HSF Hartford Income Shares Fund, Inc.

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number: 811-02281

THE HARTFORD INCOME SHARES FUND, INC.

(Exact name of registrant as specified in charter)

P. O. Box 2999, Hartford, Connecticut 06104-2999
(Address of Principal Executive Offices)

Edward P. Macdonald, Esquire
Life Law Unit
The Hartford Financial Services Group, Inc.
200 Hopmeadow Street
Simsbury, Connecticut 06089
(Name and Address of Agent for Service)

Registrant’s telephone number, including area code: (860) 843-9934
Date of fiscal year end: July 31st

Date of reporting period: August 1, 2007 — July 31, 2008

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

 

Item 1. Reports to Stockholders.

The Hartford Income Shares Fund, Inc. Annual Report

 

 

 

 

–Customer Service

 

–(888) 483-0972

 

How to use this report

 

For a quick overview of The Hartford Income Shares Fund, Inc. (the “Fund”) performance during the past twelve months, refer to the Highlights box below. The letter from the portfolio manager provides a more detailed analysis of the Fund and financial markets.

 

The charts alongside the letter are useful because they provide more information about your investments. The top holdings chart shows the types of securities in which the Fund invests, and the pie chart shows a breakdown of the Fund’s assets by sector. Additional information concerning Fund performance and policies can be found in the Notes to Financial Statements.

 

This report is just one of several tools you can use to learn more about your investment in the Fund. Your investment representative, who understands your personal financial situation, can best explain the features of your investment and how it’s designed to help you meet your financial goals.

 

Highlights

 

 

Certifications

 

In December 2007, the Fund’s principal executive officer submitted his annual certification as to compliance with the New York Stock Exchange (“NYSE”) Corporate Governance Listing Standards pursuant to Section 303A.12(a) of the NYSE Listed Company Manual. The Fund’s principal executive and principal financial officer certifications pursuant to Rule 30a-2 under the Investment Company Act of 1940 are filed with the Fund’s Form N-CSR filings and are available on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.

 

HOW TO OBTAIN A COPY OF THE FUND’S PROXY VOTING POLICIES AND PROXY VOTING RECORD

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and a record of how the Fund voted any proxies for the twelve month period ended June 30, 2008 are available (1) without charge, upon request, by calling 1-888-483-0972 and (2) on the SEC’s website at http://www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS INFORMATION

 

The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available (1) without charge, upon request, by calling 1-888-483-0972 and (2) on the SEC’s website at http://www.sec.gov. The Form N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

 

The Hartford Income Shares Fund, Inc

 

(Subadvised by Hartford Investment Management Company)

 

Portfolio Managers

Mark Niland

 

Portfolio Composition by Sector as of July 31, 2008

 

 

 

Top 10 Holdings as of
July 31, 2008

 

How did the Fund perform?

 

The Hartford Income Shares Fund, Inc. (the “Fund”) returned -8.98% at net asset value (“NAV”) and -11.28% at market price for the twelve-month period ended July 31, 2008, underperforming the Lehman Brothers Aggregate Bond Index, a benchmark for domestic investment-grade bonds, which returned 6.15% over the same period. The Fund underperformed the 1.14% return of the average fund in the Lipper Closed End Corporate BBB Rated Debt Funds peer group, a group of funds with investment strategies similar to those of the Fund.

 

Why did the Fund perform this way?

 

Credit risk assets underperformed for the twelve-month period under review as losses generated by subprime mortgages and other asset-backed securities spread to the Finance sector in the form of substantial write-downs. As large money center banks have turned inward to address their related asset quality issues, credit availability has become progressively tighter, raising the potential for a general downward migration of the creditworthiness of any corporate issuer that is in need of capital as well as the prospect that corporate defaults will rise materially. In this environment, the fact that the Fund was underweighted (i.e. the Fund’s sector position was less than the benchmark position) in U.S. Treasury securities adversely affected its benchmark-relative performance (i.e. performance of the Fund as measured against the benchmark). During the twelve-month period under review, the U.S. Treasury component of the benchmark Lehman Brothers Aggregate Bond Index posted a total return of 8.99%, easily outpacing every other sector, including the speculative-grade and higher-yielding investment-grade corporate bonds in which the Fund has invested in seeking to meet its objective of providing a high level of current income. On average, the Fund’s weighting in U.S. Treasuries was less than 1% versus a benchmark weighting of 22.41%.

 

The returns of the Fund’s investment-grade corporate bond holdings lagged those of the benchmark. The Fund held a significant overweight (i.e. the Fund’s sector position was greater than the benchmark position) to investment-grade corporate bonds, with an average weighting of 67.11% versus a benchmark weighting of 21.94%. The Fund’s overweight to the Financial sector within this allocation, specifically capital securities issued by financial firms, was the primary source of underperfomance. Security selection within the sector also proved to be a limiting factor, as securities issued by CIT Group, a financial services firm, International Lease Finance Corporation (a subsidiary of American International Group) and Farmers Insurance (a subsidiary of Zurich Financial Services) were caught up in the volatility that has surrounded financial firms in recent months.

