Payden & Rygel Investment Management

US Funds

Payden High Income Fund (PYHRX)

$6.37

NAV ($)

$-0.01

NAV change ($) as of 8/13/2018

Overview
Portfolio Statistics
Performance & Expenses
Fund Commentary

Investment Strategy

The Payden High Income Fund invests in corporate high-yield bonds, which provide a premium to U.S. Treasury bonds. The fund generally invests in the higher-quality segment of the market and looks for companies with good growth prospects, superior and defensible products and strong management teams.

Role In Portfolio

High-Yield Bond – Appropriate for investors who seek higher yields and diversification in the growing $2 trillion high-yield bond market.

Fund Highlights

	Primary focus on the upper tier (BB or B rated) of the global high-yield bond market
	Potential for both income and capital appreciation
	The value of an investment will generally fall when interest rates rise

Fund Snapshot

Fund Inception Date	Dec 30, 1997
Share Class Inception Date	Dec 30, 1997
Ticker	PYHRX
CUSIP	704329572
Fund Total Net Assets	$473.1 million
Benchmark	ICE BofA ML BB-B US Cash Pay High Yield Constrained Index
Net Expense Ratio	0.67%
Sales Charge	None

Investment Minimum
Investor Class - Regular Account	$100,000
Investor Class - IRA Account	$100,000
Additional Investment - All Classes	$250

A Low Cost leader

	Payden High Income Fund (PYHRX)	Morningstar average: High Yield Bond
Net Expense Ratio	0.67%	1.11%

Quoted performance data represent past performance, which does not guarantee future results. Investment returns and principal value will fluctuate, so investors’ shares, when sold, may be worth more or less than their original cost. For the most recent month-end performance, which may be higher or lower than that quoted, go to the Mutual Funds > Performance page on this website, or call 800 572-9336.

To obtain a prospectus or summary prospectus, click on the Prospectuses & Reports link on the right side of this page, or call 800 572-9336. Before investing, investors should consider investment objectives, risks, charges, expenses and other important information, which are contained in these documents; read the prospectus carefully before investing. Investment in foreign securities offers different rewards and challenges from investing in domestic securities, including changes in exchange rates, political changes, and differences in reporting standards, and for emerging-market securities, higher volatility. The Paydenfunds are distributed through Payden & Rygel Distributors, member FINRA.

The investment strategy and investment management information presented on this website should not be construed to be formal financial planning advice or the formation of a financial manager/client relationship. Payden.com is an informative website designed to provide information to the general public based on our recommendations of investment management and investment strategies and is not designed to be representative of your own financial needs. Nor does the information contained herein constitute financial management advice. The firm makes no warranty or representation regarding the accuracy or legality of any information contained in this website, and assumes no liability for the use of said information. Be advised that as Internet communications are not always confidential, you provide our website your personal information at your own risk. Please do not make any decisions about any investment management or investment strategy matter without consulting with a qualified professional.

Portfolio Characteristics

Fund Inception Date	Dec 30, 1997
Share Class Inception Date	Dec 30, 1997
Total Net Assets	$473.1 million

Average Duration	4.2 years
Average Maturity	6.9 years
30-Day SEC Yield (08/10/18)	5.49%
30-Day SEC Yield (unsubsidized)	5.55%

Duration Breakdown

Years	Percent of Portfolio
0-1	11%
1-3	16%
3-5	36%
5-7	29%
7+	8%
Total	100%

Credit Breakdown

Credit Quality	Percent of Portfolio
AAA	2%
BBB	2%
BB	38%
B	45%
CCC	13%
Total	100%

Credit breakdown represents the lower of the ratings provided by Standard & Poor's and Moody's

Sector Breakdown

Sector	Percent of Portfolio
Energy	18%
Communications	16%
Consumer Cyclical	15%
Financials	14%
Consumer Non-Cyclical	13%
Industrials	7%
Basic Materials	5%
Mortgage Securities	3%
Utilities	3%
Loans	2%
Total	96%

Total Returns

	YTD	1 Year	3 Year	5 Year	10 Year	Since Inception
Quarter-end (6/30/2018)	-0.71%	1.66%	4.05%	4.40%	5.74%	5.37%
Month-end (7/31/2018)	0.54%	1.84%	4.48%	4.30%	5.99%	5.41%

Yearly Returns

2017	6.53%
2016	10.61%
2015	-1.54%
2014	2.86%
2013	4.25%
2012	14.51%
2011	4.09%
2010	12.30%
2009	31.76%
2008	-20.38%

Expenses

Total Annual Operating Expense	0.67%
Net or Actual Operating Expense	0.67%

Fund Commentary

MARKET
	High-yield bonds returned +0.7% during the second quarter as measured by the ICE BOFA ML BB/B US Cash Pay High Yield Constrained Index. Bond coupon compensated for spreads (or the yield of the benchmark relative to the yield of a comparable-maturity U.S. Treasury note) that were driven wider by duration-sensitive bonds in the BB-ratings category.
	According to their relative ICE BOFA ML US Cash Pay High Yield Constrained Indices, BB-rated bonds returned -0.1%, B-rated bonds returned +1.4%, and CCC-rated bonds returned +2.7%.
	New issuance of $53 billion during the second quarter was 31% lower than new issuance of $77 billion during the second quarter of 2017.
	High-yield mutual funds experienced outflows of -$3.6 billion during the quarter. Year-to-date, outflows stand at -$19.1 billion.

