DOUBLELINE FUNDS TRUST
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DoubleLine
Funds
Prospectus
July 23,
2024 |
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Share
Classes |
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Fixed
Income
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I
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N
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R6
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DoubleLine
Total Return Bond Fund |
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DBLTX |
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DLTNX |
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DDTRX |
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DoubleLine
Core Fixed Income Fund |
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DBLFX |
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DLFNX |
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DDCFX |
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DoubleLine
Emerging Markets Fixed Income Fund |
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DBLEX |
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DLENX |
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— |
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DoubleLine
Low Duration Bond Fund |
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DBLSX |
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DLSNX |
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DDLDX |
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DoubleLine
Floating Rate Fund |
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DBFRX |
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DLFRX |
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— |
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DoubleLine
Flexible Income Fund |
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DFLEX |
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DLINX |
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DFFLX |
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DoubleLine
Low Duration Emerging Markets Fixed Income Fund |
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DBLLX |
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DELNX |
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— |
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DoubleLine
Long Duration Total Return Bond Fund |
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DBLDX |
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DLLDX |
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— |
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DoubleLine
Global Bond Fund |
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DBLGX |
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DLGBX |
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— |
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DoubleLine
Infrastructure Income Fund |
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BILDX |
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BILTX |
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— |
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DoubleLine
Income Fund |
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DBLIX |
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DBLNX |
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— |
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DoubleLine
Emerging Markets Local Currency Bond Fund |
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DBELX |
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DLELX |
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— |
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Global Asset Allocation |
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DoubleLine
Multi-Asset Trend Fund |
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DBMOX |
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DLMOX |
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— |
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Non-Traditional |
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DoubleLine
Strategic Commodity Fund |
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DBCMX |
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DLCMX |
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— |
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Equities |
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DoubleLine
Shiller Enhanced CAPE® |
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DSEEX |
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DSENX |
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DDCPX |
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DoubleLine
Shiller Enhanced International CAPE® |
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DSEUX |
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DLEUX |
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— |
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Please
read this document carefully before investing, and keep it for future
reference.
Neither
the Securities and Exchange Commission, the Commodity Futures Trading
Commission, nor any state securities commission has approved or
disapproved these securities or determined if this Prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense. |
TABLE
OF CONTENTS
The
Trust and the Funds
This
Prospectus tells you about the DoubleLine mutual funds (the “Funds”, and each, a “Fund”) listed on the Prospectus cover. Each
Fund is a series of DoubleLine Funds Trust, a Delaware statutory trust (the
“Trust”). Each Fund offers shares in a
number of different classes. Most of the Funds provide investment programs
investing principally in debt obligations and are referred to in this Prospectus
as “fixed income funds.” The remaining
Funds are DoubleLine Multi-Asset Trend Fund, DoubleLine Strategic Commodity
Fund, DoubleLine Shiller Enhanced CAPE®, and DoubleLine Shiller
Enhanced International CAPE®.
Fund
Summary
DoubleLine
Total Return Bond Fund
Investment
Objective
The
Fund’s investment objective is to seek to maximize total
return.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I and
Class R6 shares through a broker or other financial
intermediary acting as an agent on your behalf. Such commissions and
other fees, if any, are not charged by the Fund and are not reflected in the fee
table or expense example below.
Shareholder Fees (fees paid directly from your
investment)
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Share Class |
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Class I |
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Class N |
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Class R6 |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
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None |
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None |
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None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
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None |
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None |
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None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
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None |
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None |
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None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
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None |
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None |
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None |
Fee for Redemption by Wire |
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$15 |
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$15 |
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$15 |
Exchange Fee |
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None |
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None |
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None |
Account
Fee |
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None |
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None |
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None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your
investment)
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Share Class |
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Class I |
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Class N |
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Class R6 |
Management Fees |
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0.40% |
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0.40% |
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0.40% |
Distribution and/or Service (12b‑1)
Fees |
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None |
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0.25% |
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None |
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
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0.10% |
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0.10% |
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0.04% |
Total
Annual Fund Operating Expenses |
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0.50% |
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0.75% |
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0.44% |
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual
funds.
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would
be:
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Class I |
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Class N |
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Class R6 |
1 Year |
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$51 |
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$77 |
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$45 |
3 Years |
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$160 |
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$240 |
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$141 |
5 Years |
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$280 |
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$417 |
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$246 |
10 Years |
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$628 |
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$930 |
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$555 |
-2-
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 36% of the average value of its
portfolio.
Principal
Investment Strategies
Under
normal circumstances, the Fund intends to invest more than 50% of its net assets
in residential and commercial mortgage-backed securities and U.S. Treasury
obligations rated at the time of investment Aa3 or higher by Moody’s Investors
Service, Inc. (“Moody’s”) or AA‑ or
higher by S&P Global Ratings (“S&P”) or the equivalent by any other
nationally recognized statistical rating organization or unrated securities that
are determined by DoubleLine Capital LP (the “Adviser” or “DoubleLine Capital”) to be of comparable
quality. These investments may include mortgage-backed securities of any
maturity or type, including those guaranteed by, or secured by collateral that
is guaranteed by, the United States Government, its agencies, instrumentalities
or sponsored corporations, and privately issued mortgage-backed securities.
These investments also include, among others, government mortgage pass-through
securities, collateralized mortgage obligations, multiclass pass-through
securities, private mortgage pass-through securities, stripped mortgage
securities (interest-only and principal-only securities) and inverse floaters.
The Fund’s investments in derivatives and other synthetic instruments that
provide exposures comparable, in the judgment of the Adviser, to any of the
foregoing instruments described in this paragraph will be counted toward
satisfaction of the Fund’s 50% policy (using, where determined appropriate in
the Adviser’s discretion, an instrument’s notional
amount).
Since
the Fund’s inception, the Fund has historically invested substantially all of
its assets in mortgage-backed securities; short term investments, such as notes
issued by U.S. Government agencies and shares of money market funds; and other
asset-backed obligations, collateralized loan obligations, obligations of the
U.S. Government and its agencies, instrumentalities and sponsored corporations,
and futures contracts. The Fund may invest in other instruments as part of its
principal investment strategies, but it has not historically done so to a
significant extent and there can be no assurance it will do so in the
future.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal
policy.
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of borrowings for investment purposes) in bonds. “Bonds”
include bonds, debt securities, and other fixed income instruments issued by
governmental or private-sector
entities.
The
Fund may invest in bonds of any credit quality, including those that are at the
time of investment unrated or rated BB+ or lower by S&P or Ba1 or lower by
Moody’s or the equivalent by any other nationally recognized statistical rating
organization. Bonds and fixed income instruments rated below investment grade,
or such instruments that are unrated and determined by the Adviser to be of
comparable quality, are high yield, high risk bonds, commonly known as “junk
bonds.” The Fund may invest up to 33 1/3% of its net assets in junk bonds, bank
loans and assignments rated below investment grade or unrated but determined by
the Adviser to be of comparable quality, and credit default swaps of companies
in the high yield universe. The Adviser does not consider the term “junk bonds”
to include any mortgage-backed securities or any other asset-backed securities,
regardless of their credit rating or credit quality, and accordingly may invest
without limit in such investments. The Fund may invest a portion of its assets
in inverse floater securities and interest-only and principal-only
securities.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Adviser may seek to manage the dollar-weighted average effective duration of
the Fund’s portfolio through the use of derivative instruments and other
investments (including, among others, inverse floaters, futures contracts, U.S.
Treasury swaps, interest rate swaps, total return swaps and options, including
options on swap agreements). The Fund incurs costs in implementing duration
management strategies, and there can be no assurance that the Fund will engage
in duration management strategies or that any duration management strategy
employed by the Fund will be successful. In managing the Fund’s investments,
under normal market conditions, the portfolio managers intend to seek to
construct an investment portfolio with a dollar-weighted average effective
duration of no less than one year and no more than eight years. Duration is a
measure of the expected life of a fixed income instrument that is used to
determine the sensitivity of
-3-
a
security’s price to changes in interest rates. Effective duration is a measure
of the Fund’s portfolio duration adjusted for the anticipated effect of interest
rate changes on bond and mortgage prepayment rates as determined by the Adviser.
The effective duration of the Fund’s investment portfolio may vary materially
from its target range, from time to time, and there is no assurance that the
effective duration of the Fund’s investment portfolio will always be within its
target range.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. The Fund may use derivatives transactions
with the purpose or effect of creating investment leverage. For example, the
Fund may use futures contracts and options on futures contracts, in order to
gain efficient long or short investment exposures as an alternative to cash
investments or to hedge against portfolio exposures; interest rate swaps, to
gain indirect long or short exposures to interest rates, issuers, or currencies,
or to hedge against portfolio exposures; and total return swaps and credit
derivatives (such as credit default swaps), put and call options, and
exchange-traded and structured notes, to take indirect long or short positions
on indexes, securities, currencies, or other indicators of value, or to hedge
against portfolio exposures. The Fund may also engage in short sales or take
short positions, either to adjust its duration or for other investment
purposes.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the portfolio
managers believe it would be appropriate to do so in order to readjust the
duration of the Fund’s investment
portfolio.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
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active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
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asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
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counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
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credit
risk: the risk that an issuer, counterparty or other obligor to the Fund
will fail to pay its obligations to the Fund when they are due, which may
reduce the Fund’s income and/or reduce, in whole or in part, the value of
the Fund’s investment. Actual or perceived changes in the financial
condition of an obligor, changes in economic, social or political
conditions that affect a particular type of security, instrument, or
obligor, and changes in economic, social
or |
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political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
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extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
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interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
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prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
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defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
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derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
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financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both
the amounts and the types of loans and other financial commitments
financial services companies can make, the interest rates and fees they
can charge, the scope of their activities, the prices they can charge and
the amount of capital they must maintain; (ii) fluctuations,
including as a result of interest rate changes or increased competition,
in the availability and cost of capital funds on which the profitability
of financial services companies is largely dependent;
(iii) deterioration of the credit markets; (iv) credit losses
resulting from financial difficulties of borrowers, especially when
financial services companies are exposed to non‑diversified or
concentrated loan |
-5-
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portfolios;
(v) financial losses associated with investment activities,
especially when financial services companies are exposed to financial
leverage; (vi) the risk that any financial services company
experiences substantial declines in the valuations of its assets, takes
action to raise capital, or ceases operations; (vii) the risk that a
market shock or other unexpected market, economic, political, regulatory,
or other event might lead to a sudden decline in the values of most or all
companies in the financial services sector; (viii) events leading to
limited liquidity, defaults, non‑performance or other adverse developments
that affect financial institutions or the financial services industry
generally, or concerns or rumors about any events of these kinds or other
similar risks, leading to market-wide liquidity problems; and
(ix) the interconnectedness or interdependence among financial
services companies, including the risk that the financial distress or
failure of one financial services company may materially and adversely
affect a number of other financial services
companies. |
• |
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high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
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inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
• |
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leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
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liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
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loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of that financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral relating to a loan; (v) there may be limited
public information available regarding the loan and the relevant
borrower(s); (vi) the use of a particular interest rate benchmark may
limit the Fund’s ability to achieve a net return to shareholders that
consistently approximates the average published Prime Rate of U.S. banks;
(vii) the prices of certain floating rate loans that include a
feature that prevents their interest rates from adjusting if market
interest rates are below a specified minimum level may appreciate less
than other instruments in response to changes in interest rates should
interest rates rise but remain below the applicable minimum level;
(viii) if a borrower fails to comply with various restrictive
covenants that may be found in loan agreements, the borrower may default
in payment of the loan; (ix) if the Fund invests in loans that
contain fewer or less restrictive constraints on the borrower than certain
other types of loans (“covenant-lite” loans), it may have fewer rights
against the borrowers of such loans, including fewer protections against
the possibility of default and fewer remedies in the event of default;
(x) the loan is unsecured; (xi) there is a limited secondary
market; (xii) transactions in loans may settle on a delayed basis,
and the Fund may not receive the proceeds from the sale of a loan for a
substantial period of time after the sale, which may result in sale
proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the Fund. The Fund may invest in loans
directly or indirectly by investing in shares of the DoubleLine Floating
Rate Fund and in either case will be subject to the risks described
above. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to |
-6-
|
governmental
actions or intervention or general market conditions, including real or
perceived adverse political, economic or market conditions, tariffs and
trade disruptions, inflation, recession, changes in interest or currency
rates, lack of liquidity in the bond markets or adverse investor
sentiment, or other external factors, experience periods of high
volatility and reduced liquidity. During those periods, the Fund may
experience high levels of shareholder redemptions, and may have to sell
securities at times when the Fund would otherwise not do so, and
potentially at unfavorable prices. Certain securities may be difficult to
value during such periods. Market risk involves the risk that the value of
the Fund’s investment portfolio will change, potentially frequently and in
large amounts, as the prices of its investments go up or down. During
periods of severe market stress, it is possible that the market for some
or all of a Fund’s investments may become highly illiquid. Recently, there
have been inflationary price movements, which have caused the fixed income
securities markets to experience heightened levels of interest rate
volatility and liquidity risk. Please see “debt securities risks —
interest rate risk” herein for more
information. |
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
real estate
sector risk: the risk that real estate-related investments
may decline in value as a result of factors affecting the real estate
sector, such as the supply of real property in certain markets, changes in
zoning laws, delays in completion of construction, changes in real estate
values, changes in property taxes, levels of occupancy, and local,
regional, and general market conditions. Along with the risks common to
different types of real estate-related investments, real estate investment
trusts (“REITs”), no matter the
type, involve additional risk factors, including poor performance by the
REIT’s manager, adverse changes to the tax laws, and the possible failure
by the REIT to qualify for the favorable tax treatment available to REITs
under the Internal Revenue Code of 1986, as amended, or the exemption from
registration under the Investment Company Act of 1940, as amended. REITs
are not diversified and are heavily dependent on cash flow earned on the
property interests they hold. |
• |
|
restricted
securities risk: the risk that the Fund may be prevented or
limited by law or the terms of an agreement from selling a security (a
“restricted security”). To the
extent that the Fund is permitted to sell a restricted security, there can
be no assurance that a trading market will exist at any particular time,
and the Fund may be unable to dispose of the security promptly at
reasonable prices or at all. The Fund may have to bear the expense of
registering the securities for resale and the risk of substantial delays
in effecting the registration. Also, restricted securities may be
difficult to value because market quotations may not be readily available,
and the values of restricted securities may have significant
volatility. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
-7-
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
collateralized debt obligations, mortgage-backed securities, other types
of asset-backed securities and certain types of structured notes, may
decline in value due to changes in the underlying instruments, indexes,
interest rates or other factors on which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/ or expense limitations (which applied to the
Fund from inception through July 24, 2012), performance would have been
lower. Updated information on the Fund’s investment results can be obtained at
no charge by calling 877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
-8-
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
6.43% |
|
Quarter
ended 12/31/2023 |
Lowest: |
|
-4.83% |
|
Quarter
ended 3/31/2022 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
0.30%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Total Return Bond
Fund |
|
One Year |
|
Five Years |
|
Ten Years |
|
Since Inception
(April 6,
2010) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
5.33% |
|
|
|
|
0.34% |
|
|
|
|
1.83% |
|
|
|
|
3.81% |
|
Return
After Taxes on Distributions |
|
|
|
3.46% |
|
|
|
|
-1.13% |
|
|
|
|
0.22% |
|
|
|
|
1.91% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
3.12% |
|
|
|
|
-0.33% |
|
|
|
|
0.71% |
|
|
|
|
2.18% |
|
Class N |
|
Return
Before Taxes |
|
|
|
4.95% |
|
|
|
|
0.09% |
|
|
|
|
1.56% |
|
|
|
|
3.54% |
|
Class R61 |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
5.28% |
|
|
|
|
0.39% |
|
|
|
|
1.85% |
|
|
|
|
3.82% |
|
Bloomberg U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or
taxes) |
|
|
|
5.53% |
|
|
|
|
1.10% |
|
|
|
|
1.81% |
|
|
|
|
2.41% |
|
Bloomberg U.S. Mortgage Backed Securities (MBS)
Index
(reflects no deduction for fees, expenses or
taxes) |
|
|
|
5.05% |
|
|
|
|
0.25% |
|
|
|
|
1.38% |
|
|
|
|
1.85% |
|
1 |
Class R6
shares were not available for purchase until July 31, 2019. The
performance shown for Class R6 shares prior to that date is that of
the Class I shares of the Fund, another class of the Fund that is
invested in the same portfolio of securities as Class R6 shares.
Annual returns of Class R6 shares would have differed from that shown
for the period prior to July 31, 2019 only to the extent that
Class R6 shares and Class I shares have different
expenses. |
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax-advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary.
The
Bloomberg U.S. Aggregate Bond Index represents securities that are
SEC‑registered, taxable, and dollar denominated. This index covers the U.S.
investment-grade fixed rate bond market, with index components for government
and corporate securities, mortgage pass-through securities, and asset-backed
securities. These major sectors are subdivided into more specific indices that
are calculated and reported on a regular basis. The Bloomberg U.S. Mortgage
Backed Securities (MBS) Index tracks fixed-rate agency mortgage backed
pass-through securities guaranteed by Ginnie Mae (GNMA), Fannie Mae (FNMA), and
Freddie Mac (FHLMC). It is not possible to invest directly in an
index.
-9-
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience
with
the
Fund |
|
Primary Title with the
Investment
Adviser |
Jeffrey E. Gundlach |
|
Since the Fund’s
inception in April 2010 |
|
Chief Executive
Officer |
Andrew Hsu |
|
Since July 2019 |
|
Portfolio
Manager |
Ken
Shinoda |
|
Since
July 2020 |
|
Portfolio
Manager |
Purchase
and Sale of Shares
You
may purchase or redeem Class I, Class N and Class R6 shares on
any business day when the New York Stock Exchange opens for regular trading. You
may purchase or redeem shares by written request via mail (DoubleLine Funds, c/o
U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire
transfer, by telephone at 877‑DLine11 (877‑354‑6311), or through authorized
dealers, brokers, or other service providers (“financial intermediaries”). Telephone
transactions will be permitted unless you decline this privilege on your initial
purchase application. The minimum initial and subsequent investment amounts for
different types of accounts are shown below, although the Fund may reduce or
waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum
Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular
Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and
Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
Class R6
Shares |
|
|
None* |
|
|
|
N/A |
|
|
|
N/A |
|
* |
See
eligibility limitations below. |
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Eligibility for Class R6
Shares. Only authorized dealers, brokers, or other service providers who
have an agreement with the Fund’s distributor to make Class R6 shares
available to their clients who are Class R6 eligible plans or other
eligible investors are authorized to accept, on behalf of the Fund, purchase and
exchange orders and redemption requests for Class R6 shares placed by or on
behalf of Class R6 eligible plans or other eligible investors. In addition,
Class R6 shares may also be purchased directly from the Fund’s transfer
agent by a Class R6 eligible plan if such shares are held in an omnibus
account opened in the plan’s name directly with the Fund’s transfer agent.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
-10-
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-11-
Fund
Summary
DoubleLine
Core Fixed Income Fund
Investment
Objective
The
Fund’s investment objective is to seek to maximize current income and total
return.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I and
Class R6 shares through a broker or other financial
intermediary acting as an agent on your behalf. Such commissions and
other fees, if any, are not charged by the Fund and are not reflected in the fee
table or expense example below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
|
Class R6 |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
|
None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your investment)
|
|
|
|
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
|
Class R6 |
|
Management Fees |
|
|
0.40% |
|
|
|
0.40% |
|
|
|
0.40% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
|
|
None |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.07% |
|
|
|
0.07% |
|
|
|
0.04% |
|
Acquired Fund Fees and Expenses1 |
|
|
0.04% |
|
|
|
0.04% |
|
|
|
0.04% |
|
Total Annual Fund Operating Expenses
Before Fee Waiver and/or Expense Reimbursement |
|
|
0.51% |
|
|
|
0.76% |
|
|
|
0.48% |
|
Fee
Waiver and/or Expense Reimbursement1 |
|
|
-0.03% |
|
|
|
-0.03% |
|
|
|
-0.03% |
|
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement1 |
|
|
0.48% |
|
|
|
0.73% |
|
|
|
0.45% |
|
1 |
“Acquired Fund Fees and Expenses” are
expenses indirectly incurred by the Fund as a result of its investments in
one or more underlying funds, including exchange-traded funds (“ETFs”) and money market funds. Because
these costs are indirect, the Total Annual Fund Operating Expenses in this
fee table will not correlate to the expense ratio in the Fund’s financial
statements, since financial statements only include direct costs of the
Fund and not the indirect costs of investing in the underlying
funds. When the Fund invests in other investment vehicles
sponsored or advised by DoubleLine Capital LP (the “Adviser” or “DoubleLine Capital”) or a related party
of the Adviser (“other DoubleLine
funds”), the Adviser has contractually agreed to waive its advisory
fee in an amount equal to the advisory fees paid by the other DoubleLine
funds in respect of Fund assets so invested. The Adviser waived advisory
fees in the amount of 0.03% pursuant to this waiver agreement in respect
of investments made in other DoubleLine funds during the Fund’s most
recent fiscal year. The effects of this waiver agreement are reflected in
the last two rows of the table above. This waiver agreement will apply
until at least August 1, 2025, except
that it may be terminated at any time with the consent of the Board of
Trustees. |
-12-
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual
funds.
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would
be:
|
|
|
|
|
| |
|
|
Class I |
|
Class N |
|
Class R6 |
1 Year |
|
$49 |
|
$75 |
|
$46 |
3 Years |
|
$161 |
|
$240 |
|
$151 |
5 Years |
|
$282 |
|
$419 |
|
$266 |
10 Years |
|
$638 |
|
$939 |
|
$601 |
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 119% of the average value of its
portfolio.
Principal
Investment Strategies
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of borrowings for investment purposes) in fixed income
instruments. These fixed income instruments include but are not limited to
securities issued or guaranteed by the United States Government, its agencies,
instrumentalities or sponsored corporations; corporate obligations;
mortgage-backed securities of any kind, including commercial and residential
mortgage-backed securities; asset-backed securities; foreign securities
(corporate and government, including foreign hybrid securities); emerging market
securities (corporate and government); fixed and floating rate loans of any kind
(including, among others, bank loans, assignments, participations, subordinated
loans, debtor‑in‑possession loans, exit facilities, delayed funding loans and
revolving credit facilities); and other securities bearing fixed or variable
interest rates of any maturity.
The
Fund may invest in fixed income instruments of any credit quality, including
those that are at the time of investment unrated or rated BB+ or lower by
S&P Global Ratings or Ba1 or lower by Moody’s Investors Service, Inc. or the
equivalent by any other nationally recognized statistical rating organization.
Corporate bonds and certain other fixed income instruments rated below
investment grade, or such instruments that are unrated and determined by the
Adviser to be of comparable quality, are high yield, high risk bonds, commonly
known as “junk bonds.” The Fund may invest up to 33 1/3% of its net assets in
junk bonds, bank loans and assignments rated below investment grade or unrated
but determined by the Adviser to be of comparable quality, and credit default
swaps of companies in the high yield universe. The Adviser does not consider the
term “junk bonds” to include any mortgage-backed securities or any other
asset-backed securities, regardless of their credit rating or credit quality,
and accordingly may invest without limit in such
investments.
The
Fund may invest up to 5% of its net assets in defaulted corporate securities.
The Fund might do so, for example, where the portfolio managers believe the
restructured enterprise valuations or liquidation valuations may exceed current
market values. The Fund may invest a portion of its assets in inverse floaters
and interest-only and principal-only
securities.
The
Fund may also invest a portion of its assets in fixed income instruments
(including hybrid securities) issued or guaranteed by companies, financial
institutions and government entities in emerging market countries. An “emerging
market country” is a country that, at the time the Fund invests in the related
fixed income instruments, is classified as an emerging or developing economy by
any supranational organization such as an institution in the World Bank Group or
the United Nations, or an agency thereof, or is considered an emerging market
country for purposes of constructing a major emerging market securities
index.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including investment companies sponsored or managed by the Adviser or its
related parties. The amount of the Fund’s investment in certain investment
companies may be limited by law or by tax
considerations.
-13-
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal
policy.
The
portfolio managers utilize active asset allocation in managing the Fund’s
investments.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
In managing the Fund’s investments, under normal market conditions, the
portfolio managers intend to seek to construct an investment portfolio with a
dollar-weighted average effective duration of no less than two years and no more
than eight years. Duration is a measure of the expected life of a fixed income
instrument that is used to determine the sensitivity of a security’s price to
changes in interest rates. Effective duration is a measure of the Fund’s
portfolio duration adjusted for the anticipated effect of interest rate changes
on bond and mortgage prepayment rates as determined by the Adviser. The
effective duration of the Fund’s investment portfolio may vary materially from
its target range, from time to time, and there is no assurance that the
effective duration of the Fund’s investment portfolio will always be within its
target range.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. The Fund may use derivatives transactions
with the purpose or effect of creating investment leverage. For example, the
Fund may use futures contracts and options on futures contracts, in order to
gain efficient long or short investment exposures as an alternative to cash
investments or to hedge against portfolio exposures; interest rate swaps, to
gain indirect long or short exposures to interest rates, issuers, or currencies,
or to hedge against portfolio exposures; and total return swaps and credit
derivatives (such as credit default swaps), put and call options, and
exchange-traded and structured notes, to take indirect long or short positions
on indexes, securities, currencies, or other indicators of value, or to hedge
against portfolio exposures. The Fund may also engage in short sales or take
short positions, either to adjust its duration or for other investment
purposes.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell
target.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
-14-
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that,
when |
-15-
|
a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both
the amounts and the types of loans and other financial commitments
financial services companies can make, the interest rates and fees they
can charge, the scope of their activities, the prices they can charge and
the amount of capital they must maintain; (ii) fluctuations,
including as a result of interest rate changes or increased competition,
in the availability and cost of capital funds on which the profitability
of financial services companies is largely dependent;
(iii) deterioration of the credit markets; (iv) credit losses
resulting from financial difficulties of borrowers, especially when
financial services companies are exposed to non‑diversified or
concentrated loan portfolios; (v) financial losses associated with
investment activities, especially when financial services companies are
exposed to financial leverage; (vi) the risk that any financial
services company experiences substantial declines in the valuations of its
assets, takes action to raise capital, or ceases operations;
(vii) the risk that a market shock or other unexpected market,
economic, political, regulatory, or other event might lead to a sudden
decline in the values of most or all companies in the financial services
sector; (viii) events leading to limited liquidity, defaults,
non‑performance or other adverse developments that affect financial
institutions or the financial services industry generally, or concerns or
rumors about any events of these kinds or other similar risks, leading to
market-wide liquidity problems; and (ix) the interconnectedness or
interdependence among financial services companies, including the risk
that the financial distress or failure of one financial services company
may materially and adversely affect a number of other financial services
companies. |
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
• |
|
investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an |
-16-
|
investment
company might negatively affect the value of its shares. The Fund must pay
its pro rata portion of an investment company’s fees and expenses. To the
extent the Adviser determines to invest Fund assets in other investment
companies, the Adviser will have an incentive to invest in other
DoubleLine funds over investment companies sponsored or managed by others
and to maintain such investments once made due to its own financial
interest in those products and other business
considerations. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of that financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral relating to a loan; (v) there may be limited
public information available regarding the loan and the relevant
borrower(s); (vi) the use of a particular interest rate benchmark may
limit the Fund’s ability to achieve a net return to shareholders that
consistently approximates the average published Prime Rate of U.S. banks;
(vii) the prices of certain floating rate loans that include a
feature that prevents their interest rates from adjusting if market
interest rates are below a specified minimum level may appreciate less
than other instruments in response to changes in interest rates should
interest rates rise but remain below the applicable minimum level;
(viii) if a borrower fails to comply with various restrictive
covenants that may be found in loan agreements, the borrower may default
in payment of the loan; (ix) if the Fund invests in loans that
contain fewer or less restrictive constraints on the borrower than certain
other types of loans (“covenant-lite” loans), it may have fewer rights
against the borrowers of such loans, including fewer protections against
the possibility of default and fewer remedies in the event of default;
(x) the loan is unsecured; (xi) there is a limited secondary
market; (xii) transactions in loans may settle on a delayed basis,
and the Fund may not receive the proceeds from the sale of a loan for a
substantial period of time after the sale, which may result in sale
proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the Fund. The Fund may invest in loans
directly or indirectly by investing in shares of the DoubleLine Floating
Rate Fund and in either case will be subject to the risks described
above. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other |
-17-
|
investments
at a lower interest rate. During periods of rising interest rates, the
average life of a mortgage-backed security may extend, which may lock in a
below-market interest rate, increase the security’s duration, and reduce
the value of the security. Enforcing rights against the underlying assets
or collateral may be difficult, or the underlying assets or collateral may
be insufficient if the issuer defaults. The values of certain types of
mortgage-backed securities, such as inverse floaters and interest-only and
principal-only securities, may be extremely sensitive to changes in
interest rates and prepayment rates. The Fund may invest in
mortgage-backed securities that are subordinate in their right to receive
payment of interest and repayment of principal to other classes of the
issuer’s securities. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
portfolio
turnover risk: the risk that frequent purchases and sales of
portfolio securities may result in higher Fund expenses and may result in
larger distributions of taxable capital gains to investors as compared to
a fund that trades less
frequently. |
• |
|
real estate
sector risk: the risk that real estate-related investments
may decline in value as a result of factors affecting the real estate
sector, such as the supply of real property in certain markets, changes in
zoning laws, delays in completion of construction, changes in real estate
values, changes in property taxes, levels of occupancy, and local,
regional, and general market conditions. Along with the risks common to
different types of real estate-related investments, real estate investment
trusts (“REITs”), no matter the
type, involve additional risk factors, including poor performance by the
REIT’s manager, adverse changes to the tax laws, and the possible failure
by the REIT to qualify for the favorable tax treatment available to REITs
under the Internal Revenue Code of 1986, as amended, or the exemption from
registration under the Investment Company Act of 1940, as amended. REITs
are not diversified and are heavily dependent on cash flow earned on the
property interests they hold. |
• |
|
restricted
securities risk: the risk that the Fund may be prevented or
limited by law or the terms of an agreement from selling a security (a
“restricted security”). To the
extent that the Fund is permitted to sell a restricted security, there can
be no assurance that a trading market will exist at any particular time,
and the Fund may be unable to dispose of the security promptly at
reasonable prices or at all. The Fund may have to bear the expense of
registering the securities for resale and the risk of substantial delays
in effecting the registration. Also, restricted securities may be
difficult to value because market quotations may not be readily available,
and the values of restricted securities may have significant
volatility. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
collateralized debt obligations, mortgage-backed securities, other types
of asset-backed securities and certain types of structured notes, may
decline in value due to changes in the underlying instruments, indexes,
interest rates or other factors on which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing |
-18-
|
the
Fund’s income and the value of the investment. At a particular point in
time, the Fund may be unable to find qualified buyers for these
securities. Investments in structured notes involve risks including
interest rate risk, credit risk and market
risk. |
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/ or expense limitations (which applied to the
Fund from inception through July 24, 2012), performance would have been
lower. Updated information on the Fund’s investment results can be obtained at
no charge by calling 877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
6.50% |
|
Quarter
ended 12/31/2023 |
Lowest: |
|
-5.50% |
|
Quarter
ended 6/30/2022 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
0.09%.
-19-
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Core Fixed Income
Fund |
|
One Year |
|
Five Years |
|
Ten Years |
|
Since Inception
(June 1,
2010) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
6.43% |
|
|
|
|
1.08% |
|
|
|
|
2.14% |
|
|
|
|
3.44% |
|
Return
After Taxes on Distributions |
|
|
|
4.40% |
|
|
|
|
-0.40% |
|
|
|
|
0.67% |
|
|
|
|
1.84% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
3.76% |
|
|
|
|
0.23% |
|
|
|
|
1.01% |
|
|
|
|
2.00% |
|
Class N |
|
Return
Before Taxes |
|
|
|
6.17% |
|
|
|
|
0.83% |
|
|
|
|
1.88% |
|
|
|
|
3.18% |
|
Class R61 |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
6.57% |
|
|
|
|
1.13% |
|
|
|
|
2.17% |
|
|
|
|
3.46% |
|
Bloomberg U.S. Aggregate Bond
Index (reflects no deduction
for fees, expenses or taxes) |
|
|
|
5.53% |
|
|
|
|
1.10% |
|
|
|
|
1.81% |
|
|
|
|
2.25% |
|
1 |
Class R6
shares were not available for purchase until July 31, 2019. The
performance shown for Class R6 shares prior to that date is that of
the Class I shares of the Fund, another class of the Fund that is
invested in the same portfolio of securities as Class R6 shares.
