Investment Disclosures and Legal Information
Mutual fund investments developed by Capital Group are not FDIC-insured and carry the risk of value loss, according to company disclosures. These investments may include Class A shares with a maximum sales charge of 3.75%, while returns shown at net asset value (NAV) do not account for such charges, which would lower overall results.
Investment results assume all distributions are reinvested and include applicable fees and expenses. Capital Group notes that these materials should not serve as the primary basis for investment decisions or as impartial fiduciary advice.
How do sales charges affect mutual fund returns?
Returns reported at net asset value (NAV) do not include sales charges. If a sales charge were deducted, the reported results would be lower, according to the disclosures.
For Class A shares, returns shown at the maximum offering price (MOP) reflect a maximum sales charge of 3.75%. Investors are advised to review mutual fund prospectuses for detailed information on charges and expenses.
What risks are associated with bond portfolios?
Principal return for bond portfolios is not guaranteed. These investments are subject to credit, inflation, and interest rate risks associated with the underlying holdings, according to the company.
Credit rating agencies including Standard & Poor’s, Moody’s, and Fitch assign ratings from AAA/Aaa (highest) to D (lowest). Lower-rated bonds are subject to higher risks of losing principal and income, as well as greater value fluctuations.
How is the Morningstar Rating™ calculated?
Morningstar assigns ratings to managed products with at least a three-year history based on a Risk-Adjusted Return measure. This calculation emphasizes downward variations and rewards consistent performance, according to Morningstar.
The top 10% of products in a category receive 5 stars, while the bottom 10% receive 1 star. The overall rating is a weighted average of three-, five-, and 10-year metrics, though the most recent three-year period has the greatest impact.
What are the tax implications for municipal bonds?
Income from municipal bonds may be subject to the federal alternative minimum tax or state and local income taxes. Certain capital gain distributions and other income may also be taxable.
State-specific tax-exempt funds are more susceptible to adverse factors affecting issuers within those specific states than diversified municipal bond funds. This creates a different risk profile compared to more widely diversified options.
What happens next for these portfolios?
Because these portfolios are managed, holdings will likely change over time. Investors may see fluctuations in results as the investment adviser adjusts securities to align with fund objectives.
Future returns may differ from past performance, as past results do not guarantee future outcomes. Investors could see results lag behind unmanaged indexes, which carry no expenses and cannot be invested in directly.
Frequently Asked Questions
Are these investments guaranteed by a bank?
No. Investments are not FDIC-insured, nor are they deposits of or guaranteed by any bank or other entity.
How are unrated securities handled?
When securities are in the Unrated category, the investment adviser performs its own credit analysis and assigns comparable ratings for compliance with investment policies.
What is the difference between the distribution rate and SEC yield?
The distribution rate reflects past dividends paid to shareholders, while the SEC yield reflects the rate at which the fund is currently earning income on its securities.
How do you weigh the risk of lower-rated bonds against potential returns in your own strategy?