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InvestEd Income Portfolio

  • $10.29 NAV as of 9/21/2018
  • ($0.00) / 0.00% Daily NAV Change
  • 1.28% YTD (NAV)

Summary

To seek to provide current income with some capital preservation

The Portfolio is intended for investors who have a lower tolerance for risk and whose primary goal is income with some capital appreciation, who have a shorter time horizon or who are willing to accept some amount of market volatility in exchange for potential income and growth. The Portfolio is also designed for investors who do not expect to incur expenses related to higher education for at least one to two years.

Morningstar Style Box

Blend
Large
LTD
Medium
Source: Morningstar

Portfolio Management

Chace Brundige, CFA

  • Ivy Investment Management Company
  • 1 Year with Fund
  • 25 Years in Industry
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Chace Brundige is co-portfolio manager of Ivy Asset Strategy Fund, Ivy VIP Asset Strategy and institutional accounts. He was named co-portfolio manager of these investment products in 2014. He was named a portfolio manager of Ivy VIP Pathfinder Portfolios and InvestEd Portfolios in 2016. Mr. Brundige became a member of the portfolio management team of Ivy Wilshire Global Allocation Fund, sub-advised by Wilshire Associates, Inc., in 2018. Mr. Brundige joined the organization in 2003 as vice president and assistant portfolio manager to the Large Cap Growth team after a previous tenure with the firm as an equity analyst from 1996 to 1999. He was portfolio manager of the firm’s Tax-Managed Equity Fund from 2006 to 2008 and the Global Growth funds from 2009 to 2014. He was appointed senior vice president in 2012. Mr. Brundige began his investment career at UMB Financial Corp. in 1991. He joined Waddell & Reed as an equity investment analyst in 1996. He joined TCW/WestBridge Ventures LLC in San Francisco as a vice president and limited partner in 1999. He was an original member of Trust Company of the West’s venture capital arm. In 2001 he was a vice president and sector head for Citadel Investment Group. Mr. Brundige graduated from Kansas State University in 1991 with a BS in Finance. He earned an MBA with an emphasis in Finance and Accounting from the University of Chicago Graduate School of Business in 1996. Mr. Brundige is a CFA charterholder.

Aaron D. Young

  • Ivy Investment Management Company
  • 1 Year with Fund
  • 13 Years in Industry
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Aaron Young has been co-portfolio manager of Ivy Managed International Opportunities Fund, Ivy VIP Pathfinder Portfolios and InvestEd Portfolios since 2016. Mr. Young is also a member of the firm’s Investment Risk Management group. Named to the team in 2017, his extensive quantitative research capabilities add depth to the firm’s risk management and portfolio analytics resources. Mr. Young joined the organization in 2005 as a fixed income investment analyst with an emphasis in credit research and derivative securities. He joined the Asset Strategy team as an investment analyst in 2007 and was named assistant portfolio manager of Ivy and Ivy VIP Asset Strategy Funds in 2012. He covered brokers, asset managers and exchanges as an equity investment analyst during 2008. He was appointed assistant vice president in 2012 and vice president in 2014. Mr. Young graduated with honors in 2000 with a BA in Philosophy from the University of Missouri. He earned an MBA with a concentration in Finance and Strategy from the Olin School of Business, Washington University in St. Louis in 2005.

W. Jeffery Surles, CFA

  • Ivy Investment Management Company
  • <1 Year with Fund
  • 17 Years in Industry
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Jeffery Surles is portfolio manager of Ivy Global Income Allocation Fund, managing the fund since 2012, and served as co-portfolio manager from 2012 to 2014. He was named co-portfolio manager of the Ivy Asset Strategy Fund, Ivy VIP Asset Strategy, Ivy VIP Pathfinder Portfolios and InvestEd Portfolios in 2018. Mr. Surles became a member of the portfolio management team of Waddell & Reed Advisors Wilshire Global Allocation Fund, sub-advised by Wilshire Associates, Inc., in 2018. Mr. Surles joined the organization in 2007 as a fixed income investment analyst. He was appointed assistant vice president in 2012 and vice president in 2014. He was appointed senior vice president in 2018. Prior to joining the firm, Mr. Surles was a portfolio manager from 2003 to 2005, and an investment analyst from 2001 to 2003, for Surles Development Corp. In the fall of 2000 he was a sales analyst for Enterprise Development Services, Inc. Mr. Surles graduated from Vanderbilt University in 2000 with a BS in Organizational Development. He earned an MBA with an emphasis in Finance from the University of Wisconsin in 2007. While attending the University of Wisconsin he was actively involved in the Applied Security Analysis Program and completed an internship at Provident Trust Company in 2006. Mr. Surles is a CFA charterholder.