Annual returns of Class R6 shares would have differed from that shown
for the period prior to July 31, 2019 only to the extent that
Class R6 shares and Class I shares have different
expenses. |
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The
Bloomberg U.S. Aggregate Bond Index represents securities that are
SEC‑registered, taxable, and dollar denominated. This index covers the U.S.
investment-grade fixed rate bond market, with index components for government
and corporate securities, mortgage pass-through securities, and asset-backed
securities. These major sectors are subdivided into more specific indices that
are calculated and reported on a regular basis. It is not possible to invest
directly in an index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience
with
the
Fund |
|
Primary
Title with the
Investment
Adviser |
Jeffrey E. Gundlach |
|
Since the Fund’s
inception in June 2010 |
|
Chief Executive
Officer |
Jeffrey
J. Sherman |
|
Since
September 2016 |
|
Deputy Chief Investment Officer |
Purchase
and Sale of Shares
You
may purchase or redeem Class I, Class N and Class R6 shares on
any business day when the New York Stock Exchange opens for regular trading. You
may purchase or redeem shares by written request via mail (DoubleLine Funds, c/o
U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire
transfer, by telephone at 877‑DLine11 (877‑354‑6311), or through authorized
dealers, brokers, or other service providers (“financial intermediaries”). Telephone
transactions will be permitted unless you decline this privilege on your initial
purchase application. The minimum initial and subsequent investment amounts for
different types of accounts are shown below, although the Fund may reduce or
waive the minimums in some cases.
-20-
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
Class R6
Shares |
|
|
None* |
|
|
|
N/A |
|
|
|
N/A |
|
* |
See
eligibility limitations below. |
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Eligibility for Class R6
Shares. Only authorized dealers, brokers, or other service providers who
have an agreement with the Fund’s distributor to make Class R6 shares
available to their clients who are Class R6 eligible plans or other
eligible investors are authorized to accept, on behalf of the Fund, purchase and
exchange orders and redemption requests for Class R6 shares placed by or on
behalf of Class R6 eligible plans or other eligible investors. In addition,
Class R6 shares may also be purchased directly from the Fund’s transfer
agent by a Class R6 eligible plan if such shares are held in an omnibus
account opened in the plan’s name directly with the Fund’s transfer agent.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-21-
Fund
Summary
DoubleLine
Emerging Markets Fixed Income Fund
Investment
Objective
The
Fund’s investment objective is to seek high total return from current income and
capital appreciation.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I shares
through a broker or other financial intermediary acting as an agent on your
behalf. Such commissions and other fees, if any, are not charged by the
Fund and are not reflected in the fee table or expense example
below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
Management Fees |
|
|
0.75% |
|
|
|
0.75% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.17% |
|
|
|
0.17% |
|
Acquired Fund Fees and Expenses1 |
|
|
0.01% |
|
|
|
0.01% |
|
Total
Annual Fund Operating Expenses |
|
|
0.93% |
|
|
|
1.18% |
|
1 |
“Acquired Fund Fees and Expenses” are
expenses indirectly incurred by the Fund as a result of its investments in
one or more underlying funds, including exchange-traded funds (“ETFs”) and money market funds. Because
these costs are indirect, the Total Annual Fund Operating Expenses in this
fee table will not correlate to the expense ratio in the Fund’s financial
statements, since financial statements only include direct costs of the
Fund and not the indirect costs of investing in the underlying
funds. |
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual
funds.
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would
be:
|
|
|
| |
|
|
Class I |
|
Class N |
1 Year |
|
$95 |
|
$120 |
3 Years |
|
$296 |
|
$375 |
5 Years |
|
$515 |
|
$649 |
10 Years |
|
$1,143 |
|
$1,432 |
-22-
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 49% of the average value of its
portfolio.
Principal
Investment Strategies
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of borrowings for investment purposes) in fixed income
instruments. These fixed income instruments include but are not limited to
securities (including hybrid securities) issued or guaranteed by companies,
financial institutions and government entities in emerging market countries and
other securities bearing fixed or variable interest rates of any maturity. The
Fund will generally invest in at least four emerging market
countries.
An
“emerging market country” is a country that, at the time the Fund invests in the
related fixed income instruments, is classified as an emerging or developing
economy by any supranational organization such as an institution in the World
Bank Group or the United Nations, or an agency thereof, or is considered an
emerging market country for purposes of constructing a major emerging market
securities index.
The
Fund may invest, without limitation, in fixed income instruments of any credit
quality, including those that at the time of investment are unrated or rated BB+
or lower by S&P Global Ratings or Ba1 or lower by Moody’s Investors Service,
Inc. or the equivalent by any other nationally recognized statistical rating
organization. Corporate bonds and certain other fixed income instruments rated
below investment grade, or such instruments that are unrated and determined by
DoubleLine Capital LP (the “Adviser” or
“DoubleLine Capital”) to be of comparable
quality, are high yield, high risk bonds, commonly known as “junk bonds.” The
Fund may invest in hybrid securities relating to emerging market
countries.
The
Fund may invest up to 20% of its net assets in defaulted corporate securities.
The Fund might do so, for example, where the portfolio managers believe the
restructured enterprise valuations or liquidation valuations may exceed current
market values. In addition, the Fund may invest in defaulted sovereign
investments, including, for example, where the portfolio managers believe the
expected debt sustainability of the country is not reflected in current market
valuations. The Fund may invest in derivatives and other instruments, such as
options, swaps (including credit default swaps), futures, structured
investments, foreign currency futures and forward contracts. These practices may
be used to hedge the Fund’s portfolio as well as for investment purposes;
however, such practices sometimes may reduce returns or increase
volatility.
The
Fund may invest in fixed and floating rate loans of any kind (including, among
others, bank loans, assignments, participations, subordinated loans,
debtor‑in‑possession loans, exit facilities, delayed funding loans and revolving
credit facilities) and other securities bearing fixed or variable interest rates
of any maturity.
In
allocating investments among various emerging market countries, the portfolio
managers attempt to analyze internal political, market and economic factors.
These factors may include:
• |
|
foreign
investment regulations; |
• |
|
stability
of exchange rate policy; and |
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
In managing the Fund’s investments, under normal market conditions, the
portfolio managers intend to seek to construct an investment portfolio with a
dollar-weighted average effective duration of no less than two
years
-23-
and
no more than eight years. Duration is a measure of the expected life of a fixed
income instrument that is used to determine the sensitivity of a security’s
price to changes in interest rates. Effective duration is a measure of the
Fund’s portfolio duration adjusted for the anticipated effect of interest rate
changes on bond and mortgage prepayment rates as determined by the Adviser. The
effective duration of the Fund’s investment portfolio may vary materially from
its target range, from time to time, and there is no assurance that the
effective duration of the Fund’s investment portfolio will always be within its
target range.
The
Fund may invest without limit in investments denominated in any currency,
including securities denominated in the local currencies of an emerging market,
but currently expects to invest a substantial amount of its assets in
investments denominated in the U.S. dollar.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including investment companies sponsored or managed by the Adviser or its
related parties. The amount of the Fund’s investment in certain investment
companies may be limited by law or by tax
considerations.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers perceive deterioration in the credit fundamentals of
the issuer, when the portfolio managers believe there are negative macro
geo‑political considerations that may affect the issuer, when the portfolio
managers determine to take advantage of a better investment opportunity, or when
the individual security has reached the portfolio managers’ sell
target.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain
rating |
-24-
|
agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both the
amounts and the types of loans and other financial commitments financial
services companies can make, the interest rates and fees they can charge,
the scope of their activities, the prices they can charge and the amount
of capital they must maintain; (ii) fluctuations, including as a
result of interest rate changes or increased competition, in the
availability and cost of capital funds on which the profitability of
financial services |
-25-
|
companies
is largely dependent; (iii) deterioration of the credit markets;
(iv) credit losses resulting from financial difficulties of
borrowers, especially when financial services companies are exposed to
non‑diversified or concentrated loan portfolios; (v) financial losses
associated with investment activities, especially when financial services
companies are exposed to financial leverage; (vi) the risk that any
financial services company experiences substantial declines in the
valuations of its assets, takes action to raise capital, or ceases
operations; (vii) the risk that a market shock or other unexpected
market, economic, political, regulatory, or other event might lead to a
sudden decline in the values of most or all companies in the financial
services sector; (viii) events leading to limited liquidity,
defaults, non‑performance or other adverse developments that affect
financial institutions or the financial services industry generally, or
concerns or rumors about any events of these kinds or other similar risks,
leading to market-wide liquidity problems; and (ix) the
interconnectedness or interdependence among financial services companies,
including the risk that the financial distress or failure of one financial
services company may materially and adversely affect a number of other
financial services companies. |
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
-26-
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
restricted
securities risk: the risk that the Fund may be prevented or
limited by law or the terms of an agreement from selling a security (a
“restricted security”). To the
extent that the Fund is permitted to sell a restricted security, there can
be no assurance that a trading market will exist at any particular time,
and the Fund may be unable to dispose of the security promptly at
reasonable prices or at all. The Fund may have to bear the expense of
registering the securities for resale and the risk of substantial delays
in effecting the registration. Also, restricted securities may be
difficult to value because market quotations may not be readily available,
and the values of restricted securities may have significant
volatility. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
• |
|
sovereign debt
obligations risk: the risk that investments in debt
obligations of sovereign governments may lose value due to the government
entity’s unwillingness or inability to repay principal and interest when
due in accordance with the terms of the debt or otherwise in a timely
manner. Sovereign governments may default on their debt obligations for a
number of reasons, including social, political, economic and diplomatic
changes in countries issuing sovereign debt. The Fund may have limited (or
no) recourse in the event of a default because bankruptcy, moratorium and
other similar laws applicable to issuers of sovereign debt obligations may
be substantially different from those applicable to private issuers, and
any recourse may be subject to the political climate in the relevant
country. In addition, foreign governmental entities may enjoy various
levels of sovereign immunity, and it may be difficult or impossible to
bring a legal action against a foreign governmental entity or to enforce a
judgment against such an entity. Holders of certain foreign government
debt securities may be requested to participate in the restructuring of
such obligations and to extend further loans to their issuers. There can
be no assurance that the foreign government debt securities in which the
Fund may invest will not be subject to similar restructuring arrangements
or to requests for new credit, which may adversely affect the Fund’s
holdings. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
collateralized debt obligations, mortgage-backed securities, other types
of asset-backed securities and certain types of structured notes, may
decline in value due to changes in the underlying instruments, indexes,
interest rates or other factors on which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
-27-
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
14.80% |
|
Quarter
ended 6/30/2020 |
Lowest: |
|
-15.79% |
|
Quarter
ended 3/31/2020 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
4.86%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Emerging Markets Fixed
Income Fund |
|
One Year |
|
Five Years |
|
Ten Years |
|
Since Inception
(April 6,
2010) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
9.63% |
|
|
|
|
2.10% |
|
|
|
|
3.12% |
|
|
|
|
4.02% |
|
Return
After Taxes on Distributions |
|
|
|
7.12% |
|
|
|
|
0.17% |
|
|
|
|
1.14% |
|
|
|
|
1.97% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
5.62% |
|
|
|
|
0.80% |
|
|
|
|
1.52% |
|
|
|
|
2.23% |
|
Class N |
|
Return
Before Taxes |
|
|
|
9.35% |
|
|
|
|
1.86% |
|
|
|
|
2.87% |
|
|
|
|
3.77% |
|
J.P. Morgan Emerging Markets Bond Global
Diversified Index (reflects no
deduction for fees, expenses or taxes) |
|
|
|
11.09% |
|
|
|
|
1.67% |
|
|
|
|
3.22% |
|
|
|
|
4.21% |
|
-28-
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The J.P.
Morgan Emerging Markets Bond Global Diversified Index is a uniquely-weighted
version of the EMBI Global. It limits the weights of those index countries with
larger debt stocks by only including specified portions of these countries’
eligible current face amounts of debt outstanding. The countries covered in the
EMBI Global Diversified are identical to those covered by EMBI Global. It is not
possible to invest directly in an index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience
with
the
Fund |
|
Primary Title with the
Investment
Adviser |
Luz M. Padilla |
|
Since the Fund’s
inception in April 2010 |
|
Portfolio
Manager |
Su Fei Koo |
|
Since December 2015 |
|
Portfolio
Manager |
Mark
W. Christensen |
|
Since December 2015 |
|
Portfolio
Manager |
Purchase
and Sale of Shares
You
may purchase or redeem Class I and Class N shares on any business day
when the New York Stock Exchange opens for regular trading. You may purchase or
redeem shares by written request via mail (DoubleLine Funds, c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire transfer,
by telephone at 877‑DLine11 (877‑354‑6311), or through authorized dealers,
brokers, or other service providers (“financial
intermediaries”). Telephone transactions will be permitted unless you
decline this privilege on your initial purchase application. The minimum initial
and subsequent investment amounts for different types of accounts are shown
below, although the Fund may reduce or waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and
Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
-29-
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-30-
Fund
Summary
DoubleLine
Low Duration Bond Fund
Investment
Objective
The
Fund’s investment objective is to seek current
income.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I and
Class R6 shares through a broker or other financial
intermediary acting as an agent on your behalf. Such commissions and
other fees, if any, are not charged by the Fund and are not reflected in the fee
table or expense example below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
|
Class R6 |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
|
None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
|
Class R6 |
|
Management Fees |
|
|
0.35% |
|
|
|
0.35% |
|
|
|
0.35% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
|
|
None |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.08% |
|
|
|
0.08% |
|
|
|
0.04% |
|
Acquired Fund Fees and Expenses1 |
|
|
0.01% |
|
|
|
0.01% |
|
|
|
0.01% |
|
Total
Annual Fund Operating Expenses |
|
|
0.44% |
|
|
|
0.69% |
|
|
|
0.40% |
|
1 |
“Acquired Fund Fees and Expenses” are
expenses indirectly incurred by the Fund as a result of its investments in
one or more underlying funds, including exchange-traded funds (“ETFs”) and money market funds. Because
these costs are indirect, the Total Annual Fund Operating Expenses in this
fee table will not correlate to the expense ratio in the Fund’s financial
statements, since financial statements only include direct costs of the
Fund and not the indirect costs of investing in the underlying
funds. |
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds.
-31-
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would
be:
|
|
|
|
|
| |
|
|
Class I |
|
Class N |
|
Class R6 |
1 Year |
|
$45 |
|
$70 |
|
$41 |
3 Years |
|
$141 |
|
$221 |
|
$128 |
5 Years |
|
$246 |
|
$384 |
|
$224 |
10 Years |
|
$555 |
|
$859 |
|
$505 |
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 76% of the average value of its
portfolio.
Principal
Investment Strategies
The
Fund seeks current income by investing principally in debt securities of any
kind. The Fund may invest without limit in mortgage-backed securities of any
maturity or type, including those guaranteed by, or secured by collateral that
is guaranteed by, the United States Government, its agencies, instrumentalities
or sponsored corporations, as well as those of private issuers not subject to
any guarantee. Mortgage-backed securities include, among others, government
mortgage pass-through securities, collateralized mortgage obligations,
multiclass pass-through securities, private mortgage pass-through securities,
stripped mortgage securities (e.g.,
interest-only and principal-only securities) and inverse floaters. The Fund may
also invest in corporate debt obligations; asset-backed securities; foreign
securities (corporate and government, including foreign hybrid securities);
emerging market securities (corporate and government); inflation-indexed bonds;
bank loans and assignments; income-producing securitized products, including
collateralized loan obligations (“CLOs”);
preferred securities; and other instruments bearing fixed or variable interest
rates of any maturity.
DoubleLine
Capital LP (the “Adviser” or “DoubleLine Capital”) will normally seek to
construct an investment portfolio for the Fund with a dollar-weighted average
effective duration of three years or less. Duration is a measure of the expected
life of a fixed income instrument that is used to determine the sensitivity of a
security’s price to changes in interest rates. Effective duration is a measure
of the Fund’s portfolio duration adjusted for the anticipated effect of interest
rate changes on bond and mortgage prepayment rates as determined by the Adviser.
The effective duration of the Fund’s investment portfolio may vary significantly
from time to time, and there is no assurance that the effective duration of the
Fund’s investment portfolio will not exceed three years at any time. The Fund
may invest in individual securities of any maturity or
duration.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal
policy.
Under
normal circumstances, the Fund intends to invest primarily in fixed income and
other income-producing instruments rated investment grade and unrated securities
considered by the Adviser to be of comparable credit quality. The Fund may,
however, invest up to 50% of its total assets in fixed income and other
income-producing instruments rated below investment grade and those that are
unrated but determined by the Adviser to be of comparable credit quality. Those
instruments include high yield, high risk bonds, commonly known as “junk
bonds.”
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Adviser may seek to manage the dollar-weighted average effective duration of
the Fund’s portfolio through the use of derivatives and other instruments
(including, among others, inverse floaters, futures contracts, U.S. Treasury
swaps, interest rate swaps, total return swaps and options, including options on
swap agreements). The Fund may incur costs in implementing duration management
strategies, and there can be no assurance that the Fund will engage in duration
management strategies or that any duration management strategy employed by the
Fund will be successful.
-32-
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. For example, the Fund may use futures
contracts and options on futures contracts, in order to gain efficient long or
short investment exposures as an alternative to cash investments or to hedge
against portfolio exposures; interest rate swaps, to gain indirect long or short
exposures to interest rates, issuers, or currencies, or to hedge against
portfolio exposures; and total return swaps and credit derivatives (such as
credit default swaps), put and call options, and exchange-traded and structured
notes, to take indirect long or short positions on indexes, securities,
currencies, or other indicators of value, or to hedge against portfolio
exposures. The Fund may use derivatives transactions with the purpose or effect
of creating investment leverage.
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of borrowings for investment purposes) in bonds. “Bonds”
include bonds, debt securities and fixed income and income-producing instruments
of any kind issued by governmental or private-sector entities. Most bonds
consist of a security or instrument having one or more of the following
characteristics: a fixed-income security, a security issued at a discount to its
face value, a security that pays interest, whether fixed, floating or variable,
or a security with a stated principal amount that requires repayment of some or
all of that principal amount to the holder of the security. The Adviser
interprets the term bond broadly as an instrument or security evidencing what is
commonly referred to as an IOU rather than evidencing the corporate ownership of
equity unless that equity represents an indirect or derivative interest in one
or more debt securities.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including investment companies sponsored or managed by the Adviser or its
related parties (“other DoubleLine
funds”). The amount of the Fund’s investment in certain investment
companies may be limited by law or by tax
considerations.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell
target.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
• |
|
collateralized
debt obligations risk: the risks of an investment in a
collateralized debt obligation (“CDO”) depend largely on the quality and
type of the collateral and the tranche of the CDO in which the Fund
invests. Normally, collateralized bond obligations, CLOs and other CDOs
are privately offered and sold, and thus are not registered under the
securities laws. As a result, investments in CDOs may be illiquid. In
addition to the risks associated with debt instruments (e.g., interest rate risk and credit
risk), CDOs carry additional risks including, but not limited to:
(i) the possibility that distributions from
collateral |
-33-
|
will
not be adequate to make interest or other payments; (ii) the quality
of the collateral may decline in value or default; (iii) the
possibility that the Fund may invest in CDOs that are subordinate to other
classes of the issuer’s securities; and (iv) the complex structure of
the security may not be fully understood at the time of investment and may
produce disputes with the issuer or unexpected investment
results. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
-34-
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both
the amounts and the types of loans and other financial commitments
financial services companies can make, the interest rates and fees they
can charge, the scope of their activities, the prices they can charge and
the amount of capital they must maintain; (ii) fluctuations,
including as a result of interest rate changes or increased competition,
in the availability and cost of capital funds on which the profitability
of financial services companies is largely dependent;
(iii) deterioration of the credit markets; (iv) credit losses
resulting from financial difficulties of borrowers, especially when
financial services companies are exposed to non‑diversified or
concentrated loan portfolios; (v) financial losses associated with
investment activities, especially when financial services companies are
exposed to financial leverage; (vi) the risk that any financial
services company experiences substantial declines in the valuations of its
assets, takes action to raise capital, or ceases operations;
(vii) the risk that a market shock or other unexpected market,
economic, political, regulatory, or other event might lead to a sudden
decline in the values of most or all companies in the financial services
sector; (viii) events leading to limited liquidity, defaults,
non‑performance or other adverse developments that affect financial
institutions or the financial services industry generally, or concerns or
rumors about any events of these kinds or other similar risks, leading to
market-wide liquidity problems; and (ix) the interconnectedness or
interdependence among financial services companies, including the risk
that the financial distress or failure of one financial services company
may materially and adversely affect a number of other financial services
companies. |
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
-35-
• |
|
investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other DoubleLine funds over investment companies sponsored or managed
by others and to maintain such investments once made due to its own
financial interest in those products and other business
considerations. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of that financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral relating to a loan; (v) there may be limited
public information available regarding the loan and the relevant
borrower(s); (vi) the use of a particular interest rate benchmark may
limit the Fund’s ability to achieve a net return to shareholders that
consistently approximates the average published Prime Rate of U.S. banks;
(vii) the prices of certain floating rate loans that include a
feature that prevents their interest rates from adjusting if market
interest rates are below a specified minimum level may appreciate less
than other instruments in response to changes in interest rates should
interest rates rise but remain below the applicable minimum level;
(viii) if a borrower fails to comply with various restrictive
covenants that may be found in loan agreements, the borrower may default
in payment of the loan; (ix) if the Fund invests in loans that
contain fewer or less restrictive constraints on the borrower than certain
other types of loans (“covenant-lite” loans), it may have fewer rights
against the borrowers of such loans, including fewer protections against
the possibility of default and fewer remedies in the event of default;
(x) the loan is unsecured; (xi) there is a limited secondary
market; (xii) transactions in loans may settle on a delayed basis,
and the Fund may not receive the proceeds from the sale of a loan for a
substantial period of time after the sale, which may result in sale
proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the Fund. The Fund may invest in loans
directly or indirectly by investing in shares of the DoubleLine Floating
Rate Fund and in either case will be subject to the risks described
above. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
-36-
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
real estate
sector risk: the risk that real estate-related investments
may decline in value as a result of factors affecting the real estate
sector, such as the supply of real property in certain markets, changes in
zoning laws, delays in completion of construction, changes in real estate
values, changes in property taxes, levels of occupancy, and local,
regional, and general market conditions. Along with the risks common to
different types of real estate-related investments, real estate investment
trusts (“REITs”), no matter the
type, involve additional risk factors, including poor performance by the
REIT’s manager, adverse changes to the tax laws, and the possible failure
by the REIT to qualify for the favorable tax treatment available to REITs
under the Internal Revenue Code of 1986, as amended, or the exemption from
registration under the Investment Company Act of 1940, as amended. REITs
are not diversified and are heavily dependent on cash flow earned on the
property interests they hold. |
• |
|
restricted
securities risk: the risk that the Fund may be prevented or
limited by law or the terms of an agreement from selling a security (a
“restricted security”). To the
extent that the Fund is permitted to sell a restricted security, there can
be no assurance that a trading market will exist at any particular time,
and the Fund may be unable to dispose of the security promptly at
reasonable prices or at all. The Fund may have to bear the expense of
registering the securities for resale and the risk of substantial delays
in effecting the registration. Also, restricted securities may be
difficult to value because market quotations may not be readily available,
and the values of restricted securities may have significant
volatility. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
CDOs, mortgage-backed securities, other types of asset-backed securities
and certain types of structured notes, may decline in value due to changes
in the underlying instruments, indexes, interest rates or other factors on
which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
-37-
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of two
broad-based securities market indexes. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
4.33% |
|
Quarter
ended 6/30/2020 |
Lowest: |
|
-4.40% |
|
Quarter
ended 3/31/2020 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
2.63%.
-38-
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Low Duration Bond
Fund |
|
One Year |
|
Five Years |
|
Ten Years |
|
Since Inception
(September 30, 2011) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
6.76% |
|
|
|
|
2.25% |
|
|
|
|
2.07% |
|
|
|
|
2.21% |
|
Return
After Taxes on Distributions |
|
|
|
4.80% |
|
|
|
|
1.06% |
|
|
|
|
0.94% |
|
|
|
|
1.14% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
3.96% |
|
|
|
|
1.21% |
|
|
|
|
1.08% |
|
|
|
|
1.23% |
|
Class N |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
6.50% |
|
|
|
|
2.00% |
|
|
|
|
1.82% |
|
|
|
|
1.95% |
|
Class R61 |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
6.80% |
|
|
|
|
2.28% |
|
|
|
|
2.08% |
|
|
|
|
2.22% |
|
ICE
BofA 1‑3 Year U.S. Treasury Index
(reflects no deduction for fees, expenses or
taxes) |
|
|
|
4.26% |
|
|
|
|
1.30% |
|
|
|
|
1.05% |
|
|
|
|
0.94% |
|
Bloomberg U.S. Aggregate 1‑3 Years Index
(reflects no deduction for fees,
expenses or taxes) |
|
|
|
4.65% |
|
|
|
|
1.46% |
|
|
|
|
1.26% |
|
|
|
|
1.21% |
|
1 |
Class R6
shares were not available for purchase until July 31, 2019. The
performance shown for Class R6 shares prior to that date is that of
the Class I shares of the Fund, another class of the Fund that is
invested in the same portfolio of securities as Class R6 shares.
Annual returns of Class R6 shares would have differed from that shown
for the period prior to July 31, 2019 only to the extent that
Class R6 shares and Class I shares have different
expenses. |
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary.
The ICE
BofA 1‑3 Year U.S. Treasury Index is an unmanaged index that tracks the
performance of the direct sovereign debt of the U.S. Government having a
maturity of at least one year and less than three years. Beginning in July 2022,
transaction costs were incorporated into the calculation of total return for ICE
fixed income indices. The Bloomberg U.S. Aggregate 1‑3 Years Index is an
unmanaged index that tracks the performance of investment grade, dollar
denominated, fixed rate, taxable bonds having a maturity of at least one year
and less than three years. It is not possible to invest directly in an
index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience
with
the
Fund |
|
Primary
Title with the
Investment
Adviser |
Luz M. Padilla |
|
Since the Fund’s
inception in September 2011 |
|
Portfolio
Manager |
Robert Cohen |
|
Since September
2016 |
|
Director of Global Developed Credit |
Jeffrey E. Gundlach |
|
Since July 2019 |
|
Chief Executive
Officer |
Jeffrey
J. Sherman |
|
Since
July 2019 |
|
Deputy
Chief Investment Officer |
-39-
Purchase
and Sale of Shares
You
may purchase or redeem Class I, Class N and Class R6 shares on
any business day when the New York Stock Exchange opens for regular trading. You
may purchase or redeem shares by written request via mail (DoubleLine Funds, c/o
U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire
transfer, by telephone at 877‑DLine11 (877‑354‑6311), or through authorized
dealers, brokers, or other service providers (“financial intermediaries”). Telephone
transactions will be permitted unless you decline this privilege on your initial
purchase application. The minimum initial and subsequent investment amounts for
different types of accounts are shown below, although the Fund may reduce or
waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts
and
Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
Class R6
Shares |
|
|
None* |
|
|
|
N/A |
|
|
|
N/A |
|
* |
See
eligibility limitations below. |
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Eligibility for Class R6
Shares. Only authorized dealers, brokers, or other service providers who
have an agreement with the Fund’s distributor to make Class R6 shares
available to their clients who are Class R6 eligible plans or other
eligible investors are authorized to accept, on behalf of the Fund, purchase and
exchange orders and redemption requests for Class R6 shares placed by or on
behalf of Class R6 eligible plans or other eligible investors. In addition,
Class R6 shares may also be purchased directly from the Fund’s transfer
agent by a Class R6 eligible plan if such shares are held in an omnibus
account opened in the plan’s name directly with the Fund’s transfer agent.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-40-
Fund
Summary
DoubleLine
Floating Rate Fund
Investment
Objective
The
Fund’s investment objective is to seek a high level of current
income.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I shares
through a broker or other financial intermediary acting as an agent on your
behalf. Such commissions and other fees, if any, are not charged by the
Fund and are not reflected in the fee table or expense example
below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
Redemption Fee (as a percentage of amount
redeemed on shares held for 90 days or less) |
|
1.00% |
|
1.00% |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
Management Fees |
|
|
0.50% |
|
|
|
0.50% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.24% |
|
|
|
0.24% |
|
Acquired Fund Fees and Expenses1 |
|
|
0.01% |
|
|
|
0.01% |
|
Total
Annual Fund Operating Expenses |
|
|
0.75% |
|
|
|
1.00% |
|
1 |
“Acquired Fund Fees and Expenses” are
expenses indirectly incurred by the Fund as a result of its investments in
one or more underlying funds, including exchange-traded funds (“ETFs”) and money market funds. Because
these costs are indirect, the Total Annual Fund Operating Expenses in this
fee table will not correlate to the expense ratio in the Fund’s financial
statements, since financial statements only include direct costs of the
Fund and not the indirect costs of investing in the underlying
funds. |
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual
funds.
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would
be:
|
|
|
| |
|
|
Class I |
|
Class N |
1 Year |
|
$77 |
|
$102 |
3 Years |
|
$240 |
|
$318 |
5 Years |
|
$417 |
|
$552 |
10 Years |
|
$930 |
|
$1,225 |
-41-
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 50% of the average value of its
portfolio.
Principal
Investment Strategies
The
Fund invests primarily in floating rate loans and other floating rate
investments.
Floating
rate loans are typically debt obligations with interest rates that adjust or
“float” periodically, often on a daily, monthly, quarterly, or semiannual basis
by reference to a base lending rate plus a premium. Certain floating rate loans
are secured by specific collateral of the borrower and are senior to most other
securities of the borrower (e.g., common
stock and other debt instruments) in the event of bankruptcy. Other floating
rate loans may be unsecured obligations of the borrower. A floating rate loan
may be structured and administered by a financial institution that acts as the
agent of the lenders participating in the floating rate loan. Such floating rate
loans may be acquired through the agent or from the borrower, as an assignment
from another lender who holds a direct interest in the floating rate loan, or as
a participation interest in another lender’s portion of the floating rate
loan.
Floating
rate investments include, without limitation, bank loans, including assignments
and participations; floating rate debt securities; inflation-indexed securities;
certain mortgage- and asset-backed securities, and collateralized debt
obligations (“CDOs”), including
collateralized loan obligations (“CLOs”)
and collateralized mortgage obligations, backed by floating rate instruments or
structured as floating rate investments and having, in the judgment of
DoubleLine Capital LP (the “Adviser” or
“DoubleLine Capital”), characteristics
similar to those of other floating rate investments; adjustable rate mortgages;
floaters; inverse floaters; money market securities of all types; repurchase
agreements; shares of money market and short-term bond funds; and floating rate
loans of any kind (including, among others, subordinated loans,
debtor‑in‑possession loans, exit facilities, delayed funding loans and revolving
credit facilities).
The
Fund normally will invest at least 80% of its net assets (plus the amount of
borrowings for investment purposes) in floating rate loans and other floating
rate investments. For purposes of this policy, any security or instrument will
be considered a floating rate investment if it has a maturity of six months or
less even if it pays a rate of interest rate that does not reset or adjust prior
to maturity. The Fund’s investments in derivatives and other synthetic
instruments that provide exposure comparable, in the judgment of the Adviser, to
floating rate investments will be counted toward satisfaction of this 80% policy
as well.
The
Fund may invest in securities or instruments of any credit quality. The Fund
expects that many or all of the Fund’s investments will be rated below
investment grade or unrated but of comparable credit quality. Corporate bonds
and other fixed income instruments, including certain floating rate investments,
rated below investment grade, or such instruments that are unrated and
determined by the Adviser to be of comparable quality, are high yield, high risk
securities, commonly known as “junk bonds.” The Fund may invest in securities of
stressed, distressed, and defaulted issuers (including issuers involved in
bankruptcy proceedings, reorganizations, financial restructurings, or otherwise
experiencing financial hardship). Such investments entail high risk and have
speculative characteristics.
Subject
to the Fund’s policy to invest at least 80% of its net assets in floating rate
loans and other floating rate investments, the Fund may invest any portion of
its assets in bonds, debentures, notes and other debt instruments, preferred
securities, money market securities, investment-grade debt securities,
repurchase agreements, and any security or instrument bearing a fixed, floating
or adjustable rate of interest, including by investing in other investment
companies, ETFs, and domestic or foreign private investment vehicles, including
investment companies sponsored or managed by the Adviser or its related parties.
The amount of the Fund’s investment in certain investment companies may be
limited by law or by tax considerations.
The
Fund may invest in obligations of corporate and governmental issuers of any
maturity. The Fund may invest in foreign investments, including obligations of
issuers in emerging markets, without
limit.
The
Fund’s investments in loans may include loans issued in an offering that has
been oversubscribed. The Fund may be able to sell such investments at a gain
shortly after those investments are made. If the Fund seeks to take advantage of
such opportunities, it may lead to higher levels of portfolio turnover,
increased transaction costs and greater amounts of taxable distributions to
shareholders. There can be no assurance that the Adviser will be able to
identify such opportunities successfully or sell any investments at a
gain.
-42-
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Fund may enter into derivatives transactions and other instruments of any
kind for duration management purposes, hedging purposes or otherwise to gain, or
reduce, long or short exposure to one or more asset classes or issuers. The Fund
also may use derivatives transactions with the purpose or effect of creating
investment leverage.
The
Fund’s portfolio managers may consider a wide variety of factors in purchasing
and selling investments for the Fund, including, without limitation, liquidity
of the investment, fundamental analysis of the issuer, the credit quality of the
issuer and any collateral securing the investment, the issuer’s management,
capital structure, leverage, and operational performance, and the business
outlook for the industry of the issuer. The Fund also may consider available
credit ratings. Although the Fund’s portfolio managers may review credit ratings
in making investment decisions, they typically perform their own investment
analysis and generally do not rely upon the independent credit rating agencies
in making investment decisions.
