried on Monday in the “
Closed-End
Funds”
table, which
sets forth on a
per share basis the previous week
’
s net asset
value, market price and the percentage difference between net asset
value
a
nd
market price for the Fund under the name “
HrtfrdIncoFd”
.
|
Important Tax Information
(Unaudited)
Monthly Dividends Paid
(Unaudited)
|
Date
|
|
Amount
|
|
|
|
August 2009
|
|
$
|
0.0390
|
|
Income
|
|
September
2009
|
|
|
0.0390
|
|
Income
|
|
October
2009
|
|
|
0.0375
|
|
Income
|
|
N
ovember
2009
|
|
|
0.0355
|
|
Income
|
|
December
2009
|
|
|
0.0355
|
|
Income
|
|
January
2010
|
|
|
0.0350
|
|
Income
|
|
|
|
$
|
0.2215
|
|
|
Approval of Investment Management and
Investment Sub-Advisory Agreements
(Unaudited)
Section 15(c) of the Investment Company
Act of 1940, as am
ended
(the “
1940 Act”
), requires that each fund
’
s board of directors, including a
majority of those directors who are not “
interested persons”
of the fund, as defined in the 1940 Act
(the “
Independent
Directors”
), annually
review and consider the continua
t
ion of the fund
’
s investment advisory and sub-advisory
agreements. At its meeting held on August 4-5, 2009, the Board of Directors (the
“
Board”
) of The Hartford Income Shares Fund,
Inc. (“
Fund”
) including each of the Independent
Directors, unanimously vot
e
d to approve the continuation of the
investment management agreement for the Fund with Hartford Investment Financial
Services, LLC (“
HIFSCO”
) and the continuation of the investment
sub-advisory agreement between HIFSCO and the Fund
’
s sub-adviser, Hartford
Investment Management Company
(“
Hartford Investment
Management”
and together
with HIFSCO, “
Advisers”
) (collectively, the “
Agreements”
).
In the months preceding the August 4-5,
2009 meeting, the Board requested, received, and reviewed written responses
fro
m the Advisers to
questions posed to them on behalf of the Independent Directors and supporting
materials relating to those questions and responses. The Board
considered information furnished to the Board at its meetings throughout the
year, as well as i
n
formation specifically prepared in
connection with the annual approval of the Agreements at the Board
’
s meetings held on June 23-24, 2009 and
August 4-5, 2009. Information provided to the Board at its meetings throughout
the year, included, among other th
i
ngs, reports on Fund performance, legal
and compliance matters, sales, and the other services provided to the Fund by
the Advisers, and their affiliates. In addition, the Board received
in-person presentations by Fund officers and representatives of HIFS
C
O at the Board
’
s meetings on June 23-24, 2009 and
August 4-5, 2009 concerning the Agreements.
The Independent Directors, advised by
independent legal counsel, engaged two service providers to assist them with
evaluating the Agreements with respect to the
Fund. Lipper Inc.
(“
Lipper”
), an independent provider of investment
company data, was retained to provide the Board with reports on how the
Fund
’
s contractual management fees, actual
management fees, other non-management fees, overall expense ratios
and
investment performance compared to those
of mutual funds with similar investment objectives. The Independent Directors
also engaged an independent financial services consulting firm (the
“
Consultant”
) to assist them in evaluating the
Fund
’
s management fee
s
, sub-advisory fees, other
non-management fees, overall expense ratios and investment
performance.
In determining to continue the
Agreements for the Fund, the members of the Board reviewed and evaluated
information and factors they believed to be relevant
and appropriate in light of the
information that the Board deemed necessary and appropriate and through the
exercise of their reasonable business judgment. While individual
members of the Board may have weighed certain factors differently, the
Board
’
s d
e
termination to continue the Agreements
was based on a comprehensive consideration of all information provided to the
Board throughout the year, and specifically with respect to the continuation of
the Agreements. A more detailed discussion of the factors
t
he Board considered with respect to its
approval of the Agreements is provided below.
Nature, Extent And Quality Of
Services
The Board requested and considered
information concerning the nature, extent, and quality of the services provided
to the Fund
by the
Advisers. The Board considered, among other things, the terms of the Agreements
and the range of services provided by the Advisers. The Board
considered the Advisers
’
professional personnel who provide
services to the Fund, including each Adviser
’
s
ability and experience in attracting
and retaining qualified personnel to service the Fund. The Board considered each
Adviser
’
s reputation and overall financial
strength, as well as its willingness to consider and implement organizational
and operational
changes designed to improve services to
the Fund. In addition, the Board considered the quality of each
Adviser
’
s communications with the Board, and
responsiveness to Board inquiries.
