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Floating Rate High Income Fund

Objective

Seeks to provide high current income and long-term total return.

Overview

A fund that typically invests in U.S. bank loans, global bank loans, and high-yield debt.

More About Floating Rate High Income 

High Income Potential in a Low-Yield World

The Fund invests primarily in bank loans, which may provide higher yields than traditional bonds; their yields may also increase when interest rates rise.

To enhance the potential for yield, the Fund also has a strategic allocation to international bank loans and high-yield bonds.

Less Sensitivity to Rising Rates

By combining domestic bank loans, international bank loans, and high-yield bonds, the Fund provides exposure to investments that are historically less affected by rising rates. This lower sensitivity to rising rates can help diversify nearly any fixed-income portfolio.

Experienced Management

Bank loans are a small asset class, which makes them difficult for individual investors to access. The Fund is run by a veteran in bank-loan investing, Michael Bacevich. He has been managing bank loans since the asset class was created and is backed by Wellington Management’s deep fixed-income resources.


Michael Bacevich
Managing Director
Fixed-Income Portfolio Manager

Portfolio managers are supported by the full resources of Wellington Management.

Performance

Average Annual Total Returns (%)
(as of 8/31/2016)
YTD 1YR 3YR 5YR 10YR SI
Floating Rate High Income  A 9.12 4.33 2.36 --- --- 5.06
With 3.0% Max
Sales Charge
--- 1.20 1.33 --- --- 4.42
Benchmark 6.53 3.74 3.41 --- --- ---
Morningstar Bank Loan Category 6.26 3.17 2.49 --- --- ---
Average Annual Total Returns (%)
(as of 6/30/2016)
YTD 1YR 3YR 5YR 10YR SI
Floating Rate High Income  A 6.20 -0.48 1.86 --- --- 4.65
With 3.0% Max
Sales Charge
--- -3.46 0.84 --- --- 3.98
Benchmark 4.23 0.93 3.04 --- --- ---
Morningstar Bank Loan Category 4.03 0.19 2.11 --- --- ---

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.

Fund Inception: 9/30/11

Operating Expenses

Net  1.07% |  Gross 1.13%  
 

Growth of $10,000

(as of 8/31/2016)
[{"date":"2016/08/31","value":"12752"},{"date":"2016/07/31","value":"12620"},{"date":"2016/06/30","value":"12411"},{"date":"2016/05/31","value":"12385"},{"date":"2016/04/30","value":"12265"},{"date":"2016/03/31","value":"11865"},{"date":"2016/02/29","value":"11438"},{"date":"2016/01/31","value":"11461"},{"date":"2015/12/31","value":"11686"},{"date":"2015/11/30","value":"11910"},{"date":"2015/10/31","value":"12085"},{"date":"2015/09/30","value":"12083"},{"date":"2015/08/31","value":"12222"},{"date":"2015/07/31","value":"12420"},{"date":"2015/06/30","value":"12470"},{"date":"2015/05/31","value":"12581"},{"date":"2015/04/30","value":"12546"},{"date":"2015/03/31","value":"12362"},{"date":"2015/02/28","value":"12311"},{"date":"2015/01/31","value":"12067"},{"date":"2014/12/31","value":"12135"},{"date":"2014/11/30","value":"12450"},{"date":"2014/10/31","value":"12459"},{"date":"2014/09/30","value":"12450"},{"date":"2014/08/31","value":"12601"},{"date":"2014/07/31","value":"12554"},{"date":"2014/06/30","value":"12592"},{"date":"2014/05/31","value":"12501"},{"date":"2014/04/30","value":"12411"},{"date":"2014/03/31","value":"12379"},{"date":"2014/02/28","value":"12330"},{"date":"2014/01/31","value":"12268"},{"date":"2013/12/31","value":"12192"},{"date":"2013/11/30","value":"12123"},{"date":"2013/10/31","value":"12069"},{"date":"2013/09/30","value":"11935"},{"date":"2013/08/31","value":"11889"},{"date":"2013/07/31","value":"11923"},{"date":"2013/06/30","value":"11742"},{"date":"2013/05/31","value":"11871"},{"date":"2013/04/30","value":"11877"},{"date":"2013/03/31","value":"11744"},{"date":"2013/02/28","value":"11616"},{"date":"2013/01/31","value":"11581"},{"date":"2012/12/31","value":"11417"},{"date":"2012/11/30","value":"11329"},{"date":"2012/10/31","value":"11302"},{"date":"2012/09/30","value":"11230"},{"date":"2012/08/31","value":"11078"},{"date":"2012/07/31","value":"10946"},{"date":"2012/06/30","value":"10865"},{"date":"2012/05/31","value":"10744"},{"date":"2012/04/30","value":"10857"},{"date":"2012/03/31","value":"10751"},{"date":"2012/02/29","value":"10666"},{"date":"2012/01/31","value":"10510"},{"date":"2011/12/31","value":"10294"},{"date":"2011/11/30","value":"10201"},{"date":"2011/10/31","value":"10225"},{"date":"2011/09/30","value":"10000"}]