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

Daily Prices as of 9/21/2018

Net Asset Value (NAV) $10.29
Daily NAV Change ($) ($0.00) 0.00%
Weekly NAV Change ($) $0.02 0.19%
Public Offering Price (POP) $10.55

Fund Facts

Ticker Symbol WICPX
CUSIP 46132D501
Fund Code 805
Fund Type InvestEd
Fund Inception 9/18/2017
Class Inception 9/18/2017
Fiscal Year End December
Dividends Paid December
Fund Assets (as of 8/31/2018) $101.2 mil
Portfolio Turnover Rate (as of 6/30/2018) 5%
Morningstar Category Allocation--15% to 30% Equity
Benchmark 31% BBgBarc US Govt/Credit 1-5 Yr TR USD; 44% BBgBarc US Universal TR USD; 6% MSCI ACWI Ex USA NR USD; 19% Russell 3000 TR USD
Benchmark BBgBarc US Govt/Credit 1-5 Yr TR USD
Benchmark BBgBarc US Universal TR USD
Benchmark MSCI ACWI Ex USA NR USD
Benchmark Russell 3000 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.

Performance at NAV does not include the effect of sales charges, if it had, performance shown would be lower. Class A shares, including sales charges, reflects the maximum applicable front-end sales load.

Monthly Rates of Return

Average Annual Total Returns as of 8/31/2018
(Returns for periods of less than 1-yr are not annualized)
 
MSCI ACWI Ex USA NR USD -3.52% 3.18% 8.08% 5.43% 3.44%
Portfolio with 2.50% sales charge -1.15%
BBgBarc US Universal TR USD -0.98% -0.93% 2.26% 2.82% 4.06%
BBgBarc US Govt/Credit 1-5 Yr TR USD 0.14% -0.43% 0.95% 1.21% 2.20%
31% BBgBarc US Govt/Credit 1-5 Yr TR USD; 44% BBgBarc US Universal TR USD; 6% MSCI ACWI Ex USA NR USD; 19% Russell 3000 TR USD 1.36% 3.30% 4.76% 4.66% 4.96%
Portfolio at NAV 1.38%
Russell 3000 TR USD 10.39% 20.25% 15.86% 14.25% 10.89%

Quarterly Rates of Return

Average Annual Total Returns as of 6/30/2018
(Returns for periods of less than 1-yr are not annualized)
 
MSCI ACWI Ex USA NR USD -3.77% 7.28% 5.07% 5.99% 2.54%
Portfolio with 2.50% sales charge -2.88%
BBgBarc US Universal TR USD -1.67% -0.27% 2.12% 2.63% 4.07%
31% BBgBarc US Govt/Credit 1-5 Yr TR USD; 44% BBgBarc US Universal TR USD; 6% MSCI ACWI Ex USA NR USD; 19% Russell 3000 TR USD -0.41% 2.99% 3.75% 4.42% 4.80%
Portfolio at NAV -0.39%
BBgBarc US Govt/Credit 1-5 Yr TR USD -0.33% -0.20% 0.84% 1.13% 2.24%
Russell 3000 TR USD 3.22% 14.78% 11.58% 13.29% 10.23%

Calendar Year Return

  2013
BBgBarc US Universal TR USD -1.35 5.56 0.43 3.91 4.09
BBgBarc US Govt/Credit 1-5 Yr TR USD 0.28 1.42 0.97 1.56 1.27
31% BBgBarc US Govt/Credit 1-5 Yr TR USD; 44% BBgBarc US Universal TR USD; 6% MSCI ACWI Ex USA NR USD; 19% Russell 3000 TR USD 7.55
MSCI ACWI Ex USA NR USD 15.29 -3.87 -5.66 4.50 27.19
Russell 3000 TR USD 33.55 12.56 0.48 12.74 21.13