The Board also requested and evaluated
information concerning each Adv
iser
’
s regulatory and compliance environment.
In this regard, the Board requested and reviewed information on each
Adviser
’
s compliance policies and procedures,
compliance history, and a report from the Fund
’
s Chief Compliance Officer on each
Adviser
’
s co
m
pliance with applicable laws and
regulations, including responses to regulatory developments and compliance
issues raised by regulators. The Board also noted the Advisers
’
support of the Fund
’
s compliance control structure,
particularly the resources devo
t
ed by the Advisers in support of the
Fund
’
s obligations pursuant to Rule 38a-1
under the 1940 Act.
Approval of
Investment Management and Investment Sub-Advisory Agreements
(Unaudited)
–
(continued)
With respect to HIFSCO, the Board noted
that under
the Agreements,
HIFSCO is responsible for the management of the Fund, including overseeing fund
operations and service providers, and provides administration services to the
Fund as well as investment advisory services in connection with selecting,
monito
r
ing and supervising the Sub-adviser. The
Board considered HIFSCO
’
s constant monitoring of people, process
and performance, including its ongoing commitment to review and rationalize The
Hartford Fund Family
’
s product line-up. The Board considered
that HIF
S
CO or its affiliates are responsible for
providing the Fund
’
s officers and paying their salaries and
expenses.
With respect to the Sub-adviser, who
provides day-to-day portfolio management services, the Board considered the
quality of the Fund
’
s portfolio
managers, the Sub-adviser
’
s other investment personnel, its
investment philosophy and process, investment research capabilities and
resources, performance record, trade execution capabilities and experience. The
Board considered the experience of the Fun
d
’
s portfolio managers, the number of
accounts managed by the portfolio managers, and the Sub-adviser
’
s method for compensating the portfolio
managers.
Based on these considerations, the Board
concluded that it was satisfied with the nature, extent and qu
ality of the services provided to the
Fund by HIFSCO and the Sub-adviser.
Performance of the Fund, HIFSCO, and
Hartford Investment Management
The Board considered the investment
performance of the Fund. In this regard, the Board reviewed the
performanc
e of the Fund
over different time periods presented in the materials and evaluated
HIFSCO
’
s analysis of the Fund
’
s performance for these time periods.
The Board considered information and materials provided to the Board by the
Advisers concerning Fund per
f
ormance, as well as information from
Lipper comparing the investment performance of the Fund to an appropriate
universe of peer funds.
The Board considered the detailed
investment analytics reports provided by The Hartford
’
s Investment Advisory Group
thro
ughout the
year. These reports include, among other things, information on the
Fund
’
s gross and net returns, the
Fund
’
s investment performance relative to an
appropriate benchmark and peer group, various statistics concerning the
Fund
’
s portfolio, and, a
narrative summary of various factors
affecting Fund performance. The Board considered the Advisers
’
cooperation with the Investment
Committee, which assists the Board in evaluating the performance of the Fund at
periodic meetings throughout the year. The
B
oard also considered the analysis
provided by the Consultant relating to the Fund
’
s performance track
record.
In light of all the considerations noted
above, the Board concluded that it had continued confidence in
HIFSCO
’
s and the Sub-adviser
’
s overall ca
pabilities to manage the Fund.
Costs of the Services and
Profitability
The Board reviewed information regarding
HIFSCO
’
s cost to provide investment management
and related services to the Fund and HIFSCO
’
s profitability, both overall and for
the Fund, o
n a pre-tax
basis without regard to distribution expenses. The Board also requested and
reviewed information about the profitability to HIFSCO and its affiliates from
all services provided to the Fund and all aspects of their relationship with the
Fund.
T
he 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 thei
r
relationships with the Fund would not be excessive.
Comparison of Fees and Services Provided
by the Advisers
The Board considered comparative
information with respect to the investment management fees to be paid by the
Fund to HIFSCO, the investment
sub-advisory fees to be paid by HIFSCO
to the Sub-adviser, and the total expense ratios of the Fund. In this regard,
the Board requested and reviewed information from HIFSCO and the Sub-adviser
relating to the management and sub-advisory fees, and total o
p
erating expenses for the Fund. The Board
also reviewed information from Lipper comparing the
Fund
’
s contractual management fees, actual
management fees and overall expense ratios, relative to a group of funds
selected by Lipper, in consultation with t
he Consultant, and a broader universe of
funds selected by Lipper.
