Global Technology Fund (HFGAX, HFGBX, HFGCX, HFGIX)

The Fund seeks to achieve long-term capital appreciation primarily through investments in common stocks and related securities of US and non-US technology-related companies. We define technology-related companies as those companies that suggest rapid and sustainable growth potential from the development, advancement or use of technology to improve their business processes and applications. The Fund is managed by Ian Warmerdam. Stuart O'Gorman provides advice on the Fund to Mr. Warmerdam.

• Quarterly Factsheet

 

Why invest in this fund?

• Exposure to attractive global technology themes, with a focus on international and US technology
• An opportunistic approach with a flexible methodology on stock capitalization
• Bottom-up stock selection drives the portfolio construction process

   

Fund facts (as of 3/31/12)

Inception date:	8/31/01
Minimum initial investment:	$500
Benchmark:	MSCI AC World IT Index
Median market cap ($billions):	19.3
Total number of holdings:	50
Forward 12-month P/E ratio:	16.3
P/B ratio:	3.8
Beta:	1.0
% of holdings in top 10:	37.8
Class A expense ratio1:	1.50
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: Technology, Number of funds in category: 186. The overall Morningstar Rating for the Fund is derived from a weighted average of the risk-adjusted performance figure associated with its 3-, 5- and 10- year Morningstar Rating metrics.

Portfolio management

Ian Warmerdam
Director of Technology Investments

• Read biography

Stuart O'Gorman
Director of Technology Investments

• Read biography

 

 

Top ten holdings %
(as of 4/30/12)

Apple (US)	9.6
Priceline.com (US)	3.6
Samsung (Korea)	3.5
MasterCard (US)	3.2
Cognizant Technology Solutions (US)	3.1
Baidu (China)	3.1
Microsoft (US)	3.0
Google (US)	3.0
Cisco Systems (US)	3.0
QUALCOMM (US)	1.9

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

• Full holdings list

Performance

Relative performance as of 3/31/12

Inception date 8/31/01, 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 a guaranteed number 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. This ratio may differ from that presented in the Fund's prospectus.

Effective 11/30/10, the Global Technology Fund will not accept new or additional investments in Class B shares (HFGBX).

Class I shares were formerly known as Class W shares.

Technology companies may react similarly to certain market pressure and events. This may be significantly affected by short product cycles, aggressive pricing of products and services, competition from new market entrants, and obsolescence of existing technology. As a result, the Global Technology Fund’s returns may be considerably more volatile than a fund that does not invest in technology companies.

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 B shares are subject to a CDSC, which declines from 5% the first year to 0% at the beginning of the seventh year. 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 AC World IT Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the Information Technology stocks within the MSCI AC World Index. It is not possible to invest directly in any index.

Fund overview

This Fund seeks to achieve long-term capital appreciation primarily through investments in common stocks and related securities of US and non-US technology-related companies. We define technology-related companies as those companies that suggest rapid and sustainable growth potential from the development, advancement or use of technology to improve their business processes and applications. The Fund is managed by Ian Warmerdam. Stuart O'Gorman provides advice on the Fund to Mr. Warmerdam. The team evaluates companies and their potential investment returns based on theme, sector and stock specific characteristics that are driven by bottom up factors rather than on geographic regions. 

Quarterly update

The beginning of the year provided relief to investors as equity markets buoyed into a strong rally following various releases of positive economic data, particularly from the US. In these conditions Technology fared well against the broader markets.

Fund performance

Over the quarter the Fund under-performed the MSCI World IT sector. At the sector level, Internet Retail and Computers were the biggest contributors to performance, with semiconductors providing the biggest detraction.

At a stock level, Apple was the best performer following the hotly anticipated iPad release and the recent announcement of a share dividend; its first since 1995. Hon Hai, another strong performer in the portfolio, benefitted from Apple’s record number of units shipped as a Taiwanese supplier to the company. Priceline also performed well over the period. The company, which operates travel and hotel booking websites, reported strong bookings growth in the most recent quarter, driven in part by market share gains from their European site, and increased guidance for the coming quarter. Elsewhere, positions in EMC (Data storage), Microsoft (Software) and CheckPoint Software contributed positively to the fund’s performance.

Investment activity

During the quarter, Verifone was added to our paperless payment theme. The company manufactures and distributes payment terminals globally and is poised to benefit from the continued adoption of electronic payment methods. The Fund also purchased Mail Ru; the Russian social networking site that has successfully managed to leverage its consumer base in free e-mail to generate additional revenue in gaming and recruitment. Among the positions exited were Applied Materials and Gartner, both sold on valuation concerns.

Outlook

The ebbs and flows of the macro economy continue to dominate overall returns. Encouraging data from the US and a slight healing in Europe is being offset by concerns over the ability of some of the emerging markets to engineer a soft landing. We continue to make no major economic calls, but focus on companies with under-appreciated growth and barriers to entry. We believe that these characteristics, combined with the gradual increase of Technology’s share of spending within the economy, offer a strong risk/reward proposition for investors.

Prospectus/SAI

Global Technology Fund