Expense Ratios as of 4/30/2018

Net 0.74%
Gross 0.74%

5-Year Standard Deviation as of

BBgBarc US Universal TR USD 2.58
MSCI ACWI Ex USA NR USD 11.58
BBgBarc US Govt/Credit 1-5 Yr TR USD 1.24
31% BBgBarc US Govt/Credit 1-5 Yr TR USD; 44% BBgBarc US Universal TR USD; 6% MSCI ACWI Ex USA NR USD; 19% Russell 3000 TR USD N/A
Russell 3000 TR USD 9.71

Distributions

Historical Prices Inception 9/18/2017

9/4/2018 $10.29 NO NO
9/5/2018 $10.27 NO NO
9/6/2018 $10.27 NO NO
9/7/2018 $10.25 NO NO
9/10/2018 $10.26 NO NO
9/11/2018 $10.25 NO NO
9/12/2018 $10.26 NO NO
9/13/2018 $10.27 NO NO
9/14/2018 $10.27 NO NO
9/17/2018 $10.26 NO NO
9/18/2018 $10.27 NO NO
9/19/2018 $10.26 NO NO
9/20/2018 $10.29 NO NO
9/21/2018 $10.29 NO NO

Historical Distributions Inception 9/18/2017

No results found.

*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.

Portfolio

Total Portfolio Holdings

Updated quarterly, upon availability.

Top 10 Industry Allocation
as a % of Equity Holdings as of 8/31/2018

Pharmaceuticals 3.8%
Data Processing & Outsourced Services 3.7%
Internet Software & Services 3.5%
Diversified Banks 3.1%
Health Care Equipment 2.6%
Application Software 2.4%
Industrial Machinery 2.3%
Semiconductors 2.3%
Systems Software 2.2%
Technology Hardware, Storage & Peripherals 2.0%

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

United States 94.9%
Japan 1.0%
Canada 1.0%
Netherlands 0.6%
Sweden 0.3%
United Kingdom 0.3%
Luxembourg 0.2%
Australia 0.2%
Mexico 0.2%
Columbia 0.1%
Argentina 0.1%
Bermuda 0.1%
Norway 0.1%
Brazil 0.1%
Cayman Islands 0.1%
Indonesia 0.1%
Singapore 0.1%
Ireland 0.1%
France 0.1%
Switzerland 0.1%
Chile 0.1%
Qatar 0.1%
India 0.1%
China 0.0%
United Arab Emirates 0.0%
Russia 0.0%
Peru 0.0%
Spain 0.0%
Austria 0.0%
Turkey 0.0%
Poland 0.0%
Denmark 0.0%
Guernsey 0.0%
Macau 0.0%
South Korea 0.0%
Saudi Arabia 0.0%
Jamaica 0.0%
Hong Kong 0.0%

Underlying Fund Composition
as a % of net assets as of 8/31/2018

Ivy Limited-Term Bond 35.4 %
Ivy Government Securities 24.0 %
Ivy Securian Core Bond 9.3 %
Ivy Large Cap Growth 4.1 %
Ivy Value 4.1 %
Ivy ProShares S&P 500 Dividend Aristocrats Index 3.6 %
Ivy Proshares MSCI ACWI Index 3.3 %
Ivy International Core Equity 3.2 %
Ivy Corporate Bond 2.3 %
Ivy Global Bond 2.2 %
Ivy Mid Cap Growth 2.1 %
Ivy Mid Cap Income Opportunities 2.0 %
Ivy High Income 1.8 %
Ivy Emerging Markets Equity 1.0 %
Ivy ProShares Russell 2000 Dividend Growers Index 0.5 %
Ivy Core Equity 0.5 %
Ivy LaSalle Global Real Estate 0.5 %
Ivy Small Cap Growth 0.3 %
Ivy Small Cap Core 0.3 %

Portfolio Allocation Ranges
(as of the most recent prospectus)