 
Growth of $10,000

Excludes sales charges. If sales charges and taxes had been included, the value would have been lower.

Calendar Year Returns (%)
Fund Benchmark
2015 -3.70 -0.38
2014 -0.49 2.06
2013 6.78 6.15
2012 10.88 9.43
2011 --- ---
2010 --- ---
2009 --- ---
2008 --- ---
2007 --- ---
2006 --- ---

Excludes sales charges. If sales charges and taxes had been included, the value would have been lower.

Characteristics Holdings are subject to change. Percentages may be rounded.

Statistics
As of Date 8/31/2016
# of Holdings 202
Turnover (6/30/2016) 50%
Dividend Frequency Monthly
Holdings Characteristics
(as of 8/31/2016)
Fund
% in Bank Loans 81.85
Bank Loan Average Price $91.27
Effective Duration 0.45 yrs.
Yields
As of Date 8/31/2016
Distribution Yield at NAV 5.00%
Trailing 12 Month Yield 5.12%
30 Day SEC Yield 5.07%
Unsubsidized 30-Day SEC Yield 4.98%
Fund Essentials
Inception Date 09/30/2011
Net Assets $289 million
Symbol HFHAX
CUSIP 41664M177
Fund Number 1036

Top Ten Issuers (%)

(as of 8/31/2016)
label percentageholding
Valeant Pharmaceuticals International, Inc. 2.11
Brickman Group Ltd. 2.02
Advantage Sales & Marketing, Inc. 1.75
InVentiv Health, Inc. 1.61
U.S. Renal Care, Inc. 1.60
Hostess Brands LLC 1.57
Albertsons LLC 1.54
Mauser U.S. Corp. 1.54
Pike Corp. 1.46
Tribune Media Co. 1.37
Total Portfolio % 16.57
(as of 6/30/2016)
label percentageholding
Valeant Pharmaceuticals International, Inc. 2.11
Brickman Group Ltd. 2.06
Advantage Sales & Marketing, Inc. 1.77
U.S. Renal Care, Inc. 1.68
InVentiv Health, Inc. 1.66
Hostess Brands LLC 1.61
Avago Technologies Cayman Ltd. 1.58
Albertsons, LLC 1.57
Mauser U.S. Corp. 1.52
Pike Corp. 1.52
Total Portfolio % 17.08

Credit Exposure

(as of 8/31/2016)
label value
Baa/BBB 3.2%
Ba/BB 27.3%
B 42.5%
Caa/CCC or lower 18.7%
Not Rated 3.1%
Cash & Cash Offsets 5.2%

Credit exposure is the credit ratings for the underlying securities of the Fund as provided by Standard and Poor's (S&P), Moody's Investors Service, or Fitch and typically range from AAA/Aaa (highest) to C/D (lowest). If S&P, Moody's, and Fitch assign different ratings, the median rating is used. If only two agencies assign ratings, the lower rating is used. Securities that are not rated by any of the three agencies are listed as "Not Rated." Ratings do not apply to the Fund itself or to Fund shares. Ratings may change.