Proceeds
from the sale of a loan may not be available to the Fund for a substantial
period of time after the sale. As a result, it is possible that, during a period
of substantial shareholder redemptions, proceeds from sales of loans by the Fund
will not be available to the Fund on a timely basis for payment to redeeming
shareholders. The Fund might as a result incur significant borrowing or other
expenses, be forced to sell other securities with shorter settlement periods at
unfavorable times or prices, or be forced to delay payment of redemption
proceeds beyond the customary period.
Portfolio
securities may be sold at any time. By way of example, the Fund’s portfolio
managers may sell a Fund investment in order to take advantage of what the
portfolio managers consider to be a better investment opportunity, when the
portfolio managers believe the investment no longer represents a relatively
attractive investment opportunity, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
investment has reached the portfolio managers’ sell
target.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
• |
|
collateralized
debt obligations risk: the risks of an investment in a CDO
depend largely on the quality and type of the collateral and the tranche
of the CDO in which the Fund invests. Normally, collateralized bond
obligations, CLOs and other CDOs are privately offered and sold, and thus
are not registered under the securities laws. As a result, investments in
CDOs may be illiquid. In addition to the risks associated with debt
instruments (e.g., interest rate
risk and credit risk), CDOs carry additional risks including, but not
limited to: (i) the possibility that distributions from collateral
will not be adequate to make interest or other payments; (ii) the
quality of the collateral may decline in value or default; (iii) the
possibility that the Fund may invest in CDOs that are subordinate to other
classes of the issuer’s securities; and (iv) the complex structure of
the security may not be fully understood at the time of investment and may
produce disputes with the issuer or unexpected investment
results. |
-43-
• |
|
confidential
information access risk: the risk that the intentional or
unintentional receipt of material, non‑public information (“Confidential Information”) by the Adviser
could limit the Fund’s ability to sell certain investments held by the
Fund or pursue certain investment opportunities on behalf of the Fund,
potentially for a substantial period of time. Also, certain issuers of
floating rate loans or other investments may not have any publicly traded
securities (“Private Issuers”) and
may offer private information pursuant to confidentiality agreements or
similar arrangements. The Adviser may access such private information,
while recognizing that the receipt of that information could potentially
limit the Fund’s ability to trade in certain securities, including if the
Private Issuer later issues publicly traded securities. In addition, in
circumstances when the Adviser declines to receive Confidential
Information from issuers of floating rate loans or other investments, the
Fund may be disadvantaged in comparison to other investors, including with
respect to evaluating the issuer and the price the Fund would pay or
receive when it buys or sells those investments, and the Fund may not take
advantage of investment opportunities that it otherwise might have if it
had received such Confidential Information. In managing the Fund, the
Adviser may seek to avoid the receipt of Confidential Information about
the issuers of floating rate loans or other investments being considered
for acquisition by the Fund or held in the Fund’s portfolio if the receipt
of the Confidential Information would restrict one or more of the
Adviser’s clients, including, potentially, the Fund, from trading in
securities they hold or in which they may
invest. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
-44-
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both
the amounts and the types of loans and other financial commitments
financial services companies can make, the interest rates and fees they
can charge, the scope of their activities, the prices they can charge and
the amount of capital they must maintain; (ii) fluctuations,
including as a result of interest rate changes or increased competition,
in the availability and cost of capital funds on which the profitability
of financial services companies is largely dependent;
(iii) deterioration of the credit markets; (iv) credit losses
resulting from financial difficulties of borrowers, especially when
financial services companies are exposed to non‑diversified or
concentrated loan portfolios; (v) financial losses associated with
investment activities, especially when financial services companies are
exposed to financial leverage; (vi) the risk that any financial
services company experiences substantial declines in the valuations of its
assets, takes action to raise capital, or ceases operations;
(vii) the risk that a market shock or other unexpected market,
economic, political, regulatory, or other event might lead to a sudden
decline in the values of most or all companies in the financial services
sector; (viii) events leading to limited liquidity, defaults,
non‑performance or other adverse developments that affect financial
institutions or the financial services industry generally, or concerns or
rumors about any events of these kinds or other similar risks, leading to
market-wide liquidity problems; and (ix) the interconnectedness or
interdependence among financial services companies, including the risk
that the financial distress or failure of one financial services company
may materially and adversely affect a number of other financial services
companies. |
• |
|
focused
investment risk: the risk that a fund that invests a
substantial portion of its assets in a particular market, industry,
sector, group of industries or sectors, country, region, group of
countries or asset class is, relative to a fund that invests in a more
diverse investment portfolio, more susceptible to any single economic,
market, political, regulatory or other occurrence. This is because, for
example, issuers in a particular market, industry, region, sector or asset
class may react similarly to specific economic, market, regulatory,
political or other developments. The particular markets, industries,
regions, sectors or asset classes in which the Fund may focus its
investments may change over time and the Fund may alter its focus at
inopportune times. |
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
-45-
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
• |
|
investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other investment vehicles sponsored or advised by the Adviser or a
related party of the Adviser over investment companies sponsored or
managed by others and to maintain such investments once made due to its
own financial interest in those products and other business
considerations. |
• |
|
large
shareholder risk: the risk that certain account holders,
including the Adviser or funds or accounts over which the Adviser (or
related parties of the Adviser) has investment discretion, may from time
to time own or control a significant percentage of the Fund’s shares. The
Fund is subject to the risk that a redemption by those shareholders of all
or a portion of their Fund shares, including as a result of an asset
allocation decision made by the Adviser (or related parties of the
Adviser), will adversely affect the Fund’s performance if it is forced to
sell portfolio securities or invest cash when the Adviser would not
otherwise choose to do so. Redemptions of a large number of shares may
affect the liquidity of the Fund’s portfolio, increase the Fund’s
transaction costs, and accelerate the realization of taxable income and/or
gains to shareholders. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of that financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral |
-46-
|
relating
to a loan; (v) there may be limited public information available
regarding the loan and the relevant borrower(s); (vi) the use of a
particular interest rate benchmark may limit the Fund’s ability to achieve
a net return to shareholders that consistently approximates the average
published Prime Rate of U.S. banks; (vii) the prices of certain
floating rate loans that include a feature that prevents their interest
rates from adjusting if market interest rates are below a specified
minimum level may appreciate less than other instruments in response to
changes in interest rates should interest rates rise but remain below the
applicable minimum level; (viii) if a borrower fails to comply with
various restrictive covenants that may be found in loan agreements, the
borrower may default in payment of the loan; (ix) if the Fund invests
in loans that contain fewer or less restrictive constraints on the
borrower than certain other types of loans (“covenant-lite” loans), it may
have fewer rights against the borrowers of such loans, including fewer
protections against the possibility of default and fewer remedies in the
event of default; (x) the loan is unsecured; (xi) there is a
limited secondary market; (xii) transactions in loans may settle on a
delayed basis, and the Fund may not receive the proceeds from the sale of
a loan for a substantial period of time after the sale, which may result
in sale proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the
Fund. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
In such an event, the Fund may find it difficult to sell loans it holds,
and, for loans it is able to sell in such circumstances, the trade
settlement period may be longer than anticipated. Recently, there have
been inflationary price movements, which have caused the fixed income
securities markets to experience heightened levels of interest rate
volatility and liquidity risk. Please see “debt securities risks —
interest rate risk” herein for more
information. |
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
-47-
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
CDOs, mortgage-backed securities, other types of asset-backed securities
and certain types of structured notes, may decline in value due to changes
in the underlying instruments, indexes, interest rates or other factors on
which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
-48-
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
7.88% |
|
Quarter
ended 6/30/2020 |
Lowest: |
|
-10.91% |
|
Quarter
ended 3/31/2020 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
3.99%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Floating Rate
Fund |
|
One Year |
|
Five Years |
|
Ten Years |
|
Since Inception
(February 1, 2013) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
10.77% |
|
|
|
|
4.37% |
|
|
|
|
3.39% |
|
|
|
|
3.40% |
|
Return
After Taxes on Distributions |
|
|
|
7.03% |
|
|
|
|
2.17% |
|
|
|
|
1.47% |
|
|
|
|
1.58% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
6.28% |
|
|
|
|
2.38% |
|
|
|
|
1.73% |
|
|
|
|
1.78% |
|
Class N |
|
Return
Before Taxes |
|
|
|
10.46% |
|
|
|
|
4.11% |
|
|
|
|
3.15% |
|
|
|
|
3.17% |
|
Morningstar LSTA US Leveraged Loan TR USD
Index (reflects no deduction
for fees, expenses or taxes) |
|
|
|
13.32% |
|
|
|
|
5.80% |
|
|
|
|
4.42% |
|
|
|
|
4.43% |
|
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The
Morningstar LSTA US Leveraged Loan TR USD Index (formerly the S&P/LSTA
Leveraged Loan Index) tracks the market-weighted performance of institutional
weighted loans based on market weightings, spreads and interest payments. It is
not possible to invest directly in an index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience
with
the
Fund |
|
Primary Title with the Investment
Adviser |
Robert Cohen |
|
Since the Fund’s
inception in February 2013 |
|
Director of Global
Developed Credit |
Philip
Kenney |
|
Since
July 2018 |
|
Director
of Corporate Research |
-49-
Purchase
and Sale of Shares
You
may purchase or redeem Class I and Class N shares on any business day
when the New York Stock Exchange opens for regular trading. You may purchase or
redeem shares by written request via mail (DoubleLine Funds, c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire transfer,
by telephone at 877‑DLine11 (877‑354‑6311), or through authorized dealers,
brokers, or other service providers (“financial
intermediaries”). Telephone transactions will be permitted unless you
decline this privilege on your initial purchase application. The minimum initial
and subsequent investment amounts for different types of accounts are shown
below, although the Fund may reduce or waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and
Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-50-
Fund
Summary
DoubleLine
Flexible Income Fund
Investment
Objective
The
Fund’s investment objective is to seek long-term total return while striving to
generate current income.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I and
Class R6 shares through a broker or other financial
intermediary acting as an agent on your behalf. Such commissions and
other fees, if any, are not charged by the Fund and are not reflected in the fee
table or expense example below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
|
Class R6 |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
|
None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
|
Class R6 |
|
Management Fees |
|
|
0.62% |
|
|
|
0.62% |
|
|
|
0.62% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
|
|
None |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.12% |
|
|
|
0.12% |
|
|
|
0.08% |
|
Total
Annual Fund Operating Expenses |
|
|
0.74% |
|
|
|
0.99% |
|
|
|
0.70% |
|
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual
funds.
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would
be:
|
|
|
|
|
| |
|
|
Class I |
|
Class N |
|
Class R6 |
1 Year |
|
$76 |
|
$101 |
|
$72 |
3 Years |
|
$237 |
|
$315 |
|
$224 |
5 Years |
|
$411 |
|
$547 |
|
$390 |
10 Years |
|
$918 |
|
$1,213 |
|
$871 |
-51-
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 32% of the average value of its
portfolio.
Principal
Investment Strategies
The
Fund seeks to achieve its investment objective by active asset allocation among
market sectors in the fixed income universe. These sectors may include, for
example, U.S. Government securities, corporate debt securities, mortgage- and
other asset-backed securities, foreign debt securities, including emerging
market debt securities, loans, and high yield debt securities. The Adviser has
broad flexibility to use various investment strategies and to invest in a wide
variety of fixed income instruments that the Adviser believes offer the
potential for current income, capital appreciation, or both. The Fund is not
constrained by management against any
index.
The
Adviser expects to allocate the Fund’s assets in response to changing market,
financial, economic, and political factors and events that the Fund’s portfolio
managers believe may affect the values of the Fund’s investments. The allocation
of the Fund’s assets to different sectors and issuers will change over time,
sometimes rapidly, and the Fund may invest without limit in a single sector or a
small number of sectors of the fixed income
universe.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal
policy.
The
Fund may invest in securities of any credit quality. The Fund may invest without
limit in securities rated below investment grade (securities rated Ba1 or below
by Moody’s Investors Service, Inc. (“Moody’s”) and BB+ or below by S&P Global
Ratings (“S&P”) and Fitch Ratings,
Inc. (“Fitch”)) or unrated securities
judged by the Adviser to be of comparable
quality.
Corporate
bonds and certain other fixed income instruments rated below investment grade,
or such instruments that are unrated and determined by the Adviser to be of
comparable quality, are high yield, high risk bonds, commonly known as “junk
bonds.”
The
Fund may invest without limit in foreign securities, including emerging market
securities and securities denominated in foreign currencies, including the local
currencies of emerging markets.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Adviser seeks to manage the Fund’s duration based on the Adviser’s view of,
among other things, future interest rates and market conditions. While the
Adviser retains broad discretion to modify the Fund’s duration within a wide
range, the Adviser will normally seek to construct an investment portfolio for
the Fund with a dollar-weighted average effective duration of zero or greater.
Duration is a measure of the expected life of a fixed income instrument that is
used to determine the sensitivity of a security’s price to changes in interest
rates. Effective duration is a measure of the Fund’s portfolio duration adjusted
for the anticipated effect of interest rate changes on bond and mortgage
prepayment rates as determined by the Adviser and may vary significantly from
time to time.
Under
normal circumstances, the Fund intends to invest significantly in instruments
the Adviser expects to produce current income. These might include, by way of
example, (i) securities or other income-producing instruments issued or
guaranteed by the U.S. Government, its agencies, instrumentalities or sponsored
corporations (including inflation-protected securities); (ii) corporate
obligations; (iii) mortgage-backed securities (including commercial and
residential mortgage-backed securities) and other asset-backed securities,
collateralized mortgage obligations, government mortgage pass-through
securities, multiclass pass-through securities, private mortgage pass-through
securities, stripped mortgage securities (e.g., interest-only and principal-only
securities), and inverse floaters; (iv) collateralized debt obligations
(“CDOs”), including collateralized loan
obligations (“CLOs”); (v) foreign
securities (corporate and government, including foreign hybrid securities),
including emerging market securities; (vi) fixed and floating rate loans of
any kind (including, among others, bank loans, assignments, participations,
senior loans, second lien or other subordinated or unsecured fixed or floating
rate loans, debtor‑in‑possession loans, exit facilities, delayed funding loans
and revolving credit facilities), which may take the form of loans that contain
fewer
-52-
or
less restrictive constraints on the borrower than certain other types of loans
(“covenant-lite” loans); (vii) municipal securities and other debt obligations
issued by states, local governments, and government-sponsored entities,
including their agencies, authorities, and instrumentalities;
(viii) inflation-indexed bonds; (ix) convertible securities;
(x) preferred securities; (xi) real estate investment trust (“REIT”) securities; (xii) distressed and
defaulted securities; (xiii) payment‑in‑kind bonds; (xiv) zero‑coupon
bonds; (xv) custodial receipts, cash and cash equivalents;
(xvi) short-term, high quality investments, including, for example,
commercial paper, bankers’ acceptances, certificates of deposit, bank time
deposits, repurchase agreements, and investments in money market mutual funds or
similar pooled investments; and (xvii) other instruments bearing fixed,
floating, or variable interest rates of any maturity. The Fund may invest in any
level of the capital structure of an issuer of mortgage-backed or asset-backed
securities, including the equity or “first loss”
tranche.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. The Fund also may use derivatives
transactions with the purpose or effect of creating investment leverage. The
Adviser may seek to manage the dollar-weighted average effective duration of the
Fund’s portfolio through the use of derivatives and other instruments
(including, among others, inverse floaters, futures contracts, U.S. Treasury
swaps, interest rate swaps, total return swaps and options, including options on
swap agreements). The Fund may incur costs in implementing duration management
strategies, and there can be no assurance that the Fund will engage in duration
management strategies or that any duration management strategy employed by the
Fund will be successful. The Fund may enter into currency-related transactions,
including forward exchange contracts and futures contracts. The Fund may, but
will not necessarily, enter into foreign currency exchange transactions to hedge
against currency exposure in its
portfolio.
The
Fund may implement short positions, including through the use of derivative
instruments, such as swaps or futures, or through short sales of instruments
that are eligible investments for the Fund. For example, the Fund may enter into
a futures contract pursuant to which it agrees to sell an asset (that it does
not currently own) at a specified price in the future in anticipation that the
asset’s value will decrease between the time the position is established and the
agreed date of sale.
The
Fund may purchase or sell securities on a when-issued, delayed delivery or
forward commitment basis and may engage in short sales, either to earn
additional return or to hedge existing investments. The Fund may seek to obtain
market exposure to the securities in which it primarily invests by entering into
a series of purchase and sale contracts or by using other investment techniques
(such as buy backs or dollar rolls), which may create investment
leverage.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
exchange-traded funds (“ETFs”), including
other DoubleLine funds. The amount of the Fund’s investment in certain
investment companies may be limited by law or by tax
considerations.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell
target.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
-53-
• |
|
asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
• |
|
cash position
risk: the risk that to the extent that the Fund
holds assets in cash, cash equivalents, and other short-term investments,
the ability of the Fund to meet its objective may be
limited. |
• |
|
collateralized
debt obligations risk: the risks of an investment in a CDO
depend largely on the quality and type of the collateral and the tranche
of the CDO in which the Fund invests. Normally, collateralized bond
obligations (“CBOs”), CLOs and
other CDOs are privately offered and sold, and thus are not registered
under the securities laws. As a result, investments in CDOs may be
illiquid. In addition to the risks associated with debt instruments (e.g., interest rate risk and credit
risk), CDOs carry additional risks including, but not limited to:
(i) the possibility that distributions from collateral will not be
adequate to make interest or other payments; (ii) the quality of the
collateral may decline in value or default; (iii) the possibility
that the Fund may invest in CDOs that are subordinate to other classes of
the issuer’s securities; and (iv) the complex structure of the
security may not be fully understood at the time of investment and may
produce disputes with the issuer or unexpected investment
results. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates
from |
-54-
|
historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both
the amounts and the types of loans and other financial commitments
financial services companies can make, the interest rates and fees they
can charge, the scope of their activities, the prices they can charge and
the amount of capital they must maintain; (ii) fluctuations,
including as a result of interest rate changes or increased competition,
in the availability and cost of capital funds on which the profitability
of financial services companies is largely dependent;
(iii) deterioration of the credit markets; (iv) credit losses
resulting from financial difficulties of borrowers, especially when
financial services companies are exposed to non‑diversified or
concentrated loan portfolios; (v) financial losses associated with
investment activities, especially when financial services companies are
exposed to financial leverage; (vi) the risk that any financial
services company experiences substantial declines in the valuations of its
assets, takes action to raise capital, or ceases operations;
(vii) the risk that a market shock or other unexpected market,
economic, political, regulatory, or other event might lead to a sudden
decline in the values of most or all companies in the financial services
sector; (viii) events leading to limited liquidity, defaults,
non‑performance or other adverse developments that affect financial
institutions or the financial services industry generally, or concerns or
rumors about any events of these kinds or other similar risks, leading to
market-wide liquidity problems; and (ix) the interconnectedness or
interdependence among financial services companies, including the risk
that the financial distress or failure of one financial services company
may materially and adversely affect a number of other financial services
companies. |
• |
|
focused
investment risk: the risk that a fund that invests a
substantial portion of its assets in a particular market, industry,
sector, group of industries or sectors, country, region, group of
countries or asset class is, relative to a fund that invests in a more
diverse investment portfolio, more susceptible to any single economic,
market, political, regulatory or other occurrence. This is because, for
example, issuers in a particular market, industry, region, sector or asset
class may react similarly to specific economic, market, regulatory,
political or other developments. The particular markets, industries,
regions, sectors or asset classes in which the Fund may focus its
investments may change over time and the Fund may alter its focus at
inopportune times. |
-55-
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
• |
|
investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other DoubleLine funds over investment companies sponsored or managed
by others and to maintain such investments once made due to its own
financial interest in those products and other business
considerations. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of that financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral relating to a loan; (v) there may be limited
public information available regarding the loan and the relevant
borrower(s); (vi) the use of a particular interest rate benchmark may
limit the Fund’s ability to achieve a net return to shareholders that
consistently approximates the average published Prime Rate of U.S. banks;
(vii) the prices of certain floating rate loans that include a
feature that prevents their interest rates from adjusting if market
interest rates are below a specified minimum level may appreciate less
than other instruments in response to changes in interest rates should
interest rates rise but remain below the applicable minimum level;
(viii) if a borrower fails to comply with various restrictive
covenants |
-56-
|
that
may be found in loan agreements, the borrower may default in payment of
the loan; (ix) if the Fund invests in loans that contain fewer or
less restrictive constraints on the borrower than certain other types of
loans (“covenant-lite” loans), it may have fewer rights against the
borrowers of such loans, including fewer protections against the
possibility of default and fewer remedies in the event of default;
(x) the loan is unsecured; (xi) there is a limited secondary
market; (xii) transactions in loans may settle on a delayed basis,
and the Fund may not receive the proceeds from the sale of a loan for a
substantial period of time after the sale, which may result in sale
proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the Fund. The Fund may invest in loans
directly or indirectly by investing in shares of the DoubleLine Floating
Rate Fund and in either case will be subject to the risks described
above. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
real estate
sector risk: the risk that real estate-related investments
may decline in value as a result of factors affecting the real estate
sector, such as the supply of real property in certain markets, changes in
zoning laws, delays in completion of construction, changes in real estate
values, changes in property taxes, levels of occupancy, and local,
regional, and general market conditions. Equity REITs, which invest
primarily in direct fee ownership or leasehold ownership of real property
and derive most of their income from rents, are generally affected by
changes in the values of and incomes from the properties they own.
Mortgage REITs invest mostly in mortgages on real estate, which may
secure, for example, construction, development or long-term loans, and the
main source of their income is mortgage interest payments. Mortgage REITs
may be affected by the credit quality of the mortgage loans they hold. A
hybrid REIT combines the characteristics of equity REITs and mortgage
REITs, generally by holding both ownership interests and mortgage
interests in real estate, and thus may be subject to risks associated with
both real estate ownership and mortgage-related investments. Along with
the risks common to different types of real estate-related investments,
REITs, no matter the type, involve additional risk factors, including poor
performance by the REIT’s manager, adverse changes to the tax laws, and
the possible failure by the REIT to qualify for the favorable tax
treatment available to REITs under the Internal Revenue Code of 1986, as
amended, or the exemption from registration under the Investment Company
Act of 1940, as amended. REITs are not diversified and are heavily
dependent on cash flow earned on the property interests they
hold. |
-57-
• |
|
restricted
securities risk: the risk that the Fund may be prevented or
limited by law or the terms of an agreement from selling a security (a
“restricted security”). To the
extent that the Fund is permitted to sell a restricted security, there can
be no assurance that a trading market will exist at any particular time,
and the Fund may be unable to dispose of the security promptly at
reasonable prices or at all. The Fund may have to bear the expense of
registering the securities for resale and the risk of substantial delays
in effecting the registration. Also, restricted securities may be
difficult to value because market quotations may not be readily available,
and the values of restricted securities may have significant
volatility. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
• |
|
short position
risk: the risk that an increase in the value of an
instrument, index or interest rate with respect to which the Fund has
established a short position will result in a loss to the
Fund. |
• |
|
sovereign debt
obligations risk: the risk that investments in debt
obligations of sovereign governments may lose value due to the government
entity’s unwillingness or inability to repay principal and interest when
due in accordance with the terms of the debt or otherwise in a timely
manner. Sovereign governments may default on their debt obligations for a
number of reasons, including social, political, economic and diplomatic
changes in countries issuing sovereign debt. The Fund may have limited (or
no) recourse in the event of a default because bankruptcy, moratorium and
other similar laws applicable to issuers of sovereign debt obligations may
be substantially different from those applicable to private issuers, and
any recourse may be subject to the political climate in the relevant
country. In addition, foreign governmental entities may enjoy various
levels of sovereign immunity, and it may be difficult or impossible to
bring a legal action against a foreign governmental entity or to enforce a
judgment against such an entity. Holders of certain foreign government
debt securities may be requested to participate in the restructuring of
such obligations and to extend further loans to their issuers. There can
be no assurance that the foreign government debt securities in which the
Fund may invest will not be subject to similar restructuring arrangements
or to requests for new credit, which may adversely affect the Fund’s
holdings. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
CDOs, mortgage-backed securities, other types of asset-backed securities
and certain types of structured notes, may decline in value due to changes
in the underlying instruments, indexes, interest rates or other factors on
which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
-58-
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index and another performance
benchmark. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
9.85% |
|
Quarter
ended 6/30/2020 |
Lowest: |
|
-12.56% |
|
Quarter
ended 3/31/2020 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
4.39%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Flexible Income
Fund |
|
One Year |
|
Five Years |
|
Since Inception
(April 7,
2014) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
7.83% |
|
|
|
|
2.48% |
|
|
|
|
2.67% |
|
Return
After Taxes on Distributions |
|
|
|
5.23% |
|
|
|
|
0.58% |
|
|
|
|
0.85% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
4.58% |
|
|
|
|
1.09% |
|
|
|
|
1.23% |
|
Class N |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
7.57% |
|
|
|
|
2.22% |
|
|
|
|
2.40% |
|
Class R61 |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
7.88% |
|
|
|
|
2.52% |
|
|
|
|
2.69% |
|
Bloomberg U.S. Aggregate Bond Index
(reflects no deduction for fees, expenses or
taxes) |
|
|
|
5.53% |
|
|
|
|
1.10% |
|
|
|
|
1.64% |
|
ICE BofA SOFR Overnight Rate Index
(reflects no deduction for fees, expenses or
taxes) |
|
|
|
5.20% |
|
|
|
|
1.86% |
|
|
|
|
1.27% |
|
ICE BofA 1‑3 Year Eurodollar Index
(reflects no deduction for fees, expenses or
taxes) |
|
|
|
5.27% |
|
|
|
|
2.04% |
|
|
|
|
1.73% |
|
1 |
Class R6
shares were not available for purchase until July 31, 2019. The
performance shown for Class R6 shares prior to that date is that of
the Class I shares of the Fund, another class of the Fund that is
invested in the same portfolio of securities as Class R6 shares.
Annual returns of Class R6 shares would have differed from that shown
for the period prior to July 31, 2019 only to the extent that
Class R6 shares and Class I shares have different
expenses. |
-59-
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary.
As of
July 23, 2024, the Fund’s benchmark changed from ICE BofA 1‑3 Year
Eurodollar Index to the Bloomberg U.S. Aggregate Bond Index.
The
Adviser selected the Bloomberg U.S. Aggregate Bond Index because of, among other
things, the breadth of the debt market that it represents. The Bloomberg U.S.
Aggregate Bond Index represents securities that are SEC‑registered, taxable, and
dollar denominated. This index covers the U.S. investment-grade fixed rate bond
market, with index components for government and corporate securities, mortgage
pass-through securities, and asset-backed securities. These
major sectors are subdivided into more specific indices that are calculated and
reported on a regular basis. The ICE BofA SOFR Overnight Rate Index tracks the
performance of a synthetic asset paying SOFR to a stated maturity. The ICE BofA
SOFR Overnight Rate Index is based on the assumed purchase at par of a synthetic
instrument having exactly its stated maturity and with a coupon equal to that
day’s fixing rate. That issue is assumed to be sold the following business day
(priced at a yield equal to the current day fixing rate) and rolled into a new
instrument. The ICE BofA 1‑3 Year Eurodollar Index is a subset of the ICE BofA
Eurodollar Index including all securities with a remaining term to final
maturity less than 3 years. The ICE BofA Eurodollar Index tracks the performance
of US dollar denominated investment grade quasigovernment, corporate,
securitized and collateralized debt publicly issued in the eurobond markets.
Qualifying securities must have an investment grade rating (based on an average
of Moody’s, S&P and Fitch). Beginning in July 2022, transaction costs were
incorporated into the calculation of total return for ICE fixed income indices.
It is not possible to invest directly in an index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience with the Fund |
|
Primary Title with the Investment
Adviser |
Jeffrey E. Gundlach |
|
Since the Fund’s
inception in April 2014 |
|
Chief Executive
Officer |
Jeffrey
J. Sherman |
|
Since September 2016 |
|
Deputy
Chief Investment Officer |
Purchase
and Sale of Shares
You
may purchase or redeem Class I, Class N and Class R6 shares on
any business day when the New York Stock Exchange opens for regular trading. You
may purchase or redeem shares by written request via mail (DoubleLine Funds, c/o
U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire
transfer, by telephone at 877‑DLine11 (877‑354‑6311), or through authorized
dealers, brokers, or other service providers (“financial intermediaries”). Telephone
transactions will be permitted unless you decline this privilege on your initial
purchase application. The minimum initial and subsequent investment amounts for
different types of accounts are shown below, although the Fund may reduce or
waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular
Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
Class R6
Shares |
|
|
None* |
|
|
|
N/A |
|
|
|
N/A |
|
* |
See
eligibility limitations below. |
-60-
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Eligibility for Class R6
Shares. Only authorized dealers, brokers, or other service providers who
have an agreement with the Fund’s distributor to make Class R6 shares
available to their clients who are Class R6 eligible plans or other
eligible investors are authorized to accept, on behalf of the Fund, purchase and
exchange orders and redemption requests for Class R6 shares placed by or on
behalf of Class R6 eligible plans or other eligible investors. In addition,
Class R6 shares may also be purchased directly from the Fund’s transfer
agent by a Class R6 eligible plan if such shares are held in an omnibus
account opened in the plan’s name directly with the Fund’s transfer agent.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-61-
Fund
Summary
DoubleLine
Low Duration Emerging
Markets
Fixed Income Fund
Investment
Objective
The
Fund’s investment objective is to seek long term total
return.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I shares
through a broker or other financial intermediary acting as an agent on your
behalf. Such commissions and other fees, if any, are not charged by the
Fund and are not reflected in the fee table or expense example
below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
Management Fees |
|
|
0.50% |
|
|
|
0.50% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.24% |
|
|
|
0.24% |
|
Total Annual Fund Operating Expenses
Before Fee Waiver and/or Expense Reimbursement |
|
|
0.74% |
|
|
|
0.99% |
|
Fee
Waiver and/or Expense Reimbursement1 |
|
|
-0.15% |
|
|
|
-0.15% |
|
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement |
|
|
0.59% |
|
|
|
0.84% |
|
1 |
DoubleLine
Capital LP (the “Adviser” or “DoubleLine Capital”) has contractually
agreed to waive its investment advisory fee and to reimburse the Fund for
other ordinary operating expenses to the extent necessary to limit
ordinary operating expenses to an amount not to exceed 0.59% for
Class I shares and 0.84% for Class N shares. Ordinary operating
expenses exclude taxes, commissions, mark‑ups, litigation expenses,
indemnification expenses, interest expenses, Acquired Fund Fees and
Expenses, and any extraordinary expenses. These expense limitations will
apply until at least August 1, 2025, except
that they may be terminated by the Board of Trustees at any time. To the
extent that the Adviser waives its investment advisory fee and/or
reimburses the Fund for other ordinary operating expenses, it may seek
reimbursement of a portion or all of such amounts at any time within three
fiscal years after the fiscal year in which such amounts were waived or
reimbursed. Any such recoupment may not cause the Fund’s ordinary
operating expenses to exceed the expense limitation that was in place when
the fees were waived or expenses were reimbursed. Additionally, the
Adviser would generally seek recoupment only in accordance with the terms
of any expense limitation that is in place at the time of
recoupment. |
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds.
-62-
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (taking into account the Fund’s
expense limitation for the first year). Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
|
|
|
| |
|
|
Class I |
|
Class N |
1 Year |
|
$60 |
|
$86 |
3 Years |
|
$221 |
|
$300 |
5 Years |
|
$397 |
|
$532 |
10 Years |
|
$904 |
|
$1,199 |
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 29% of the average value of its
portfolio.
Principal
Investment Strategies
The
Fund normally invests primarily in debt obligations issued by sovereign,
quasi-sovereign and private (non‑government) emerging market issuers. Sovereign
and quasi-sovereign emerging market issuers include governments of emerging
market countries, and governmental entities or agencies, and issuers that are
owned, in whole or in part, or whose obligations are guaranteed, in whole or in
part, by a government or governmental entity or agency of an emerging market
country. Private emerging market issuers include private (non‑governmental)
issuers domiciled or located in emerging market countries, issuers with their
principal place of business or corporate headquarters located in an emerging
market country, or issuers the Adviser has determined are emerging market
issuers based on a consideration of a number of qualitative factors, including
the relative importance of emerging markets to the issuer’s business, including
the issuer’s profits, revenues, assets and/or future potential
growth.
Although
the Fund may invest in individual securities of any maturity or duration, the
Adviser will normally seek to construct an investment portfolio for the Fund
with a dollar-weighted average effective duration of three years or less.
Duration is a measure of the expected life of a fixed income instrument that is
used to determine the sensitivity of a security’s price to changes in interest
rates. Effective duration is a measure of the Fund’s portfolio duration adjusted
for the anticipated effect of interest rate changes on prepayment rates as
determined by the Adviser. The effective duration of the Fund’s investment
portfolio may vary significantly from time to time, and there is no assurance
that the effective duration of the Fund’s investment portfolio will not exceed
three years at any time.