 

The other significant overweight for the Fund was an out-of-benchmark allocation to high yield corporate bonds, which had an average weighting of 25.55% during the period. In general, the high yield corporate sector lagged the broad bond market and the Fund’s allocation to the sector hindered relative performance. Security selection also detracted from performance, particularly holdings of General Motors Acceptance Corp. (“GMAC”) and Charter Communications, two of the largest issuers within the market that suffered from considerable negative investor sentiment over the course of the period. GMAC was dragged down by subsidiary Residential Capital, a home mortgage originator and servicer that experienced credit problems in its portfolio of home loans. Charter Communications, a cable company that has historically been one of the market’s more volatile issuers due to its leveraged balance sheet, suffered in the wake of the rise in risk aversion that has gripped the market.

 

An overweight in asset-backed securities (ABS) also hindered relative returns during the period. Within the sector, the Fund’s holdings of fixed-rate home equity securities continued to suffer. While our ABS team is comfortable with the fundamental characteristics of the collateral underlying our securities (performing generally in line with original expectations from a delinquency and default perspective), loan-to-value ratios have deteriorated, which has reduced some of the credit protection for our positions. The Fund’s ABS position averaged 3.80% over the period, versus a benchmark weighting of 0.86%.

 

 

What is your outlook?

 

The general market consensus appears to be that while economic growth will remain below the long-term trend, the economy will avoid recession and strengthen in late 2008 and 2009. We believe, however, that growth for the remainder of the year will be erratic and possibly fall into negative territory in the third and fourth quarters as the severity and extent of the credit crunch is still unknown and may worsen. Although the investment-grade corporate bond market has improved, we see little evidence that credit is more available generally or is priced any more favorably than it was at the end of the first quarter. When coupled with the oppressive effect of high energy prices and slow growth abroad, it seems unlikely the U.S. economy will follow the consensus path. We also believe inflation will remain a concern at least in the near-term. As such, we expect the Federal Reserve Board to hold rates steady over the next few months.

 

Corporate credit defaults are clearly heading upward, as some of the more aggressively underwritten deals that were originated in 2005 through early 2007 are beginning to experience difficulties as the economy cools. In addition, the high yield market is absorbing a rising percentage of “fallen angels”, or former investment-grade credits that have migrated down to the speculative-grade ranks, which have a higher tendency to default. As such, we expect the default rate to rise to a level in line with the long-term average of roughly 4.5% by year end. An important determinant of the extent of this current wave of defaults will likely be a function of corporate liquidity and cash flows. The Financial sector along with the Consumer Discretionary sector have felt the most pain so far this cycle but there is now clear evidence that the weakness is beginning to spread to the Transportation sector, as well as other sectors that are heavily dependent on energy as an input to their cost structures. The second-quarter’s earnings season will shed some important light on how severe this weakness is likely to be.

The Hartford Income Shares Fund, Inc.

Schedule of Investments

July 31, 2008

(000’s Omitted)

 

 

The accompanying notes are an integral part of this financial statement.

The Hartford Income Shares Fund, Inc.

Schedule of Investments — (continued)

July 31, 2008

(000’s Omitted)

 

 

The accompanying notes are an integral part of this financial statement.

The Hartford Income Shares Fund, Inc.

Schedule of Investments — (continued)

July 31, 2008

(000’s Omitted)

 

 

The accompanying notes are an integral part of this financial statement.

The Hartford Income Shares Fund, Inc.

Schedule of Investments — (continued)

July 31, 2008

(000’s Omitted)

 

 

 

 

 

 

 

 

 

Distribution by Credit Quality

as of July 31, 2008

 

 

 

The accompanying notes are an integral part of this financial statement.

The Hartford Income Shares Fund, Inc.

Statement of Assets and Liabilities

July 31, 2008

(000’s Omitted)

 

The Hartford Income Shares Fund, Inc.

Statement of Operations

For the Year Ended July 31, 2008

(000’s Omitted)

 

The accompanying notes are an integral part of this financial statement.

The Hartford Income Shares Fund, Inc.

Statements of Changes in Net Assets
(000’s Omitted)

 

 

The accompanying notes are an integral part of this financial statement.

The Hartford Income Shares Fund, Inc.

Notes to Financial Statements

July 31, 2008

(000’s Omitted)

 

 

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 income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. 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 quotations 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 may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the exchange on which a portfolio security is principally traded but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred 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 issuer, 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 securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks principally traded on foreign markets the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models to adjust for “stale” prices caused by the movement of other markets and other factors occurring after the close of the foreign markets but before the close of the Exchange. Securities that are principally traded on foreign markets may trade on days that are not business days of the Fund. Because the net asset value (“NAV”) of the Fund’s shares is determined only on business days of the Fund, the value of the portfolio securities of the Fund, if it is invested in foreign securities, may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of the respective shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is principally traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV per share.

