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Ivy Apollo Strategic Income Fund

  • $9.95 NAV as of 9/25/2018
  • ($-0.01) / -0.10% Daily NAV Change
  • 1.12% YTD (NAV)

Summary

Combining strategies to focus on providing solutions

Access
A partnership of world class asset managers investing in a wide range of credit instruments across the fixed income landscape including alternative credit strategies.
Diversification
Potential risk mitigation with allocations across the fixed income market including corporate and sovereign debt in the U.S. and internationally, investment-grade and high-yield securities.
Flexibility
Flexible allocations offer the potential for duration management as well as additional potential sources of yield.

Morningstar Style Box

Growth
Medium
LTD
Low
Source: Morningstar

Portfolio Management

Mark G. Beischel, CFA

  • Ivy Investment Management Company
  • 2 Years with Fund
  • 25 Years in Industry
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Mark Beischel is portfolio manager of Ivy Global Bond Fund and Ivy VIP Global Bond. He has been a portfolio manager of Ivy Global Bond since 2008 and of Ivy VIP Global Bond since 2010. He had been a portfolio manager of the former Waddell & Reed Advisors Global Bond Fund since 2002. He has held oversight of allocation levels and management of all allocation sleeves for Ivy Apollo Strategic Income Fund and co-oversight of allocation levels and management of all allocation sleeves for Ivy Apollo Multi- Asset Income Fund since 2015. On an interim basis as of April 2018, Mr. Beischel is co-portfolio manager of Ivy Bond Fund, Ivy Government Securities Fund, Ivy Crossover Credit Fund, Ivy Balanced Fund, Ivy VIP Bond and Ivy VIP Balanced. Mr. Beischel joined the organization in 1998 specializing in taxable investment-grade corporate credit analysis and emerging market credit analysis. He was appointed assistant vice president and named an assistant portfolio manager in 2000. He was appointed vice president in 2002 and senior vice president in 2006. Mr. Beischel was appointed Global Director of Fixed Income in 2011. Mr. Beischel graduated in 1991 with a BBA in Management from the University of Wisconsin-Eau Claire. He earned an MBA with an emphasis in Finance from the University of Denver in 1993. Mr. Beischel is a CFA charterholder. He is a member of the CFA Institute and the CFA Society of Kansas City.

Chad Gunther

  • Ivy Investment Management Company
  • 2 Years with Fund
  • 20 Years in Industry
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Chad Gunther is portfolio manager of Ivy High Income Fund, Ivy VIP High Income and Ivy High Income Opportunities Fund, managing the funds since 2014. He is portfolio manager of the High Income Strategy sleeve of Ivy Apollo Strategic Income Fund and of Ivy Apollo Multi-Asset Income Fund since 2015. Mr. Gunther joined the organization in 2003 as a high yield fixed income investment analyst. He was appointed assistant vice president and named assistant portfolio manager of the firm's High Income funds in 2008. He was appointed vice president in 2013 and senior vice president in 2014. Prior to joining the firm, Mr. Gunther was affiliated with Dialpad Communications as director of business operations. His responsibilities included the customer care, risk management and billing departments. Before joining Dialpad, Mr. Gunther was an associate analyst in equity research for George K. Baum & Company. He spent five years with Piper Jaffray before earning his master’s degree. Mr. Gunther graduated from the University of Kansas in 1993 with a BS in Business Administration with an emphasis in Economics. He earned an MBA with an emphasis in Finance from Washington University/St. Louis Olin Graduate School of Business in 2000.

James Zelter

  • Apollo Credit Management, LLC.
  • 2 Years with Fund
  • 31 Years in Industry
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Mr. Zelter has held his Fund responsibilities since October 2015. Mr. Zelter joined Apollo Global in 2006 and is Managing Partner and ChiefInvestment Officer of Apollo Capital Management, L.P., Apollo Global’s credit asset management business. He is also the Chief Executive Officer and director of Apollo Investment Corporation. Prior to joining Apollo Global, Mr. Zelter was with Citigroup Inc. and its predecessor companies from 1994 to 2006. From 2003 to 2005, Mr. Zelter was Chief Investment Officer of Citigroup Alternative Investments, and prior to that, he was responsible for the firm’s Global High Yield franchise. Mr. Zelter is a board member of DUMAC, the investment management company that oversees the Duke Endowment and Duke Foundation, and a Director of the Dalton School. Mr. Zelter has a degree in economics from Duke University.