An
“emerging market country” is a country that, at the time the Fund invests in the
related fixed income instruments, is classified as an emerging or developing
economy by any supranational organization such as an institution in the World
Bank Group or the United Nations, or an agency thereof, or is considered an
emerging market country for purposes of constructing a major emerging market
securities index.
The
Fund may invest without limit in investments denominated in any currency, but
currently expects to invest a substantial amount of its assets in investments
denominated in the U.S. dollar.
The
Fund generally will invest in at least three emerging market countries. In
allocating investments among various emerging market countries, the portfolio
managers attempt to analyze internal political, market and economic factors.
These factors may include:
• |
|
foreign
investment regulations; |
-63-
• |
|
stability
of exchange rate policy; and |
The
Fund may invest in obligations of any credit quality, including those that at
the time of investment are rated BB+ or lower by S&P Global Ratings or Ba1
or lower by Moody’s Investors Service, Inc. or the equivalent by any other
nationally recognized statistical rating organization or in unrated securities
that are determined by the Adviser to be of comparable quality. Corporate bonds
and certain other fixed income instruments rated below investment grade, or such
instruments that are unrated and determined by the Adviser to be of comparable
quality, are high yield, high risk bonds, commonly known as “junk
bonds.”
The
Fund may invest in fixed income and debt obligations of any kind. Fixed income
obligations include bonds, debt securities and fixed income and income-producing
instruments of any kind issued or guaranteed by governmental or private-sector
entities and other securities or instruments bearing fixed, floating, or
variable interest rates of any maturity. Most fixed income obligations consist
of a security or instrument having one or more of the following characteristics:
an income-producing obligation, an obligation issued at a discount to its face
value, an obligation that pays interest, whether fixed, floating or variable, or
an obligation with a stated principal amount that requires repayment of some or
all of that principal amount to the holder of the obligation. The Adviser
interprets the term fixed income obligation broadly as an instrument or security
evidencing what is commonly referred to as an IOU rather than evidencing the
ownership of corporate equity unless that equity represents an indirect or
derivative interest in one or more debt securities. The Fund’s fixed-income
investments may include, by way of example, corporate debt obligations;
mortgage- and asset-backed securities; inflation-indexed bonds; fixed and
floating rate loans of any kind (including, among others, bank loans, and
assignments, participations, subordinated loans, debtor‑in‑possession loans,
exit facilities, delayed funding loans and revolving credit facilities);
income-producing securitized products; and preferred
securities.
Under
normal circumstances, the Fund invests at least 80% of its net assets (plus the
amount of borrowings for investment purposes) in fixed income
instruments.
The
Fund may invest in hybrid securities relating to emerging market
countries.
The
Fund may invest up to 20% of its net assets in defaulted corporate securities.
The Fund might do so, for example, where the portfolio managers believe the
restructured enterprise valuations or liquidation valuations may exceed current
market values. In addition, the Fund may invest in defaulted sovereign
investments, including, for example, where the portfolio managers believe the
expected debt sustainability of the country is not reflected in current market
valuations.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
exchange-traded funds (“ETFs”), including
investment companies sponsored or managed by the Adviser or its related parties.
The amount of the Fund’s investment in certain investment companies may be
limited by law or by tax considerations.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Adviser may seek to manage the dollar-weighted average effective duration of
the Fund’s portfolio through the use of derivatives and other instruments
(including, among others, inverse floaters, futures contracts, U.S. Treasury
swaps, interest rate swaps, total return swaps and options, including options on
swap agreements). The Fund may incur costs in implementing duration management
strategies, and there can be no assurance that the Fund will engage in duration
management strategies or that any duration management strategy employed by the
Fund will be successful.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. The Fund also may use derivatives
transactions with the purpose or effect of creating investment leverage. The
Fund may enter into currency-related transactions, including spot transactions,
forward exchange contracts and futures contracts. The Fund may, but will not
necessarily, enter into foreign currency exchange transactions to take a “long”
or “short” position in a currency or to hedge against currency exposure in its
portfolio. The results of such transactions also may represent, from time to
time, a significant component of the Fund’s investment returns. The Adviser
considers various factors, such as availability and cost, in deciding whether,
when and to what extent to enter into derivative
transactions.
There
is no limit on the amount of the Fund’s assets that may be allocated to one or
more specific asset classes or market
sectors.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the
portfolio
-64-
managers
believe the portfolio securities no longer represent relatively attractive
investment opportunities, when the portfolio managers perceive deterioration in
the credit fundamentals of the issuer, or when the individual security has
reached the portfolio managers’ sell
target.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
cash position
risk: the risk that to the extent that the Fund
holds assets in cash, cash equivalents, and other short-term investments,
the ability of the Fund to meet its objective may be
limited. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase.
Certain |
-65-
|
other
investments, such as inverse floaters and certain derivative instruments,
may have a negative duration. The value of instruments with a negative
duration will generally decline if interest rates decrease. Inverse
floaters, interest-only and principal-only securities are especially
sensitive to interest rate changes, which can affect not only their prices
but can also change the income flows and repayment assumptions about those
investments. Recently, there have been inflationary price movements, which
have caused the fixed income securities markets to experience heightened
levels of interest rate volatility and liquidity risk. The risks
associated with rising interest rates are heightened under current market
conditions given that the U.S. Federal Reserve has raised interest rates
from historically low levels and may continue to do so. Fiscal, economic,
monetary or other government policies or measures have in the past, and
may in the future, cause or exacerbate risks associated with interest
rates, including changes in interest rates. Further, in market
environments where interest rates are rising, issuers may be less willing
or able to make principal and interest payments on fixed-income
investments when due. |
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both
the amounts and the types of loans and other financial commitments
financial services companies can make, the interest rates and fees they
can charge, the scope of their activities, the prices they can charge and
the amount of capital they must maintain; (ii) fluctuations,
including as a result of interest rate changes or increased competition,
in the availability and cost of capital funds on which the profitability
of financial services companies is largely dependent;
(iii) deterioration of the credit markets; (iv) credit losses
resulting from financial difficulties of borrowers, especially when
financial services companies are exposed to non‑diversified or
concentrated loan portfolios; (v) financial losses associated with
investment activities, especially when financial services companies are
exposed to financial leverage; (vi) the risk that any financial
services company experiences substantial declines in the valuations of its
assets, takes action to raise capital, or ceases operations;
(vii) the risk that a market shock or other unexpected market,
economic, political, regulatory, or other event might lead to a sudden
decline in the values of most or all companies in the financial services
sector; (viii) events leading to limited liquidity, defaults,
non‑performance or other adverse developments that affect financial
institutions or the financial services industry generally, or concerns or
rumors about any events of these kinds or other similar risks, leading to
market-wide liquidity problems; and (ix) the interconnectedness or
interdependence among financial services companies, including the risk
that the financial distress or failure of one financial services company
may materially and adversely affect a number of other financial services
companies. |
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
-66-
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
• |
|
investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other investment vehicles sponsored or advised by the Adviser or a
related party of the Adviser over investment companies sponsored or
managed by others and to maintain such investments once made due to its
own financial interest in those products and other business
considerations. |
• |
|
large
shareholder risk: the risk that certain account holders,
including the Adviser or funds or accounts over which the Adviser (or
related parties of the Adviser) has investment discretion, may from time
to time own or control a significant percentage of the Fund’s shares. The
Fund is subject to the risk that a redemption by those shareholders of all
or a portion of their Fund shares, including as a result of an asset
allocation decision made by the Adviser (or related parties of the
Adviser), will adversely affect the Fund’s performance if it is forced to
sell portfolio securities or invest cash when the Adviser would not
otherwise choose to do so. Redemptions of a large number of shares may
affect the liquidity of the Fund’s portfolio, increase the Fund’s
transaction costs, and accelerate the realization of taxable income and/or
gains to shareholders. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio
will |
-67-
|
change,
potentially frequently and in large amounts, as the prices of its
investments go up or down. During periods of severe market stress, it is
possible that the market for some or all of a Fund’s investments may
become highly illiquid. Recently, there have been inflationary price
movements, which have caused the fixed income securities markets to
experience heightened levels of interest rate volatility and liquidity
risk. Please see “debt securities risks — interest rate risk” herein for
more information. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
restricted
securities risk: the risk that the Fund may be prevented or
limited by law or the terms of an agreement from selling a security (a
“restricted security”). To the
extent that the Fund is permitted to sell a restricted security, there can
be no assurance that a trading market will exist at any particular time,
and the Fund may be unable to dispose of the security promptly at
reasonable prices or at all. The Fund may have to bear the expense of
registering the securities for resale and the risk of substantial delays
in effecting the registration. Also, restricted securities may be
difficult to value because market quotations may not be readily available,
and the values of restricted securities may have significant
volatility. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
• |
|
sovereign debt
obligations risk: the risk that investments in debt
obligations of sovereign governments may lose value due to the government
entity’s unwillingness or inability to repay principal and interest when
due in accordance with the terms of the debt or otherwise in a timely
manner. Sovereign governments may default on their debt obligations for a
number of reasons, including social, political, economic and diplomatic
changes in countries issuing sovereign debt. The Fund may have limited (or
no) recourse in the event of a default because bankruptcy, moratorium and
other similar laws applicable to issuers of sovereign debt obligations may
be substantially different from those applicable to private issuers, and
any recourse may be subject to the political climate in the relevant
country. In addition, foreign governmental entities may enjoy various
levels of sovereign immunity, and it may be difficult or impossible to
bring a legal action against a foreign governmental entity or to enforce a
judgment against such an entity. Holders of certain foreign government
debt securities may be requested to participate in the restructuring of
such obligations and to extend further loans to their issuers. There can
be no assurance that the foreign government debt securities in which the
Fund may invest will not be subject to similar restructuring arrangements
or to requests for new credit, which may adversely affect the Fund’s
holdings. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
collateralized debt obligations, mortgage-backed securities, other types
of asset-backed securities and certain types of structured notes, may
decline in value due to changes in the underlying instruments, indexes,
interest rates or other factors on which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
-68-
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
5.13% |
|
Quarter
ended 6/30/2020 |
Lowest: |
|
-4.71% |
|
Quarter
ended 3/31/2020 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
3.74%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Low Duration Emerging
Markets Fixed Income Fund |
|
One Year |
|
Five Years |
|
Since Inception
(April 7,
2014) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
6.99% |
|
|
|
|
2.49% |
|
|
|
|
2.42% |
|
Return
After Taxes on Distributions |
|
|
|
5.34% |
|
|
|
|
1.23% |
|
|
|
|
1.09% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
4.10% |
|
|
|
|
1.37% |
|
|
|
|
1.26% |
|
Class N |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
6.80% |
|
|
|
|
2.24% |
|
|
|
|
2.18% |
|
J.P. Morgan CEMBI Broad Diversified 1‑3 Year
Index (reflects no deduction
for fees, expenses or taxes) |
|
|
|
8.00% |
|
|
|
|
2.71% |
|
|
|
|
2.89% |
|
Bloomberg
U.S. Aggregate 1‑3 Years Index
(reflects no deduction for fees, expenses or
taxes) |
|
|
|
4.65% |
|
|
|
|
1.46% |
|
|
|
|
1.25% |
|
-69-
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual
U.S. federal marginal income tax rates for the period and do not reflect
the impact of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary.
The
J.P. Morgan CEMBI Broad Diversified 1‑3 Year Index is a market capitalization
weighted index consisting of US denominated emerging market corporate bonds with
1‑3 year maturity. It is a liquid global corporate benchmark representing Asia,
Latin America, Europe, and the Middle East/Africa. The Bloomberg U.S. Aggregate
1‑3 Years Index is an unmanaged index that tracks the performance of investment
grade, dollar denominated, fixed-rate, taxable bonds having a maturity of at
least one year and less than three years. It is not possible to invest directly
in an index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience
with
the
Fund |
|
Primary Title with the
Investment
Adviser |
Mark W. Christensen |
|
Since the Fund’s
inception in April 2014 |
|
Portfolio
Manager |
Su Fei Koo |
|
Since the Fund’s
inception in April 2014 |
|
Portfolio
Manager |
Luz
M. Padilla |
|
Since
the Fund’s inception in April 2014 |
|
Portfolio
Manager |
Purchase
and Sale of Shares
You
may purchase or redeem Class I and Class N shares on any business day
when the New York Stock Exchange opens for regular trading. You may purchase or
redeem shares by written request via mail (DoubleLine Funds, c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire transfer,
by telephone at 877‑DLine11 (877‑354‑6311), or through authorized dealers,
brokers, or other service providers (“financial
intermediaries”). Telephone transactions will be permitted unless you
decline this privilege on your initial purchase application. The minimum initial
and subsequent investment amounts for different types of accounts are shown
below, although the Fund may reduce or waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular
Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
-70-
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-71-
Fund
Summary
DoubleLine
Long Duration Total Return Bond Fund
Investment
Objective
The
Fund’s investment objective is to seek long-term total
return.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I shares
through a broker or other financial intermediary acting as an agent on your
behalf. Such commissions and other fees, if any, are not charged by the
Fund and are not reflected in the fee table or expense example
below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
Management Fees |
|
|
0.35% |
|
|
|
0.35% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.27% |
|
|
|
0.32% |
|
Total Annual Fund Operating Expenses
Before Fee Waiver and/or Expense Reimbursement |
|
|
0.62% |
|
|
|
0.92% |
|
Fee
Waiver and/or Expense Reimbursement1 |
|
|
-0.12% |
|
|
|
-0.17% |
|
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement |
|
|
0.50% |
|
|
|
0.75% |
|
1 |
DoubleLine
Capital LP (the “Adviser” or “DoubleLine Capital”) has contractually
agreed to waive its investment advisory fee and to reimburse the Fund for
other ordinary operating expenses to the extent necessary to limit
ordinary operating expenses to an amount not to exceed 0.50% for
Class I shares and 0.75% for Class N shares. Ordinary operating
expenses exclude taxes, commissions, mark‑ups, litigation expenses,
indemnification expenses, interest expenses, Acquired Fund Fees and
Expenses, and any extraordinary expenses. These expense limitations will
apply until at least August 1, 2025, except
that they may be terminated by the Board of Trustees at any time. To the
extent that the Adviser waives its investment advisory fee and/or
reimburses the Fund for other ordinary operating expenses, it may seek
reimbursement of a portion or all of such amounts at any time within three
fiscal years after the fiscal year in which such amounts were waived or
reimbursed. Any such recoupment may not cause the Fund’s ordinary
operating expenses to exceed the expense limitation that was in place when
the fees were waived or expenses were reimbursed. Additionally, the
Adviser would generally seek recoupment only in accordance with the terms
of any expense limitation that is in place at the time of
recoupment. |
-72-
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual
funds.
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (taking into account the Fund’s
expense limitation for the first year). Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
|
|
|
| |
|
|
Class I |
|
Class N |
1 Year |
|
$51 |
|
$77 |
3 Years |
|
$186 |
|
$276 |
5 Years |
|
$334 |
|
$493 |
10 Years |
|
$763 |
|
$1,116 |
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 146% of the average value of its
portfolio.
Principal
Investment Strategies
The
Fund seeks long-term total return comprised of capital growth and current income
by investing principally in debt securities of any kind. The Fund may invest
without limit in mortgage-backed securities of any maturity or type, including
those guaranteed by, or secured by collateral that is guaranteed by, the United
States Government, its agencies, instrumentalities or sponsored corporations, as
well as those of private issuers not subject to any guarantee. Mortgage-backed
securities include, among others, government mortgage pass-through securities,
collateralized mortgage obligations, multiclass pass-through securities, private
mortgage pass-through securities, stripped mortgage securities (e.g., interest-only and principal-only
securities) and inverse floaters. The Fund may also invest in corporate debt
obligations; asset-backed securities; foreign securities (corporate and
government, including foreign hybrid securities); emerging market securities
(corporate and government); inflation-indexed bonds; bank loans and assignments;
income-producing securitized products, including collateralized loan obligations
(“CLOs”); preferred securities; and other
instruments bearing fixed or variable interest rates of any
maturity.
Under
normal circumstances, the Adviser expects to construct an investment portfolio
for the Fund with a dollar-weighted average effective duration of at least ten
years. Duration is a measure of the expected life of a fixed income instrument
that is used to determine the sensitivity of a security’s price to changes in
interest rates. Effective duration is a measure of the Fund’s portfolio duration
adjusted for the anticipated effect of interest rate changes on bond and
mortgage prepayment rates as determined by the Adviser. The effective duration
of the Fund’s investment portfolio may vary significantly from time to time
based on, among other things, fluctuations in interest rates, changes in the
rate of prepayments on mortgages underlying the Fund’s mortgage-related
investments, and the Adviser’s expectations with respect to future interest
rates. There can be no assurance that the effective duration of the Fund’s
investment portfolio will equal or exceed ten years at all times. The Fund may
invest in individual securities of any maturity or duration. Because the Fund will usually have a relatively long
duration, the value of its shares will be especially sensitive to changes in
interest rates.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal
policy.
Under
normal circumstances, the Fund intends to invest primarily in fixed income and
other income-producing instruments rated investment grade and unrated securities
considered by the Adviser to be of comparable credit quality. The Fund may,
however, invest up to 20% of its total assets in fixed income and other
income-producing instruments rated below investment grade and those that are
unrated but determined by the Adviser to be of comparable credit quality. Those
instruments include high yield, high risk bonds, commonly known as “junk
bonds.”
-73-
The
Fund will normally limit its foreign currency exposure (from non‑U.S. dollar
denominated securities or currencies) to 30% of its total assets, and may invest
without limit in U.S. dollar-denominated securities of foreign issuers. The Fund
may invest up to 25% of its total assets in obligations of governmental or
private obligors in emerging market countries. The Adviser considers an
“emerging market country” to be a country that, at the time the Fund invests in
the related fixed income instruments, is classified as an emerging or developing
economy by any supranational organization such as an institution in the World
Bank Group or the United Nations, or an agency thereof, or is considered an
emerging market country for purposes of constructing a major emerging market
securities index.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion and subject to the duration parameters described
above, adjust the Fund’s exposure to interest rate risk. The Adviser may seek to
manage the dollar-weighted average effective duration of the Fund’s portfolio
through the use of derivatives and other instruments (including, among others,
inverse floaters, futures contracts, U.S. Treasury swaps, interest rate swaps,
total return swaps and options, including options on swap agreements). The Fund
may incur costs in implementing duration management strategies, and there can be
no assurance that the Fund will engage in duration management strategies or that
any duration management strategy employed by the Fund will be
successful.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. For example, the Fund may use futures
contracts and options on futures contracts, in order to gain efficient long or
short investment exposures as an alternative to cash investments or to hedge
against portfolio exposures; interest rate swaps, to gain indirect long or short
exposures to interest rates, issuers, or currencies, or to hedge against
portfolio exposures; and total return swaps and credit derivatives (such as
credit default swaps), put and call options, and exchange-traded and structured
notes, to take indirect long or short positions on indexes, securities,
currencies, or other indicators of value, or to hedge against portfolio
exposures. The Fund may also engage in short sales or take short positions,
either to adjust its duration or for other investment purposes. The Fund may use
derivatives transactions with the purpose or effect of creating investment
leverage.
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of borrowings for investment purposes) in bonds. “Bonds”
include bonds, debt securities and fixed income and income-producing instruments
of any kind issued by governmental or private-sector entities. Most bonds
consist of a security or instrument having one or more of the following
characteristics: a fixed-income security, a security issued at a discount to its
face value, a security that pays interest, whether fixed, floating or variable,
or a security with a stated principal amount that requires repayment of some or
all of that principal amount to the holder of the security. The Adviser
interprets the term bond broadly as an instrument or security evidencing what is
commonly referred to as an IOU rather than evidencing the corporate ownership of
equity unless that equity represents an indirect or derivative interest in one
or more debt securities.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
exchange-traded funds (“ETFs”), including
investment companies sponsored or managed by the Adviser or its related parties.
The amount of the Fund’s investment in certain investment companies may be
limited by law or by tax considerations.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell
target.
-74-
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
• |
|
cash position
risk: the risk that to the extent that the Fund
holds assets in cash, cash equivalents, and other short-term investments,
the ability of the Fund to meet its objective may be
limited. |
• |
|
collateralized
debt obligations risk: the risks of an investment in a
collateralized debt obligation (“CDO”) depend largely on the quality and
type of the collateral and the tranche of the CDO in which the Fund
invests. Normally, collateralized bond obligations, CLOs and other CDOs
are privately offered and sold, and thus are not registered under the
securities laws. As a result, investments in CDOs may be illiquid. In
addition to the risks associated with debt instruments (e.g., interest rate risk and credit
risk), CDOs carry additional risks including, but not limited to:
(i) the possibility that distributions from collateral will not be
adequate to make interest or other payments; (ii) the quality of the
collateral may decline in value or default; (iii) the possibility
that the Fund may invest in CDOs that are subordinate to other classes of
the issuer’s securities; and (iv) the complex structure of the
security may not be fully understood at the time of investment and may
produce disputes with the issuer or unexpected investment
results. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
-75-
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both
the amounts and the types of loans and other financial commitments
financial services companies can make, the interest rates and fees they
can charge, the scope of their activities, the prices they can charge and
the amount of capital they must maintain; (ii) fluctuations,
including as a result of interest rate changes or increased competition,
in the availability and cost of capital funds on which the profitability
of financial services companies is largely dependent;
(iii) deterioration of the credit markets; (iv) credit losses
resulting from financial difficulties of borrowers, especially when
financial services companies are exposed to non‑diversified or
concentrated loan portfolios; (v) financial losses associated with
investment activities, especially when financial services companies are
exposed to financial leverage; (vi) the risk that any financial
services company experiences substantial declines in
the |
-76-
|
valuations
of its assets, takes action to raise capital, or ceases operations;
(vii) the risk that a market shock or other unexpected market,
economic, political, regulatory, or other event might lead to a sudden
decline in the values of most or all companies in the financial services
sector; (viii) events leading to limited liquidity, defaults,
non‑performance or other adverse developments that affect financial
institutions or the financial services industry generally, or concerns or
rumors about any events of these kinds or other similar risks, leading to
market-wide liquidity problems; and (ix) the interconnectedness or
interdependence among financial services companies, including the risk
that the financial distress or failure of one financial services company
may materially and adversely affect a number of other financial services
companies. |
• |
|
focused
investment risk: the risk that a fund that invests a
substantial portion of its assets in a particular market, industry,
sector, group of industries or sectors, country, region, group of
countries or asset class is, relative to a fund that invests in a more
diverse investment portfolio, more susceptible to any single economic,
market, political, regulatory or other occurrence. This is because, for
example, issuers in a particular market, industry, region, sector or asset
class may react similarly to specific economic, market, regulatory,
political or other developments. The particular markets, industries,
regions, sectors or asset classes in which the Fund may focus its
investments may change over time and the Fund may alter its focus at
inopportune times. |
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
• |
|
investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other investment vehicles sponsored or advised by the Adviser or a
related party of the Adviser over investment companies sponsored or
managed by others and to maintain such investments once made due to its
own financial interest in those products and other business
considerations. |
• |
|
large
shareholder risk: the risk that certain account holders,
including the Adviser or funds or accounts over which the Adviser (or
related parties of the Adviser) has investment discretion, may from time
to time own or control a significant percentage of the Fund’s shares. The
Fund is subject to the risk that a redemption by those shareholders of all
or a portion of their Fund shares, including as a result of an asset
allocation decision made by the Adviser (or related parties of the
Adviser), will adversely affect the Fund’s performance if it is forced to
sell portfolio securities or invest cash when the Adviser would not
otherwise choose to do so. Redemptions of a large number of shares may
affect the liquidity of the Fund’s portfolio, increase the Fund’s
transaction costs, and accelerate the realization of taxable income and/or
gains to shareholders. |
-77-
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of that financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral relating to a loan; (v) there may be limited
public information available regarding the loan and the relevant
borrower(s); (vi) the use of a particular interest rate benchmark may
limit the Fund’s ability to achieve a net return to shareholders that
consistently approximates the average published Prime Rate of U.S. banks;
(vii) the prices of certain floating rate loans that include a
feature that prevents their interest rates from adjusting if market
interest rates are below a specified minimum level may appreciate less
than other instruments in response to changes in interest rates should
interest rates rise but remain below the applicable minimum level;
(viii) if a borrower fails to comply with various restrictive
covenants that may be found in loan agreements, the borrower may default
in payment of the loan; (ix) if the Fund invests in loans that
contain fewer or less restrictive constraints on the borrower than certain
other types of loans (“covenant-lite” loans), it may have fewer rights
against the borrowers of such loans, including fewer protections against
the possibility of default and fewer remedies in the event of default;
(x) the loan is unsecured; (xi) there is a limited secondary
market; (xii) transactions in loans may settle on a delayed basis,
and the Fund may not receive the proceeds from the sale of a loan for a
substantial period of time after the sale, which may result in sale
proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the
Fund. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
-78-
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
portfolio
turnover risk: the risk that frequent purchases and sales of
portfolio securities may result in higher Fund expenses and may result in
larger distributions of taxable capital gains to investors as compared to
a fund that trades less
frequently. |
• |
|
real estate
sector risk: the risk that real estate-related investments
may decline in value as a result of factors affecting the real estate
sector, such as the supply of real property in certain markets, changes in
zoning laws, delays in completion of construction, changes in real estate
values, changes in property taxes, levels of occupancy, and local,
regional, and general market conditions. Along with the risks common to
different types of real estate-related investments, real estate investment
trusts (“REITs”), no matter the
type, involve additional risk factors, including poor performance by the
REIT’s manager, adverse changes to the tax laws, and the possible failure
by the REIT to qualify for the favorable tax treatment available to REITs
under the Internal Revenue Code of 1986, as amended, or the exemption from
registration under the Investment Company Act of 1940, as amended. REITs
are not diversified and are heavily dependent on cash flow earned on the
property interests they hold. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
• |
|
short position
risk: the risk that an increase in the value of an
instrument, index or interest rate with respect to which the Fund has
established a short position will result in a loss to the
Fund. |
• |
|
sovereign debt
obligations risk: the risk that investments in debt
obligations of sovereign governments may lose value due to the government
entity’s unwillingness or inability to repay principal and interest when
due in accordance with the terms of the debt or otherwise in a timely
manner. Sovereign governments may default on their debt obligations for a
number of reasons, including social, political, economic and diplomatic
changes in countries issuing sovereign debt. The Fund may have limited (or
no) recourse in the event of a default because bankruptcy, moratorium and
other similar laws applicable to issuers of sovereign debt obligations may
be substantially different from those applicable to private issuers, and
any recourse may be subject to the political climate in the relevant
country. In addition, foreign governmental entities may enjoy various
levels of sovereign immunity, and it may be difficult or impossible to
bring a legal action against a foreign governmental entity or to enforce a
judgment against such an entity. Holders of certain foreign government
debt securities may be requested to participate in the restructuring of
such obligations and to extend further loans to their issuers. There can
be no assurance that the foreign government debt securities in which the
Fund may invest will not be subject to similar restructuring arrangements
or to requests for new credit, which may adversely affect the Fund’s
holdings. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
CDOs, mortgage-backed securities, other types of asset-backed securities
and certain types of structured notes, may decline in value due to changes
in the underlying instruments, indexes, interest rates or other factors on
which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
-79-
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class
I Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
15.82% |
|
Quarter
ended 3/31/2020 |
Lowest: |
|
-11.42% |
|
Quarter
ended 6/30/2022 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
-3.38%.
-80-
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Long Duration Total Return
Bond Fund |
|
One Year |
|
Five Years |
|
Since Inception
(December 15, 2014) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
3.78% |
|
|
|
|
-2.13% |
|
|
|
|
-0.21% |
|
Return
After Taxes on Distributions |
|
|
|
2.35% |
|
|
|
|
-3.84% |
|
|
|
|
-1.78% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
2.21% |
|
|
|
|
-2.02% |
|
|
|
|
-0.64% |
|
Class N |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
3.54% |
|
|
|
|
-2.38% |
|
|
|
|
-0.48% |
|
Bloomberg U.S. Long Government/Credit
Index (reflects no deduction
for fees, expenses or taxes) |
|
|
|
7.13% |
|
|
|
|
1.12% |
|
|
|
|
1.62% |
|
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The
Bloomberg U.S. Long Government/Credit Index includes publicly issued U.S.
Treasury debt, U.S. government agency debt, taxable debt issued by U.S. states
and territories and their political subdivisions, debt issued by U.S. and
non‑U.S. government debt and supranational debt. It is not possible to invest
directly in an index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience with
the Fund |
|
Primary Title with the Investment
Adviser |
Jeffrey E. Gundlach |
|
Since the Fund’s
inception in December 2014 |
|
Chief Executive
Officer |
Vitaliy
Liberman |
|
Since
the Fund’s inception in December 2014 |
|
Portfolio
Manager |
Purchase
and Sale of Shares
You
may purchase or redeem Class I and Class N shares on any business day
when the New York Stock Exchange opens for regular trading. You may purchase or
redeem shares by written request via mail (DoubleLine Funds, c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire transfer,
by telephone at 877‑DLine11 (877‑354‑6311), or through authorized dealers,
brokers, or other service providers (“financial
intermediaries”). Telephone transactions will be permitted unless you
decline this privilege on your initial purchase application. The minimum initial
and subsequent investment amounts for different types of accounts are shown
below, although the Fund may reduce or waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular
Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and
Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
-81-
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-82-
Fund
Summary
DoubleLine
Global Bond Fund
Investment
Objective
The
Fund’s investment objective is to seek long-term total
return.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I shares
through a broker or other financial intermediary acting as an agent on your
behalf. Such commissions and other fees, if any, are not charged by the
Fund and are not reflected in the fee table or expense example
below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
Management Fees |
|
|
0.50% |
|
|
|
0.50% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
Other Expenses (includes fee recoupment,
sub‑transfer agent accounting or administrative services expenses)1 |
|
|
0.10% |
|
|
|
0.10% |
|
Acquired Fund Fees and Expenses2 |
|
|
0.01% |
|
|
|
0.01% |
|
Total
Annual Fund Operating Expenses |
|
|
0.61% |
|
|
|
0.86% |
|
1 |
DoubleLine
Capital LP (the “Adviser” or “DoubleLine Capital”) has contractually
agreed to waive its investment advisory fee and to reimburse the Fund for
other ordinary operating expenses to the extent necessary to limit
ordinary operating expenses to an amount not to exceed 0.70% for
Class I shares and 0.95% for Class N shares. Ordinary operating
expenses exclude taxes, commissions, mark‑ups, litigation expenses,
indemnification expenses, interest expenses, Acquired Fund Fees and
Expenses, and any extraordinary expenses. These expense limitations will
apply until at least August 1, 2025, except
that they may be terminated by the Board of Trustees at any time. To the
extent that the Adviser waives its investment advisory fee and/or
reimburses the Fund for other ordinary operating expenses, it may seek
reimbursement of a portion or all of such amounts at any time within three
fiscal years after the fiscal year in which such amounts were waived or
reimbursed. Any such recoupment may not cause the Fund’s ordinary
operating expenses to exceed the expense limitation that was in place when
the fees were waived or expenses were reimbursed. Additionally, the
Adviser would generally seek recoupment only in accordance with the terms
of any expense limitation that is in place at the time of
recoupment. |
2 |
“Acquired Fund Fees and Expenses” are
expenses indirectly incurred by the Fund as a result of its investments in
one or more underlying funds, including exchange-traded funds (“ETFs”) and money market funds. Because
these costs are indirect, the Total Annual Fund Operating Expenses in this
fee table will not correlate to the expense ratio in the Fund’s financial
statements, since financial statements only include direct costs of the
Fund and not the indirect costs of investing in the underlying
funds. |
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds.
-83-
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would
be:
|
|
|
| |
|
|
Class I |
|
Class N |
1 Year |
|
$62 |
|
$88 |
3 Years |
|
$195 |
|
$274 |
5 Years |
|
$340 |
|
$477 |
10 Years |
|
$762 |
|
$1,061 |
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 49% of the average value of its
portfolio.
Principal
Investment Strategies
The
Fund normally invests primarily in debt obligations issued by governments and
governmental agencies, authorities or instrumentalities, located anywhere in the
world. The Fund expects to invest significantly in obligations of members of the
G20, an organization of governments composed of 20 of the major economies in the
world, including developed markets and emerging market
economies.
The
Adviser expects to allocate the Fund’s assets among a variety of debt
instruments based on its view of their potential to provide current income,
capital appreciation, or both, as well as the Adviser’s view of changing global
macroeconomic conditions such as, but not limited to, broad dollar trends,
commodity cycles, cross border trade and portfolio flows, and relative growth
and inflation differentials. The Adviser will also consider changes in a
specific country’s market, economic, monetary and political factors and other
developments that the Adviser believes may affect the values of the Fund’s
investments.
The
Fund’s investment universe includes, without limitation, sovereign debt,
including U.S. Government securities; quasi-sovereign debt, such as obligations
issued by governmental agencies and instrumentalities; and supra-national
obligations. The Fund may also invest in obligations of private,
non‑governmental issuers. The Fund’s investments may include government and
private high yield and defaulted debt securities; inflation-indexed securities;
mortgage- and asset-backed securities; bank loans; and securities or structured
products that are linked to or derive their values from another security, asset
or currency of any country or issuer in which the Fund may otherwise
invest.