  Low High
Ivy Government Money Market Fund 0.0 % 40.0 %
Ivy Limited-Term Bond Fund 0.0 % 40.0 %
Ivy Government Securities Fund <sup>1</sup> 0.0 % 35.0 %
Ivy ProShares S&P 500 Bond Index Fund 0.0 % 35.0 %
Ivy Securian Core Bond Fund 0.0 % 35.0 %
Ivy Corporate Bond Fund <sup>1</sup> 0.0 % 35.0 %
Ivy ProShares S&P 500 Dividend Aristocrats Index Fund 0.0 % 25.0 %
Ivy Core Equity Fund 0.0 % 25.0 %
Ivy Large Cap Growth Fund 0.0 % 25.0 %
Ivy Global Equity Income Fund 0.0 % 25.0 %
Ivy Value Fund 0.0 % 25.0 %
Ivy ProShares Interest Rate Hedged High Yield Index Fund 0.0 % 20.0 %
Ivy Apollo Strategic Income Fund 0.0 % 20.0 %
Ivy High Income Fund 0.0 % 20.0 %
Ivy Global Bond Fund 0.0 % 20.0 %
Ivy International Core Equity Fund 0.0 % 15.0 %
Ivy Global Growth Fund 0.0 % 15.0 %
Ivy Proshares MSCI ACWI Index Fund 0.0 % 15.0 %
Ivy Small Cap Core Fund 0.0 % 10.0 %
Ivy Mid Cap Growth Fund 0.0 % 10.0 %
Ivy Small Cap Growth Fund 0.0 % 10.0 %
Ivy ProShares Russell 2000 Dividend Growers Index Fund 0.0 % 10.0 %
Ivy Mid Cap Income Opportunities Fund 0.0 % 10.0 %
Ivy LaSalle Global Real Estate Fund 0.0 % 5.0 %
Ivy Emerging Markets Equity Fund 0.0 % 5.0 %

Sector Allocation
as a % of equity assets as of 8/31/2018

Information Technology 19.15%
Financials 15.03%
Consumer Discretionary 14.26%
Industrials 12.86%
Health Care 11.23%
Consumer Staples 9.20%
Materials 5.64%
Energy 5.26%
Real Estate 4.00%
Utilities 1.87%
Telecommunication Services 1.50%

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 57.20%
NonRated 0.60%
AAA 2.60%
AA 3.20%
A 11.10%
BBB 19.70%
BB 3.00%
B 2.00%
CCC 0.60%
Below CCC 0.00%

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

Government Bonds 39.42%
Corporate Bonds 23.90%
Domestic Common Stock 19.33%
Cash and Cash Equivalents 6.13%
Foreign Common Stock 5.54%
Asset-Backed Securities 2.06%
Mortgage-Backed Securities 1.58%
General Obligation Bonds 0.78%
Revenue Bonds 0.45%
Senior Loans 0.39%
Other Government Securities 0.31%
Preferred Stock 0.11%
Other Financial Instruments 0.00%

Equity Country Allocation
as a % of equity assets as of 8/31/2018

United States 76.2%
Japan 3.0%
United Kingdom 3.0%
China 2.5%
France 2.3%
Switzerland 1.6%
Germany 1.5%
Canada 1.1%
South Korea 0.9%
Hong Kong 0.9%
India 0.8%
Brazil 0.8%
Australia 0.7%
Ireland 0.6%
Netherlands 0.6%
Taiwan 0.6%
Luxembourg 0.4%
Sweden 0.3%
Russia 0.3%
Spain 0.3%
Italy 0.3%
Denmark 0.2%
South Africa 0.2%
Norway 0.2%
Mexico 0.2%
Vietnam 0.1%
Singapore 0.1%
Panama 0.1%
Belgium 0.1%
Indonesia 0.1%
Thailand 0.1%
Macau 0.1%
Finland 0.0%
Argentina 0.0%
Bermuda 0.0%
Malaysia 0.0%
Jersey 0.0%
Chile 0.0%
Peru 0.0%
Poland 0.0%
Israel 0.0%
Philippines 0.0%
Portugal 0.0%
Austria 0.0%
Columbia 0.0%

Total Portfolio Holdings

Updated quarterly, upon availability.

Documents

Select a document below to view or download.

Documents

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.

Past performance is not a guarantee of future results. Investments into a 529 plan, including the Ivy InvestEdSM 529 Plan, are not guaranteed, and all investments involve a certain degree of risk. The value of your Ivy InvestEdSM 529 Plan account will depend upon the performance of the Portfolios in which your account is invested and the Portfolio’s share price will likely change based on the performance of the underlying funds in which it invests.

