Download High Yield Bond Fund

As of June 30, 2017
Fact sheet
wellsfargofunds.com
High Yield Bond Fund
Asset class: Fixed Income
OVERALL MORNINGSTAR RATINGTM, †
★★★★
The Overall Morningstar Rating, a weighted average of the
three-, five-, and ten-year (if applicable) ratings, is out of
590 funds in the High Yield Bond category, based on
risk-adjusted return as of 06-30-17.
Class
CUSIP
Ticker
Class A
94985D210
EKHAX
Class C
94985D186
EKHCX
Administrator
94985D178
EKHYX
Institutional
94988A726
EKHIX
THE FUND
Seeks current income by investing primarily in a
diversified portfolio of non-investment-grade
corporate debt securities.
Competitive advantages
■
More than 30 years of investment management experience: The portfolio manager has
extensive experience in the high-yield bond markets, managing through virtually all market
conditions, and has built a legacy of competitive returns through diligent evaluation of each
company’s entire capital structure to determine the best relatively valued securities.
■
Depth of resources: Management of the fund draws on a deep network of investment
professionals across the company, including economic strategists, fixed-income and equity
research analysts, and risk management consultants.
■
Top-down approach fortified by rigorous credit analysis: Security selection is founded on a
top-down evaluation of the best sectors and industries to invest in, while being supported by an
extensive team of credit analysts that focus on individual credit fundamentals. This combination
of resources empowers the portfolio manager to execute her top-down strategy through a
discerning selection of the best relatively valued debt securities within each company’s entire
capital structure.
Credit quality (%)1
■
■
■
■
Seeks to outperform the broad high-yield
fixed-income market (represented by the BofA
Merrill Lynch U.S. High Yield Constrained
Index) over a full market cycle.
Principally invests in below-investment-grade
debt securities of corporate issuers, including
traditional corporate bonds and convertible
bonds.
Seeks to identify the best relatively valued debt
securities by evaluating the entire capital
structure of a company.
Uses a top-down macroeconomic approach to
determine which sectors and industries to
invest in and applies fundamental research to
identify the most attractive companies within
those sectors and industries.
Seeks to invest in debt securities issued by
companies with sustainable competitive
advantages and high barriers to entry,
specifically preferring companies with strong
management teams and financial flexibility.
Diebold Nixdorf Incorporated, 8.50,
4-15-2024
Post Holdings, Inc., 5.00, 8-15-2026
14
24
0
49
8
5 10 15 20 25 30 35 40 45 50 55
The percentages of the fund's portfolio with the ratings depicted in the chart are calculated based on total investments of the fund. Maturity
distribution and credit quality are subject to change and may have changed since the date specified. Percent total may not add to 100% due to
rounding.
Growth of $10,000 and annual returns (Class A shares 6-30-07 through 6-30-17)
Does not include sales charges and assumes reinvestment of dividends and capital gains. If sales charges were included, returns would be lower.
$25,000
20,000
$18,939
15,000
10,000
5,000
0
’08
TOP HOLDINGS (%)
4
0–1 year
1–3 years
3–5 years
5–10 years
Other
BBB/Baa (3)
BB/Ba (41)
B/B (46)
Other (8)
Not Rated (2)
FUND STRATEGY
■
Maturity distribution (%)
Fund (%) -26.17
’09
’10
’11
’12
’13
’14
’15
’16
52.42
13.26
4.08
14.11
3.66
4.56
-1.92
12.55
3.11
ANNUALIZED
2.73
Year to
3 Month date
’17
Gross
Net
expense expense
10 year
ratio
ratio
TransDigm, Inc., 6.38, 6-15-2026
WESCO Distribution, Inc., 5.38,
6-15-2024
Mallinckrodt International Finance
SA, 5.50, 4-15-2025
HD Supply, Inc., 5.75, 4-15-2024
Iron Mountain US Holdings, Inc., 5.38,
6-1-2026
SPX Flow, Inc., 5.88, 8-15-2026
2.73
Total returns (%)
1 year
3 year
5 year
2.72
Class A Shares2
Including Sales Charge
2.59
–
4.97
–
11.01
6.02
4.48
2.88
6.22
5.23
6.59
6.10
1.04
–
0.93
–
2.64
Class C Shares2
Including Sales Charge
2.40
–
4.58
–
10.18
9.18
3.71
3.71
5.43
5.43
5.80
5.80
1.79
–
1.68
–
BofAML U.S. High Yield
Constrained Index3
2.14
4.90
12.74
4.49
6.92
7.63
A. Schulman, Inc., 6.88, 6-1-2023
2.32
AMN Healthcare, Inc., 5.13, 10-1-2024
2.27
2.64
2.45
2.36
Portfolio holdings are subject to change and may have changed
since the date specified. The holdings listed should not be
considered recommendations to purchase or sell a particular
security.
Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay
on a fund. Investment return, principal value, and yields of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more
or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower
or higher than the performance data quoted and assumes the reinvestment of dividends and capital gains. Current month-end performance is available at
the funds’ website, wellsfargofunds.com. For Class A, the maximum front-end sales charge is 4.50%. For Class C, the maximum contingent deferred sales
charge is 1.00%. Performance including sales charge assumes the sales charge for the corresponding time period.
The manager has contractually committed, through 12-31-17, to waive fees and/or reimburse expenses to the extent necessary to cap the fund's total
annual operating expenses after fee waiver, at 0.93% for Class A and 1.68% for Class C. Brokerage commissions, stamp duty fees, interest, taxes, acquired
fund fees and expenses, and extraordinary expenses are excluded from the cap. After this time, the cap may be increased or the commitment to maintain the
cap may be terminated only with the approval of the Board of Trustees. Without this cap, the fund's returns would have been lower. The expense ratio paid
by an investor is the net expense ratio or the total annual fund operating expense after fee waiver, as stated in the prospectus.
As of June 30, 2017
Fact sheet
wellsfargofunds.com
High Yield Bond Fund
Asset class: Fixed Income
FIXED-INCOME STYLE BOX4
Ltd
Fund characteristics
Fund
BofAML U.S.
High Yield
Constrained
Index3
Effective duration
4.45 years
4.03 years
Portfolio turnover
44.54%
–
121
1,888
DURATION
Mod
Ext
CREDIT QUALITY
High Medium Low
Number of holdings
Fund information
Advisor: Wells Fargo Funds Management, LLC
Sub-Advisor: Wells Capital Management Incorporated
Fund managers/years of experience: Margaret D. Patel5 (45)
Inception Date: 9-11-35
Class A
Class C
1-20-98
Monthly
Daily Accrual
1-21-98
Monthly
Daily Accrual
30-day SEC yield6
3.59%
3.01%
30-day SEC unsubsidized yield6
3.51%
2.93%
August 31
August 31
$1,000/$100
$1,000/$100
Class inception date
Distribution frequency
Fiscal year-end
Minimum initial/subsequent purchase
Net asset value
Class/fund assets ($M)
$3.39
$3.39
$317.46/$549.34
$63.13/$549.34
Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. Changes in market conditions and government policies may
lead to periods of heightened volatility in the bond market and reduced liquidity for certain bonds held by the fund. In general, when interest rates rise, bond values fall and investors may lose principal value.
Interest-rate changes and their impact on the fund and its share price can be sudden and unpredictable. The use of derivatives may reduce returns and/or increase volatility. High-yield securities have a greater risk of
default and tend to be more volatile than higher-rated debt securities. Loans are subject to risks similar to those associated with other below-investment-grade bond investments, such as credit risk (for example, risk
of issuer default), below-investment-grade bond risk (for example, risk of greater volatility in value), and risk that the loan may become illiquid or difficult to price. This fund is exposed to foreign investment risk.