The
Fund expects normally to have significant exposure to foreign currencies, which
may be achieved by investing in bonds denominated in the local currencies of
foreign issuers or by investing in currencies directly or in currency-related
instruments, such as forward contracts. The Fund may enter into foreign currency
exchange transactions, including foreign currency futures and forward contracts
and foreign currency swaps and options, to take long or short positions in
various currencies, including currencies to which the Fund might not otherwise
have exposure, in order to benefit from changes in the values of those
currencies anticipated by the Adviser. The Fund may also, but will not
necessarily, enter into foreign currency exchange transactions in order to hedge
against changes in the values of its portfolio investments due to declines in
the values of the currencies in which those investments are denominated against
the U.S. dollar. The Fund may use any of the instruments, or any combination of
the instruments, above (e.g., an
interest rate swap combined with a long forward currency contract) to create
long or short synthetic positions as a substitute for a cash investment. Foreign
currency exchange transactions may have the effect of creating investment
leverage in the Fund’s portfolio and the returns from such transactions may
represent, from time to time, a significant component of the Fund’s investment
returns.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal
policy.
-84-
Under
normal market conditions, the Fund will generally invest in securities that
provide exposure to at least three different countries, not including the United
States. There is no limit on the percentage of the Fund that may be invested in
emerging market countries or in any single or small number of currencies or
issuers.
The
Fund normally invests principally in “investment grade” securities (i.e., those rated above Ba1 by Moody’s
Investors Service, Inc. or above BB+ by S&P Global Ratings or Fitch Ratings,
Inc. or, if unrated, determined by the Adviser to be of comparable quality). The
Fund normally will not invest more than 25% of its total assets in fixed income
instruments that are, at the time of purchase, rated or determined by the
Adviser to be below investment grade. Fixed income instruments rated below
investment grade, or unrated securities that are determined by the Adviser to be
of comparable quality, are high yield, high risk bonds, commonly known as “junk
bonds.” Generally, lower-rated debt securities offer a higher yield than higher
rated debt securities of similar maturity but are subject to greater risk of
loss of principal and interest than higher rated securities of similar
maturity.
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of borrowings for investment purposes) in bonds. Bonds include
debt securities, debt obligations, fixed-income instruments, and any evidence of
indebtedness, including, by way of example, a security or instrument having one
or more of the following characteristics: a security or instrument issued at a
discount to its face value, a security or instrument that pays interest at a
fixed, floating, or variable rate, or a security or instrument with a stated
principal amount that requires repayment of some or all of that principal amount
to the holder of the security. For these purposes, the term bond shall be
interpreted broadly to include any instrument or security evidencing what is
commonly referred to as an IOU rather than evidencing the corporate ownership of
equity unless that equity represents an indirect or derivative interest in one
or more debt securities. For purposes of the Fund’s 80% policy, bonds also
include instruments that are intended to provide one or more of the
characteristics of a direct investment in one or more debt securities, such as
an ETF that invests in bonds.
The
Fund is classified as a non‑diversified fund under the Investment Company Act of
1940, as amended, and may invest in the securities of a smaller number of
issuers than a diversified fund.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
In managing the Fund’s investments, under normal market conditions, the
portfolio managers intend to seek to construct an investment portfolio with a
dollar-weighted average effective duration of no less than one year and no more
than ten years. Duration is a measure of the expected life of a fixed income
instrument that is used to determine the sensitivity of a security’s price to
changes in interest rates. All other things remaining equal, for each one
percentage point increase in interest rates, the value of a portfolio of fixed
income securities would generally be expected to decline by one percent for
every year of the portfolio’s average duration above zero. For example, the
value of a portfolio of fixed income securities with an average duration of
three years would generally be expected to decline by approximately 3% if
interest rates rose by one percentage point. Effective duration is a measure of
the Fund’s portfolio duration adjusted for the anticipated effect of interest
rate changes on bond and mortgage prepayment rates as determined by the Adviser.
The effective duration of the Fund’s investment portfolio may vary materially
from its target range, from time to time, and there is no assurance that the
effective duration of the Fund’s investment portfolio will always be within its
target range.
The
Adviser may also seek to manage the dollar-weighted average effective duration
of the Fund’s portfolio through the use of derivatives and other instruments
(including, among others, inverse floaters, futures contracts, U.S. Treasury
swaps, interest rate swaps, total return swaps and options, including options on
swap agreements). The Fund may incur costs in implementing duration management
strategies, and there can be no assurance that the Fund will engage in duration
management strategies or that any duration management strategy employed by the
Fund will be successful.
In
addition to its use of foreign currency exchange transactions, the Fund may use
other derivatives transactions with the purpose or effect of creating investment
leverage or for other purposes. For example, the Fund may use futures contracts
and options on futures contracts, in order to gain efficient long or short
investment exposures as an alternative to cash investments or to hedge against
portfolio exposures; swaps, to gain indirect long or short exposures to interest
rates, issuers, or currencies, or to hedge against portfolio exposures; and
total return swaps and credit derivatives (such as credit default swaps), put
and call options, and exchange-traded and structured notes, to take indirect
long or short positions on indexes, securities, or other indicators of value, or
to hedge against portfolio exposures. The Adviser considers various factors,
such as availability and cost, in deciding whether, when and to what extent to
enter into derivative transactions. The Fund will incur costs in implementing
derivatives strategies, and there can be no assurance that the Fund will engage
in derivatives strategies or that any such strategy will be successful. Any use
of derivatives strategies entails the risks of investing directly in the
securities, instruments or assets underlying the derivatives strategies, as well
as the risks of using derivatives generally, and in some cases the risks of
leverage, described in this Prospectus and in the Fund’s Statement of Additional
Information.
-85-
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including investment companies sponsored or managed by the Adviser or its
related parties. The amount of the Fund’s investment in certain investment
companies may be limited by law or by tax
considerations.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
• |
|
cash position
risk: the risk that to the extent that the Fund
holds assets in cash, cash equivalents, and other short-term investments,
the ability of the Fund to meet its objective may be
limited. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
-86-
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
focused
investment risk: the risk that a fund that invests a
substantial portion of its assets in a particular market, industry,
sector, group of industries or sectors, country, region, group of
countries or asset class is, relative to a fund that invests in a more
diverse investment portfolio, more susceptible to any single economic,
market, political, regulatory or other occurrence. This is because, for
example, issuers in a particular market, industry, region, sector or asset
class may react similarly to specific economic, market, regulatory,
political or other developments. The particular markets, industries,
regions, sectors or asset classes in which the Fund may focus its
investments may change over time and the Fund may alter its focus at
inopportune times. |
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
-87-
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
• |
|
investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other investment vehicles sponsored or advised by the Adviser or a
related party of the Adviser over investment companies sponsored or
managed by others and to maintain such investments once made due to its
own financial interest in those products and other business
considerations. |
• |
|
large
shareholder risk: the risk that certain account holders,
including the Adviser or funds or accounts over which the Adviser (or
related parties of the Adviser) has investment discretion, may from time
to time own or control a significant percentage of the Fund’s shares. The
Fund is subject to the risk that a redemption by those shareholders of all
or a portion of their Fund shares, including as a result of an asset
allocation decision made by the Adviser (or related parties of the
Adviser), will adversely affect the Fund’s performance if it is forced to
sell portfolio securities or invest cash when the Adviser would not
otherwise choose to do so. Redemptions of a large number of shares may
affect the liquidity of the Fund’s portfolio, increase the Fund’s
transaction costs, and accelerate the realization of taxable income and/or
gains to shareholders. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of that financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral |
-88-
|
relating
to a loan; (v) there may be limited public information available
regarding the loan and the relevant borrower(s); (vi) the use of a
particular interest rate benchmark may limit the Fund’s ability to achieve
a net return to shareholders that consistently approximates the average
published Prime Rate of U.S. banks; (vii) the prices of certain
floating rate loans that include a feature that prevents their interest
rates from adjusting if market interest rates are below a specified
minimum level may appreciate less than other instruments in response to
changes in interest rates should interest rates rise but remain below the
applicable minimum level; (viii) if a borrower fails to comply with
various restrictive covenants that may be found in loan agreements, the
borrower may default in payment of the loan; (ix) if the Fund invests
in loans that contain fewer or less restrictive constraints on the
borrower than certain other types of loans (“covenant-lite” loans), it may
have fewer rights against the borrowers of such loans, including fewer
protections against the possibility of default and fewer remedies in the
event of default; (x) the loan is unsecured; (xi) there is a
limited secondary market; (xii) transactions in loans may settle on a
delayed basis, and the Fund may not receive the proceeds from the sale of
a loan for a substantial period of time after the sale, which may result
in sale proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the
Fund. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
• |
|
non‑diversification risk: the
risk that, because a relatively higher percentage of the Fund’s assets may
be invested in a limited number of issuers, the Fund may be more
susceptible to any single economic, political, or regulatory occurrence
than a diversified fund investing in a broader range of issuers. A decline
in the market value of one of the Fund’s investments may affect the Fund’s
value more than if the Fund were a diversified
fund. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
portfolio
turnover risk: the risk that frequent purchases and sales of
portfolio securities may result in higher Fund expenses and may result in
larger distributions of taxable capital gains to investors as compared to
a fund that trades less
frequently. |
-89-
• |
|
restricted
securities risk: the risk that the Fund may be prevented or
limited by law or the terms of an agreement from selling a security (a
“restricted security”). To the
extent that the Fund is permitted to sell a restricted security, there can
be no assurance that a trading market will exist at any particular time,
and the Fund may be unable to dispose of the security promptly at
reasonable prices or at all. The Fund may have to bear the expense of
registering the securities for resale and the risk of substantial delays
in effecting the registration. Also, restricted securities may be
difficult to value because market quotations may not be readily available,
and the values of restricted securities may have significant
volatility. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
• |
|
short position
risk: the risk that an increase in the value of an
instrument, index or interest rate with respect to which the Fund has
established a short position will result in a loss to the
Fund. |
• |
|
sovereign debt
obligations risk: the risk that investments in debt
obligations of sovereign governments may lose value due to the government
entity’s unwillingness or inability to repay principal and interest when
due in accordance with the terms of the debt or otherwise in a timely
manner. Sovereign governments may default on their debt obligations for a
number of reasons, including social, political, economic and diplomatic
changes in countries issuing sovereign debt. The Fund may have limited (or
no) recourse in the event of a default because bankruptcy, moratorium and
other similar laws applicable to issuers of sovereign debt obligations may
be substantially different from those applicable to private issuers, and
any recourse may be subject to the political climate in the relevant
country. In addition, foreign governmental entities may enjoy various
levels of sovereign immunity, and it may be difficult or impossible to
bring a legal action against a foreign governmental entity or to enforce a
judgment against such an entity. Holders of certain foreign government
debt securities may be requested to participate in the restructuring of
such obligations and to extend further loans to their issuers. There can
be no assurance that the foreign government debt securities in which the
Fund may invest will not be subject to similar restructuring arrangements
or to requests for new credit, which may adversely affect the Fund’s
holdings. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
collateralized debt obligations, mortgage-backed securities, other types
of asset-backed securities and certain types of structured notes, may
decline in value due to changes in the underlying instruments, indexes,
interest rates or other factors on which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings
could |
-90-
|
result
in the Fund’s shareholder transactions being effected at an NAV that does
not accurately reflect the underlying value of the Fund’s portfolio,
resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
7.63% |
|
Quarter
ended 12/31/2023 |
Lowest: |
|
-7.87% |
|
Quarter
ended 12/31/2016 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
-3.82%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Global Bond
Fund |
|
One Year |
|
Five Years |
|
Since
Inception
(December 17, 2015) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
4.36% |
|
|
|
|
-2.54% |
|
|
|
|
-1.02% |
|
Return
After Taxes on Distributions |
|
|
|
4.36% |
|
|
|
|
-2.76% |
|
|
|
|
-1.30% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
2.58% |
|
|
|
|
-1.93% |
|
|
|
|
-0.83% |
|
Class N |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
4.02% |
|
|
|
|
-2.78% |
|
|
|
|
-1.26% |
|
FTSE World Government Bond Index
(reflects no deduction for fees, expenses or
taxes) |
|
|
|
5.19% |
|
|
|
|
-1.39% |
|
|
|
|
0.17% |
|
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax
returns depend on your tax situation and may differ from those shown. If you own
shares of the Fund in a tax‑advantaged account, such as a 401(k) plan or an
individual retirement account (IRA), after‑tax returns shown are not relevant to
your
-91-
investment.
The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The FTSE
World Government Bond Index (“WGBI”)
measures the performance of fixed-rate, local currency, investment grade
sovereign bonds. The WGBI is a widely used benchmark that currently includes
sovereign debt from over 20 countries, denominated in a variety of currencies,
and has more than 30 years of history available. The WGBI provides a broad
benchmark for the global sovereign fixed income market. It is not possible to
invest directly in an index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience with the Fund |
|
Primary Title with the Investment
Adviser |
Jeffrey E. Gundlach |
|
Since the Fund’s
inception in December 2015 |
|
Chief Executive
Officer |
William Campbell |
|
Since July 2016 |
|
Portfolio
Manager |
Valerie
Ho |
|
Since
July 2016 |
|
Portfolio
Manager |
Purchase
and Sale of Shares
You
may purchase or redeem Class I and Class N shares on any business day
when the New York Stock Exchange opens for regular trading. You may purchase or
redeem shares by written request via mail (DoubleLine Funds, c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire transfer,
by telephone at 877‑DLine11 (877‑354‑6311), or through authorized dealers,
brokers, or other service providers (“financial
intermediaries”). Telephone transactions will be permitted unless you
decline this privilege on your initial purchase application. The minimum initial
and subsequent investment amounts for different types of accounts are shown
below, although the Fund may reduce or waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
-92-
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-93-
Fund
Summary
DoubleLine
Infrastructure Income Fund
Investment
Objective
The
Fund’s investment objective is to seek long-term total return while striving to
generate current income.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I shares
through a broker or other financial intermediary acting as an agent on your
behalf. Such commissions and other fees, if any, are not charged by the
Fund and are not reflected in the fee table or expense example
below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
Management Fees |
|
|
0.50% |
|
|
|
0.50% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.07% |
|
|
|
0.08% |
|
Total
Annual Fund Operating Expenses |
|
|
0.57% |
|
|
|
0.83% |
|
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual
funds.
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would
be:
|
|
|
| |
|
|
Class I |
|
Class N |
1 Year |
|
$58 |
|
$85 |
3 Years |
|
$183 |
|
$265 |
5 Years |
|
$318 |
|
$460 |
10 Years |
|
$714 |
|
$1,025 |
-94-
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 49% of the average value of its
portfolio.
Principal
Investment Strategies
Under
normal market conditions, the Fund intends to invest at least 80% of its net
assets (plus the amount of borrowings for investment purposes) in
“Infrastructure Investments.” Infrastructure Investments include any assets or
projects that support the operation, function, growth or development of a
community or economy.
The
Infrastructure Investments in which the Fund may invest include, without
limitation, fixed or floating-rate debt instruments, loans or other
income-producing instruments issued:
• |
|
by
companies or other issuers to finance (or re‑finance) the ownership,
development, construction, maintenance, renovation, enhancement, or
operation of infrastructure
assets; |
• |
|
by
companies or other issuers that invest in, own, lease or hold
infrastructure assets; and |
• |
|
by
companies or other issuers that operate infrastructure assets or provide
services, products or raw materials related to the development,
construction, maintenance, renovation, enhancement or operation of
infrastructure
assets. |
The
Fund may hold instruments issued by a wide range of entities including, among
others, operating companies, holding companies, special purpose vehicles,
including vehicles created to hold or finance infrastructure assets, municipal
issuers, and governments and governmental agencies, authorities or
instrumentalities.
The
infrastructure assets to which the Fund may have exposure through its
investments include, without limitation, assets related
to:
• |
|
transportation
(e.g., airports, metro systems,
subways, railroads, ports, toll
roads); |
• |
|
transportation
equipment (e.g., shipping,
aircraft, railcars,
containers); |
• |
|
electric
utilities and power (e.g., power
generation, transmission and
distribution); |
• |
|
energy
(e.g., exploration and production,
pipeline, storage, refining and distribution of energy), including
renewable energies (e.g., wind,
solar, hydro, geothermal); |
• |
|
communication
networks and equipment; |
• |
|
water
and sewage treatment; |
• |
|
social
infrastructure (e.g., health care
facilities, government buildings and other public service facilities);
and |
• |
|
metals,
mining, and other resources and services related to infrastructure assets
(e.g., cement, chemical
companies). |
The
Fund may invest without limit in Infrastructure Investments in the United States
or in foreign countries, including emerging market countries. However, the Fund
generally seeks to invest principally in instruments denominated in U.S.
dollars.
Although,
under normal circumstances, the Fund intends to invest more than 50% of its net
assets in investment grade investments (i.e., those rated above Ba1 by Moody’s
Investors Service, Inc. or above BB+ by S&P Global Ratings, Fitch Ratings,
Inc., Kroll Bond Rating Agency or the equivalent by any other nationally
recognized rating organization) and unrated instruments considered by DoubleLine
Capital LP (the “Adviser” or “DoubleLine Capital”) to be of comparable credit
quality, the Fund may purchase investments of any credit quality, including
investments that are rated below investment grade or unrated instruments
considered by the Adviser to be of comparable credit quality. Instruments rated
below investment grade and unrated instruments of comparable quality, are high
yield, high risk bonds, commonly known as “junk bonds.”
-95-
Generally,
lower-rated debt securities offer the potential for a higher yield than higher
rated debt securities of similar maturity but are subject to greater risk of
loss of principal and interest than higher rated securities of similar
maturity.
The
Fund may invest without limit in debt obligations, loans and other
income-producing instruments where the obligation to repay principal and pay
interest or otherwise make payments to the Fund is secured by underlying
infrastructure asset(s) (e.g., a power
generating facility, aircraft, railcars, and/ or containers) or secured solely
by an equity ownership stake in a particular asset or project. Alternatively,
the Fund may invest in income-producing instruments where the obligation to
repay principal and pay interest is unsecured and backed only by the
creditworthiness of the issuer.
The
Fund may invest in debt obligations, income-producing instruments and
infrastructure-related investments of any kind, including, without limitation,
(i) project bonds; (ii) corporate obligations; (iii) loans; (iv)
mortgage-backed securities; (v) asset-backed securities (including
securities collateralized by installment loan contracts and/or leases of various
types of real and personal property such as aircraft and cellular towers); (vi)
foreign corporate securities, including emerging market securities;
(vii) enhanced equipment trust certificates and equipment trust
certificates; (viii) debt obligations issued or guaranteed by governments
or governmental agencies; (ix) credit-linked notes; (x) municipal
bonds; (xi) pass-through notes; (xii) perpetual maturity bonds; and
(xiii) other instruments bearing fixed, floating, or variable interest
rates of any maturity. The Fund may invest in any level of the capital structure
of an issuer of asset-backed securities, including the equity or “first loss”
tranche. Loans include, without limitation, secured and unsecured senior loans,
term loan Bs, mezzanine, second lien, and other subordinated loans, loan
participations and assignments, and other fixed and floating rate
loans.
The
Fund may use derivative transactions for any purpose, including to create
efficient investment exposure, create investment leverage, hedge against
portfolio exposures, create indirect long or short positions as a substitute for
a cash investment, or to manage the Fund’s duration or adjust the Fund’s
exposure to changes in market interest rates. The Fund will incur costs in
implementing derivatives strategies, and there can be no assurance that the Fund
will engage in derivatives strategies or that any such strategy will be
successful.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies, and
exchange-traded funds (“ETFs”), including
investment companies sponsored or managed by the Adviser or its related parties.
The amount of the Fund’s investment in certain investment companies may be
limited by law or by tax considerations.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Adviser intends, under normal market conditions, to construct an investment
portfolio with a dollar-weighted average effective duration of no less than two
years and no more than ten years. Duration is a measure of the expected life of
a fixed income instrument that is used to determine the sensitivity of a
security’s price to changes in interest rates. All other things remaining equal,
for each one percentage point increase in interest rates, the value of a
portfolio of fixed income securities would generally be expected to decline by
one percent for every year of the portfolio’s average duration above zero. For
example, the value of a portfolio of fixed income securities with an average
duration of three years would generally be expected to decline by approximately
3% if interest rates rose by one percentage point. Effective duration is a
measure of the Fund’s portfolio duration adjusted for the anticipated effect of
interest rate changes on bond and loan prepayment rates as determined by the
Adviser. The effective duration of the Fund’s investment portfolio may vary
materially from its target range, from time to time, and there is no assurance
that the effective duration of the Fund’s investment portfolio will always be
within its target range.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
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active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or
available |
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investments.
Any given investment strategy may fail to produce the intended results,
and the Fund’s portfolio may underperform other comparable funds because
of portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
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asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
• |
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cash position
risk: the risk that to the extent that the Fund
holds assets in cash, cash equivalents, and other short-term investments,
the ability of the Fund to meet its objective may be
limited. |
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confidential
information access risk: the risk that the intentional or
unintentional receipt of material, non‑public information (“Confidential Information”) by the Adviser
could limit the Fund’s ability to sell certain investments held by the
Fund or pursue certain investment opportunities on behalf of the Fund,
potentially for a substantial period of time. Also, certain issuers of
floating rate loans or other investments may not have any publicly traded
securities (“Private Issuers”) and
may offer private information pursuant to confidentiality agreements or
similar arrangements. The Adviser may access such private information,
while recognizing that the receipt of that information could potentially
limit the Fund’s ability to trade in certain securities, including if the
Private Issuer later issues publicly traded securities. In addition, in
circumstances when the Adviser declines to receive Confidential
Information from issuers of floating rate loans or other investments, the
Fund may be disadvantaged in comparison to other investors, including with
respect to evaluating the issuer and the price the Fund would pay or
receive when it buys or sells those investments, and the Fund may not take
advantage of investment opportunities that it otherwise might have if it
had received such Confidential Information. In managing the Fund, the
Adviser may seek to avoid the receipt of Confidential Information about
the issuers of floating rate loans or other investments being considered
for acquisition by the Fund or held in the Fund’s portfolio if the receipt
of the Confidential Information would restrict one or more of the
Adviser’s clients, including, potentially, the Fund, from trading in
securities they hold or in which they may
invest. |
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counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
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credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
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extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
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interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
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prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
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derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
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emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
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focused
investment risk: the risk that a fund that invests a
substantial portion of its assets in a particular market, industry,
sector, group of industries or sectors, country, region, group of
countries or asset class is, relative to a fund that invests in a more
diverse investment portfolio, more susceptible to any single economic,
market, political, regulatory or other occurrence. This is because, for
example, issuers in a particular market, industry, region, sector or asset
class may react similarly to specific economic, market, regulatory,
political or other developments. The particular markets, industries,
regions, sectors or asset classes in which the Fund may focus its
investments may change over time and the Fund may alter its focus at
inopportune times. |
• |
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foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
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high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
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infrastructure
sector risk: The values of the Fund’s Infrastructure
Investments may be entirely dependent upon the successful development,
construction, maintenance, renovation, enhancement or operation of
infrastructure assets or infrastructure-related projects. Accordingly, the
Fund has significant exposure to adverse economic, regulatory, political,
legal, demographic, environmental, and other developments affecting the
success of the Infrastructure Investments in which it directly or
indirectly invests. In addition to the risks described above,
sector-specific risks may adversely affect the values of the Fund’s
investments. A summary of some of the principal sector-specific risks is
included below. The inclusion of a specific risk below with respect to a
specific sector does not mean that that risk does not also apply in
respect of the Fund’s other
investments: |
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transportation:
transportation-related infrastructure assets may be
adversely affected by, among other things, economic and market changes,
fuel prices, labor relations, geo‑political concerns and insurance costs.
Transportation-related infrastructure assets and related businesses may
also be subject to significant government regulation and oversight, which
may adversely affect their
businesses. |
|
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electric
utilities and power: utility- and power-related
infrastructure assets may have difficulty obtaining financing during
periods of inflation or unsettled capital markets; may be subject to
greater competition as a result of deregulation; face changes in climate
or environmental policy; face restrictions on operations and increased
cost and delays attributable to environmental considerations and
regulation; find that existing plants, equipment or products have been
rendered obsolete by technological innovations; or be subject to increased
costs because of the scarcity of certain fuels or the effects of man‑made
or natural disasters. |
|
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energy:
energy-related infrastructure assets may be adversely
affected by one or more of the following: the levels and volatility of
global energy prices, energy supply and demand, capital expenditures on
exploration and production of energy sources, energy conservation efforts,
exchange rates, interest rates, economic conditions, tax treatment,
increased competition, government regulation, technological advances, risk
of liability from accidents resulting in injury or loss of life or
property, supply of products and services, and world
events. |
|
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renewable
energy: renewable-energy related infrastructure assets may
be adversely affected by changes in government policy relating to
incentives and subsidies for renewable energy assets, technological
developments (or the application thereof), unforeseen technical
deficiencies with installations, and the reliance of any renewable energy
project, or group of projects, on variable
resources. |
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communication
networks and equipment: infrastructure assets in the
telecommunications sector may be adversely affected by increased
competition, regulation by various regulatory authorities, distressed cash
flows due to the need to commit substantial capital to meet increasing
competition, technological advances, limited availability of franchise and
licensing rights, and high barriers to market entry. Various forms of
cyber attack threaten communication networks and could severely hamper any
infrastructure project dependent upon communication networks and
equipment. |
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public and
social infrastructure: public and social infrastructure
assets, such as hospitals, schools, government accommodations, and other
public service facilities projects, may be subject to risks that include,
but are not limited to, costs associated with governmental, environmental
and other regulations, the effects of economic slowdowns, increased
competition from other providers of such services, uncertainties
concerning costs, adverse political developments, and the level of
government spending on infrastructure
projects. |
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metals and
mining: investments in metals and mining related
infrastructure assets may be speculative and subject to greater price
volatility than investments in other types of companies. The performance
of assets in this sector is related to, among other things, worldwide
metal prices, and extraction and production
costs. |
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industrial:
industrial-related infrastructure assets may be adversely
affected by supply and demand both for their specific product or service
and for industrial sector products in general. Government regulation,
world events, exchange rates and economic conditions, changes or trends in
commodity prices, technological developments and liabilities for
environmental damage and general civil liabilities will likewise affect
the performance of these assets and their ability to repay their
debts. |
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investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other investment vehicles sponsored or advised by the Adviser or a
related party of the Adviser over investment companies sponsored or
managed by others and to maintain such investments once made due to its
own financial interest in those products and other business
considerations. |
• |
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large
shareholder risk: the risk that certain account holders,
including the Adviser or funds or accounts over which the Adviser (or
related parties of the Adviser) has investment discretion, may from time
to time own or control a significant percentage of the Fund’s shares. The
Fund is subject to the risk that a redemption by those shareholders of all
or a portion of their Fund shares, including as a result of an asset
allocation decision made by the Adviser (or related parties of the
Adviser), will adversely affect the Fund’s performance if it is forced to
sell portfolio securities or invest cash when the Adviser would not
otherwise choose to do so. Redemptions of a large number of shares may
affect the liquidity of the Fund’s portfolio, increase the Fund’s
transaction costs, and accelerate the realization of taxable income and/or
gains to shareholders. |
• |
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leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
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liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
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loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of that financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral relating to a loan; (v) there may be limited
public information available regarding the loan and the relevant
borrower(s); (vi) the use of a particular interest rate benchmark may
limit the Fund’s ability to achieve a net return to shareholders that
consistently approximates the average published Prime Rate of U.S. banks;
(vii) the prices of certain floating rate loans that include a
feature that prevents their interest rates from adjusting if market
interest rates are below a specified minimum level may appreciate less
than other instruments in response to changes in interest rates should
interest rates rise but remain below the applicable minimum level;
(viii) if a borrower fails to comply with various restrictive
covenants that may be found in loan agreements, the borrower may default
in payment of the loan; (ix) if the Fund invests in loans that
contain fewer or less restrictive constraints on the borrower than certain
other types of loans (“covenant-lite” loans), it may have fewer rights
against the borrowers of such loans, including fewer protections against
the possibility of default and fewer remedies in the event of default;
(x) the loan is unsecured; (xi) there is a limited secondary
market; (xii) transactions in loans may settle on a delayed basis,
and the Fund may not receive the proceeds from the sale of a loan for a
substantial period of time after the sale, which may result in sale
proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the
Fund. |
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market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may |
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have
to sell securities at times when the Fund would otherwise not do so, and
potentially at unfavorable prices. Certain securities may be difficult to
value during such periods. Market risk involves the risk that the value of
the Fund’s investment portfolio will change, potentially frequently and in
large amounts, as the prices of its investments go up or down. During
periods of severe market stress, it is possible that the market for some
or all of a Fund’s investments may become highly illiquid. Recently, there
have been inflationary price movements, which have caused the fixed income
securities markets to experience heightened levels of interest rate
volatility and liquidity risk. Please see “debt securities risks —
interest rate risk” herein for more
information. |
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mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
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municipal bond
risk: the risk that investing in the municipal bond market
involves the risks of investing in debt securities generally and certain
other risks. The amount of public information available about the
municipal bonds in which the Fund may invest is generally less than that
for corporate equities or bonds, and the investment performance of the
Fund’s investments in municipal bonds may therefore be more dependent on
the analytical abilities of the Adviser than its investments in other
types of bonds. The secondary market for municipal bonds also tends to be
less well developed or liquid than many other securities markets, which
may adversely affect the Fund’s ability to sell municipal bonds at
attractive prices. The ability of municipal issuers to make timely
payments of interest and principal may be diminished during general
economic downturns, by litigation, legislation or political events, or by
the bankruptcy of the issuer. The Fund may invest in revenue bonds, which
are typically issued to fund a wide variety of capital projects including
electric, gas, water and sewer systems; highways, bridges and tunnels;
port and airport facilities; colleges and universities; and hospitals.
Because the principal security for a revenue bond is generally the net
revenues derived from a particular facility or group of facilities or, in
some cases, from the proceeds of a special excise or other specific
revenue source, there is no guarantee that the particular project will
generate enough revenue to pay its obligations, in which case the Fund’s
performance may be adversely affected. Taxable municipal bonds involve
similar risks as tax‑exempt municipal bonds, including credit and market
risk. |
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operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
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restricted
securities risk: the risk that the Fund may be prevented or
limited by law or the terms of an agreement from selling a security (a
“restricted security”). To the
extent that the Fund is permitted to sell a restricted security, there can
be no assurance that a trading market will exist at any particular time,
and the Fund may be unable to dispose of the security promptly at
reasonable prices or at all. The Fund may have to bear the expense of
registering the securities for resale and the risk of substantial delays
in effecting the registration. Also, restricted securities may be
difficult to value because market quotations may not be readily available,
and the values of restricted securities may have significant
volatility. |
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securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
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structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
collateralized debt obligations, mortgage-backed securities, other types
of asset-backed securities and certain types of structured notes, may
decline in value due to changes in the underlying instruments, indexes,
interest rates or other factors on which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
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U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
-102-
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
8.70% |
|
Quarter
ended 6/30/2020 |
Lowest: |
|
-7.21% |
|
Quarter
ended 3/31/2020 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
1.37%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Infrastructure Income
Fund |
|
One Year |
|
Five Years |
|
Since Inception
(April 1, 2016) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
8.88% |
|
|
|
|
1.96% |
|
|
|
|
2.21% |
|
Return
After Taxes on Distributions |
|
|
|
7.33% |
|
|
|
|
0.63% |
|
|
|
|
0.90% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
5.21% |
|
|
|
|
0.96% |
|
|
|
|
1.14% |
|
Class N |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
8.61% |
|
|
|
|
1.71% |
|
|
|
|
1.96% |
|
Bloomberg U.S. Aggregate Bond
Index (reflects no deduction
for fees, expenses or taxes) |
|
|
|
5.53% |
|
|
|
|
1.10% |
|
|
|
|
1.12% |
|
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The
Bloomberg U.S. Aggregate Bond Index represents securities that are
SEC‑registered, taxable, and dollar denominated. This index covers the U.S.
investment-grade fixed rate bond market, with index components for government
and corporate securities, mortgage pass-through securities, and asset-backed
securities. These major sectors are subdivided into more specific indices that
are calculated and reported on a regular basis. It is not possible to invest
directly in an index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience with
the
Fund |
|
Primary Title with the
Investment
Adviser |
Damien Contes |
|
Since the Fund’s
inception in April 2016 |
|
Portfolio
Manager |
Andrew
Hsu |
|
Since
the Fund’s inception in April 2016 |
|
Portfolio
Manager |
-103-
Purchase
and Sale of Shares
You
may purchase or redeem Class I and Class N shares on any business day
when the New York Stock Exchange opens for regular trading. You may purchase or
redeem shares by written request via mail (DoubleLine Funds, c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire transfer,
by telephone at 877‑DLine11 (877‑354‑6311), or through authorized dealers,
brokers, or other service providers (“financial
intermediaries”). Telephone transactions will be permitted unless you
decline this privilege on your initial purchase application. The minimum initial
and subsequent investment amounts for different types of accounts are shown
below, although the Fund may reduce or waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular
Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and
Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-104-
Fund
Summary
DoubleLine
Income Fund
Investment
Objective
The
Fund’s investment objective is to maximize total return through investment
principally in income-producing securities.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I shares
through a broker or other financial intermediary acting as an agent on your
behalf. Such commissions and other fees, if any, are not charged by the
Fund and are not reflected in the fee table or expense example
below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
Management Fees |
|
|
0.50% |
|
|
|
0.50% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.38% |
|
|
|
0.38% |
|
Acquired Fund Fees and Expenses1 |
|
|
0.02% |
|
|
|
0.02% |
|
Total Annual Fund Operating Expenses
Before Fee Waiver and/or Expense Reimbursement |
|
|
0.90% |
|
|
|
1.15% |
|
Fee
Waiver and/or Expense Reimbursement2 |
|
|
-0.23% |
|
|
|
-0.23% |
|
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement2 |
|
|
0.67% |
|
|
|
0.92% |
|
1 |
“Acquired Fund Fees and Expenses” are
expenses indirectly incurred by the Fund as a result of its investments in
one or more underlying funds, including exchange-traded funds (“ETFs”) and money market funds. Because
these costs are indirect, the Total Annual Fund Operating Expenses in this
fee table will not correlate to the expense ratio in the Fund’s financial
statements, since financial statements only include direct costs of the
Fund and not the indirect costs of investing in the underlying
funds. |
2 |
DoubleLine
Capital LP (the “Adviser” or “DoubleLine Capital”) has contractually
agreed to waive its investment advisory fee and to reimburse the Fund for
other ordinary operating expenses to the extent necessary to limit
ordinary operating expenses to an amount not to exceed 0.65% for
Class I shares and 0.90% for Class N shares. Ordinary operating
expenses exclude taxes, commissions, mark‑ups, litigation
expenses, indemnification expenses, interest expenses, Acquired Fund Fees
and Expenses, and any extraordinary expenses. These expense limitations
will apply until at least August 1, 2025 except
that they may be terminated by the Board of Trustees at any time. To the
extent that DoubleLine Capital waives its investment advisory fee and/or
reimburses the Fund for other ordinary operating expenses, it may seek
reimbursement of a portion or all of such amounts at any time within three
fiscal years after the fiscal year in which such amounts were waived or
reimbursed. Any such recoupment may not cause the Fund’s ordinary
operating expenses to exceed the expense limitation that was in place when
the fees were waived or expenses were reimbursed. Additionally, the
Adviser would generally seek recoupment only in accordance with the terms
of any expense limitation that is in place at the time of
recoupment. |
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds.