Joseph Moroney

  • Apollo Credit Management, LLC.
  • <1 Year with Fund
  • 24 Years in Industry
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Joseph Moroney is a Partner in Credit and currently serves as Co-Head of Global Liquid Credit. He joined Apollo in 2008 to help establish Apollo’s Performing Credit business. Prior to joining Apollo, Mr. Moroney was with Aladdin Capital Management where he served as the Senior Managing Director of its Leveraged Loan Group. His investment management career includes experience at firms including Merrill Lynch Investment Managers and MetLife Insurance. Mr. Moroney graduated from Rutgers University with a BS in Ceramic Engineering and serves on Board of Overseers of the Rutgers Foundation. He is a Chartered Financial Analyst and a member of the CFA Society of New York.

Growth of a $10,000 Investment
through 7/31/2018

Assumes an investment over 10 years or life of the share class, reinvestment of dividends and capital gains, and does not include the effect of sales charges or taxes.

Documents

Perspectives

Quarterly Fund Commentary

Daily Prices as of 9/25/2018

Net Asset Value (NAV) $9.95
Daily NAV Change ($) ($-0.01) -0.10%
Weekly NAV Change ($) $0.00 0.00%
Public Offering Price (POP) $9.95

Fund Facts

Ticker Symbol IYPOX
CUSIP 46600B854
Fund Code 774
Fund Type Fixed Income Funds
Fund Inception 10/1/2015
Class Inception 10/1/2015
Fiscal Year End September
Dividends Paid Monthly
Fund Assets (as of 8/31/2018) $497.0 mil
Total Holdings (as of 8/31/2018) 679
Portfolio Turnover Rate (as of 3/31/2018) 30%
Lipper Category Multi-Sector Income Funds
Morningstar Category Multisector Bond
Benchmark 50 % Bloomberg Barclays Global Credit 1-10 Year Hedged Index + 50% ICE BofAML US High Yield Index
Benchmark Bloomberg Barclays Global Credit 1-10 Year Hedged Index
Benchmark ICE BofAML US High Yield Index
Benchmark 50% Bloomberg Barclays Multiverse + 50% ICE BofAML US HY
Benchmark Bloomberg Barclays Multiverse TR USD

Performance

Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.

Class Y shares are not subject to sales charges.

Monthly Rates of Return

Average Annual Total Returns as of 8/31/2018
(Returns for periods of less than 1-yr are not annualized)
 
Bloomberg Barclays Multiverse TR USD -1.64% -1.38% 2.70% 1.50% 2.93%
Lipper Multi-Sector Income Funds -0.26% 0.67% 3.69% 3.51% 5.30%
50% Bloomberg Barclays Multiverse + 50% ICE BofAML US HY 0.14% 0.93%
Bloomberg Barclays Global Credit 1-10 Year Hedged Index 0.20% 0.69% 3.53% 3.63% 5.02%
Fund at NAV 0.99% 1.55% 3.78%
50 % Bloomberg Barclays Global Credit 1-10 Year Hedged Index + 50% ICE BofAML US High Yield Index 1.06% 1.97%
ICE BofAML US High Yield Index 1.93% 3.26% 7.04% 5.63% 8.37%

Quarterly Rates of Return

Average Annual Total Returns as of 6/30/2018
(Returns for periods of less than 1-yr are not annualized)
 
Bloomberg Barclays Multiverse TR USD -1.58% 1.34% 2.78% 1.67% 2.78%
Lipper Multi-Sector Income Funds -1.18% 0.98% 3.02% 3.27% 5.10%
50% Bloomberg Barclays Multiverse + 50% ICE BofAML US HY -0.74% 1.95%
Bloomberg Barclays Global Credit 1-10 Year Hedged Index -0.66% 1.12% 3.16% 3.56% 5.02%
50 % Bloomberg Barclays Global Credit 1-10 Year Hedged Index + 50% ICE BofAML US High Yield Index -0.29% 1.83%
Fund at NAV -0.03% 1.52% 3.64%
ICE BofAML US High Yield Index 0.08% 2.53% 5.55% 5.51% 8.03%