OUTLOOK
	A strong economy is good news for high-yield markets. Strong earnings reports bolstered by last year's corporate tax cut have improved companies' financial health and low unemployment and higher wages should continue to drive growth.
	Traditional warning signs for the high-yield market are not sounding any alarms. CCC issuance is at historical lows, and the size of the high-yield bond market is actually shrinking as net new issuance remains scarce.
	Of course, risks to the asset class remain. Trade war escalation would certainly spook risk markets, and rising rates remain a risk for fixed-income assets. Nonetheless, with default rates expected to fall through the end of the year, high yield should remain healthy.

US mutual funds

Disaster Recovery and Business Continuity Preperations

Payden & Rygel has developed a Business Continuity Plan to ensure that all critical functions continue in the event of a disruption in normal operations.

The firm has configured data replication servers and related infrastructure in its Boston, Massachusetts office. Data on critical Los Angeles servers is replicated to corresponding servers in the Boston location on a live basis throughout each day. In addition, other servers and databases are backed up, sent electronically to Boston, and restored at the end of each day. The firm has established a dedicated high-speed connection between the Los Angeles and Boston offices to facilitate the secure transmission of data backups.

A number of individuals from the Trading, Portfolio Operations, Information Technology, Compliance and Portfolio Management departments have been selected to connect remotely to the Boston office to complete their daily responsibilities, in the event of a disruption to normal business operations. The firm has implemented a VMWare virtual environment for each of these individuals so that they each have their own remote desktop in Boston to which they securely connect using a laptop or desktop computer with an Internet connection. Our expectation is that routine business operations will resume within 24 hours of a business continuity event. In addition, the Boston office has capacity to accommodate additional employees if a physical relocation of selected Los Angeles employees is necessary.

The firm uses a third-party hosted mass notification system to quickly communicate with all employees in the event of a disruption in operations. The system allows management to compose a text or voice message notifying employees of the event, which is then sent automatically to employees' mobile phones, home phones, and e-mail addresses. Employees indicate their receipt of the message from their phone or mobile device, which allows management to immediately review summary reports of the employees who are aware of the disruption. Additional instructions and updates can then be sent to all staff, as necessary under the circumstances.

In the event that our Business Continuity Plan is activated and Los Angeles office phone lines are down, the Los Angeles phone numbers are re-directed to the Boston office. Boston-based staff will direct callers to the mobile phones of key portfolio professionals, as necessary. All key investment personnel have access to firm e-mail on mobile devices. E-mail delivery to Payden & Rygel addresses is not dependent on the availability of either Los Angeles or Boston servers. Finally, Boston-based staff has access to portfolio management and reporting information independent of Los Angeles technology availability.

The transfer agent for the Paydenfunds is not located in Payden & Rygel's offices. The transfer agent for all of the funds maintains all shareholder records and will continue to receive all shareholder calls related to their accounts.

On at least a quarterly basis, several employees from the departments specified above will remotely connect to the Boston office to test the infrastructure by conducting their daily job responsibilities, including the execution, ticketing, settlement and processing of securities trades.

The Business Continuity Plan was developed and is monitored by a committee of senior managers, including the heads of the Trading, Portfolio Operations, Compliance and Information Technology departments. The committee meets regularly to discuss any necessary updates to the Plan and coordinates ongoing tests of the Boston location by a team of employees from various departments. The committee also solicits feedback from personnel based on the ongoing tests and promptly makes adjustments to the Plan and the Boston office resources, as necessary.

Updates to the Business Continuity Plan will be posted on this website page and a copy of the Plan may also be obtained by written request.

Privacy Policy

Payden & Rygel respects your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner and in compliance with applicable legal and regulatory requirements.

Collection of Information

To meet those expectations, we must collect and maintain certain personal information which is required by state and federal agencies such as name, address and tax ID. We may collect or capture personal information about you from the following sources:

The investment management agreement between us, or other forms;
Oral conversations or written correspondence between you and our representatives;
Your transactions with us;
and Electronic sources, such as our website, or e-mails

We do not make personal information available on line. To change your personal information, call Paydenfund Shareholder Services at 800-572-9366 and request forms needed to make any corrections.

Internal access to information and safeguards

We limit access to your personal and account information to those employees who need to know that information so that we can provide products and services to you. We also maintain physical, electronic and procedural safeguards to protect your nonpublic personal and account information.

Disclosure of information

We do not disclose any nonpublic personal and account information about our customers, or former customers, to anyone, except as permitted by law.

In this regard, we may disclose such information to our affiliates, in the event some or all of your assets may be invested in the Paydenfunds, and to unaffiliated third parties (such as broker-dealers, transfer agents or custodians), all as permitted by law and only as needed for us to provide agreed-upon services to you. Finally, we may also disclose information to appropriate government agencies, and to others, as required by law or to prevent fraud..

We will post a notice on our website for 30 days whenever our Privacy Policy is materially changed.