-105-
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (taking into account the Fund’s
expense limitation or recoupment for the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
|
|
|
| |
|
|
Class I |
|
Class N |
1 Year |
|
$68 |
|
$94 |
3 Years |
|
$264 |
|
$343 |
5 Years |
|
$476 |
|
$611 |
10 Years |
|
$1,087 |
|
$1,377 |
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 66% of the average value of its
portfolio.
Principal
Investment Strategies
The
Fund seeks to achieve its investment objective by investing in a portfolio of
income-producing instruments of varying characteristics selected by the Adviser
for their potential to provide a high level of current income, capital
appreciation or both.
The
Fund will also seek to construct a portfolio that provides yield and duration
characteristics that are attractive relative to those offered by a portfolio of
corporate debt instruments by investing principally in a combination of
mortgage-backed securities, other asset-backed securities, and collateralized
loan obligations (“CLOs”).
The
Fund expects normally to invest in a combination of investment grade, below
investment grade and unrated debt instruments. The Fund may invest in securities
of any credit quality and may invest without limit in securities rated below
investment grade (securities rated Ba1 or below by Moody’s Investors Service,
Inc. and BB+ or below by S&P Global Ratings and Fitch Ratings, Inc.) and
unrated securities, including those judged by the Adviser to be of below
investment grade quality. High yield corporate bonds and certain other fixed
income instruments in which the Fund may invest are commonly known as “junk
bonds.” Mortgage-backed securities in which the Fund may invest include, without
limitation: mortgage-related securities of any maturity or type, including
residential or commercial mortgage-backed securities, those guaranteed by, or
secured by collateral that is guaranteed by, the United States Government, its
agencies, instrumentalities or sponsored corporations, and privately issued
mortgage-backed securities; pass-through securities, including government,
private, and multiclass pass-through securities; stripped mortgage securities
(interest-only and principal-only securities); inverse floaters; commercial real
estate CLOs; Real Estate Mortgage Investment Conduits (“REMICs”) and Re‑REMICs (which are REMICs that
have been re‑securitized); and those backed by collateral such
as non‑performing and/or re‑performing loans, non-qualifying mortgage
loans, and single asset, single borrower
loans.
The
other asset-backed securities in which the Fund will invest include, without
limitation: obligations backed or supported by leases of various types,
including leases of real, personal and other property (including those relating
to aircrafts, containers, railroads, telecommunication, energy, and/or other
infrastructure assets and infrastructure-related assets); securities backed by
receivables from credit card agreements and automobile finance agreements; home
equity sharing agreements; student loans; consumer loans; home equity loans;
mobile home loans; boat loans; loans of any type that contain fewer or less
restrictive constraints on the borrower than certain other types of loans
(“covenant-lite” loans); income from other non‑mortgage‑related income streams,
such as income from business and small business loans, project finance loans,
renewable energy projects, personal financial assets, timeshare receivables and
franchise rights; and CLOs, including CLOs backed by any of the previously
mentioned assets or instruments, such as CLOs backed by covenant-lite
loans.
In
pursuing its investment objective, the Fund may also invest directly in
residential or commercial real estate loans, individually or in pools of loans,
which loans may include senior mortgage loans and mezzanine loans, second lien
loans or other types of subordinated loans, any of which may be
covenant-lite.
In
selecting among available residential or commercial mortgage-backed securities,
the Fund expects to consider, among other things, available yield, duration
characteristics, collateral quality, level of correlation to other risk assets,
supply/demand technicals, and sponsor quality. With respect to asset-backed
securities, the Fund also expects to seek diversified
opportunities
-106-
with
varying risk/return profiles across different sectors of that market. The Fund
will seek CLOs that offer, among other characteristics, attractive yields,
diversification within the underlying pool of loans, and quality management. The
Fund may invest in any level of the capital structure of an issuer of
mortgage-backed or asset-backed securities, including subordinated or residual
tranches and the equity or “first loss” tranche.
The
Adviser has broad discretion to manage the Fund’s portfolio duration; however,
the Adviser expects normally to construct an investment portfolio with a
dollar-weighted average effective duration similar to, or shorter than, that of
its benchmark index, the Bloomberg U.S. Aggregate Bond Index, which was 6.13
years as of June 30, 2024. The Adviser monitors the duration of the Fund’s
portfolio securities to seek to assess and, in its discretion, adjust the Fund’s
exposure to interest rate risk. The Adviser seeks to manage the Fund’s duration
based on the Adviser’s view of, among other things, future interest rates and
market conditions. Duration is a measure of the expected life of a fixed income
instrument that is used to determine the sensitivity of a security’s price to
changes in interest rates. Effective duration is a measure of the Fund’s
portfolio duration adjusted for the anticipated effect of interest rate changes
on bond and mortgage prepayment rates as determined by the Adviser. The Fund may
invest in individual securities of any maturity or duration. The effective
duration of the Fund’s investment portfolio may vary significantly from time to
time and may be negative at certain times, and there is no assurance that the
effective duration of the Fund’s investment portfolio will remain within the
targeted range described above.
Although
the Fund will normally invest principally in mortgage-backed securities, other
asset-backed securities and CLOs, the Fund may invest in other debt instruments
of any kind. The Adviser expects to allocate and re‑allocate the
Fund’s assets among income-producing investments with varying characteristics in
response to changing market, financial, economic, and other conditions in an
attempt to construct a portfolio that maximizes total return. In addition to the
instruments described above, the Fund’s principal investments may include,
without limitation, (i) U.S. Treasury obligations, (ii) bank loans,
(iii) other securities or other income-producing instruments issued or
guaranteed by the U.S. Government, its agencies, instrumentalities or sponsored
corporations (including inflation-protected securities); (iv) collateralized
debt obligations (“CDOs”); (v) pass
through certificates or other participation rights with respect to warehouse
lending facilities; (vi) municipal securities and other debt obligations
issued by states, local governments, and government-sponsored entities,
including their agencies, authorities, and instrumentalities;
(vii) inflation-indexed bonds; (viii) real estate investment trust
(“REIT”) securities (equity, preferred or
debt); (ix) distressed and defaulted
securities; (x) payment‑in‑kind bonds;
(xi) zero‑coupon bonds; (xii) corporate bonds and other corporate
obligations, including high yield debt; (xiii) custodial receipts;
(xiv) short-term, high quality investments, including, for example, cash
equivalents, commercial paper, bankers’ acceptances, certificates of deposit,
bank time deposits, repurchase agreements, and investments in money market
mutual funds or similar pooled investments; and (xv) other instruments
bearing fixed, floating, or variable interest rates of any maturity. The
allocation of the Fund’s assets to different sectors and issuers will change
over time, sometimes rapidly, and the Fund may invest without limit in a single
sector or a small number of sectors of the fixed income
universe.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. The Fund may use derivatives transactions
with the effect of creating investment leverage. The Adviser may seek to manage
the dollar-weighted average effective duration of the Fund’s portfolio through
the use of derivatives and other instruments (including, among others, inverse
floaters, futures contracts, U.S. Treasury swaps, interest rate swaps, total
return swaps and options, including options on swap agreements). The Fund may
incur costs in implementing hedging or duration management strategies, and there
can be no assurance that the Fund will engage in hedging or duration management
strategies or that any hedging or duration management strategy employed by the
Fund will be successful.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or
available |
-107-
|
investments.
Any given investment strategy may fail to produce the intended results,
and the Fund’s portfolio may underperform other comparable funds because
of portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
• |
|
cash position
risk: the risk that to the extent that the Fund
holds assets in cash, cash equivalents, and other short-term investments,
the ability of the Fund to meet its objective may be
limited. |
• |
|
collateralized
debt obligations risk: the risks of an investment in a CDO
depend largely on the quality and type of the collateral and the tranche
of the CDO in which the Fund invests. Normally, collateralized bond
obligations, CLOs and other CDOs are privately offered and sold, and thus
are not registered under the securities laws. As a result, investments in
CDOs may be illiquid. In addition to the risks associated with debt
instruments (e.g., interest rate
risk and credit risk), CDOs carry additional risks including, but not
limited to: (i) the possibility that distributions from collateral
will not be adequate to make interest or other payments; (ii) the
quality of the collateral may decline in value or default; (iii) the
possibility that the Fund may invest in CDOs that are subordinate to other
classes of the issuer’s securities; and (iv) the complex structure of
the security may not be fully understood at the time of investment and may
produce disputes with the issuer or unexpected investment
results. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, |
-108-
|
there
have been inflationary price movements, which have caused the fixed income
securities markets to experience heightened levels of interest rate
volatility and liquidity risk. The risks associated with rising interest
rates are heightened under current market conditions given that the U.S.
Federal Reserve has raised interest rates from historically low levels and
may continue to do so. Fiscal, economic, monetary or other government
policies or measures have in the past, and may in the future, cause or
exacerbate risks associated with interest rates, including changes in
interest rates. Further, in market environments where interest rates are
rising, issuers may be less willing or able to make principal and interest
payments on fixed-income investments when
due. |
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both
the amounts and the types of loans and other financial commitments
financial services companies can make, the interest rates and fees they
can charge, the scope of their activities, the prices they can charge and
the amount of capital they must maintain; (ii) fluctuations,
including as a result of interest rate changes or increased competition,
in the availability and cost of capital funds on which the profitability
of financial services companies is largely dependent;
(iii) deterioration of the credit markets; (iv) credit losses
resulting from financial difficulties of borrowers, especially when
financial services companies are exposed to non‑diversified or
concentrated loan portfolios; (v) financial losses associated with
investment activities, especially when financial services companies are
exposed to financial leverage; (vi) the risk that any financial
services company experiences substantial declines in the valuations of its
assets, takes action to raise capital, or ceases operations;
(vii) the risk that a market shock or other unexpected market,
economic, political, regulatory, or other event might lead to a sudden
decline in the values of most or all companies in the financial services
sector; (viii) events leading to limited liquidity, defaults,
non‑performance or other adverse developments that affect financial
institutions or the financial services industry generally, or concerns or
rumors about any events of these kinds or other similar risks, leading to
market-wide liquidity problems; and (ix) the interconnectedness or
interdependence among financial services companies, including the risk
that the financial distress or failure of one financial services company
may materially and adversely affect a number of other financial services
companies. |
• |
|
focused
investment risk: the risk that a fund that invests a
substantial portion of its assets in a particular market, industry,
sector, group of industries or sectors, country, region, group of
countries or asset class is, relative to a fund that invests in a more
diverse investment portfolio, more susceptible to any single economic,
market, political, regulatory or other occurrence. This is because, for
example, issuers in a particular market, industry, region, sector or asset
class may react similarly to specific economic, market, regulatory,
political or other developments. The particular markets, industries,
regions, sectors or asset classes in which the Fund may focus its
investments may change over time and the Fund may alter its focus at
inopportune times. |
-109-
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
• |
|
investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any
exchange-traded funds or money market funds, in which the Fund invests
will not achieve its investment objective or execute its investment
strategies effectively or that significant purchase or redemption activity
by shareholders of such an investment company might negatively affect the
value of its shares. The Fund must pay its pro rata portion of an
investment company’s fees and expenses. To the extent the Adviser
determines to invest Fund assets in other investment companies, the
Adviser will have an incentive to invest in other investment vehicles
sponsored or advised by the Adviser or a related party of the Adviser over
investment companies sponsored or managed by others and to maintain such
investments once made due to its own financial interest in those products
and other business
considerations. |
• |
|
large
shareholder risk: the risk that certain account holders,
including the Adviser or funds or accounts over which the Adviser (or
related parties of the Adviser) has investment discretion, may from time
to time own or control a significant percentage of the Fund’s shares. The
Fund is subject to the risk that a redemption by those shareholders of all
or a portion of their Fund shares, including as a result of an asset
allocation decision made by the Adviser (or related parties of the
Adviser), will adversely affect the Fund’s performance if it is forced to
sell portfolio securities or invest cash when the Adviser would not
otherwise choose to do so. Redemptions of a large number of shares may
affect the liquidity of the Fund’s portfolio, increase the Fund’s
transaction costs, and accelerate the realization of taxable income and/or
gains to shareholders. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
limited
operating history risk: the risk that a fund has a limited
operating history to evaluate and may not attract sufficient assets to
achieve or maximize investment and operational
efficiencies. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of
that |
-110-
|
financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral relating to a loan; (v) there may be limited
public information available regarding the loan and the relevant
borrower(s); (vi) the use of a particular interest rate benchmark may
limit the Fund’s ability to achieve a net return to shareholders that
consistently approximates the average published Prime Rate of U.S. banks;
(vii) the prices of certain floating rate loans that include a
feature that prevents their interest rates from adjusting if market
interest rates are below a specified minimum level may appreciate less
than other instruments in response to changes in interest rates should
interest rates rise but remain below the applicable minimum level;
(viii) if a borrower fails to comply with various restrictive
covenants that may be found in loan agreements, the borrower may default
in payment of the loan; (ix) if the Fund invests in loans that
contain fewer or less restrictive constraints on the borrower than certain
other types of loans (“covenant-lite” loans), it may have fewer rights
against the borrowers of such loans, including fewer protections against
the possibility of default and fewer remedies in the event of default;
(x) the loan is unsecured; (xi) there is a limited secondary
market; (xii) transactions in loans may settle on a delayed basis,
and the Fund may not receive the proceeds from the sale of a loan for a
substantial period of time after the sale, which may result in sale
proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the Fund. The Fund may invest in loans
directly or indirectly by investing in shares of the DoubleLine Floating
Rate Fund and in either case will be subject to the risks described
above. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
real estate
sector risk: the risk that real estate-related investments
may decline in value as a result of factors affecting the real estate
sector, such as the supply of real property in certain markets, changes in
zoning laws, delays in completion of construction, changes in real estate
values, changes in property taxes, levels of occupancy, and local,
regional, and |
-111-
|
general
market conditions. Equity real estate investment trusts (“REITs”), which invest primarily in direct
fee ownership or leasehold ownership of real property and derive most of
their income from rents, are generally affected by changes in the values
of and incomes from the properties they own. Mortgage REITs invest mostly
in mortgages on real estate, which may secure, for example, construction,
development or long-term loans, and the main source of their income is
mortgage interest payments. Mortgage REITs may be affected by the credit
quality of the mortgage loans they hold. A hybrid REIT combines the
characteristics of equity REITs and mortgage REITs, generally by holding
both ownership interests and mortgage interests in real estate, and thus
may be subject to risks associated with both real estate ownership and
mortgage-related investments. Along with the risks common to different
types of real estate-related investments, REITs, no matter the type,
involve additional risk factors, including poor performance by the REIT’s
manager, adverse changes to the tax laws, and the possible failure by the
REIT to qualify for the favorable tax treatment available to REITs under
the Internal Revenue Code of 1986, as amended, or the exemption from
registration under the 1940 Act. REITs are not diversified and are heavily
dependent on cash flow earned on the property interests they
hold. |
• |
|
restricted
securities risk: the risk that the Fund may be prevented or
limited by law or the terms of an agreement from selling a security (a
“restricted security”). To the
extent that the Fund is permitted to sell a restricted security, there can
be no assurance that a trading market will exist at any particular time,
and the Fund may be unable to dispose of the security promptly at
reasonable prices or at all. The Fund may have to bear the expense of
registering the securities for resale and the risk of substantial delays
in effecting the registration. Also, restricted securities may be
difficult to value because market quotations may not be readily available,
and the values of restricted securities may have significant
volatility. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
• |
|
short position
risk: the risk that an increase in the value of an
instrument, index or interest rate with respect to which the Fund has
established a short position will result in a loss to the
Fund. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
collateralized debt obligations, mortgage-backed securities, other types
of asset-backed securities and certain types of structured notes, may
decline in value due to changes in the underlying instruments, indexes,
interest rates or other factors on which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings
could |
-112-
|
result
in the Fund’s shareholder transactions being effected at an NAV that does
not accurately reflect the underlying value of the Fund’s portfolio,
resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
7.53% |
|
Quarter
ended 6/30/2020 |
Lowest: |
|
-17.76% |
|
Quarter
ended 3/31/2020 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
5.62%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
| |
Income
Fund |
|
One Year |
|
Since
Inception
(September 3, 2019) |
Class I |
|
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
9.69% |
|
|
|
|
-0.97% |
|
Return
After Taxes on Distributions |
|
|
|
6.38% |
|
|
|
|
-3.06% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
5.64% |
|
|
|
|
-1.60% |
|
Class N |
|
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
9.39% |
|
|
|
|
-1.19% |
|
Bloomberg U.S. Aggregate Bond
Index (reflects no deduction
for fees, expenses or taxes) |
|
|
|
5.53% |
|
|
|
|
-0.78% |
|
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After
Taxes on Distributions and Sale of Fund Shares” may be higher than other return
figures because when a capital loss occurs upon the redemption of shares of the
Fund, a tax deduction is provided that may benefit
the
-113-
investor.
After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The
Bloomberg U.S. Aggregate Bond Index represents securities that are
SEC‑registered, taxable, and dollar denominated. This index covers the U.S.
investment-grade fixed rate bond market, with index components for government
and corporate securities, mortgage pass-through securities, and asset-backed
securities. These major sectors are subdivided into more specific indices that
are calculated and reported on a regular basis. It is not possible to invest
directly in an index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience
with
the
Fund |
|
Primary Title with the Investment
Adviser |
Morris Chen |
|
Since the Fund’s
inception in September 2019 |
|
Portfolio
Manager |
Andrew Hsu |
|
Since the Fund’s
inception in September 2019 |
|
Portfolio
Manager |
Ken
Shinoda |
|
Since
the Fund’s inception in September 2019 |
|
Portfolio
Manager |
Purchase
and Sale of Shares
You
may purchase or redeem Class I and Class N shares on any business day
when the New York Stock Exchange opens for regular trading. You may purchase or
redeem shares by written request via mail (DoubleLine Funds, c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire transfer,
by telephone at 877‑DLine11 (877‑354‑6311), or through authorized dealers,
brokers, or other service providers (“financial
intermediaries”). Telephone transactions will be permitted unless you
decline this privilege on your initial purchase application. The minimum initial
and subsequent investment amounts for different types of accounts are shown
below, although the Fund may reduce or waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-114-
Fund
Summary
DoubleLine
Emerging Markets Local Currency Bond Fund
Investment
Objective
The
Fund’s investment objective is to seek high total return from current income and
capital appreciation.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I shares
through a broker or other financial intermediary acting as an agent on your
behalf. Such commissions and other fees, if any, are not charged by the
Fund and are not reflected in the fee table or expense example
below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
Annual Fund Operating Expenses (expenses that
you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
Management Fees |
|
|
0.75% |
|
|
|
0.75% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
1.59% |
|
|
|
1.70% |
|
Acquired Fund Fees and Expenses1 |
|
|
0.01% |
|
|
|
0.01% |
|
Total Annual Fund Operating Expenses
Before Fee Waiver and/or Expense Reimbursement |
|
|
2.35% |
|
|
|
2.71% |
|
Fee
Waiver and/or Expense Reimbursement2 |
|
|
-1.44% |
|
|
|
-1.55% |
|
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement2 |
|
|
0.91% |
|
|
|
1.16% |
|
1 |
“Acquired Fund Fees and Expenses” are
expenses indirectly incurred by the Fund as a result of its investments in
one or more underlying funds, including exchange-traded funds (“ETFs”) and money market funds. Because
these costs are indirect, the Total Annual Fund Operating Expenses in this
fee table will not correlate to the expense ratio in the Fund’s financial
statements, since financial statements only include direct costs of the
Fund and not the indirect costs of investing in the underlying
funds. |
2 |
DoubleLine
Capital LP (the “Adviser” or “DoubleLine Capital”) has contractually
agreed to waive its investment advisory fee and to reimburse the Fund for
other ordinary operating expenses to the extent necessary to limit
ordinary operating expenses to an amount not to exceed 0.90% for
Class I shares and 1.15% for Class N shares. Ordinary operating
expenses exclude taxes, commissions, mark‑ups, litigation expenses,
indemnification expenses, interest expenses, Acquired Fund Fees and
Expenses, and any extraordinary expenses. These expense limitations will
apply until at least August 1, 2025, except
that they may be terminated by the Board of Trustees at any time. To the
extent that DoubleLine Capital waives its investment advisory fee and/or
reimburses the Fund for other ordinary operating expenses, it may seek
reimbursement of a portion or all of such amounts at any time within three
fiscal years after the fiscal year in which such amounts were waived or
reimbursed. Any such recoupment may not cause the Fund’s ordinary
operating expenses to exceed the expense limitation that was in place when
the fees were waived or expenses were reimbursed. Additionally, the
Adviser would generally seek recoupment only in accordance with the terms
of any expense limitation that is in place at the time of
recoupment. |
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds.
-115-
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (taking into account the Fund’s
expense limitation or recoupment for the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
|
|
|
| |
|
|
Class I |
|
Class N |
1 Year |
|
$93 |
|
$118 |
3 Years |
|
$595 |
|
$694 |
5 Years |
|
$1,124 |
|
$1,296 |
10 Years |
|
$2,575 |
|
$2,928 |
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 31% of the average value of its
portfolio.
Principal
Investment Strategies
The
Fund intends to invest principally in bonds of issuers in emerging market
countries denominated in local (non‑U.S.) currencies. These bonds include but
are not limited to sovereign debt; quasi-sovereign debt, such as obligations
issued by governmental agencies and instrumentalities; supra-national
obligations; and obligations of private, non‑governmental issuers. Bonds may pay
interest at fixed or variable rates and may be of any maturity. The Fund’s
investments may include government and private high yield and defaulted debt
securities; inflation-indexed securities; mortgage- and asset-backed securities;
bank loans; hybrid securities; and securities or structured products that are
linked to or derive their values from another security, asset, or currency of
any country or issuer in which the Fund may otherwise invest. High yield
corporate bonds and certain other fixed income instruments in which the Fund may
invest are commonly known as “junk bonds.”
The
Adviser interprets the term “bond” broadly as an instrument or security
evidencing what is commonly referred to as an IOU rather than evidencing the
corporate ownership of equity unless that equity represents an indirect or
derivative interest in one or more debt securities, such as the interests in the
equity tranche of a trust collateralized by debt
securities.
An
“emerging market country” is a country that, at the time the Fund invests in the
related fixed income instruments, is classified as an emerging or developing
economy by any supranational organization such as an institution in the World
Bank Group or the United Nations, or an agency thereof, or is considered an
emerging market country for purposes of constructing a major emerging market
securities index, such as the J.P. Morgan or Bank of America suite of emerging
market indices (e.g., the JP Morgan
GBI‑EM Global Diversified Index or the ICE Bank of America Broad Local Emerging
Markets non‑Sovereign Index). In allocating investments among various emerging
market countries, the portfolio managers attempt to analyze political, market,
and economic factors affecting a country. These factors may include public
finances; monetary policy; external accounts; financial markets; foreign
investment regulations; stability of exchange rate policy; and labor conditions.
Although the Fund invests principally in investments denominated in local
currencies, the Fund may invest in investments denominated in the U.S. dollar
(including U.S. Government securities). There is no limit on the percentage of
the Fund’s assets that may be invested in any single emerging market country,
currency, or issuer or any group of emerging market countries, currencies, or
issuers.
The
Fund expects normally to have significant exposure to foreign currencies, which
may be achieved by investing in bonds denominated in the local currencies of
foreign issuers or by investing in currencies directly or in currency-related
instruments, such as forward contracts. The Fund may enter into foreign currency
exchange transactions, including foreign currency futures and forward contracts
and foreign currency swaps and options, to take long or short positions in
various currencies, including currencies to which the Fund might not otherwise
have exposure, in order to benefit from changes in the values of those
currencies anticipated by the Adviser. The Fund may also enter into foreign
currency exchange transactions in order to hedge against changes in the values
of its portfolio investments due to declines in the values of the currencies in
which those investments are denominated against the U.S. dollar (although the
Fund does not expect typically to hedge portfolio currency exposures). The Fund
may use any of the instruments, or any combination of the instruments, described
above (e.g., an interest rate swap
combined with a long forward currency contract) to create long or short
synthetic positions as a substitute for a cash investment. Foreign currency
exchange transactions may have the effect of creating investment leverage in the
Fund’s portfolio, and the returns from such transactions may represent, from
time to time, a significant component of the Fund’s investment
returns.
-116-
The
Fund may invest without limitation in fixed income instruments of any credit
quality, which may include securities that are at the time of investment rated
BB+ or lower by S&P Global Ratings or Ba1 or lower by Moody’s Investor
Service, Inc. or the equivalent by any other nationally recognized statistical
rating organization or unrated securities judged by the Adviser to be of
comparable quality. The Fund may invest up to 20% of its net assets in defaulted
securities (including defaulted corporate and sovereign securities). The Fund
may invest in defaulted corporate securities, for example, when the portfolio
managers believe the restructured enterprise valuations or liquidation
valuations may exceed current market values. The Fund may invest in defaulted
sovereign securities, for example, when the portfolio managers believe the
expected recovery value is not reflected in current market
valuations.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, current fiscal policy, and the Adviser’s views
on currency values.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
In managing the Fund’s investments, under normal market conditions, the
portfolio managers intend to seek to construct an investment portfolio with a
dollar-weighted average effective duration of no less than two years and no more
than eight years. Duration is a measure of the expected life of a fixed income
instrument that is used to determine the sensitivity of a security’s price to
changes in interest rates. Effective duration is a measure of the Fund’s
portfolio duration adjusted for the anticipated effect of interest rate changes
on bond and mortgage pre‑payment rates as determined by the Adviser. The
effective duration of the Fund’s investment portfolio may vary materially from
its target range, from time to time, and there is no assurance that the
effective duration of the Fund’s investment portfolio will always be within its
target range. The Adviser may seek to manage the dollar-weighted average
effective duration of the Fund’s portfolio through the purchase and sale of
securities of different durations and through the use of derivatives and other
instruments (including, among others, inverse floaters, futures contracts, U.S.
Treasury swaps, interest rate swaps, total return swaps and options, including
options on swap agreements). The Fund may incur costs in implementing duration
management strategies, and there can be no assurance that the Fund will engage
in duration management strategies or that any duration management strategy
employed by the Fund will be successful.
The
Fund may use derivatives transactions for a variety of purposes. For example,
the Fund may use futures contracts and options on futures contracts, in order to
gain efficient long or short investment exposures as an alternative to cash
investments or to hedge against portfolio exposures; swaps, in order to gain
indirect long or short exposures to interest rates or issuers or to hedge
against portfolio exposures; and total return swaps and credit derivatives (such
as credit default swaps), put and call options, and exchange-traded and
structured notes, in order to take indirect long or short positions on indexes,
securities, or other indicators of value or to hedge against portfolio
exposures. The Adviser considers various factors, such as availability and cost,
in deciding whether, when, and to what extent to enter into derivatives
transactions. The Fund will incur costs in implementing derivatives strategies,
and there can be no assurance that the Fund will engage in derivatives
strategies or that any such strategy will be successful. Any use of derivatives
strategies entails the risks of investing directly in the securities,
instruments or assets underlying the derivatives strategies, as well as the
risks of using derivatives generally, and in some cases the risks of leverage,
described in this Prospectus and in the SAI.
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of any borrowings for investment purposes) in bonds of issuers
in emerging market countries denominated in the currencies of emerging market
countries. Issuers in emerging market countries include governmental,
quasi-governmental, and private (non‑governmental) emerging market issuers.
Private emerging market issuers include non‑governmental issuers organized under
the laws of or domiciled in an emerging market country, issuers with their
principal places of business or corporate headquarters located in an emerging
market country, or issuers where the Adviser considers the principal country
risk of such issuer to stem from one or more emerging market countries. In
assessing an issuer’s principal country risk, the Adviser will consider one or
more factors it considers significant in assessing the risk of an investment in
the issuer. Those factors will typically include one or more of the following:
the source of an issuer’s earnings, revenues, EBITDA, cash flow, or assets. The
Fund’s investments in derivatives and other synthetic instruments that provide
exposures comparable, in the judgment of the Adviser, to local currency bonds of
emerging market issuers will be counted toward satisfaction of the Fund’s 80%
policy (using, where determined appropriate in the Adviser’s discretion, an
instrument’s notional amount). Instruments, such as an ETF that invests in
bonds, that, in the judgment of the Adviser, provide characteristics of a direct
investment in one or more debt securities will also be counted toward
satisfaction of the Fund’s 80% policy.
-117-
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers perceive deterioration in the credit fundamentals of
the issuer, when the portfolio managers consider that changes or anticipated
changes in currency values favor the sale of the security, when the portfolio
managers believe there are negative macro geo‑political considerations that may
affect the issuer, when the portfolio managers determine to take advantage of a
better investment opportunity, or when the individual security has reached the
portfolio managers’ sell target. The Adviser may engage in active and frequent
trading of the Fund’s portfolio investments. To the extent that it does so, the
Fund may incur greater transaction costs and may make greater distributions of
income and gains, which will be taxable to shareholders who do not hold their
shares through a tax‑advantaged or tax‑deferred
account.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including those sponsored or managed by the Adviser or its related
parties.
The
Fund may from time to time hold a portion of its assets in cash, cash
equivalents, or other short-term investments for a number of reasons, including,
for example, for temporary defensive purposes, to satisfy future redemption
requests, pending the investment of subscription proceeds, or when the Adviser
otherwise determines for investment purposes to hold a portion of the Fund’s
assets in cash or similar investments.