Calendar Year Return

  2013
Bloomberg Barclays Multiverse TR USD -2.19 0.48 -3.29 2.84 7.69
ICE BofAML US High Yield Index 7.42 2.50 -4.64 17.49 7.48
Class Y 7.86 4.22

Lipper Ranking through 8/31/2018 Lipper Logo

Category: Multi-Sector Income Funds
 
Rankings are based on average annual total returns, but do not consider sales charges.
1 Year 88/313 29
3 Year
5 Year
10 Year

Expense Ratios as of 7/31/2018

Net 1.11%
Gross 1.20%

5-Year Standard Deviation as of

Bloomberg Barclays Multiverse TR USD 4.43
ICE BofAML US High Yield Index 4.98
50% Bloomberg Barclays Multiverse + 50% ICE BofAML US HY N/A
Bloomberg Barclays Global Credit 1-10 Year Hedged Index 2.08
50 % Bloomberg Barclays Global Credit 1-10 Year Hedged Index + 50% ICE BofAML US High Yield Index N/A

Distributions

Historical Prices Inception 10/1/2015

9/4/2018 $9.96 NO NO
9/5/2018 $9.96 NO NO
9/6/2018 $9.96 NO NO
9/7/2018 $9.96 NO NO
9/10/2018 $9.96 NO NO
9/11/2018 $9.96 NO NO
9/12/2018 $9.97 NO NO
9/13/2018 $9.95 YES YES
9/14/2018 $9.95 NO NO
9/17/2018 $9.95 NO NO
9/18/2018 $9.95 NO NO
9/19/2018 $9.95 NO NO
9/20/2018 $9.95 NO NO
9/21/2018 $9.96 NO NO
9/24/2018 $9.96 NO NO
9/25/2018 $9.95 NO NO

Historical Distributions Inception 10/1/2015

9/13/2018 $0.033 Long: $0.000 Short: $0.000 $9.95 9/13/2018
7/12/2018 $0.031 Long: $0.000 Short: $0.000 $9.93 7/12/2018
6/14/2018 $0.03 Long: $0.000 Short: $0.000 $9.95 6/14/2018
5/10/2018 $0.03 Long: $0.000 Short: $0.000 $9.94 5/10/2018
3/15/2018 $0.03 Long: $0.000 Short: $0.000 $10.01 3/15/2018
2/15/2018 $0.031 Long: $0.000 Short: $0.000 $10.03 2/15/2018
1/11/2018 $0.015 Long: $0.000 Short: $0.000 $10.12 1/11/2018
12/14/2017 $0.0795 Long: $0.018 Short: $0.037 $10.08 12/14/2017
11/16/2017 $0.031 Long: $0.000 Short: $0.000 $10.19 11/16/2017
10/12/2017 $0.03 Long: $0.000 Short: $0.000 $10.26 10/12/2017
9/14/2017 $0.031 Long: $0.000 Short: $0.000 $10.26 9/14/2017
8/10/2017 $0.03 Long: $0.000 Short: $0.000 $10.23 8/10/2017
6/15/2017 $0.03 Long: $0.000 Short: $0.000 $10.24 6/15/2017
5/11/2017 $0.031 Long: $0.000 Short: $0.000 $10.23 5/11/2017
4/13/2017 $0.03 Long: $0.000 Short: $0.000 $10.2 4/13/2017
3/16/2017 $0.03 Long: $0.000 Short: $0.000 $10.17 3/16/2017
2/9/2017 $0.031 Long: $0.000 Short: $0.000 $10.19 2/9/2017
1/12/2017 $0.015 Long: $0.000 Short: $0.000 $10.18 1/12/2017
12/8/2016 $0.069 Long: $0.007 Short: $0.037 $10.09 12/8/2016
11/10/2016 $0.031 Long: $0.000 Short: $0.000 $10.14 11/10/2016
10/13/2016 $0.031 Long: $0.000 Short: $0.000 $10.24 10/13/2016
9/15/2016 $0.03 Long: $0.000 Short: $0.000 $10.22 9/15/2016
8/11/2016 $0.03 Long: $0.000 Short: $0.000 $10.2 8/11/2016
7/14/2016 $0.026 Long: $0.000 Short: $0.000 $10.17 7/14/2016
6/16/2016 $0.025 Long: $0.000 Short: $0.000 $10.04 6/16/2016
5/12/2016 $0.026 Long: $0.000 Short: $0.000 $10 5/12/2016
4/14/2016 $0.025 Long: $0.000 Short: $0.000 $9.96 4/14/2016
3/10/2016 $0.025 Long: $0.000 Short: $0.000 $9.81 3/10/2016
2/11/2016 $0.026 Long: $0.000 Short: $0.000 $9.61 2/11/2016
1/14/2016 $0.01 Long: $0.000 Short: $0.000 $9.74 1/14/2016
12/10/2015 $0.037 Long: $0.000 Short: $0.000 $9.83 12/10/2015
11/12/2015 $0.008 Long: $0.000 Short: $0.000 $9.97 11/12/2015