Sector Distribution
Sectors 06/30/2016 Fund 08/31/2016 Benchmark 08/31/2016 UNDERWEIGHT / OVERWEIGHT -8 0 8
Consumer Non-Cyclical 25.3 25.7 18.4
Overweight 100.0%
Energy 6.8 7.5 3.8
Overweight 50.0%
Financial Institutions 8.5 9.4 6.5
Overweight 25.0%
Other Industrial 3.9 4.0 2.5
Overweight 25.0%
Utilities 4.0 3.9 2.8
Overweight 12.5%
Basic Industry 6.3 6.2 6.2
Overweight 0.0%
Cash and Cash Equivalents 6.6 5.2 0.0
Overweight 0.0%
Government & Government Related 0.0 0.4 0.0
Overweight 0.0%
Other Securities 0.2 0.3 0.0
Overweight 0.0%
Other High Yield 0.3 0.4 0.8
Overweight 12.5%
Transportation 1.4 1.4 2.4
Overweight 12.5%
Capital Goods 4.6 4.2 8.2
Overweight 50.0%
Technology 8.5 7.7 13.4
Overweight 62.5%
Communications 7.1 7.5 12.9
Overweight 75.0%
Consumer Cyclical 16.3 16.3 22.0
Overweight 75.0%

Insights

pdf

Bank Loans: A Sector That May Be Poised to Benefit from the Recent Rise in U.S. LIBOR 

09/26/2016
Bank loans are getting renewed interest from investors, with the long-anticipated start of higher interest rates looking like it might finally materialize in the US.
pdf

Bank Loans: A Sector That May Be Poised to Benefit from the Recent Rise in U.S. LIBOR 

09/26/2016
Bank loans are getting renewed interest from investors, with the long-anticipated start of higher interest rates looking like it might finally materialize in the US.
pdf

3Q 2016 Outlooks  

07/22/2016
Thought leaders from Wellington Management provide their outlooks on the risks and opportunities available in equities, fixed income, asset allocation, and commodities.

Literature

Fund Literature

Select All

Fact Sheet

06/30/2016 | pdf
Get FINRA Letter

Max 100

Commentary

06/30/2016 | pdf
Get FINRA Letter

Max 100

Summary Prospectus

03/01/2016 | pdf

Available For
Download Only

Pitchbook

06/30/2016 | pdf

Flyer

12/31/2015 | pdf
Get FINRA Letter

Max 100

Semi-Annual Report

04/30/2016 | pdf

Available For
Download Only

Statutory Prospectus

03/01/2016 | pdf

Available For
Download Only

SAI

03/01/2016 | pdf

Available For
Download Only

Annual Report

10/31/2015 | pdf

Available For
Download Only

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A WORD ABOUT RISK

All investments are subject to risk, including the possible loss of principal. There is no guarantee the Fund will achieve its stated objective. The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. Fixed Income risks include credit, liquidity, call, duration, and interest-rate risk. As interest rates rise, bond prices generally fall; these risks are currently heightened due to the historically low interest rate environment. Investments in high-yield (“junk”) bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities. Loans can be difficult to value and highly illiquid; they are subject to credit risk and risks of bankruptcy and insolvency. Derivatives may be riskier or more volatile than other types of investments because they are generally more sensitive to changes in market or economic conditions; risks include currency, leverage, liquidity, index, pricing, and counterparty risk. Foreign investments can be riskier than U.S. investments due to the adverse effects of currency exchange rates, differences in market structure and liquidity, as well as political and economic developments in foreign countries and regions. Privately placed, restricted (Rule 144A) securities may be more difficult to sell and value than publicly traded securities, thus they may be potentially illiquid.
Floating Rate High Income Fund should not be considered an alternative to CDs or money market funds. This Fund is for investors who are looking to complement their traditional fixed-income investments.

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