The
Fund is classified as a non‑diversified fund under the Investment Company Act of
1940, as amended, and may invest in the securities of a smaller number of
issuers than a diversified fund.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
• |
|
cash position
risk: the risk that to the extent that the Fund
holds assets in cash, cash equivalents, and other short-term investments,
the ability of the Fund to meet its objective may be
limited. |
• |
|
collateralized
debt obligations risk: the risks of an investment in a
collateralized debt obligation (“CDO”) depend largely on the quality and
type of the collateral and the tranche of the CDO in which the Fund
invests. Normally, collateralized bond obligations, collateralized loan
obligations and other CDOs are privately offered and sold, and thus are
not registered under the securities laws. As a result, investments in CDOs
may be illiquid. In addition to the risks associated with debt instruments
(e.g., interest rate risk and
credit risk), CDOs carry additional risks including, but not limited to:
(i) the possibility that distributions from collateral will not be
adequate to make interest or other payments; (ii) the quality of the
collateral may decline in value or default; (iii) the possibility
that the Fund may invest in CDOs that are subordinate to other classes of
the issuer’s securities; and (iv) the complex structure of the
security may not be fully understood at the time of investment and may
produce disputes with the issuer or unexpected investment
results. |
-118-
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when
a |
-119-
|
derivative
is used as a substitute for or alternative to a direct cash investment,
the transaction may not provide a return that corresponds precisely or at
all with that of the cash investment; that the positions may be improperly
executed or constructed; that the Fund’s counterparty will be unable or
unwilling to perform its obligations; or that, when used for hedging
purposes, derivatives will not provide the anticipated protection, causing
the Fund to lose money on both the derivatives transaction and the
exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both
the amounts and the types of loans and other financial commitments
financial services companies can make, the interest rates and fees they
can charge, the scope of their activities, the prices they can charge and
the amount of capital they must maintain; (ii) fluctuations,
including as a result of interest rate changes or increased competition,
in the availability and cost of capital funds on which the profitability
of financial services companies is largely dependent;
(iii) deterioration of the credit markets; (iv) credit losses
resulting from financial difficulties of borrowers, especially when
financial services companies are exposed to non‑diversified or
concentrated loan portfolios; (v) financial losses associated with
investment activities, especially when financial services companies are
exposed to financial leverage; (vi) the risk that any financial
services company experiences substantial declines in the valuations of its
assets, takes action to raise capital, or ceases operations;
(vii) the risk that a market shock or other unexpected market,
economic, political, regulatory, or other event might lead to a sudden
decline in the values of most or all companies in the financial services
sector; (viii) events leading to limited liquidity, defaults,
non‑performance or other adverse developments that affect financial
institutions or the financial services industry generally, or concerns or
rumors about any events of these kinds or other similar risks, leading to
market-wide liquidity problems; and (ix) the interconnectedness or
interdependence among financial services companies, including the risk
that the financial distress or failure of one financial services company
may materially and adversely affect a number of other financial services
companies. |
• |
|
focused
investment risk: the risk that a fund that invests a
substantial portion of its assets in a particular market, industry,
sector, group of industries or sectors, country, region, group of
countries or asset class is, relative to a fund that invests in a more
diverse investment portfolio, more susceptible to any single economic,
market, political, regulatory or other occurrence. This is because, for
example, issuers in a particular market, industry, region, sector or asset
class may react similarly to specific economic, market, regulatory,
political or other developments. The particular markets, industries,
regions, sectors or asset classes in which the Fund may focus its
investments may change over time and the Fund may alter its focus at
inopportune times. |
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
-120-
• |
|
inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
• |
|
investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other investment vehicles sponsored or advised by the Adviser or a
related party of the Adviser over investment companies sponsored or
managed by others and to maintain such investments once made due to its
own financial interest in those products and other business
considerations. |
• |
|
large
shareholder risk: the risk that certain account holders,
including the Adviser or funds or accounts over which the Adviser (or
related parties of the Adviser) has investment discretion, may from time
to time own or control a significant percentage of the Fund’s shares. The
Fund is subject to the risk that a redemption by those shareholders of all
or a portion of their Fund shares, including as a result of an asset
allocation decision made by the Adviser (or related parties of the
Adviser), will adversely affect the Fund’s performance if it is forced to
sell portfolio securities or invest cash when the Adviser would not
otherwise choose to do so. Redemptions of a large number of shares may
affect the liquidity of the Fund’s portfolio, increase the Fund’s
transaction costs, and accelerate the realization of taxable income and/or
gains to shareholders. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
limited
operating history risk: the risk that a fund has a limited
operating history to evaluate and may not attract sufficient assets to
achieve or maximize investment and operational
efficiencies. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of that financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral relating to a loan; (v) there may be limited
public information available regarding the loan and the relevant
borrower(s); (vi) the use of a particular interest rate benchmark may
limit the Fund’s ability to achieve a net return to shareholders that
consistently approximates the average published Prime Rate of U.S. banks;
(vii) the prices of certain floating rate loans that include a
feature that prevents their interest rates from adjusting if market
interest rates are below a specified minimum level may appreciate less
than other instruments in response to changes in interest rates should
interest rates rise but remain below the applicable minimum level;
(viii) if a borrower fails to comply with various restrictive
covenants that may be found in loan agreements, the borrower may default
in payment of the loan; (ix) if the Fund invests in loans that
contain fewer or less restrictive constraints on the borrower than certain
other types of loans (“covenant-lite” loans), it may have fewer rights
against the borrowers of such loans, including fewer protections against
the possibility of default and fewer remedies in the event of default;
(x) the loan is unsecured; (xi) there is a limited secondary
market; (xii) transactions in loans may settle on a delayed basis,
and the Fund may not receive the proceeds from the sale of a loan for a
substantial period of time after the sale, which may result in sale
proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the Fund. The Fund may invest in loans
directly or indirectly by investing in shares of the DoubleLine Floating
Rate Fund and in either case will be subject to the risks described
above. |
-121-
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
• |
|
non‑diversification risk: the
risk that, because a relatively higher percentage of the Fund’s assets may
be invested in a limited number of issuers, the Fund may be more
susceptible to any single economic, political, or regulatory occurrence
than a diversified fund investing in a broader range of issuers. A decline
in the market value of one of the Fund’s investments may affect the Fund’s
value more than if the Fund were a diversified
fund. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
restricted
securities risk: the risk that the Fund may be prevented or
limited by law or the terms of an agreement from selling a security (a
“restricted security”). To the
extent that the Fund is permitted to sell a restricted security, there can
be no assurance that a trading market will exist at any particular time,
and the Fund may be unable to dispose of the security promptly at
reasonable prices or at all. The Fund may have to bear the expense of
registering the securities for resale and the risk of substantial delays
in effecting the registration. Also, restricted securities may be
difficult to value because market quotations may not be readily available,
and the values of restricted securities may have significant
volatility. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
-122-
• |
|
short position
risk: the risk that an increase in the value of an
instrument, index or interest rate with respect to which the Fund has
established a short position will result in a loss to the
Fund. |
• |
|
sovereign debt
obligations risk: the risk that investments in debt
obligations of sovereign governments may lose value due to the government
entity’s unwillingness or inability to repay principal and interest when
due in accordance with the terms of the debt or otherwise in a timely
manner. Sovereign governments may default on their debt obligations for a
number of reasons, including social, political, economic and diplomatic
changes in countries issuing sovereign debt. The Fund may have limited (or
no) recourse in the event of a default because bankruptcy, moratorium and
other similar laws applicable to issuers of sovereign debt obligations may
be substantially different from those applicable to private issuers, and
any recourse may be subject to the political climate in the relevant
country. In addition, foreign governmental entities may enjoy various
levels of sovereign immunity, and it may be difficult or impossible to
bring a legal action against a foreign governmental entity or to enforce a
judgment against such an entity. Holders of certain foreign government
debt securities may be requested to participate in the restructuring of
such obligations and to extend further loans to their issuers. There can
be no assurance that the foreign government debt securities in which the
Fund may invest will not be subject to similar restructuring arrangements
or to requests for new credit, which may adversely affect the Fund’s
holdings. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
CDOs, mortgage-backed securities, other types of asset-backed securities
and certain types of structured notes, may decline in value due to changes
in the underlying instruments, indexes, interest rates or other factors on
which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
-123-
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
8.75% |
|
Quarter
ended 12/31/2020 |
Lowest: |
|
-13.29% |
|
Quarter
ended 3/31/2020 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
-4.51%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
| |
Emerging Markets Local
Currency Bond Fund |
|
One Year |
|
Since Inception
(June 28,
2019) |
Class I |
|
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
12.49% |
|
|
|
|
-0.41% |
|
Return
After Taxes on Distributions |
|
|
|
11.59% |
|
|
|
|
-1.13% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
7.42% |
|
|
|
|
-0.60% |
|
Class N |
|
Return
Before Taxes |
|
|
|
12.15% |
|
|
|
|
-0.66% |
|
J.P. Morgan GBI‑EM Global Diversified Index
(reflects no deduction for fees, expenses or
taxes) |
|
|
|
12.70% |
|
|
|
|
-0.59% |
|
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The J.P.
Morgan Government Bond Index Emerging Markets Global Diversified is a
custom-weighted index that tracks local currency bonds issued by emerging market
governments, excluding China and India, and has a broader roster of countries
than the base index, J.P. Morgan Government Bond Index Emerging Markets, which
limits inclusion to countries that are readily accessible and where no
impediments exist for foreign investors. It is not possible to invest directly
in an index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
-124-
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience with the Fund |
|
Primary Title with the Investment
Adviser |
William Campbell |
|
Since the Fund’s
inception in June 2019 |
|
Portfolio
Manager |
Mark W. Christensen |
|
Since the Fund’s
inception in June 2019 |
|
Portfolio
Manager |
Valerie Ho |
|
Since the Fund’s
inception in June 2019 |
|
Portfolio
Manager |
Su
Fei Koo |
|
Since
the Fund’s inception in June 2019 |
|
Portfolio
Manager |
Purchase
and Sale of Shares
You
may purchase or redeem Class I and Class N shares on any business day
when the New York Stock Exchange opens for regular trading. You may purchase or
redeem shares by written request via mail (DoubleLine Funds, c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire transfer,
by telephone at 877‑DLine11 (877‑354‑6311), or through authorized dealers,
brokers, or other service providers (“financial
intermediaries”). Telephone transactions will be permitted unless you
decline this privilege on your initial purchase application. The minimum initial
and subsequent investment amounts for different types of accounts are shown
below, although the Fund may reduce or waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and
Automatic
Investment
Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-125-
Fund
Summary
DoubleLine
Multi-Asset Trend Fund
Investment
Objective
The
Fund’s investment objective is to seek total return (capital appreciation and
current income) which exceeds the total return of its benchmark index over a
full market cycle. The Fund’s current benchmark index is the Credit Suisse
Managed Futures Liquid Total Return USD
Index.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I shares
through a broker or other financial intermediary acting as an agent on your
behalf. Such commissions and other fees, if any, are not charged by the
Fund and are not reflected in the fee table or expense example
below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
Annual Fund Operating Expenses1 (expenses that you
pay each year as a percentage of the value of your investment)
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
Management Fees |
|
|
0.50% |
|
|
|
0.50% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.91% |
|
|
|
0.89% |
|
Acquired Fund Fees and Expenses2 |
|
|
0.38% |
|
|
|
0.38% |
|
Total Annual Fund Operating Expenses
Before Fee Waiver and/or Expense Reimbursement |
|
|
1.79% |
|
|
|
2.02% |
|
Fee
Waiver and/or Expense Reimbursement3 |
|
|
-1.07% |
|
|
|
-1.07% |
|
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement2,3 |
|
|
0.72% |
|
|
|
0.95% |
|
1 |
The
Fund enters into index-related swap transactions. The level of the index
itself will be reduced by a number of assumed expenses or charges; in
addition, the Fund may incur additional fees payable to its swap
counterparties. Those fees and costs reduce the index-based returns to the
Fund under the swaps. During the Fund’s most recent fiscal year, those
expenses and charges were approximately 1.95% of the Fund’s net assets.
The amounts of those expenses or charges will change over time based on,
among other things, changes in the composition of the index. None of these
fees and costs are reflected in the table above or in the example below.
See “Index Risk — Note regarding Index-Based Swaps” for more information
regarding such fees and costs. |
2 |
“Acquired Fund Fees and Expenses” are
expenses indirectly incurred by the Fund as a result of its investments in
one or more underlying funds, including exchange-traded funds (“ETFs”) and money market funds. Because
these costs are indirect, the Total Annual Fund Operating Expenses in this
fee table will not correlate to the expense ratio in the Fund’s financial
statements, since financial statements only include direct costs of the
Fund and not the indirect costs of investing in the underlying
funds. When the Fund invests in other investment vehicles
sponsored or advised by DoubleLine Alternatives LP (the “Adviser” or “DoubleLine Alternatives”) or a related
party of the Adviser (“other DoubleLine
funds”), the Adviser has contractually agreed to waive its advisory
fee in an amount equal to the advisory fees paid by the other DoubleLine
funds in respect of Fund assets so invested. The Adviser waived advisory
fees in the amount of 0.30% pursuant to this waiver agreement in respect
of investments made in other DoubleLine funds during the Fund’s most
recent fiscal year. The effects of this waiver agreement are reflected in
the last two rows of the table above. This waiver agreement will apply
until at least August 1, 2025, except that it may be terminated at
any time with the consent of the Board of
Trustees. |
-126-
3 |
The
Adviser has contractually agreed to waive its investment advisory fee and
to reimburse the Fund for other ordinary operating expenses to the extent
necessary to limit ordinary operating expenses to an amount not to exceed
0.65% for Class I shares and 0.90% for Class N shares. Ordinary
operating expenses exclude taxes, commissions, mark‑ups, litigation
expenses, indemnification expenses, interest expenses, Acquired Fund Fees
and Expenses, and any extraordinary expenses. These expense limitations
will apply until at least August 1, 2025, except
that they may be terminated by the Board of Trustees at any time. To the
extent that the Adviser waives its investment advisory fee and/or
reimburses the Fund for other ordinary operating expenses, it may seek
reimbursement of a portion or all of such amounts at any time within three
fiscal years after the fiscal year in which such amounts were waived or
reimbursed. The Adviser will seek recoupment in accordance with the terms
of any expense limitation that is in place at the time of recoupment, and
any such recoupment may not cause the Fund’s ordinary operating expenses
to exceed the expense limitation that was in place when the fees were
waived or expenses were
reimbursed. |
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual
funds.
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (taking into account the Fund’s
expense limitation for the first year). Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
|
|
|
| |
|
|
Class I |
|
Class N |
1 Year |
|
$74 |
|
$97 |
3 Years |
|
$459 |
|
$530 |
5 Years |
|
$869 |
|
$989 |
10 Years |
|
$2,017 |
|
$2,262 |
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
period, the Fund’s portfolio turnover rate was 17% of the average value of its portfolio.
However, the portfolio turnover rate is determined using a required formula
which does not call for the inclusion of cash or cash equivalent instruments or
certain derivatives transactions. If the Fund’s transactions in cash and cash
equivalent instruments and derivatives were reflected in the calculation, the
Fund’s portfolio turnover rate shown would be
higher.
Principal
Investment Strategies
The
Fund seeks total return (capital appreciation and current income) which exceeds
the total return of its benchmark index over a full market cycle. The Fund’s
current benchmark index is the Credit Suisse Managed Futures Liquid Total Return
USD Index, which was selected as a measure of the performance of a number of
trend following investment strategies. Trend following is an investment approach
that seeks to invest in a manner that will benefit from persistent trends in
price movements, whether that trend is the appreciation or depreciation of an
asset’s value.
With
a portion of its assets, the Fund will seek to use derivatives, or a combination
of derivatives and direct investments, to provide a return that approximates,
before fees and expenses, the performance of the BNP Paribas Multi-Asset Trend
Index (the “Index”). The Index has been
designed to seek investment exposure to trends in price movements of a broad
universe of assets across different markets, including domestic, foreign and
emerging market equities, sovereign bonds and other debt securities, interest
rates, currencies and commodities (e.g., energy and precious and industrial
metals). The Index was selected, in significant part, because it reflects trend
following strategies using a broadly diversified set of investments. The Fund’s
investment adviser believes an investment program that includes exposure to the
Index as well as the other investments described below provides the potential to
earn incremental return that is not highly correlated with the performance of
traditional investment strategies and asset
classes.
The
Fund will separately invest in a portfolio of debt securities to seek to provide
additional total return over the long term. The Fund may invest directly in debt
instruments or it may invest all or a portion of the Fund’s assets in one or
more fixed income funds advised by DoubleLine Capital LP (“DoubleLine Capital”) or a related party of
DoubleLine Capital.
-127-
The Fund uses investment leverage as part of its
principal investment strategies. The Fund expects normally to invest an amount
approximately equal to its net assets in a portfolio of debt securities while
also maintaining notional exposure to the Index, providing the Fund with
economic exposure to the Index in an amount up to the value of the Fund’s net
assets. As a result, the Fund’s total investment exposure (investments in debt
securities plus notional exposure to the Index) will typically be equal to
approximately 200% of the Fund’s net asset value (“NAV”).
It is possible that the Fund could lose money on both its investments in debt
securities and its exposure to the Index at the same time.
The
Fund intends to use derivatives in an attempt to create an investment return
that approximates (before fees and expenses) the Index’s return. The Fund will
use primarily swap transactions, although the Fund may also use futures
transactions, where the reference asset is the Index or a modified version of
the Index, one or more components of the Index, or an unrelated index or basket
of securities. Please see “Index Risk — Note regarding Index-Based Swaps” in the
Fund’s Prospectus for more information. The Fund expects to use only a small
percentage of its assets to attain the desired exposure to the Index because of
the structure of the derivatives the Fund will use. As a result, use of those
derivatives, combined with the Fund’s investments in a portfolio of debt
securities, will create investment leverage in the Fund’s portfolio. In certain
cases, derivatives based on the Index or that use the Index as the reference
asset might be unavailable or the pricing of those derivatives might be
unfavorable; in those cases, the Fund may attempt to approximate the Index’s
return by purchasing some or all of the components of the Index, or portions of
the Index, at the time.
To
the extent use of the above-described derivatives strategy leaves a substantial
portion of the Fund’s assets available for other investment by the Fund, the
Fund will invest those assets in a portfolio of debt instruments managed by
DoubleLine Capital, the Fund’s sub‑adviser, to seek to provide additional total
return over the long term. References to the “Adviser” in this section and in
“Principal Risks” below shall refer to DoubleLine Alternatives, the Fund’s
investment adviser, except in the case of the discussion of the Fund’s principal
investment strategies and principal risks that relate to investing directly in
debt securities, in which cases “Adviser” shall refer to DoubleLine Capital, the
sub‑adviser to the Fund and the entity primarily responsible for the day‑to‑day
management of the Fund’s fixed income
portfolio.
The BNP Paribas Multi-Asset Trend Index. The
Index is an index the performance of which is designed to reflect exposure to a
diverse range of asset classes and geographic regions, weighted based on
performance trends and historical volatility. These asset classes and
instruments include equities, bonds, commodities, foreign exchange rates and
credit default swap instruments. The asset classes are represented in the Index
by futures contracts on 19 domestic, foreign and emerging market equity indices,
15 developed market interest rates, 13 commodities (including energy and
precious and industrial metals), and 7 developed market currencies, as well as 4
credit indices (each an “Index
Component”). The Index’s composition is determined daily based on
historical trends in the price or level of each Index Component, the short-term
and long-term variance of the Index Components, and the covariance between the
Index Components, all subject to weighting constraints and a targeted volatility
level for the Index of 8%. The Index is denominated in U.S. dollars (“USD”). For all Index Components that are not
denominated in USD, non‑U.S. currencies will be converted to USD for purposes of
determining the composition of the Index. The calculation of the level of the
Index is reduced by a number of assumed expenses; see footnote 1 to the Fund’s
table entitled “Annual Fund Operating Expenses” in the Fund
Summary.
If
derivatives designed to provide the Fund a return approximating the Index’s
return become unavailable or cost prohibitive or DoubleLine Alternatives
determines against investing in them for any reason, DoubleLine Alternatives may
seek investment exposure to the asset classes and instruments comprising the
Index by investing directly in some or all of the components of the Index or in
other investments that, in DoubleLine Alternatives’ view, provide similar
investment exposure to that provided by one or more components of or asset
classes represented in the Index. DoubleLine Alternatives or the Fund’s Board of
Trustees may in their sole discretion and without advance notice to shareholders
select, in place of the Index, another trend following index or a basket of
investments. The Fund may gain exposure to any substitute index or basket of
investments in any manner DoubleLine Alternatives determines appropriate,
including those described above with respect to how the Fund may obtain exposure
to the Index.
The
Fund intends to invest only a portion of its assets to obtain exposure to the
Index; the Fund’s overall portfolio is not designed to replicate the performance
of any index. Even if the Fund’s investments in derivative instruments perform
in‑line with the Index, the Fund’s performance will deviate, potentially
significantly, from the performance of any index used by the Fund because of,
among other factors, the performance of the Fund’s investments in fixed income
instruments and the investment, operational and other expenses that the Fund
incurs.
The
Fund will likely enter into swap transactions related to the Index with a
limited number of counterparties for the foreseeable future and, until the Fund
grows significantly, the Fund expects to obtain exposure to the Index through
swap transactions with a single counterparty, BNP
Paribas.
The Fund’s Investments in Debt Instruments.
Under normal circumstances, to the extent use of the above-described derivatives
strategy leaves a substantial portion of the Fund’s assets available for other
investment by the Fund, the Fund
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intends
to invest those assets in a portfolio of debt instruments managed by DoubleLine
Capital to seek to provide additional total return over the long term. The Fund
expects that it will, at least initially, invest all or substantially all of its
cash available for investment in debt securities in one or more fixed income
funds advised by DoubleLine Capital, including DoubleLine Low Duration Bond
Fund, DoubleLine Floating Rate Fund, and/or DoubleLine Income
Fund.
As
the Fund achieves greater scale, the Fund expects to invest to a greater extent
directly in debt instruments. Debt instruments in which the Fund may invest
include, by way of example, (i) securities or other income-producing
instruments issued or guaranteed by the U.S. Government, its agencies,
instrumentalities or sponsored corporations (including inflation-protected
securities); (ii) corporate obligations; (iii) mortgage-backed securities
(including commercial and residential mortgage-backed securities) and other
asset-backed securities, collateralized mortgage obligations, government
mortgage pass-through securities, multiclass pass-through securities, private
mortgage pass-through securities, stripped mortgage securities (e.g., interest-only and principal-only
securities), and inverse floaters; (iv) collateralized debt obligations
(“CDOs”), including collateralized loan
obligations (“CLOs”); (v) foreign
securities (corporate and government, including foreign hybrid securities),
including emerging market securities; (vi) fixed and floating rate loans of
any kind (including, among others, bank loans, assignments, participations,
senior loans, second lien or other subordinated or unsecured fixed or floating
rate loans, debtor‑in‑possession loans, exit facilities, delayed funding loans
and revolving credit facilities), which may take the form of loans that contain
fewer or less restrictive constraints on the borrower than certain other types
of loans (“covenant-lite” loans); (vii) municipal securities and other debt
obligations issued by states, local governments, and government-sponsored
entities, including their agencies, authorities, and instrumentalities;
(viii) inflation-indexed bonds; (ix) convertible securities;
(x) preferred securities; (xi) real estate investment trust (“REIT”) securities; (xii) payment‑in‑kind
bonds; (xiii) zero‑coupon bonds; (xiv) custodial receipts, cash and
cash equivalents; (xv) short-term, high quality investments, including, for
example, commercial paper, bankers’ acceptances, certificates of deposit, bank
time deposits, repurchase agreements, and investments in money market mutual
funds or similar pooled investments; and (xvi) other instruments bearing
fixed, floating, or variable interest rates of any maturity. The Fund may invest
in any level of the capital structure of an issuer of mortgage-backed or
asset-backed securities, but does not intend to invest in the equity or “first
loss” tranche of such investments.
In
managing the Fund’s portfolio of debt instruments, under normal market
conditions, the portfolio managers will seek to construct an investment
portfolio with an overall dollar-weighted average effective duration of between
one year and three years. Duration is a measure of the expected life of a fixed
income instrument that is used to determine the sensitivity of a security’s
price to changes in interest rates. Effective duration is a measure of the
Fund’s portfolio duration adjusted for the anticipated effect of interest rate
changes on bond and mortgage prepayment rates as determined by DoubleLine
Capital. The longer a portfolio’s effective duration, the more sensitive it will
be to changes in interest rates. The effective duration of the Fund’s portfolio
of debt instruments may vary materially from its target range, from time to
time, and there is no assurance that the effective duration of the portfolio
will always be within its target range. DoubleLine Capital monitors the
effective duration of the Fund’s portfolio of debt instruments to seek to assess
and, in its discretion, adjust the Fund’s exposure to interest rate
risk.
The
Fund may invest in debt instruments of any credit quality, which may include
securities that are at the time of investment unrated or rated BB+ or lower by
S&P Global Ratings or Ba1 or lower by Moody’s Investors Service, Inc. or the
equivalent by any other nationally recognized statistical rating organization or
unrated securities judged by DoubleLine Capital to be of comparable quality.
Corporate bonds and certain other fixed income instruments rated below
investment grade, or such instruments that are unrated and determined by
DoubleLine Capital to be of comparable quality, are high yield, high risk bonds,
commonly known as “junk bonds.” Generally, lower-rated debt securities offer a
higher yield than higher-rated debt securities of similar maturity but are
subject to greater risk of loss of principal and interest than higher-rated
securities of similar maturity. The Fund may invest up to 331/3% of its net assets in junk
bonds, bank loans and assignments rated below investment grade or unrated but
determined by DoubleLine Capital to be of comparable quality, and credit default
swaps of companies in the high yield universe. DoubleLine Capital does not
consider the term “junk bonds” to include any mortgage-backed securities or any
other asset-backed securities, regardless of their credit rating or credit
quality, and accordingly may invest without limit in such
investments.
The
Fund may invest a portion of its assets in inverse floater securities and
interest-only and principal-only securities. An inverse floater is a type of
instrument, which may be backed by or related to a mortgage-backed security,
that bears a floating or variable interest rate that moves in the opposite
direction to movements in interest rates generally or the interest rate on
another security or index. Because an inverse floater inherently carries
financial leverage in its coupon rate, it can change very substantially in value
in response to changes in interest
rates.
The
Fund may invest a portion of its assets in debt instruments (including hybrid
securities) issued or guaranteed by companies, financial institutions and
government entities in emerging market countries. An “emerging market country”
is a country that, at the time the Fund invests in the related fixed income
instruments, is classified as an emerging or developing
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economy
by any supranational organization such as an institution in the World Bank Group
or the United Nations, or an agency thereof, or is considered an emerging market
country for purposes of constructing a major emerging market securities
index.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including those sponsored or managed by DoubleLine Capital or its related
parties. The Fund may engage in short sales or take short positions, either to
earn additional return or to hedge existing
investments.
The
portfolio managers utilize active asset allocation in managing the Fund’s
investments in debt instruments.
The Fund’s Investments in Commodities. The Fund
may obtain commodities exposures by investing in one or more subsidiary private
investment vehicles organized outside the United States that invest directly or
indirectly in commodities and commodity-related investments or in derivatives
transactions relating to commodities where DoubleLine Alternatives determines
that it may benefit the Fund if the subsidiary invests in those transactions.
DoubleLine Multi-Asset Trend Ltd., a wholly-owned subsidiary of the Fund (the
“Subsidiary”), is currently expected to
participate in such investments. The Fund does not expect to invest more than
25% of its assets in a subsidiary, though its investments in the Subsidiary may
exceed 25% of its assets from time to time. To the extent the Fund’s swap
investments involve commodities, the Subsidiary typically will engage in the
swap transactions and the Fund will obtain commodities exposure
indirectly.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
• |
|
collateralized
debt obligations risk: the risks of an investment in a CDO
depend largely on the quality and type of the collateral and the tranche
of the CDO in which the Fund invests. Normally, collateralized bond
obligations, CLOs and other CDOs are privately offered and sold, and thus
are not registered under the securities laws. As a result, investments in
CDOs may be illiquid. In addition to the risks associated with debt
instruments (e.g., interest rate
risk and credit risk), CDOs carry additional risks including, but not
limited to: (i) the possibility that distributions from collateral
will not be adequate to make interest or other payments; (ii) the
quality of the collateral may decline in value or default; (iii) the
possibility that the Fund may invest in CDOs that are subordinate to other
classes of the issuer’s securities; and (iv) the complex structure of
the security may not be fully understood at the time of investment and may
produce disputes with the issuer or unexpected investment
results. |
• |
|
commodities
risk: the risk that the value of the Fund’s shares may be
affected by changes in the values of the Fund’s investment exposures to
commodities or commodity-related instruments, which may be extremely
volatile and difficult to value. The value of commodities and
commodity-related instruments may be affected by, among other factors,
market movements, commodity index volatility, changes in interest rates,
or factors affecting supply, demand and/or other market fundamentals with
respect to a particular sector, industry or commodity, such as embargoes,
tariffs and international |
-130-
|
economic,
political and regulatory developments. The Fund will likely at times have
significant exposure to particular sectors through its commodities-related
investments, including, for example, the energy sector, industrial metals,
and precious metals and may be exposed to greater risk associated with
events affecting those
sectors. |
• |
|
confidential
information access risk: the risk that the intentional or
unintentional receipt of material, non‑public information (“Confidential Information”) by the Adviser
could limit the Fund’s ability to sell certain investments held by the
Fund or pursue certain investment opportunities on behalf of the Fund,
potentially for a substantial period of time. Also, certain issuers of
floating rate loans or other investments may not have any publicly traded
securities (“Private Issuers”) and
may offer private information pursuant to confidentiality agreements or
similar arrangements. The Adviser may access such private information,
while recognizing that the receipt of that information could potentially
limit the Fund’s ability to trade in certain securities, including if the
Private Issuer later issues publicly traded securities. In addition, in
circumstances when the Adviser declines to receive Confidential
Information from issuers of floating rate loans or other investments, the
Fund may be disadvantaged in comparison to other investors, including with
respect to evaluating the issuer and the price the Fund would pay or
receive when it buys or sells those investments, and the Fund may not take
advantage of investment opportunities that it otherwise might have if it
had received such Confidential Information. In managing the Fund, the
Adviser may seek to avoid the receipt of Confidential Information about
the issuers of floating rate loans or other investments being considered
for acquisition by the Fund or held in the Fund’s portfolio if the receipt
of the Confidential Information would restrict one or more of the
Adviser’s clients, including, potentially, the Fund, from trading in
securities they hold or in which they may
invest. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. To the extent that the Fund enters into multiple transactions
with a single or a small set of counterparties, it will be subject to
increased counterparty risk. |
|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates
from |
-131-
|
historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by an Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
equity issuer
risk: the risk that the market price of common stocks and
other equity securities may go up or down, sometimes rapidly or
unpredictably, including due to factors affecting equity securities
markets generally, particular industries represented in those markets, or
the issuer itself. |
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the values of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
index risk:
the risk that the Fund’s investments in derivatives based on
the Index or that use the Index as the reference asset, or other
substitute investment exposure to the Index, may underperform the return
of the Index or other trend |
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|
following
indices, including the Fund’s benchmark index, for a number of reasons,
including, for example, (i) the performance of derivatives related to
the Index may not correlate with the Index and/or may underperform the
Index due to transaction costs, fees, or other aspects of the
transaction’s pricing; (ii) the Fund may not be able to find
counterparties willing to enter into derivative instruments whose returns
are based on the return of the Index or find parties who are willing to do
so at an acceptable cost or level of risk to the Fund; (iii) the
design of the Index, including related costs or embedded assumed expenses
that reduce, potentially significantly, the level of the Index (and the
returns of derivative instruments that have the Index as a reference
asset); and (iv) errors may arise in carrying out the Index’s
methodology, or the Index provider may incorrectly report information
concerning the Index. Although the Adviser has licensed from the Index’s
sponsor the right to use the Index as part of implementing the Fund’s
principal investment strategies, there can be no guarantee that the Index
will be maintained indefinitely or that the Fund will be able to continue
to utilize the Index to implement the Fund’s principal investment
strategies indefinitely. If the sponsor of the Index ceases to maintain
the Index, the Fund no longer has the ability to utilize the Index to
implement its principal investment strategies, or other circumstances
exist that the Adviser or the Fund’s Board of Trustees concludes
substantially limit the Fund’s ability to create cost-effective synthetic
investment exposure to the Index, the Adviser or the Fund’s Board of
Trustees may substitute the Index with another index that it chooses in
its sole discretion and without advance notice to shareholders. There can
be no assurance that any substitute index so selected will be similar to
the Index or will perform in a manner similar to the Index. Unavailability
of the Index could affect adversely the ability of the Fund to achieve its
investment objective. There can be no assurance that the Index will
provide a better measure of momentum or trend investing across the
different asset classes represented in the Index than other measures, over
any period or over the long
term. |
In
addition, while the Index has a targeted volatility level, the Fund is not
managed to have a targeted volatility and there can be no assurance that the
Fund’s volatility will be limited in any manner or that it will be similar to
that of the Index. The Fund invests in securities outside of the Index and
therefore is not expected to have a volatility similar to the Index. The Fund’s
actual or realized volatility for any particular period may be materially higher
or lower than the Index’s targeted or actual volatility level depending on
market conditions.