*Special Dividend
The table includes the daily prices at NAV (net asset value) for the history of this fund's selected share class. NAV is the amount per share you would receive if you sold shares that day.

12-Month Trailing Dist. Yield as of 8/31/2018

NAV 3.99%
With Sales Charge 3.99%

Annualized 30-Day SEC Yield as of 8/31/2018

Subsidized - NAV 4.47%
Unsubsidized - NAV 4.41%

Portfolio

Top 10 Holdings as a % of net assets 8/31/2018

U.S. Treasury Notes, 1.4%, 6/30/2023 1.43%
iShares iBoxx $ High Yield Corporate Bond ETF iShares iBoxx $ High Yield Corporate Bond ETF is an exchange-traded fund incorporated in the USA. The ETF seeks to track the investment results of an index composed of U.S. dollar-denominated, high yield corporate bonds. 1.35%
Republic of Poland, 5.1%, 4/21/2021 1.27%
Federal Republic of Brazil, 4.9%, 1/22/2021 1.24%
Republic of Indonesia, 3.8%, 4/25/2022 1.20%
U.S. Treasury Notes, 1.5%, 8/15/2026 1.01%
Laureate Education, Inc., 8.3%, 5/1/2025 0.83%
U.S. Treasury Bonds, 2.3%, 11/15/2025 0.82%
U.S. Treasury Notes, 1.5%, 8/15/2020 0.79%
Qatar Government Bond, 2.4%, 6/2/2021 0.78%

Total Portfolio Holdings

Updated quarterly, upon availability.

Maturity
as a % of fixed income assets as of 8/31/2018

<1 Year 6.9%
1-5 Years 46.3%
5-10 Years 44.8%
10-20 Years 1.6%
>20 Years 0.5%
Average Maturity 4.45 years
Effective Duration 3.65 years

Fixed Income Country Allocation
as a % of bond holdings as of 8/31/2018

United States 61.3%
Luxembourg 4.1%
Mexico 2.9%
Netherlands 2.9%
Canada 2.9%
Brazil 2.7%
France 2.7%
Cayman Islands 2.6%
United Kingdom 2.1%
Indonesia 2.1%
Poland 1.3%
Qatar 1.0%
Japan 1.0%
China 0.9%
India 0.9%
Columbia 0.9%
South Korea 0.8%
Argentina 0.7%
Chile 0.7%
Peru 0.7%
Australia 0.6%
Austria 0.6%
Turkey 0.4%
Spain 0.4%
Norway 0.3%
Venezuela 0.3%
Panama 0.3%
Saudi Arabia 0.3%
United Arab Emirates 0.3%
Bermuda 0.2%
Germany 0.2%
Macau 0.2%
Switzerland 0.2%
Euro 0.1%
Sweden 0.1%
Hong Kong 0.1%
Jamaica 0.1%
Ireland 0.1%
British Virgin Islands 0.1%
Israel 0.1%
Denmark 0.1%
Isle Of Man 0.1%
Malaysia 0.0%
Jersey 0.0%