While the Board recognized that
comparisons between the Fund and peer funds are imprecise, given the differing
service levels and characteristics of closed end funds, and the different
bus
iness models and cost
structures of the Advisers, the comparative information provided by Lipper
assisted the Board in evaluating the reasonableness of the Fund
’
s management fees and total operating
expenses. In addition, the Board considered the analysis
and recommendations of the Consultant
relating to the Fund
’
s management and sub-advisory fees and
total operating expenses.
Based on these considerations, the Board
concluded that the Fund
’
s fees and total operating expenses, in
conjunction with the infor
mation about quality of services,
profitability, economies of scale, and other matters discussed, were reasonable
in light of the services provided.
Economies of Scale
The Board requested and considered
information regarding the Advisers
’
realization o
f economies of scale with respect to the
Fund, and whether the fee levels reflect these economies of scale for the
benefit of the Fund
’
s investors. The Board reviewed the
breakpoints in the advisory fee schedule for the Fund, which reduces fees as
Fund as
s
ets grow over time. The Board recognized
that a fund with assets beyond the last breakpoint level will continue to
benefit from economies of scale, because additional assets are charged the
lowest breakpoint fee, resulting in lower overall effective manag
e
ment fee rates.
The Board reviewed and evaluated
materials from Lipper showing how management fee schedules of peer funds reflect
economies of scale for the benefit of investors as a peer fund
’
s assets hypothetically increase over
time. Based on informati
on
provided by HIFSCO, Lipper, and the Consultant, the Board recognized that there
is no uniform methodology for establishing breakpoints, or uniform pattern in
asset levels that trigger breakpoints or the amounts of breakpoints triggered.
After consider
ing all of the information available to
it, the Board concluded that it was satisfied with the extent to which economies
of scale would be shared for the benefit of the Fund
’
s shareholders, based on currently
available information and the effective adviso
r
y fees and expense ratios for the Fund
at its current and reasonably anticipated asset levels. The Board noted,
however, that it would continue to monitor future growth in Fund assets and the
appropriateness of additional breakpoints.
Other Benefits
Th
e Board considered other benefits to the
Advisers and their affiliates from their relationships with the Fund. The Board
also considered that the Fund has a transfer agency agreement with Hartford
Administrative Services Company (“
HASCO”
), which has, in t
u
rn, appointed DST Systems, Inc. to act
as a “
service
company”
to perform certain
recordkeeping and related administrative services on behalf of the Fund,
including but not limited to, shareholder reporting, transaction processing and
maintenance of the Fu
n
d's dividend reinvestment
plan.
* * * *
Based upon its review of these various
factors, among others, the Board concluded that it is in the best interests of
the Fund and its shareholders for the Board to approve the Agreements for an
additional year. I
n
reaching this decision, the Board did not assign relative weights to the factors
discussed above or deem any one or group of them to be controlling in and of
themselves. In connection with their deliberations, the Independent Directors
met separately in
executive session on several occasions,
with independent legal counsel, to review the relevant materials and consider
their responsibilities under relevant laws and regulations.
Dividend Reinvestment Plan
(Unaudited)
Dividend
Reinvestment Plan
. The
Fund has adopted a dividend
reinvestment plan (the “
Plan”
), which is open to all registered
holders of the Fund
’
s common stock ( the “
Common Stock”
). New registered holders of the Common
Stock shall be sent a notice by Hartford Administrative Services Com
p
any (“
HASCO”
) giving them an opportunity to
participate in the Plan. A shareholder who elects to participate in the Plan
will have his or her dividend and capital gain distributions automatically
reinvested in additional whole or fractional shares of the
F
und by HASCO; HASCO has delegated
certain of its duties as plan agent to DST Systems, Inc. (“
DST”
), the Fund
’
s sub-transfer agent (HASCO and DST are
collectively referred to herein as the “
Plan Agent”
). Such distributions are recorded as of
the ex-dividen
d
date. Shareholders will automatically
receive their dividends and capital gains distributions in cash, unless they
inform the Plan Agent in writing at the address set forth in the last paragraph
that they wish to participate in the Plan. Elections to par
t
icipate in the Plan must be received by
the Plan Agent at least 10 days prior to the record date of a dividend or
distribution payment in order for such dividend or distribution payment to be
included in the Plan. Shareholders whose common shares are held
in the name of a broker or nominee
should contact their broker or nominee to determine whether and how they may
participate in the Plan.
