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	4/27/12			NASDAQ Symbol	Per Share Dividend
Record date	4/26/12		Class A	HFQAX	0.065000
Reinvest date	4/27/12		Class C	HFQCX	0.060304
Payable date	4/27/12		Class I	HFQIX	0.066271

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 3/31/12)

Inception date:		11/30/06
Minimum initial investment:		$500
Benchmark:		MSCI World Index
Median market cap ($billions):		15.7
Total number of holdings:		73
Forward 12-month P/E ratio:		10.5
P/B ratio:		1.9
Beta:		0.8
Dividend frequency:		Monthly
% of holdings in top 10:		24.9
Class A expense ratio1:		1.29
Morningstar rating (as of 4/30/12)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 3/31/12. 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: 707. 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 4/30/12)

Centrica (UK)	3.0
ENI (Italy)	2.9
Royal Dutch Shell (Netherlands)	2.8
Nestle (Switzerland)	2.4
British American Tobacco (UK)	2.3
Vodafone (UK)	2.2
Pfizer (US)	2.2
Statoil (Norway)	2.1
BAE Systems (UK)	2.1
Merck & Co. (US)	2.0

A company's county classification is based on multiple factors including multiple factors including legal domicile and underlying exposure of its business.

• Full holdings list

Performance

Relative performance as of 3/31/12

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 3/31/12. 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.

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 first quarter, driven partly by increasing optimism that the three-year LTRO (Long Term Refinancing Operation) borrowing facility announced by the European Central Bank in December had underpinned the European Banking sector in the short term, and partly by economic data from the US showing signs of improvement, leading to increased confidence in the sustainability of a global recovery.

Fund performance

Over the period the Fund made positive gains and met its income objectives, however it underperformed the MSCI World Index. One of the best performers during the quarter was Cielo, Brazilian card processor following a tender offer for its closest competitor, Redecard, at a significant multiple premium. Another strong performer during the quarter was Legal & General, UK-based life and non-life insurer, which presented better than expected full year results and a large dividend increase, signaling a confident outlook for this year.

Amongst the most significant negative contributors was Unilever, which fell following the news that one of its key competitors, Procter and Gamble, will be significantly increasing price investment in the sector, leading to fears of an increasingly competitive environment.

Investment activity

During the quarter a new position was added in Statoil, Norwegian oil and gas, on the expectation that the reserve replacement rate and production levels will benefit from a successful exploration year in 2011. Electrolux, Consumer Durables manufacturer, was added as we believe operating margins should benefit from falling raw material costs and ongoing cost savings in the manufacturing process. Also, the Fund purchased Roche, Pharmaceuticals, which remains on a compelling valuation and has a number of significant pipeline opportunities for its drug portfolio in 2012. Positions were increased in a number of names within the insurance sector, such as Amlin and Legal & General, following strong full year results and dividend increases.

The weighting within the Mining sector was reduced, as a slowdown in Chinese growth would reduce demand for inputs such as steel, putting downward pressure on pricing. The position in Novartis, the Swiss pharmaceutical, was sold as there are better prospects for earnings growth at similar valuations elsewhere within the sector. The position in Telefonica Czech Republic was sold due to concerns that earnings growth will be subdued and the regulatory environment could deteriorate. Profits were taken in Catlin, non-life insurer, following full-year results in which earnings and the capital position was stronger than expected.

Outlook

Going into the second quarter, we believe the companies held in the portfolio remain well positioned to benefit from global growth. Nestle, for example, has a significant portion of their sales in emerging markets, so revenues are likely to benefit from growth in incomes and a growing middle class in these regions. Following the recent market rally, equity prices are higher than at the start of the year, however we still see compelling valuation opportunities in the global equity markets.

Prospectus/SAI

Global Equity Income Fund