Quality
as a % of fixed income assets as of 8/31/2018

Quality: Our preference is to always use ratings obtained from Standard & Poor's, Moody’s, and Fitch. It is each Portfolio’s general policy to classify such security at the lower rating level if only two ratings are available. If more than two ratings are available and a median exists, the median is used. If more than two ratings exist without a median, the lower of the two middle ratings is used. We do not evaluate these ratings, but simply assign them to the appropriate credit quality category as determined by the rating agency.
Government Bonds 8.10%
NonRated 4.50%
AAA 0.10%
AA 1.90%
A 8.70%
BBB 17.30%
BB 16.00%
B 31.90%
CCC 10.90%
Below CCC 0.60%

Portfolio Composition
as a % of net assets as of 8/31/2018

Corporate Bonds 58.13%
Senior Loans 16.59%
Other Government Securities 8.98%
Government Bonds 7.69%
Cash and Cash Equivalents 3.70%
Mortgage-Backed Securities 1.71%
Domestic Common Stock 1.46%
Asset-Backed Securities 1.36%
Preferred Stock 0.37%
Foreign Common Stock 0.01%

Total Portfolio Holdings

Updated quarterly, upon availability.

Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.

Risk factors. The value of the Fund’s shares will change, and you could lose money on your investment. Although asset allocation among different sleeves and asset categories generally tends to limit risk and exposure to any one sleeve, the risk remains that the allocation of assets may skew toward a sleeve that performs poorly relative to the fund’s other sleeves, or to the market as a whole, which would result in the Funds performing poorly. While Ivy Investment Management Company (IICO) monitors the investments of Apollo in addition to the overall management of the Funds, including rebalancing the Fund’s target allocations, IICO and Apollo make investment decisions for their investment sleeves independently from one another. It is possible that the investment styles used by Apollo or IICO will not always complement each other, which could adversely affect the performance of the Funds. As a result, the Fund’s aggregate exposure to a particular industry or group of industries, or to a single issuer, could unintentionally be larger or smaller than intended. International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets.

Investment risks associated with investing in real estate securities, in addition to other risks, include rental income fluctuation, depreciation, property tax value changes and differences in real estate market values. Fixed income securities are subject to interest rate risk and, as such, the net asset value of the Funds may fall as interest rates rise. Investing in below investment grade securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. Loans (including loan assignments, loan participations and other loan instruments) carry other risks, including the risk of insolvency of the lending bank or other intermediary. Loans may be unsecured or not fully collateralized may be subject to restrictions on resale and sometimes trade infrequently on the secondary market. These and other risks are more fully described in the Fund’s prospectus. Not all funds or fund classes may be offered at all broker/ dealers. Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. For a prospectus, or, if available, a summary prospectus, containing this and other valuable information for the Ivy Funds, all your financial advisor or visit us online at www.ivyfunds.com. Please read the prospectus and summary prospectus carefully before investing

Effective May 11, 2018, the Ivy Apollo Strategic Income Fund's blended benchmark changed to 50% Bloomberg Barclays Global Credit 1-10 Year Hedged Index + 50% ICE BofAML US High Yield Index from the prior blended benchmark of 50% Bloomberg Barclays Multiverse Index + 50% ICE BofAML US High Yield Index. Ivy Investment Management Company believes the new blended benchmark and new component are more reflective of the types of securities in which the Fund invests than the prior blended benchmark and benchmark component. The prior blended benchmark and benchmark component will be shown for one year from the effective date for comparison purposes.

Index Description: The Bloomberg Barclays Multiverse TR USD - The Barclays Multiverse Index is an unmanaged index comprised of securities that represent the global bond market. It is not possible to invest directly in an index.

Index Description: The BofAML U.S. HY Master II TR USD tracks the performance of U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market. It is not possible to invest directly in an index

Index Description: Ivy Apollo Strategic Income Fund Custom Benchmark is a blend of 50% of BofAML US Master II TR USD, which tracks the performance of U.S. dollar-denominated, below-investment-grade corporate debt publicly issued in the U.S. domestic market, and 50% Bloomberg Barclays Multiverse TR USD, which is an unmanaged index comprised of securities that represent the global bond market.