Under the Plan, the number of shares and
the price per share that participants will receive as a shareholder of the
C
ommon Stock when the
Fund
’
s Board of Directors declares a dividend
or capital gain distribution will be calculated as follows:
|
|
1)
|
When the market price of the
Common Stock (plus brokerage commissions and other incidental expenses
that would be incurred i
n a purchase of shares) is greater
than or equal to the NAV, the reinvestment price will be the greater of
95% of the month-end market price (plus brokerage commissions) or the
month-end NAV.
|
|
|
2)
|
When the market price of the
Common Stock (plus brokerage c
ommissions and other incidental
expenses that would be incurred in a purchase of shares) is less than the
NAV, the Plan Agent will receive the dividend or distribution in cash and
will purchase the Fund
’
s shares on the Exchange. It is
possible that the ma
r
ket price for the Common Stock may
increase to equal to or above the NAV before the Plan Agent has completed
its purchases. In this event, the Plan Agent will suspend purchasing
shares on the Exchange and the remaining balance of the dividend or
distribut
i
on will be invested in authorized
but unissued shares of the Fund valued at the greater of 95% of the
month-end market price (plus brokerage commissions) or the month-end NAV.
The Plan Agent will use all dividends and distributions received in cash
to pur
c
hase Common Stock in the open
market prior to the payment date. If the Plan Agent
’
s purchase requirements remain
incomplete as of the last business day before the next date on which the
shares trade on an “
ex-dividend”
basis, the remaining balance of
the
d
ividend or distribution will be
invested in authorized but unissued shares of the Fund valued at the
greater of 95% of the month-end market price (plus brokerage commissions)
or the month-end NAV.
|
The Plan Agent will maintain all
shareholders
’
accounts i
n the Plan and supply written
confirmation of the last fifteen transactions in the account, including
informatio
n needed for tax
records. Shares in the account of each Plan participant will be held by the Plan
Agent in non-certificate form. Any proxy shareholders receive will include all
shares of Common Stock a participant has purchased or received under the
Plan.
Automatically reinvesting dividends and
distributions does not mean that a participant does not have to pay income taxes
due (or required to be withheld) upon receiving dividends and
distributions.
Participants may terminate or partially
withdraw from
the Plan by
giving written notice to the Plan Agent. Notice to terminate or partially
withdraw from the Plan must be received by the Plan Agent at least 10 days prior
to the record date for any subsequent dividend or distribution; otherwise, the
notice wi
l
l not be effective for such dividend or
distribution. Upon termination of the Plan or partial withdrawal from the Plan,
participants will receive certificates for whole common shares and a cash
payment for all fractional shares.
There is no charge for re
investment of dividends or
distributions. However, all participants will bear a pro rata share of brokerage
commissions and incidental expenses incurred with respect to the Plan
Agent
’
s open market purchases, when
applicable, and participants for whose ac
c
ounts shares are sold will bear a pro
rata share of the brokerage commissions and incidental expenses incurred with
respect to the Plan Agent
’
s open market sales.
The Fund reserves the right to amend or
terminate the Plan. All correspondence concerning t
he plan, including requests for
additional information or any questions about the Plan, should be directed to
the Plan Agent at DST Systems, Inc., The Hartford Income Shares Fund, Inc.,
Attn: Closed End Funds, P.O. Box 219812, Kansas City, Missouri
64121-
9
812.
Managed
Distribution Policy and Investment Policies
(Unaudited)
Managed Distribution
Policy
The Fund
’
s dividend policy is to distribute
substantially all its net investment income to its shareholders on a monthly
basis. In order to provide sh
areholders with a more stable level of
dividend distributions, the Fund may at times pay out less than the entire
amount of net investment income earned in any particular month and may at times
in any particular month pay out such accumulated but undistri
b
uted income in addition to net
investment income earned in that month.
As a result, the dividends paid by the
Fund for any particular month may be more or less than the amount of net
investment income earned by the Fund during such month. The Fund
’
s curre
nt accumulated but undistributed net
investment income, if any, is disclosed in the Statement of Assets and
Liabilities, which comprises part of the financial information included in this
report. The Fund
’
s target rate of distribution is
evaluated regular
l
y and can change at any time.
