High Yield spreads widened significantly over the course of 2022, making high yield valuations more attractive.

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(Updated from original version posted in September 2022)

We believe the market now recognizes the quality differences between today’s issuers and HY market of the past.

Better valuations, stronger earnings yields, historically attractive performance, and solid balance sheets for many issuers may provide a liquidity buffer and downside protection IF we enter an economic downturn.

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Important Risk Considerations
Credit & Interest: Debt securities are subject to various risks, the most prominent of which are credit and interest rate risk. The issuer of a debt security may fail to make interest and/or principal payments. Values of debt securities may rise or fall in response to changes in interest rates, and this risk may be enhanced with longer-term maturities. High Yield-High Risk Fixed Income Securities: There is a greater level of credit risk and price volatility involved with high yield securities than investment grade securities. Foreign Investing: Investing internationally involves additional risks such as currency, political, accounting, economic, and market risk. Industry/Sector Concentration: A fund that focuses its investments in a particular industry or sector will be more sensitive to conditions that affect that industry or sector than a non-concentrated fund. Market Volatility: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness or other public health issue, recessions, or other events could have a significant impact on the fund and its investments, including hampering the ability of the fund’s portfolio manager(s) to invest the fund’s assets as intended. Prospectus: For additional information on risks, please see a fund’s prospectus.

The J.P. Morgan U.S. High Yield Index is designed to mirror the investable universe of the U.S. dollar domestic high yield corporate debt market. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and it is not available for direct investment. The ICE BofA US High Yield Cash Pay Index is an unmanaged index consisting of all domestic and Yankee high-yield bonds maturing over one year. The quality range is less than BBB-/Baa3 but not in default (DDD1 or less). The index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. A fund’s performance reflects the deduction of fees for these services. ICE BofA US High Yield Index (H0A0) tracks the performance of US dollar denominated below investment grade rated corporate debt publicly issued in the US domestic market. To qualify for inclusion in the index, securities must have a below investment grade rating and an investment grade rated country of risk. The ICE BofA BB US High Yield Index (H0A1) is a subset of the ICE BofA US High Yield Master II Index and includes all securities with a given investment grade rating BB. The ICE BofA CCC & Lower US High Yield Index (H0A3) subset includes all securities with a given investment grade rating CCC or below. The ICE BofA Single-B US High Yield Index (H0A2) subset includes all securities with a given investment grade rating B. The indexes are unmanaged, their returns do not reflect any fees, expenses, or sales charges, and are not available for direct investment.

A Basis Point (bp) is equal to 0.01%.