Index Description: The Bloomberg Barclays Global Credit 1-10 Year (Hedged) Index measures the global investment grade local currency corporate and government-related bond markets with a maturity greater than 1 year and less than 10 years. The hedged component of the index takes rolling one-month forward contracts that are reset at the end of each month and hedges each non-reporting currency-denominated bond in the index into the reporting currency terms, reducing the index's currency risk. The Global Credit 1-10 Year is a subset of the Global Aggregate Credit Index, a multi-currency index including fixed-rate bonds from both developed and emerging markets issuers. The Global Aggregate Credit Index is a component of the Global Aggregate Index. It is not possible to invest directly in an index.

Index Description: Ivy Apollo Strategic Income Fund Custom Benchmark is a blend of 50% of ICEBofAML US High Yield Master II TR USD, which tracks the performance of U.S. dollar-denominated, below-investment-grade corporate debt publicly issued in the U.S. domestic market, and 50% Bloomberg Barclays Global Credit 1-10 Year Hedged Index, which measures the global investment grade local currency corporate and government-related bond markets with a maturity greater than 1 year and less than 10 years. The hedged component of the index takes rolling one-month forward contracts that are reset at the end of each month and hedges each non-reporting currency-denominated bond in the index into the reporting currency terms, reducing the index's currency risk.

Fee Waiver and/or Expense Reimbursement: Through January 31, 2019, Ivy Investment Management Company (IICO), the Fund’s investment manager, Ivy Distributors, Inc. (IDI), the Fund’s distributor, and/or Waddell & Reed Services Company, doing business as WI Services Company (WISC), the Fund’s transfer agent, have contractually agreed to reimburse sufficient management fees, 12b-1 fees and/or shareholder servicing fees to cap the total annual ordinary fund operating expenses (which would exclude interest, taxes, brokerage commissions, acquired fund fees and expenses, and extraordinary expenses, if any) for the Fund’s Class A shares at 1.15%, Class C shares at 1.85%, and Class Y shares at 1.10%. Prior to that date, the expense limitation may not be terminated without the consent of the Board of Trustees of Ivy Funds (Board).

Fee Waiver and/or Expense Reimbursement: Through January 31, 2020, IICO, the Fund’s investment manager, IDI, the Fund’s distributor, and/or WISC, the Fund’s transfer agent, have contractually agreed to reimburse sufficient management fees, 12b-1 fees and/or shareholder servicing fees to cap the total annual ordinary fund operating expenses (which would exclude interest, taxes, brokerage commissions, acquired fund fees and expenses, and extraordinary expenses, if any) for the Fund’s Class I shares and Class N shares at 0.67%. Prior to that date, the expense limitation may not be terminated without the consent of the Board.

Fee Waiver and/or Expense Reimbursement: Through January 31, 2019, IDI and/or WISC have contractually agreed to reimburse sufficient 12b-1 and/or shareholder servicing fees to ensure that the total annual ordinary fund operating expenses of the Class Y shares do not exceed the total annual ordinary fund operating expenses of the Class A shares, as calculated at the end of each month. Prior to that date, the expense limitation may not be terminated without the consent of the Board.

Joseph Moroney, CFA, was named a co-portfolio manager on Ivy Apollo Strategic Income Fund on April 30, 2018.

Pricing: All prices and year-to-date returns are based on closing quotes unless noted, as supplied to the NASDAQ by 6:00 p.m. Eastern time. YTD Prices can be updated 3 to 4 hours after the Daily Pricing information which can result in mismatching data.