Investment
Policies
In May 2008, the Fund
’
s Board of Directors approved amendments
to the Fund
’
s investment policies and restrictions
to update the restrictions and to clarify their nature and scope. Among other
things, th
e proposed
revisions (i) eliminate the Fund
’
s 75% investment basket and replace it
with a description of the Fund
’
s primary investment policies and any
related restrictions; (ii) remove investment grade debt securities of foreign
issuers and liquid, marke
t
able 144A securities from the list of
instruments in which the Fund may invest only up to 25% of its assets; (iii)
impose a non-fundamental limit of 30% of the Fund
’
s assets on investments in foreign
securities (other than securities of the governments of
Canada or its Provinces); and (iv)
increase from 5% to 10% the amount of its assets the Fund may invest in credit
default swap agreements. In addition to amending the discussion of the
Fund
’
s primary and secondary investments, the
Board also approved cert
a
in changes to the Fund
’
s non-fundamental investment
restrictions to update the restrictions to reflect current law and conform those
restrictions to the investment policies that currently apply to the other funds
advised by the Fund
’
s investment adviser a
n
d its affiliates. Under its
revised non-fundamental investment restrictions, the Fund may not:
|
|
1.
|
Except as may be otherwise
permitted by applicable law, purchase a security of an investment company
if, as a result: (1) more than 10% of the Company
’
s to
tal assets would be invested in
securities of other investment companies, (2) such purchase would result
in more than 3% of the total outstanding voting securities of any one such
investment company being held by the Company, or (3) more than 5% of the
Co
m
pany
’
s total assets would be invested
in any one such investment company. The investment companies in
which the Company would invest may or may not be registered under the
Investment Company Act of 1940, as amended. Securities in certain
countries are cu
r
rently accessible to the
Company only through such
investments. The investment in other investment companies is limited in
amount by the Investment Company Act of 1940, and will involve the
indirect payment of a portion of the expenses, including
advisor
y fees, of
such other investment companies.
|
|
|
2.
|
Pledge its assets other than to
secure permitted borrowings or to secure investments permitted by the
Company
’
s investment policies as set forth
in its Prospectus, as they may be amended from time to time, a
nd applicable law.
|
|
|
3.
|
Purchase securities on margin
except to the extent permitted by applicable law. The deposit or payment
by the Company of initial or maintenance margin in connection with futures
contracts or related options transactions is not consi
dered the purchase of a security
on margin.
|
|
|
4.
|
Make short sales of securities or
maintain a short position, except to the extent permitted by the
Company
’
s Prospectus, as amended from time
to time, and applicable law.
|
THIS PRIVACY POLICY IS NOT
PART
OF THE ANNUAL REPORT
Privacy Policy and Practices
of
The Hartford Financial Services Group,
Inc. and its Affiliates
(herein called “
we, our, and us”
)
This Privacy Policy applies to our
United States Operations
We
value your trust. We are
committed
to the
responsible:
of
Personal
Information
.
This notice describes how we collect,
disclose, and protect
Personal
Information
.
We collect
Personal
Information
to:
|
a)
|
service your
Transactions
with us; and
|
|
b)
|
s
upport our business functions.
|
We may obtain
Personal
Information
from:
|
b)
|
your
Transactions
with us; and
|
|
c)
|
third parties such as a
consumer-reporting agency.
|
Based on the type of product or service
You
apply for or get from us,
Personal
Infor
mation
such as:
may be gathered from sources such as
applications,
Transactions
, and consumer reports.
To serve
You
and service our business, we may share
certain
Personal
Information
. We will share
Personal
Information
, only as
allowed by law, with affiliates such as:
|
a)
|
our insurance companies;
|
|
c)
|
our brokerage firms; and
|
As allowed by law, we may share
Personal
Fina
ncial
Information
with our
affiliates to:
|
a)
|
market our products; or
|
to
You
without providing
You
with an option to prevent these
disclosures.
We may also share
Personal
Information
, only as
allowed by law, with unaffiliated third
parties including:
who help us serve
You
and service our business.
When allowed by law, we may share
certain
Personal
Financial Information
w
ith other unaffiliated
third parties who assist us by performing services or functions such as:
|
b)
|
marketing our products or
services; or
|
|
c)
|
offering financial products or
services under a joint agreement between us and one or more
finan
cial
institutions.
|
We will not sell or share your
Personal
Financial Information
with
anyone for purposes unrelated to our business functions without offering
You
the opportunity to:
as required by law.