 

Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an unaffiliated pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an unaffiliated pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service, but where an active market exists, are valued using market quotations obtained from one or more dealers that make markets in the securities or from a widely-used quotation system in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund 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 valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value.

 

Futures contracts are valued at the final settlement price reported by an exchange on which they are principally traded. If there were no trades as of the valuation day, then the contract is valued at the closing bid price as of the Valuation Time.

 

c) Repurchase Agreements  — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. As of July 31, 2008, the Fund had no outstanding repurchase agreements.

The Hartford Income Shares Fund, Inc.

Notes to Financial Statements

July 31, 2008

(000’s Omitted)

 

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 customary 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 July 31, 2008, the Fund had no outstanding when-issued or forward commitments.

 

e) Illiquid and Restricted 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 per share. The Fund may not be able to sell illiquid securities 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 illiquid 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 investment in them may have an adverse impact on 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.

 

f) Credit Risk  — Credit risk depends largely on the perceived financial health of bond issuers. In general, lower rated bonds have higher credit risk. High yield bond prices can fall on bad news about the economy, an industry or a company. The share price, yield and total return of a fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds.

 

g) Use of Estimates  — The preparation of financial statements in conformity with U.S. GAAP 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 future could vary from the amounts derived from management’s estimates.

 

h) Financial Accounting Standards Board Financial Accounting Standards No. 157  — In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurement” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurement. FAS 157 is effective for the Fund’s financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Management has evaluated the impact of the standard and does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements; however, additional disclosures will be required about the inputs used to develop the measurements of fair value and the effect of certain measurements reported in the Statement of Operations for a fiscal year.

 

i) Financial Accounting Standards Board Financial Accounting Standards No. 161  — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements has not yet been determined.

 

Indemnifications:  Under the Fund’s organizational documents, the Fund shall indemnify its officers and directors to the full extent required or permitted under Maryland Corporate Law 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 these contracts and expects the risk of loss to be remote.

 

 

Futures and Options Transactions  — The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. 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 futures 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 security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., marked-to-market), which results in an unrealized gain or loss to the Fund.

 

At any time prior to the expiration of the futures 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,

The Hartford Income Shares Fund, Inc.

Notes to Financial Statements

July 31, 2008

(000’s Omitted)

 

additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss.

 

The use of futures contracts involve 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 decrease the effectiveness of the Fund’s strategy and potentially result in loss. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of July 31, 2008.

 

The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets 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 covered 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 or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will establish or maintain with its custodian for the term of the option a “segregated account” consisting of cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The 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 from a change in the value of such options, which may exceed the related premiums received. During the year ended July 31, 2008, the Fund had no transactions involving written options contracts.

 

 

a) Federal Income Taxes  — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2008. 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 distribution for federal income tax purposes.

 

Net investment income and net realized gains differ for financial statement and tax purposes. The character of distributions made during the year from net investment income or net realized gains may therefore differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that income or realized gains (losses) were recorded by the Fund.

 

The tax character of distributions paid for the fiscal years ended July 31, 2008 and 2007, were ordinary income in the amounts of $7,066 and $7,191, respectively.

 

b) Reclassification of Capital Accounts: On the Fund’s Statement of Assets and Liabilities, as a result of permanent book-to-tax differences, accumulated net realized loss was decreased by $2,941 and paid-in-capital was decreased by $2,941.

 

As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:

 

 

 

 

c) Capital Loss Carryforward:

 

For federal income tax purposes, the Fund had capital loss carryforwards of $19,412 as of July 31, 2008, which, if not offset by subsequent capital gains, will expire in 2009 through 2016 as follows:

 

 

As of July 31, 2008, the Fund elected to defer post October losses of $3,510.

 

For the tax year ended July 31, 2008, the Fund expired $2,941 of capital loss carryforwards.

The Hartford Income Shares Fund, Inc.

Notes to Financial Statements

July 31, 2008

(000’s Omitted)

 

d) Financial Accounting Standards Board Interpretation No. 48  — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended December 31, 2005 — 2007) and has determined there is no impact to the Fund’s financial statements.

 

 

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 the 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.

 

As investment manager for the Fund, HIFSCO has retained 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 Directors. 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, including the purchase, retention and disposition of securities.

 

The Hartford Financial Services Group, Inc. (“The Hartford”) and its 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, Hartford Investment Management and/or The Hartford or its subsidiaries. For the year ended July 31, 2008, a portion of the Fund’s Chief Compliance Officer’s salary was paid by the Fund. The amount paid was less than five hundred dollars and rounds to zero for this report. Hartford Administrative Services Company (“HASCO”), a wholly-owned 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-bearing account. For the year ended July 31, 2008, the custodian fee offset arrangement reduced expenses by $8. The total expense reduction represents an effective annual rate of 0.008% of the Fund’s average daily net assets. This amount is included on the fees paid indirectly line of the Fund’s Statement of Operations.

 

 

For the year ended July 31, 2008, the cost of purchases and proceeds from sales of securities (excluding short-term investments) were as follows:

 

 

Financial Highlights