Style Analysis: The Morningstar Style Box reveals a fund's investment style. For equity funds the vertical axis shows the market capitalization of the stocks owned and the horizontal axis shows investment style (value, blend, or growth). For fixed-income funds, the vertical axis shows the credit quality of the bonds owned and the horizontal axis shows interest rate sensitivity as measured by a bond's effective duration. Morningstar seeks credit rating information from fund companies on a periodic basis (e.g., quarterly). In compiling credit rating information, Morningstar instructs fund companies to only use ratings that have been assigned by the following Nationally Recognized Statistical Rating Organizations (NRSROs): Moody's, Standard & Poor's, Fitch, and Egan-Jones. If two NRSROs have rated a security, fund companies are to report the lowest rating; if three or more NRSROs have rated the same security differently, fund companies are to report the rating that is in the middle. For example, if NRSRO X rates a security AA-, NRSRO Y rates the same security an A and NRSRO Z rates it a BBB+, the fund company should use the credit rating of 'A' in its reporting to Morningstar. PLEASE NOTE: Morningstar, Inc. is not itself an NRSRO nor does it issue a credit rating on the fund. An NRSRO rating on a fixed-income security can change from time-to-time. For credit quality, Morningstar combines the credit rating information provided by the fund companies with an average default rate calculation to come up with a weighted-average credit quality. The weighted-average credit quality is currently a letter that roughly corresponds to the scale used by a leading NRSRO. Bond funds are assigned a style box placement of "low", "medium", or "high" based on their average credit quality. Funds with a low credit quality are those whose weighted-average credit quality is determined to be less than "BBB-"; medium are those less than "AA-", but greater or equal to "BBB-"; and high are those with a weighted-average credit quality of "AA-" or higher. When classifying a bond portfolio, Morningstar first maps the NRSRO credit ratings of the underlying holdings to their respective default rates (as determined by Morningstar's analysis of actual historical default rates). Morningstar then averages these default rates to determine the average default rate for the entire bond fund. Finally, Morningstar maps this average default rate to its corresponding credit rating along a convex curve. For interest-rate sensitivity, Morningstar obtains from fund companies the average effective duration. Generally, Morningstar classifies a fixed-income fund's interest-rate sensitivity based on the effective duration of the Morningstar Core Bond Index (MCBI), which is currently three years. The classification of Limited will be assigned to those funds whose average effective duration is between 25% to 75% of MCBI's average effective duration; funds whose average effective duration is between 75% to 125% of the MCBI will be classified as Moderate; and those that are at 125% or greater of the average effective duration of the MCBI will be classified as Extensive. For municipal bond funds, Morningstar also obtains from fund companies the average effective duration. In these cases static breakpoints are utilized. These breakpoints are as follows: (i) Limited: 4.5 years or less; (ii) Moderate: more than 4.5 years but less than 7 years; and (iii) Extensive: more than 7 years. In addition, for non-US taxable and non-US domiciled fixed income funds static duration breakpoints are used: (i) Limited: less than or equal to 3.5 years; (ii) Moderate: greater than 3.5 and less than equal to 6 years; (iii) Extensive: greater than 6 years.

Unsubsidized yields reflect what the yield would have been without the effect of reimbursements and waivers. The adviser and its affiliates have or may voluntarily waive a portion of their fees (including, but not limited to, distribution and service (12b-1) fees) and reimburse certain expenses. There is no guarantee that the fund will avoid a negative yield. Such undertaking may be amended or withdrawn at any time.

30-Day SEC Yield: is calculated based on a formula mandated by the Securities and Exchange Commission (SEC) that calculates a fund's hypothetical annualized income, as a percentage of its assets. A security's income, for the purposes of this calculation, is based on the current market yield to maturity (in the case of bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30 day period. This hypothetical income will differ (at times, significantly) from the fund's actual experience; as a result, income distributions from the fund may be higher or lower than implied by the SEC yield.

12-Month Trailing Distribution Yield: at NAV refers to the 12-month historical cash flow paid over the past 12 months in dividends, divided by the past months ending NAV.

Quality: Our preference is to always use ratings obtained from Standard & Poor's, Moody’s, and Fitch. It is each Portfolio’s general policy to classify such security at the lower rating level if only two ratings are available. If more than two ratings are available and a median exists, the median is used. If more than two ratings exist without a median, the lower of the two middle ratings is used. We do not evaluate these ratings, but simply assign them to the appropriate credit quality category as determined by the rating agency.

Information is subject to change and is not intended to represent any past or future investment recommendations.

YTD Prices can be updated 3 to 4 hours after the Daily Pricing information which can result in mismatching data.

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