CREDIT OPPORTUNITIES

Results shown in US $. Gross returns on Fee Based Composites are stated gross of the AAM management fee and net of transaction costs. Net returns on Fee Based Composites include the deduction of transaction costs and the AAM management fee. Actual fees are used to calculate composite net performance. The fees charged by AAM are described in its Form ADV Part 2A. It is not possible to invest directly in an index. From 7/1/03 through 3/1/05 the Credit Opportunities strategy was comprised of only the AAM proprietary funded account. During this period the account returned a net annualized return of 16.59%. The proprietary account exited the strategy on 7/31/09. The proprietary account, since inception through July 2009 experience a net annual return of 3.37% juxtaposed to the negative returns that may have been experienced by client accounts formed after March 2005. Returns will vary depending on when the investor enters the strategy.

Benchmark is the Bloomberg Barclays Capital U.S. Corporate High-Yield Bond Index.*** – The Bloomberg Barclays Capital U.S. High Yield Index covers the universe of fixed rate, non-investment grade debt. Eurobonds and debt issues from countries designated as emerging markets (sovereign rating of Baa1/BBB+/BBB+ and below using the middle of Moody’s, S&P and Fitch) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. Original issue zeros, step-up coupon structures, 144-As and pay-in-kind bonds (PIKs, as of October 1, 2009) are also included.

Duration targets are portfolio average and not security specific targets.

*Partial period return from 7/1/2003 to 12/31/2003

** N/A = 36 monthly returns are not available for this composite for period of time specified and are not required to be presented for years prior to 2011.

*** The Bloomberg Barclays Capital U.S. Corporate High-Yield Bond Index was formerly known as the Barclays Capital U.S. Corporate High-Yield Bond Index.

NOTE: The Composite Dispersion column reflects information based on accounts that were in the composite for the duration of the year. AAM Internal Dispersion utilizes the asset-weighted standard deviation of the individual composite component full-period portfolios around the composite weighted mean return. Composites containing 5 portfolios or less show < = 5 and NM, as not meaningful.

Advisors Asset Management Inc. (AAM) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS® standards. Advisors Asset Management Inc. has been independently verified from July 1, 2003 through Q4-2017. The verification report(s) is/are available upon request.

Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

Advisors Asset Management, Inc. is a registered broker/dealer, member FINRA and SIPC and SEC registered investment adviser. AAM offers individual account advisory services under the business name Advisors Asset Management, Inc. and AAM’s Managed Accounts department represents the registered investment adviser within the firm. AAM also sponsors unit investment trusts (UITs), which are excluded from the GIPS definition of the firm. To obtain a presentation that complies with the requirements of GIPS and/or a list and description of all firm composites, contact your financial professional. You may also obtain this information by emailing SMAadministration@aamlive.com.

This report is for informational purposes only and subject to change. All content has been obtained from sources believed reliable; however, we do not guarantee its accuracy or completeness. Each account will be managed on an individual basis and will have variations. Investment return and principal value will fluctuate and there can be no assurance that the portfolio’s objective will be achieved. Past performance does not guarantee comparable future results. Actual returns may be lower. Composite returns assume the reinvestment of dividends, capital gains, and other earnings. Bonds are subject to a variety of risks, including interest rate, income, credit and inflation risk. Maturity and duration targets are portfolio averages and not intended to be security specific targets.

The indices shown are not managed portfolios and are not subject to advisory fees or trading costs. Investors cannot invest directly in the indices. Adviser is aware of the benchmark comparison guidelines set forward in the SEC Clover No-Action Letter (1986) and compares clients’ performance results to a benchmark or a combination of benchmarks most closely resembling clients’ actual portfolio holdings. However, investors should be aware that the referenced benchmark funds may have a different composition, volatility, risk, investment philosophy, holding times, and/or other investment-related factors that may affect the benchmark funds’ ultimate performance results. Therefore, an investor’s individual results may vary significantly from the benchmark’s performance.

 

AAM Credit Opportunities Fixed Income Composite - The objective of this aggressive strategy is capital appreciation through credit opportunities. These opportunities will predominantly be found in below investment grade bonds. Allocation decisions and sector weightings are based on macroeconomics and event-driven effects on individual securities. There are no restrictions on percentages of assets in any one asset class. AAM does not employ a market timing strategy, which can lead to increased volatility of the portfolio during extraordinary market conditions. The portfolio strategy would be characterized as high volatility and high risk. An appropriate benchmark for this composite would be the Barclays Capital U.S. Corporate High-Yield Bond Index.

Fixed Income Portfolios smaller than $75,000 are not included in composites. Prior to May 21, 2014 Fixed Income Portfolios smaller than $200,000 were not included in composites.  

The firm believes that all significant events that would help a prospective client interpret the performance record are contained within the composite disclosures as well as the firm’s SEC Form ADV Part 2a.

 

Composites are valued on the last business day of the month for all periods presented. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request.

Composite creation date for the AAM Credit Opportunities Fixed Income Composite is July 2003.

The AAM fee range for the Credit Opportunities strategy is 0.35 to 1.30 bps. There may be some accounts with fees negotiated outside this range depending on the overall relationship with the client.