Global Equity Income Fund (HFQAX, HFQCX, HFQIX)

The Fund seeks to achieve a high level of current income and, as a secondary objective, steady growth of capital. With two experienced co-portfolio managers, the Fund invests in income-producing equities, with a focus on international equities. The Fund is managed by a Value and Income team with Portfolio Managers Alex Crooke and Job Curtis.

• Quarterly Factsheet

 

Dividend information

Ex date	1/30/12			NASDAQ Symbol	Per Share Dividend
Record date	1/27/12		Class A	HFQAX	0.021900
Reinvest date	1/30/12		Class C	HFQCX	0.017425
Payable date	1/30/12		Class I	HFQIX	0.023709

Why invest in this fund?

• Invests in global income producing equities, with a focus on international equities
• Uses a specialized regional rotation strategy that rotates among global markets seeking to capitalize on the seasonality of dividends
• Two experienced co-portfolio managers based in London

 

Fund facts (as of 12/31/11)

Inception date:		11/30/06
Minimum initial investment:		$500
Benchmark:		MSCI World Index
Median market cap ($billions):		13.0
Total number of holdings:		72
Forward 12-month P/E ratio:		9.8
P/B ratio:		1.8
Beta:		0.8
Dividend frequency:		Monthly
% of holdings in top 10:		28.5
Class A expense ratio1:		1.31
Morningstar rating (as of 12/31/11)2

¹This ratio is not a guaranteed number and may fluctuate. The class A expense ratio is presented as a percentage of average net assets. The expense ratio is unaudited and is based on annualized fiscal year-to-date results from 8/01/11 to 11/30/11. The ratio may differ from that presented in the Fund’s prospectus that is based on the Fund’s then most recent previous fiscal year.

² Morningstar category: World Stock, Number of funds in category: 697. The overall Morningstar Rating for the Fund is derived from a weighted average of the risk-adjusted performance figure associated with its 3- and 5- year Morningstar Rating metrics.

 

Portfolio management

Alex Crooke
Director of Value and Income

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Job Curtis
Head of Value and Income

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Top ten holdings %
(as of 12/31/11)

Vodafone (UK)	3.5
Royal Dutch Shell (Netherlands)	3.4
GlaxoSmithKline (UK)	3.2
ENI (Italy)	3.1
Pfizer (US)	2.8
Reynolds American (US)	2.7
TOTAL (France)	2.5
Unilever (Netherlands)	2.4
Imperial Tobacco (UK)	2.4
Siemens (German)	2.4
A company's country classification is based on multiple factors including legal domicile and underlying exposure of its business.

 

Performance

Relative performance as of 12/31/11

Inception date 11/30/06, inception of Class I shares 3/31/09.

Lipper rankings are based on total return and do not reflect a sales charge. Rankings are for Class A shares only, other share classes may vary.

Expense ratios are not guaranteed numbers and may fluctuate. Gross and net expense ratios are presented as a percentage of average net assets. The gross expense ratio is stated in the current prospectus and is based on the Fund's then most recent previous fiscal year. The net expense ratio is unaudited and is based on annualized fiscal year-to-date results from 8/01/11 to 11/30/11. The ratio may differ from that presented in the Fund's prospectus.

Class I shares were formerly known as Class W shares.

The performance for Class I shares for the period prior to 3/31/09 is based on the performance of Class A shares. Performance for Class I shares would be similar because the shares are invested in the same portfolio of securities and have the same portfolio management. Class I shares are not subject to a front-end sales charge or a distribution fee.

Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Performance results with sales charges reflect the deduction of the maximum front end sales charge and/or the deduction of the applicable contingent deferred sales charge (CDSC). Class A shares are subject to a maximum front end sales charge of 5.75%. Class C shares may be subject to a CDSC of up to 1% on certain redemptions made within 12 months of purchase. Performance presented at NAV which does not include these sales charges would be lower if these charges were reflected. The Fund’s annual operating expenses will likely vary from year to year. It is important for you to understand that a decline in the Fund’s average net assets during the current fiscal year due to recent market volatility or other factors could cause the Fund’s expense ratios for the Fund’s current fiscal year to be higher than the expense information presented. Returns greater than one year are annualized. Index returns provided by Lipper, Inc. Net Asset Value (NAV) is the value of one share of the Fund excluding any sales charge.

The recent growth rate in the stock market has helped to produce short term returns for some asset classes that are not typical and may not continue in the future. Because of ongoing market volatility, Fund performance may be subject to substantial short term changes.

Returns included the reinvestment of dividends and capital gains. Performance results reflect expense subsidies and waivers in effect during the periods shown. Absent these waivers, results would have been less favorable for certain periods.

Forward 12-month P/E ratio is calculated using the closing price of portfolio holdings divided by the sum of the 12-month forward earnings per share. P/B ratio is calculated using the closing price of portfolio holdings divided by the most recent fiscal year end book value. Both calculations take into account the respective weightings of portfolio holdings. Beta is a quantitative measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market. The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. It is not possible to invest directly in any index.

Fund overview

This Fund seeks to achieve a high level of current income and, as a secondary objective, steady growth of capital. Under normal circumstances, the Fund invests primarily in a portfolio of income-producing equity securities, such as common and preferred dividend-paying stocks. The Fund primarily seeks to identify companies with attractive long-term business prospects that generate cash and produce attractive levels of dividend income, and which are undervalued relative to other similar investments. The Fund may also seek to enhance the level of income it receives by engaging in a dividend capture strategy. The Fund is managed by Job Curtis and Alex Crooke.

Quarterly update

Global equity markets rose during the quarter, as continued uncertainty surrounding the eurozone sovereign debt crisis was offset by positive economic data from the United States.

Fund performance

The Fund performed roughly in line with the MSCI World Index and continued to meet its income objectives. Among the best performers during the quarter was Pfizer, the global pharmaceutical company, which announced an increase to its quarterly dividend and a new share repurchase program that was met with a positive reaction by the market. Also notable was integrated oil firm ENI, which benefitted from a large gas discovery in offshore Mozambique that will add to production over the long-term. One of the worst performers during the quarter was Hays, the global recruiting firm, which fell following earnings downgrades as a result of slowing growth in the fourth quarter in markets such as the Eurozone. Hays continues to be held within the Fund as at current levels we believe it looks compelling from a valuation perspective and offers exposure to the growing market for professional staffing specialists around the world.

Investment activity

During the quarter a new position was added in Merck, the US pharmaceutical company, as it has been highly cash generative and management has been making efforts to reduce costs. Siemens was also added to the Fund, as we believe it is attractively valued and looks set to benefit from rising gas turbine capital expenditure in countries such as the US. The Fund’s position in HTC, the Taiwanese mobile phone manufacturer, was sold. We are concerned that as the market for smart-phones becomes increasingly commoditized, HTC’s margins and profits are likely to come under pressure leading earnings pressure.

Outlook

Going into 2012, many of the companies held within the Fund are global leaders in their industries that we believe should continue to benefit from global economic growth. While there is ongoing uncertainty surrounding a resolution to the eurozone crisis, we remain comfortable with the balance sheets and free cash flow generation of the companies held.

Prospectus/SAI

Global Equity Income Fund