We only disclose
Pe
rsonal
Health Information
with:
|
a)
|
your proper written authorization;
or
|
|
b)
|
as otherwise allowed or required
by law.
|
Our employees have access to
Personal
Information
in the course
of doing their jobs, such as:
|
a)
|
underwriting policies;
|
|
c)
|
developing new products; or
|
|
d)
|
advising customers of our products
and services.
|
We use manual and electronic security
procedures to maintain:
|
a)
|
the confidentiality; and
|
Personal
Information
that we have.
We use these procedures
to
guard against unauthorized access.
Some techniques we use to protect
Personal
Information
include:
|
c)
|
encryption;
|
|
d)
|
firewall technology; and
|
|
e)
|
the use of detection software.
|
We are responsible for and m
ust:
|
a)
|
identify information to be
protected;
|
|
b)
|
provide an adequate level of
protection for that data;
|
|
c)
|
grant access to protected data
only to those people who must use it in the performance of their
job-related duties.
|
Employees who violate our
Priva
cy Policy will be
subject to discipline, which may include ending their employment with us.
At the start of our business
relationship, we will give
You
a copy of our current Privacy Policy.
We will also give
You
a copy of our current Privacy Policy
onc
e a year if
You
maintain a continuing business
relationship with us.
We will continue to follow our Privacy
Policy regarding
Personal
Information
even when a
business relationship no longer exists between us.
As used in this Privacy
Notice:
Applicati
on
means your request for our product or
service.
Personal
Financial Information
means
financial information such as:
|
c)
|
financial benefits; or
|
|
d)
|
policy or claim information.
|
Personal
Health Information
means
health inform
ation such as:
|
a)
|
your medical records; or
|
|
b)
|
information about your illness,
disability or injury.
|
Personal
Information
means
information that identifies
You
personally and is not otherwise
available to the public. It includes:
|
a)
|
Personal
Financial Info
rmation
; and
|
|
b)
|
Personal
Health Information
.
|
Transaction
means your business
dealings with us, such
as:
|
b)
|
your request for us to pay a
claim; and
|
|
c)
|
your request for us to take an
action on your account.
|
You
means an individua
l who has given us
Personal
Information
in conjunction
with:
a financial product or service from us
if the product or service is used mainly for personal, family, or household
purposes.
This Privacy Poli
cy is being provided on behalf of the
following affiliates of The Hartford Financial Services Group, Inc.:
American Maturity Life Insurance
Company; Hartford Accident and Indemnity Company; Hartford Administrative
Services Company; Hartford Casualty Insu
rance Company; Hartford Equity Sales
Company, Inc.; Hartford Fire Insurance Company; Hartford Fire General Agency,
Inc.; Hartford HLS Series Fund II, Inc.; Hartford Insurance Company of Illinois;
Hartford Insurance Company of the Midwest; Hartford Insuran
c
e Company of the Southeast; Hartford
International Life Reassurance Corporation; Hartford Investment Advisory
Company, LLC; Hartford Investment Financial Services, LLC; Hartford Investment
Management Company; Hartford Life and Accident Insurance Company;
H
artford Life and Annuity Insurance
Company; Hartford Life Insurance Company; Hartford Lloyd
’
s Insurance Company; Hartford Mezzanine
Investors I, LLC; Hartford Retirement Services, LLC ; Hartford Securities
Distribution Company, Inc.; Hartford Series Fund,
Inc.; Hartford Specialty Company;
Hartford Specialty Insurance Services of Texas, LLC; Hartford Underwriters
Insurance Company; Hartford-Comprehensive Employee Benefit Service Company; HL
Investment Advisors, LLC; Hartford Life Private Placement, LLC; M-C
A
P Insurance Agency, LLC; New England
Insurance Company; Nutmeg Insurance Agency, Inc.; Nutmeg Insurance Company;
Pacific Insurance Company, Limited; Planco, LLC; Hartford Life Distributors,
LLC; Property and Casualty Insurance Company of Hartford; Sentine
l
Insurance Company, Ltd.; Specialty Risk
Services, LLC.; The Hartford Income Shares Fund, Inc.; The Hartford Mutual Funds
II, Inc.; The Hartford Mutual Funds, Inc.; Trumbull Insurance Company; Trumbull
Services, L.L.C.; Twin City Fire Insurance Company; W
o
odbury Financial Services, Inc.