The bond funds in which the Portfolio invests are subject to interest rate risk and, as such, the net asset value of the Portfolio 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. Foreign 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. The equity funds in which the Portfolio invests are subject to market risks, and certain types of stocks, such as stocks of small-capitalization companies and foreign companies may be subject to greater price volatility. These and other risks are more fully described in the Portfolio's prospectus.

You could lose money by investing in the Ivy Government Money Market Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.

Before investing, investors should carefully consider the investment objectives, risks, charges and expenses of the Ivy InvestEdSM 529 Plan. This and other information is found in the InvestEdSM Portfolios prospectus, and the Ivy Funds prospectus, the Ivy InvestEdSM 529 Plan Program Overview, and the InvestEdSM 529 Plan Account Application. All of these items are available from these links or from a financial advisor. Please read the prospectus carefully before investing.

Before investing, non-residents or tax-payers of states other than Arizona should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors than those offered under the Ivy InvestEdSM 529 Plan. Please consult your tax advisor regarding your personal tax situation.

The Ivy InvestEdSM 529 Plan and shares of InvestEdSM Portfolios are offered by Waddell & Reed, Inc. as part of the Arizona Family College Savings Program Trust Fund, a 529 plan administered by the Arizona Commission for Postsecondary Education (the “Program”). Waddell & Reed, Inc. is one of multiple financial Institutions eligible to offer Investments under the Program. Accounts a not insured by the State of Arizona, the Trust, the Arizona Commission for Postsecondary Education, or any other governmental entity, Waddell & Reed, Inc., Ivy Distributors, Inc., or any affiliated or related party, and neither the principal deposited nor the Investment return is guaranteed by any of the referenced parties.

Index Description: The Bloomberg Barclays U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, and the non-ERISA portion of the CMBS Index. Municipal debt, private placements, and non-dollar-denominated issues are excluded from the Universal Index. The only constituent of the index that includes floating-rate debt is the Emerging Markets Index. Source: Bloomberg Barclays

The MSCI ACWI ex USA Index captures large and mid-cap representation across 22 of 23 Developed Markets (DM) countries (excluding the U.S.) and 24 Emerging Markets (EM) countries. The index covers approximately 85% of the global equity opportunity set outside the U.S. It is not possible to invest directly in an index.

The MSCI information may only be used for your internal use, may not be reproduced or repurposed in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, salability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com) Source: MSCI.

Index Description: The Bloomberg Barclays U.S. 1-5 Year Government/Credit Bond Index is the 1-5 year component of the Bloomberg Barclays U.S. Government/Credit Index, which includes treasuries, agencies, publicly issued U.S. corporate and foreign debentures & secured notes. To be included in the index, securities must have at least one, and up to, but not including five years to maturity. Source: Bloomberg Barclays

Index Description: The Russell 3000® Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000® Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. Source: FTSE Russell

1Waddell & Reed Advisors (WRA) Bond Fund merged into Ivy Bond Fund on Oct. 16, 2017. The returns shown prior to this date reflect the performance of WRA Bond Fund, which was incepted on March 30, 1964. Ivy Bond Fund adopted that performance as the result of a reorganization in which it acquired all assets and liabilities of WRA Bond Fund. Prior to the reorganization, the Ivy Bond Fund had no assets and had not commenced operations. Performance shown after Jan. 31, 2012, may significantly differ from prior performance due to changes made on that date to WRA Bond Fund's investment strategies. WRA Bond Fund's past performance does not necessarily indicate how Ivy Bond Fund will perform in the future. Waddell & Reed Advisors (WRA) Government Securities Fund merged into Ivy Government Securities Fund on Oct. 16, 2017. The returns shown prior to this date reflect the performance of WRA Government Securities Fund, which was incepted on April 10, 1984. Ivy Government Securities Fund adopted that performance as the result of a reorganization in which it acquired all assets and liabilities of WRA Government Securities Fund. Prior to the reorganization, the Ivy Government Securities Fund had no assets and had not commenced operations. Performance shown after Jan. 31, 2012, may significantly differ from prior performance due to changes made on that date to WRA Government Securities Fund's investment strategies. WRA Government Securities Fund's past performance does not necessarily indicate how Ivy Government Securities Fund will perform in the future.

W. Jeffery Surles, CFA, became a co-portfolio manager on the Portfolio on Feb. 5, 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.

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.

Co-Portfolio Manager Cynthia Prince-Fox retired from the firm on April 30, 2018.

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

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