We assign Fund Credit Quality and Fund Volatility Ratings to actively or passively managed fixed-income funds, as well as to other collectively managed pools or segregated mandates holding fixed-income assets. These include exchange traded funds, short-duration funds, EU regulated ‘Standard VNAV’ money market funds, fixed-income hedge funds, sovereign wealth funds, local government investment pools, unit investment trusts, and preferred shares trusts.

The Fund Credit Quality Rating (FCQR) reflects S&P Global Ratings' forward-looking and independent opinion about the overall credit quality of fixed-income investment funds. The rating categories range from 'AAAf' (credit quality of the portfolio exposure is extremely strong), to 'Df' (fund’s portfolio is predominantly exposed to defaulted assets and/or counterparties). FCQRs reflect the credit risks of the fund's portfolio investments, the level of the fund's counterparty risk, and the risk of the fund's management ability and willingness to maintain current fund credit quality.

S&P Global Ratings has been rating global FCQRs since 1994. Identified by the 'f' suffix, FCQRs are distinguished from an S&P Global Ratings traditional issue or issuer credit rating, which by comparison, reflects our view of a borrower's ability to fully and timely meet its financial obligations. When assigning an FCQR to a fund, we focus on quantitative and qualitative areas, including:

• Overall credit quality, diversification, maturity, and liquidity of a fixed-income investment.

• The strengths and weaknesses of the fund's management and organization, risk management & compliance, credit culture and credit research.

• The fund’s sensitivity to interest rate risk, credit risks, concentration risk, counterparty risk and liquidity risk. FCQRs are typically accompanied by Fund Volatility Ratings (FVR) (i.e., 'Af/S3') -- when fund volatility ratings can be assigned--to communicate our opinion about certain risks not addressed by a FCQR.

The Fund Volatility Rating (FVR) reflects S&P Global Ratings' forward-looking opinion of a fund's sensitivity to interest rate risk, credit risk, and liquidity risk, as well as other factors that may affect returns such as use of derivatives, use of leverage, exposure to foreign currency risk, and investment concentration, and fund management. FVRs range from ‘S1+’ (lowest volatility whose asset maturities typically do not exceed on year) to ‘S5’ ( the highest volatility) to distinguish the rating in symbology from an S&P Global Ratings traditional issue or issuer credit rating which reflects, by comparison, reflects our view of a borrower's ability to fully and timely meet its financial obligations.

Fund Volatility Ratings reflect our opinion about a fixed-income investment fund's volatility of returns relative to that of a "reference index" denominated in the base currency of the fund. FVRs capture our expectation of the fund's future volatility of returns to remain consistent with its historical volatility of returns.

Our Fund Credit Quality and Fund Volatility Ratings provide an independent view, based on a set of objective, public criteria, on:

• The overall credit quality of a fixed-income investment fund.

• A fund's sensitivity to interest rate risk, credit risk and liquidity risk, as well as other factors that may affect returns such as the use of derivatives, use of leverage, exposure to foreign currency risk, and investment concentration and fund management.

• The strengths and/or weaknesses of management and their associated mechanisms (credit research, internal controls, pricing, etc.) utilized to assess whether the fund meets its objective.