For the quarter, the Fund returned 0.65%. The Funds broader maturity profile and yield curve positioning enhanced relative performance. In particular, the Fund benefited from being underweight the two- to four-year segment of the curve while being overweight seven to eight years as the yield curve flattened. Our longstanding emphasis on higher quality, more conservative sectors detracted from relative performance as credit spreads narrowed further. Nonetheless, we prefer the superior liquidity and lower volatility of higher quality credits. The Fund has less than 6% of its holdings in A-rated securities and holds no BBB securities or Puerto Rico bonds.
We expect second-half issuance to be slightly higher than in the first half of the year, and will look to take advantage of market dislocations and expected periods of elevated volatility.
Holdings are subject to change and current and future portfolio holdings are subject to risk.
If you are an investor seeking higher current income, but potentially less price volatility than the Intermediate Tax-Exempt Fund, with income exempt from regular federal income tax, you may find this Fund attractive. It is well suited for income-oriented investors in higher tax brackets who are willing to accept some risk of principal in exchange for higher yield potential. Income from the Fund may be subject to federal alternative minimum tax (AMT), state and local taxes.