Consult the fund’s prospectus for additional information on these and other risks.
† For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar risk-adjusted return measure that accounts for variation in a fund’s monthly performance (including the
effects of sales charges, loads, and redemption fees, unless otherwise indicated), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the
next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. (Each Share Class is counted as a fraction of one fund within this scale and is rated separately, which may
cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar
Rating metrics. Across U.S.-domiciled High Yield Bond funds, the High Yield Bond Fund received 4 stars among 590 funds, 4 stars among 474 funds, and 3 stars among 317 funds for the 3-, 5-, and 10-year periods, respectively. The
Morningstar Rating is for the A Class only; other classes may have different performance characteristics. Past performance is no guarantee of future results.
1. The ratings indicated are from Standard & Poor’s, Moody’s Investors Service, and/or Fitch Ratings Ltd. Credit Quality Ratings: Credit quality ratings apply to underlying holdings of the fund and not the fund itself.
Standard & Poor's rates the creditworthiness of bonds, ranging from AAA (highest) to D (lowest). Standard & Poor's rates the creditworthiness of short-term notes from SP-1 (highest) to SP-3 (lowest).Moody’s rates the
creditworthiness of bonds, ranging from Aaa (highest) to C (lowest). Moody’s rates the creditworthiness of short-term U.S. tax-exempt municipal securities from MIG-1/VMIG-1 (highest) to SG (lowest). Fitch rates the
creditworthiness of bonds, ranging from AAA (highest) to D (lowest). Fitch rates the creditworthiness of short-term notes from F-1 (highest) to D (lowest). If a security was rated by all three rating agencies, the middle
rating was used. If rated by two of three rating agencies, the lower rating was used, and if rated by one of the agencies, that rating was used. 2. Performance for the fund or the class shown reflects a predecessor fund's or
class' performance and may be adjusted to reflect the fund's or class' expenses as applicable. 3. The BofA Merrill Lynch U.S. High Yield Constrained Index is a market-value-weighted index of all domestic and Yankee
high-yield bonds, including deferred interest bonds and payment-in-kind securities. Issues included in the index have maturities of one year or more and have a credit rating lower than BBB-/Baa3 but are not in default.
The BofA Merrill Lynch U.S. High Yield Constrained Index limits any individual issuer to a maximum of 2% benchmark exposure. You cannot invest directly in an index. 4. Placement within the Morningstar Fixed-Income
Style Box™ is based on two variables: the vertical axis shows the credit quality of the long bonds owned and the horizontal axis shows interest-rate sensitivity as measured by a bond's effective duration. 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 AAor 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. 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. 5. Effective August 31, 2012. 6. The 30-day SEC yield is calculated with a standardized formula mandated by the SEC. The formula is based on maximum offering price per share and includes the effect of any
fee waivers. Without waivers, yields would be reduced. The 30-day unsubsidized SEC yield does not reflect waivers in effect. A fund's actual distribution rate will differ from the SEC yield and any income distributions from the fund
may be higher or lower than the SEC yield.
Carefully consider a fund’s investment objectives, risks, charges, and expenses before investing. For a current prospectus and, if available, a summary prospectus, containing this and other information,
visit wellsfargofunds.com. Read it carefully before investing.
Wells Fargo Asset Management (WFAM) is a trade name used by the asset management businesses of Wells Fargo & Company. Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company,
provides investment advisory and administrative services for Wells Fargo Funds. Other affiliates of Wells Fargo & Company provide subadvisory and other services for the funds. The funds are distributed by Wells Fargo
Funds Distributor, LLC, Member FINRA, an affiliate of Wells Fargo & Company. Neither Wells Fargo Funds Management nor Wells Fargo Funds Distributor has fund customer accounts/assets, and neither provides
investment advice/recommendations or acts as an investment advice fiduciary to any investor. 304689-FAFS101 07-17
© 2017 Wells Fargo Funds Management, LLC. All rights reserved.