• |
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investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other DoubleLine funds over investment companies sponsored or managed
by others and to maintain such investments once made due to its own
financial interest in those products and other business
considerations. |
• |
|
large
shareholder risk: the risk that certain account holders,
including the Adviser or funds or accounts over which the Adviser (or
related parties of the Adviser) has investment discretion, may from time
to time own or control a significant percentage of the Fund’s shares. The
Fund is subject to the risk that a redemption by those shareholders of all
or a portion of their Fund shares, including as a result of an asset
allocation decision made by the Adviser (or related parties of the
Adviser), will adversely affect the Fund’s performance if it is forced to
sell portfolio securities or invest cash when the Adviser would not
otherwise choose to do so. Redemptions of a large number of shares may
affect the liquidity of the Fund’s portfolio, increase the Fund’s
transaction costs, and accelerate the realization of taxable income and/or
gains to shareholders. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
limited
operating history risk: the risk that a fund has a limited
operating history to evaluate and may not attract sufficient assets to
achieve or maximize investment and operational
efficiencies. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of
that |
-133-
|
financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral relating to a loan; (v) there may be limited
public information available regarding the loan and the relevant
borrower(s); (vi) the use of a particular interest rate benchmark may
limit the Fund’s ability to achieve a net return to shareholders that
consistently approximates the average published Prime Rate of U.S. banks;
(vii) the prices of certain floating rate loans that include a
feature that prevents their interest rates from adjusting if market
interest rates are below a specified minimum level may appreciate less
than other instruments in response to changes in interest rates should
interest rates rise but remain below the applicable minimum level;
(viii) if a borrower fails to comply with various restrictive
covenants that may be found in loan agreements, the borrower may default
in payment of the loan; (ix) if the Fund invests in loans that
contain fewer or less restrictive constraints on the borrower than certain
other types of loans (“covenant-lite” loans), it may have fewer rights
against the borrowers of such loans, including fewer protections against
the possibility of default and fewer remedies in the event of default;
(x) the loan is unsecured; (xi) there is a limited secondary
market; (xii) transactions in loans may settle on a delayed basis,
and the Fund may not receive the proceeds from the sale of a loan for a
substantial period of time after the sale, which may result in sale
proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the
Fund. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
• |
|
models and data
risk: the risk that the quantitative models or related data
used in managing the Fund fail to identify profitable opportunities. In
addition, failures to properly gather, organize, and analyze large amounts
of data or errors in a model or data, or in the application of such
models, may result in, among other things, execution and investment
allocation failures and investment losses. For example, the models may
incorrectly identify opportunities or data used in the construction and
application of models may prove to be inaccurate or stale, which may
result in misidentified opportunities that may lead to substantial losses
for the Fund. A given model may be more effective with certain instruments
or strategies than others, and there can be no assurance that any model
can identify and incorporate all factors that will affect an investment’s
price or performance. |
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of
any |
-134-
|
of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
portfolio
turnover risk: the risk that frequent purchases and sales of
portfolio securities may result in higher Fund expenses and may result in
larger distributions of taxable capital gains to investors as compared to
a fund that trades less
frequently. |
• |
|
restricted
securities risk: the risk that the Fund may be prevented or
limited by law or the terms of an agreement from selling a security (a
“restricted security”). To the
extent that the Fund is permitted to sell a restricted security, there can
be no assurance that a trading market will exist at any particular time,
and the Fund may be unable to dispose of the security promptly at
reasonable prices or at all. The Fund may have to bear the expense of
registering the securities for resale and the risk of substantial delays
in effecting the registration. Also, restricted securities may be
difficult to value because market quotations may not be readily available,
and the values of restricted securities may have significant
volatility. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
• |
|
short position
risk: the risk that an increase in the value of an
instrument, index or interest rate with respect to which the Fund has
established a short position will result in a loss to the
Fund. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
CDOs, mortgage-backed securities, other types of asset-backed securities
and certain types of structured notes, may decline in value due to changes
in the underlying instruments, indexes, interest rates or other factors on
which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
• |
|
tax risk:
in order to qualify as a regulated investment company under
the Internal Revenue Code of 1986, as amended, the Fund must meet
requirements regarding, among other things, the source of its income.
Certain investments in commodity-linked derivatives do not give rise to
qualifying income for this purpose, and it is possible that certain
investments in other commodity-linked instruments, ETFs and other
investment pools will not give rise to qualifying income. Any income the
Fund derives from investments in instruments that do not generate
qualifying income must be limited to a maximum of 10% of the Fund’s annual
gross income. If the Fund were to earn non‑qualifying income in excess of
10% of its annual gross income, it could fail to qualify as a regulated
investment company for that year. If the Fund were to fail to qualify as a
regulated investment company, the Fund would be subject to tax and
shareholders of the Fund would be subject to the risk of diminished
returns. |
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for |
-135-
|
purposes
of calculating the Fund’s NAV. The valuation of the Fund’s investments
involves subjective judgment. Certain securities in which the Fund may
invest may be more difficult to value accurately, especially during
periods of market disruptions or extreme market volatility. Incorrect
valuations of the Fund’s portfolio holdings could result in the Fund’s
shareholder transactions being effected at an NAV that does not accurately
reflect the underlying value of the Fund’s portfolio, resulting in the
dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
3.94% |
|
Quarter
ended 3/31/2022 |
Lowest: |
|
-8.67% |
|
Quarter
ended 12/31/2022 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
1.62%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
| |
Multi-Asset Trend
Fund |
|
One Year |
|
Since Inception
(February 26, 2021) |
Class I |
|
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
-0.32% |
|
|
|
|
-0.81% |
|
Return
After Taxes on Distributions |
|
|
|
-2.25% |
|
|
|
|
-3.89% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
-0.19% |
|
|
|
|
-1.79% |
|
Class N |
|
Return
Before Taxes |
|
|
|
-0.58% |
|
|
|
|
-1.06% |
|
Credit Suisse Managed Futures Liquid Total
Return USD Index (reflects no
deduction for fees, expenses or taxes) |
|
|
|
-5.91% |
|
|
|
|
5.30% |
|
-136-
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The Credit
Suisse Managed Futures Liquid Total Return USD Index measures on a total return,
U.S. dollar-denominated basis the performance of the Credit Suisse Managed
Futures Liquid Index, which is designed to provide exposure to both up and down
price trends in four broad asset classes: equities, fixed income, commodities
and currencies. It is not possible to invest directly in an
index.
Investment
Adviser
DoubleLine
Alternatives is the investment adviser to the Fund. DoubleLine Capital is the
sub‑adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience
with
the
Fund |
|
Primary Title with the Investment
Adviser |
Jeffrey E. Gundlach |
|
Since the Fund’s
inception in February 2021 |
|
Chief Executive Officer —
DoubleLine Capital |
Jeffrey
J. Sherman |
|
Since
the Fund’s inception in February 2021 |
|
Deputy
Chief Investment Officer — DoubleLine Capital; President —
DoubleLine Alternatives |
Purchase
and Sale of Shares
You
may purchase or redeem Class I and Class N shares on any business day
when the New York Stock Exchange opens for regular trading. You may purchase or
redeem shares by written request via mail (DoubleLine Funds, c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire transfer,
by telephone at 877‑DLine11 (877‑354‑6311), or through authorized dealers,
brokers, or other service providers (“financial
intermediaries”). Telephone transactions will be permitted unless you
decline this privilege on your initial purchase application. The minimum initial
and subsequent investment amounts for different types of accounts are shown
below, although the Fund may reduce or waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular
Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and
Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
-137-
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, an Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-138-
Fund
Summary
DoubleLine
Strategic Commodity Fund
Investment
Objective
The
Fund’s investment objective is to seek long-term total
return.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I shares
through a broker or other financial intermediary acting as an agent on your
behalf. Such commissions and other fees, if any, are not charged by the
Fund and are not reflected in the fee table or expense example
below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
Annual Fund Operating Expenses1 (expenses that you pay each year as a
percentage of the value of your investment)
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
Management Fees |
|
|
0.90% |
|
|
|
0.90% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.18% |
|
|
|
0.18% |
|
Acquired Fund Fees and Expenses2 |
|
|
0.01% |
|
|
|
0.01% |
|
Total Annual Fund Operating Expenses
Before Fee Waiver and/or Expense Reimbursement |
|
|
1.09% |
|
|
|
1.34% |
|
Fee
Waiver and/or Expense Reimbursement3 |
|
|
-0.01% |
|
|
|
-0.01% |
|
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement |
|
|
1.08% |
|
|
|
1.33% |
|
1 |
The
Fund enters into index-related swap transactions, under which the Fund
incurs fees payable to its counterparties and other costs. Those fees and
costs reduce the index-based returns to the Fund under the swaps. During
the Fund’s most recent fiscal year, those expenses and charges were
approximately 0.21% of the Fund’s net assets. None of these fees and costs
are reflected in the table above or in the example below. See “Index Risk
– Note regarding Index-Based Swaps” for more information regarding such
fees and costs. |
2 |
“Acquired Fund Fees and Expenses” are
expenses indirectly incurred by the Fund as a result of its investments in
one or more underlying funds, including exchange-traded funds (“ETFs”) and money market funds. Because
these costs are indirect, the Total Annual Fund Operating Expenses in this
fee table will not correlate to the expense ratio in the Fund’s financial
statements, since financial statements only include direct costs of the
Fund and not the indirect costs of investing in the underlying
funds. |
3 |
DoubleLine
Alternatives LP (the “Adviser” or
“DoubleLine Alternatives”) has
contractually agreed to waive its investment advisory fee and to reimburse
the Fund for other ordinary operating expenses to the extent necessary to
limit ordinary operating expenses to an amount not to exceed 1.10% for
Class I shares and 1.35% for Class N shares. Ordinary operating
expenses exclude taxes, commissions, mark‑ups, litigation expenses,
indemnification expenses, interest expenses, Acquired Fund Fees and
Expenses, and any extraordinary expenses. These expense limitations will
apply until at least August 1, 2025, except
that they may be terminated by the Board of Trustees at any time. To the
extent that the Adviser waives its investment advisory fee and/or
reimburses the Fund for other ordinary operating expenses, it may seek
reimbursement of a portion or all of such amounts at any time within three
fiscal years after the fiscal year in which such amounts were waived or
reimbursed. Any such recoupment may not cause the Fund’s ordinary
operating expenses to exceed the expense limitation that was in place when
the fees were waived or expenses were reimbursed. Additionally, the
Adviser would generally seek recoupment only in accordance with the terms
of any expense limitation that is in place at the time of
recoupment. |
-139-
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual
funds.
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would
be:
|
|
|
| |
|
|
Class I |
|
Class N |
1 Year |
|
$110 |
|
$135 |
3 Years |
|
$346 |
|
$424 |
5 Years |
|
$600 |
|
$733 |
10 Years |
|
$1,328 |
|
$1,612 |
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 0% of the average value of its portfolio.
However, the portfolio turnover rate is determined using a required formula
which does not call for the inclusion of cash or cash equivalent instruments or
certain derivatives transactions. If the Fund’s transactions in cash and cash
equivalent instruments and derivatives were reflected in the calculation, the
Fund’s portfolio turnover rate shown would be
higher.
Principal
Investment Strategies
The
Fund normally seeks to generate long term total return through long and short
exposures to commodity-related investments. The commodities to which the Fund
may have investment exposure may include, without limitation, industrial metals
(e.g., copper and nickel); precious
metals (e.g., gold and silver); oil, gas
and other energy commodities (e.g.,
crude oil, brent oil, gasoil, RBOB (reformulated blendstock for oxygenate
blending) oil, and heating oil); agricultural products (e.g., soybeans, sugar, and cotton); and
livestock (e.g., live cattle).
Commodity-related investments may include investments in commodities,
investments in instruments tied or related to one or more commodities or
commodity-related indices or investments in companies with direct or indirect
exposure to commodities (e.g., an
investment in an oil production company or a mining company). As of the date of
this Prospectus, the Fund expects to gain commodity-related investment exposure
primarily through derivatives contracts, securities, or other instruments that
provide a return tied to a commodities index, a basket of commodities, or a
single commodity. The Fund generally uses instruments that involve investment
leverage to achieve commodity exposures and expects to have, under normal
circumstances, investment exposure to commodities in an amount up to the value
of the Fund’s total assets.
The
Fund expects to obtain its commodities exposures through swap contracts, futures
contracts and/or other derivatives not requiring significant investments of the
Fund’s cash. As a result, the Fund expects to have free cash available to invest
in other assets. The Fund currently expects that those other investments will
comprise principally fixed-income investments. See “Fixed Income Investments”
below. It is possible that the Fund might lose money on both its commodity
exposures and on its fixed-income investments. The use of derivatives to gain
commodities exposure will create investment leverage in the Fund’s
portfolio.
The
Adviser may use a variety of commodity-related investment strategies in pursuing
the Fund’s investment objective, including the following principal
approaches:
- |
|
Long Basket or Index-Related Exposure.
The Adviser may create one or more long commodity-related positions
in the Fund’s portfolio, representing what the Adviser considers from time
to time to be efficient, broad-based exposure to a number of commodities.
For example, the Adviser may identify one or more baskets or indexes of
commodities, which will typically be administered and maintained by a
third party, although the Adviser may provide recommendations to the
basket or index sponsor during the construction of the basket or index or
from time to time thereafter as to the exposures to be reflected in the
basket or index. In pursuit of this strategy, the Adviser will normally
attempt to replicate within the Fund’s portfolio the commodity exposures
of the basket or index. These basket- or index-based exposures will
typically comprise at least 50% of the Fund’s commodity exposures, and may
constitute as much as 100% of the Fund’s
commodity |
-140-
|
exposures.
The Adviser, in its discretion, may add to or replace the baskets or
indexes, or may determine to implement the Fund’s investment program
without relying on any baskets or indexes. In the latter case, the Adviser
would rely principally on the investment techniques described under
“Tactical Commodity Exposure,”
below. |
- |
|
As
of the date of this Prospectus, the Adviser has licensed the right to use
the Morgan Stanley Backwardation-Focused Multi-Commodity Index (described
below) (the “Morgan Stanley
Index”), and the Fund invests in derivative instruments intended to
provide exposure to the Morgan Stanley Index in implementing this aspect
of the Fund’s principal investment strategies. However, the Adviser at any
time may discontinue the use of the Morgan Stanley Index or may use other
commodities-related indices at any time and without notice or may work
with another index sponsor to create a custom commodities-related index.
There can be no assurance that the Fund will continue to use the Morgan
Stanley Index in implementing its principal investment strategies. For
more information regarding the Morgan Stanley Index, see “The Morgan
Stanley Index” below. |
- |
|
Tactical Commodity Exposure. The Adviser
may seek to generate additional returns or modify the Fund’s broad-based
commodities exposures by taking long and/or short positions in individual
commodities or in other baskets of commodities or commodity indexes. These
investments may be made in commodities, such as precious metals, that are
not represented in the basket or index of commodities through which the
Fund may be obtaining broad-based commodities exposures. The Adviser will
determine whether to take such positions based on the Adviser’s
quantitative models as well as the Adviser’s views of changing market,
economic and political factors, market fundamentals, macroeconomic trends,
and global or local events. The Adviser may also seek to pursue “market
neutral” returns by creating roughly equal “long” and “short” exposures on
different commodities of any kind. The Fund’s tactical commodity exposures
will be actively managed, and the allocation of the Fund’s assets to
various commodities will change over time, sometimes
rapidly. |
The
Fund may also employ commodity roll-timing strategies. “Rolling”
derivative-related exposure is the process by which the holder of a particular
derivative instrument (such as a futures contract) or other instrument providing
investment exposure will sell or close out the instrument on or before the
termination or expiration date and simultaneously purchase or enter into a new
instrument with identical terms except for a later termination date.
“Roll-timing” is a process by which the Fund may seek to add incremental return
through the timing of its commodity roll activities. For example, if the
structure of an index reflects the effect of derivative “rolls” in the markets,
the Fund might attempt to time its own roll activities to gain a pricing
advantage over the pricing reflected in the index. The Adviser may consider the
historical “backwardation” of commodity-related futures contracts in
constructing the Fund’s portfolio and as part of any roll-timing strategies it
uses. (Backwardation can occur when a futures contract calling for delivery of a
commodity in the future has a lower value than the current “spot” or market
price of the commodity. The value of such a futures contract may have the
potential to appreciate to the value of the underlying commodity’s spot price
(current market price) as the contract approaches expiration, although there can
be no assurance that it will.)
The Morgan Stanley Index. The Morgan Stanley
Index is expected to track the performance of futures contracts on eleven
commodities, selected by Morgan Stanley Capital Group Inc. (the “Morgan Stanley Index Sponsor”), a direct,
wholly-owned subsidiary of Morgan Stanley, based on (i) the contracts’
historical backwardation relative to other commodity-related futures contracts
and (ii) the contracts’ historical liquidity. Of the commodities
represented in the Morgan Stanley Index, currently five are in the energy
sector, two are in the industrial metals sector, and four are in the
agricultural sector or livestock sector. As of June 30, 2024, the Morgan
Stanley Index’s exposure was weighted approximately 34% to the energy sector,
35% to the industrial metals sector, 26% to the agricultural sector, and 5% to
the livestock sector. The Morgan Stanley Index’s actual exposure to futures
contracts and sectors will change throughout the year based on changes in the
market values of the futures contracts. The Morgan Stanley Index Sponsor also
may alter the commodities that comprise the Morgan Stanley Index or the
parameters that determine the futures contracts that comprise the Morgan Stanley
Index. The Morgan Stanley Index is normally rebalanced annually during the month
of January. In addition, the Morgan Stanley Index Sponsor may make interim
changes to the Morgan Stanley Index in its discretion if it determines that a
disruption event has occurred that requires modification of the Morgan Stanley
Index; such events may include, but are not limited to market or trading
disruptions in the commodities underlying the Morgan Stanley Index, changes in
law, or other events or circumstances beyond the reasonable anticipation or
control of the Morgan Stanley Index
Sponsor.
The
Fund has historically entered into swap transactions, including those related to
the Morgan Stanley Index, with a limited number of counterparties and will
likely enter into swap transactions, including those related to the Morgan
Stanley Index, with a limited number of counterparties for the foreseeable
future. In selecting swap counterparties for the Fund, the Adviser will normally
consider a variety of factors, including, without limitation: cost; the quality,
reliability, and responsiveness of a counterparty; the operational compatibility
between a counterparty and the Adviser; and a counterparty’s
creditworthiness.
The
Adviser may seek to effect the Fund’s commodity-related investment strategies by
investing in a variety of instruments, such as total and excess return swaps,
futures contracts, options on futures, forward contracts, exchange traded
products,
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including
exchange traded funds and exchange traded notes, structured notes, common or
preferred stocks of subsidiaries of the Fund that invest directly or indirectly
in commodities, and other investments intended to provide long or short exposure
to one or more commodities.
The
Fund expects that many of the instruments in which it will invest will involve
leverage. When the Fund utilizes leverage, small changes in the values of the
underlying commodity prices may result in significant changes in the values of
the Fund’s investments, and the Fund can lose significantly more than the amount
it invests in an instrument, or the margin it supplies to its counterparty on
the instrument.
Fixed Income Investments. The Fund will
normally create its commodities exposures using derivatives and other
instruments that allow the Fund to achieve those exposures without significant
upfront investment of cash. As a result, the Fund expects to have available to
it cash assets to invest in securities or other instruments. The Fund may invest
directly in debt instruments; alternatively, the Adviser may choose to invest
all or a portion of the Fund’s assets in one or more fixed income funds advised
by DoubleLine Capital LP (“DoubleLine
Capital”) or a related party of DoubleLine Capital. Fixed income
investments in which the Fund may invest include, by way of example,
(i) securities or other income-producing instruments issued or guaranteed
by the U.S. Government, its agencies, instrumentalities or sponsored
corporations (including inflation-protected securities); (ii) other investment
companies that invest principally in debt securities; or (iii) short-term
investments, such as commercial paper, repurchase agreements and money market
funds.
Under
normal circumstances, the Fund’s portfolio of fixed income investments is
expected to include primarily fixed income and other income-producing
instruments rated investment grade and unrated securities considered by the
Adviser to be of comparable credit quality. The Fund may, however, invest up to
20% of its total assets in fixed income and other income-producing instruments
rated below investment grade and those that are unrated but determined by the
Adviser to be of comparable credit quality.
Other Information. The Fund may pursue its
investment objective and obtain exposures to some or all of the asset classes
described in this Prospectus by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies, ETFs,
and domestic or foreign private investment vehicles, including investment
companies sponsored or managed by the Adviser or its related parties. The Fund
may from time to time invest in one or more subsidiary private investment
vehicles organized outside the United States that invest directly or indirectly
in commodities and commodity-related investments or in derivatives transactions
relating to commodities where the Adviser determines that it may benefit the
Fund if the subsidiary invests in those transactions. The amount of the Fund’s
investment in certain investment companies or investment pools may be limited by
law or by tax considerations.
Except
as expressly prohibited by the Fund’s Prospectus or its Statement of Additional
Information (“SAI”), the Fund may make
any investment or use any investment strategy consistent with applicable law.
The Fund may engage in short sales, either to earn additional return or to hedge
existing investments. The Fund may enter into derivatives transactions of any
kind for hedging purposes or otherwise to gain, or reduce, long or short
exposure to one or more asset classes or issuers. A derivative is a financial
contract whose value depends upon or is derived from the value of one or more
underlying assets, reference rates, or indexes. These instruments include, among
others, options, futures contracts, forward currency contracts, swap agreements
and similar instruments. The Fund may use derivatives transactions with the
purpose or effect of creating investment leverage. Although the Fund reserves
the right to invest in derivatives of any kind, it currently expects that it may
use the following types of derivatives: futures contracts and options on futures
contracts, in order to gain efficient long or short investment exposures as an
alternative to cash investments or to hedge against portfolio exposures;
interest rate swaps, to gain indirect long or short exposures to interest rates,
issuers, or currencies, or to hedge against portfolio exposures; and total and
excess return swaps and credit derivatives (such as credit default swaps), put
and call options, and exchange-traded and structured notes, to take indirect
long or short positions on indexes, commodities, securities, currencies, or
other indicators of value, or to hedge against portfolio exposures. Any use of
derivatives strategies entails the risks of investing directly in the
securities, instruments or assets underlying the derivatives strategies, as well
as the risks of using derivatives generally, and in some cases the risks of
leverage, described in this Prospectus and in the Fund’s
SAI.
There
is no limit on the amount of the Fund’s assets that may be allocated to one or
more commodities, specific asset classes or market sectors, and the Fund may at
times have significant exposure to a single commodity or a limited number of
commodities. The Fund may invest without limit in obligations of issuers in any
country or group of countries, including emerging market countries, and
investments denominated in foreign currencies. The amount of the Fund’s
investment in a particular asset class, or the types of investments it may make
in a particular asset class, may be limited by tax considerations or limitations
imposed by applicable law.
The
Adviser may engage in active and frequent trading of the Fund’s portfolio
investments. To the extent that it does so, the Fund may incur greater
transaction costs and may make greater distributions of income and gains, which
will be taxable to
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shareholders
who do not hold their shares through a tax‑advantaged or tax‑deferred account.
Any percentage limitation and requirement as to investments will apply only at
the time of an investment to which the limitation or requirement is applicable
and shall not be considered violated unless an excess or deficiency occurs or
exists immediately after and as a result of such investment. Accordingly, any
later increase or decrease resulting from a change in values, net assets or
other circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or
requirement.
Portfolio
investments may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio investments no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell
target.
Although
a portion of the Fund’s assets may be invested in instruments the performance of
which is based on an index, the Fund’s overall portfolio is not designed to
replicate the performance of any index. The Fund’s performance will deviate,
potentially significantly, from the performance of any index used by the
Fund.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
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active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
cash position
risk: the risk that to the extent that the Fund
holds assets in cash, cash equivalents, and other short-term investments,
the ability of the Fund to meet its objective may be
limited. |
• |
|
commodities
risk: the risk that the value of the Fund’s shares may be
affected by changes in the values of the Fund’s investment exposures to
commodities or commodity-related instruments, which may be extremely
volatile and difficult to value. The value of commodities and
commodity-related instruments may be affected by, among other factors,
market movements, commodity index volatility, changes in interest rates,
or factors affecting supply, demand and/or other market fundamentals with
respect to a particular sector, industry or commodity, such as drought,
floods, weather, livestock disease, embargoes, tariffs and international
economic, political and regulatory developments. The Fund will likely at
times have significant exposure to particular sectors through its
commodities-related investments, including, for example, the energy,
industrial metals, and agricultural and livestock sectors and may be
exposed to greater risk associated with events affecting those
sectors. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into directly by the Fund or held by special purpose
or structured vehicles in which the Fund invests; that the Fund’s
counterparty will be unable or unwilling to perform its obligations; that
the Fund will be unable to enforce contractual remedies if its
counterparty defaults; that if a counterparty (or an affiliate of a
counterparty) becomes bankrupt, the Fund may experience significant delays
in obtaining any recovery or may obtain limited or no recovery in a
bankruptcy or other insolvency proceeding. The Fund has historically
obtained exposure to the Morgan Stanley Index through swap transactions
with a limited number of counterparties, and will likely enter into swap
transactions related to the Morgan Stanley Index with a limited number of
counterparties for the foreseeable future. To the extent that the Fund
enters into multiple transactions with a small set of counterparties, it
will be subject to increased counterparty
risk. |
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credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
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extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
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interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
|
¡ |
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prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
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emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
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• |
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focused
investment risk: the risk that a fund that invests a
substantial portion of its assets in a particular market, industry,
sector, group of industries or sectors, country, region, group of
countries or asset class is, relative to a fund that invests in a more
diverse investment portfolio, more susceptible to any single economic,
market, political, regulatory or other occurrence. This is because, for
example, issuers in a particular market, industry, region, sector or asset
class may react similarly to specific economic, market, regulatory,
political or other developments. The particular markets, industries,
regions, sectors or asset classes in which the Fund may focus its
investments may change over time and the Fund may alter its focus at
inopportune times. |
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
index risk:
the risk that the portion of the Fund invested in
instruments based on an index or basket of commodities or that use an
index or basket of commodities as the reference asset may not match or may
underperform the return of the index or basket for a number of reasons,
including, for example, (i) the performance of derivatives related to
an index or basket in which the Fund invests may not correlate with the
performance of the index or basket and/or may underperform the index or
basket due to transaction costs, fees, or other aspects of the
transaction’s pricing; (ii) the Fund may not be able to find
counterparties willing to enter into derivative instruments whose returns
are based on the return of the index or basket, or the Fund may be unable
to find parties who are willing to do so at an acceptable cost or level of
risk to the Fund; and (iii) errors may arise in carrying out an
index’s methodology, or an index provider may incorrectly report
information concerning the index. There can be no guarantee that any
index, including the Morgan Stanley Index, will be maintained indefinitely
or that the Fund will be able to continue to utilize a specific index to
implement the Fund’s principal investment strategies
indefinitely. |
Although
the Adviser has licensed the right to use the Morgan Stanley Index as part of
implementing the Fund’s principal investment strategies, there can be no
guarantee that the Morgan Stanley Index Sponsor will maintain it indefinitely,
that the Fund will use the Morgan Stanley Index to implement its principal
investment strategies, or that other circumstances will not prevent the Fund
from obtaining cost-effective synthetic investment exposure to the Morgan
Stanley Index. In those or similar conditions, the Adviser or the Fund’s Board
of Trustees may, in its sole discretion and without advance notice to
shareholders, license or select another index or basket of commodities to use in
implementing the Fund’s principal investment strategies. There can be no
assurance that any substitute index or basket so selected will be similar to the
Morgan Stanley Index or will perform in a manner similar to the Morgan Stanley
Index. Unavailability of the Morgan Stanley Index could affect adversely the
ability of the Fund to achieve its investment
objective.
The
Morgan Stanley Index consists of futures contracts that were selected, in part,
on the basis of their historical backwardation in relation to the spot price for
the underlying commodity. Any investment exposure tied or related to the Morgan
Stanley Index is subject to, among other things, the risk that the historical
behavior of the futures contracts comprising the Morgan Stanley Index may not
continue as expected and that the prices of the futures contracts held by the
Fund may depreciate.
• |
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investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other investment vehicles sponsored or advised by the Adviser or a
related party of the Adviser over investment companies sponsored or
managed by others and to maintain such investments once made due to its
own financial interest in those products and other business
considerations. |
• |
|
large
shareholder risk: the risk that certain account holders,
including the Adviser or funds or accounts over which the Adviser (or
related parties of the Adviser) has investment discretion, may from time
to time own or control a
significant |
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percentage
of the Fund’s shares. The Fund is subject to the risk that a redemption by
those shareholders of all or a portion of their Fund shares, including as
a result of an asset allocation decision made by the Adviser (or related
parties of the Adviser), will adversely affect the Fund’s performance if
it is forced to sell portfolio securities or invest cash when the Adviser
would not otherwise choose to do so. Redemptions of a large number of
shares may affect the liquidity of the Fund’s portfolio, increase the
Fund’s transaction costs, and accelerate the realization of taxable income
and/or gains to shareholders. |
• |
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leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
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liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
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market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
• |
|
models and data
risk: the risk that the quantitative models or related data
used in managing the Fund fail to identify profitable opportunities. In
addition, failures to properly gather, organize, and analyze large amounts
of data or errors in a model or data, or in the application of such
models, may result in, among other things, execution and investment
allocation failures and investment losses. For example, the models may
incorrectly identify opportunities or data used in the construction and
application of models may prove to be inaccurate or stale, which may
result in misidentified opportunities that may lead to substantial losses
for the Fund. A given model may be more effective with certain instruments
or strategies than others, and there can be no assurance that any model
can identify and incorporate all factors that will affect an investment’s
price or performance. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
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• |
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short position
risk: the risk that an increase in the value of an
instrument, index or interest rate with respect to which the Fund has
established a short position will result in a loss to the
Fund. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
collateralized debt obligations, mortgage-backed securities, other types
of asset-backed securities and certain types of structured notes, may
decline in value due to changes in the underlying instruments, indexes,
interest rates or other factors on which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
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tax risk:
in order to qualify as a regulated investment company under
the Internal Revenue Code of 1986, as amended, the Fund must meet
requirements regarding, among other things, the source of its income.
Certain investments in commodity-linked derivatives do not give rise to
qualifying income for this purpose, and it is possible that certain
investments in other commodity-linked instruments, ETFs and other
investment pools will not give rise to qualifying income. Any income the
Fund derives from investments in instruments that do not generate
qualifying income must be limited to a maximum of 10% of the Fund’s annual
gross income. If the Fund were to earn non‑qualifying income in excess of
10% of its annual gross income, it could fail to qualify as a regulated
investment company for that year. If the Fund were to fail to qualify as a
regulated investment company, the Fund would be subject to tax and
shareholders of the Fund would be subject to the risk of diminished
returns. |
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s net
asset value (“NAV”). The valuation
of the Fund’s investments involves subjective judgment. Certain securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results, including its current NAV per share, can be
obtained at no charge by calling 877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
-147-
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
25.35% |
|
Quarter
ended 3/31/2022 |
Lowest: |
|
-25.05% |
|
Quarter
ended 3/31/2020 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
6.55%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Strategic Commodity
Fund |
|
One Year |
|
Five Years |
|
Since Inception
(May 18,
2015) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
-3.93% |
|
|
|
|
7.03% |
|
|
|
|
3.43% |
|
Return
After Taxes on Distributions |
|
|
|
-5.18% |
|
|
|
|
2.70% |
|
|
|
|
0.64% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
-2.33% |
|
|
|
|
3.70% |
|
|
|
|
1.49% |
|
Class N |
|
|
|
|
| |
Return
Before Taxes |
|
|
|
-4.13% |
|
|
|
|
6.79% |
|
|
|
|
3.17% |
|
Bloomberg Commodity Index Total
Return (reflects no deduction
for fees, expenses or taxes) |
|
|
|
-7.91% |
|
|
|
|
7.23% |
|
|
|
|
0.78% |
|
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The
Bloomberg Commodity Index Total Return is an index calculated on an excess
return basis that reflects commodity futures price movements. The Index
rebalances annually weighted 2/3 by trading volume and 1/3 by world production
and weight-caps are applied at the commodity, sector and group level for
diversification. Roll period typically occurs from the 6th-10th business day based on the
roll schedule. It is not possible to invest directly in an
index.
Investment
Adviser
DoubleLine
Alternatives is the investment adviser to the Fund.
-148-
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience with the Fund |
|
Primary Title with the
Investment
Adviser |
Jeffrey J. Sherman |
|
Since the Fund’s
inception in May 2015 |
|
Deputy Chief
Investment Officer |
Samuel Lau |
|
Since July 2018 |
|
Portfolio
Manager |
Jeffrey
Mayberry |
|
Since
July 2018 |
|
Portfolio
Manager |
Purchase
and Sale of Shares
You
may purchase or redeem Class I and Class N shares on any business day
when the New York Stock Exchange opens for regular trading. You may purchase or
redeem shares by written request via mail (DoubleLine Funds, c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire transfer,
by telephone at 877‑DLine11 (877‑354‑6311), or through authorized dealers,
brokers, or other service providers (“financial
intermediaries”). Telephone transactions will be permitted unless you
decline this privilege on your initial purchase application. The minimum initial
and subsequent investment amounts for different types of accounts are shown
below, although the Fund may reduce or waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum
Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and
Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-149-
Fund
Summary
DoubleLine
Shiller Enhanced CAPE®
Investment
Objective
The
Fund’s investment objective is to seek total return which exceeds the total
return of its benchmark index over a full market
cycle.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I and
Class R6 shares through a broker or other financial
intermediary acting as an agent on your behalf. Such commissions and
other fees, if any, are not charged by the Fund and are not reflected in the fee
table or expense example below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
|
Class R6 |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
|
None |
Annual Fund Operating Expenses1 (expenses that you pay each year as a
percentage of the value of your investment)
|
|
|
|
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
|
Class R6 |
|
Management Fees |
|
|
0.45% |
|
|
|
0.45% |
|
|
|
0.45% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
|
|
None |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.09% |
|
|
|
0.09% |
|
|
|
0.03% |
|
Acquired Fund Fees and Expenses2 |
|
|
0.01% |
|
|
|
0.01% |
|
|
|
0.01% |
|
Total
Annual Fund Operating Expenses |
|
|
0.55% |
|
|
|
0.80% |
|
|
|
0.49% |
|
1 |
The
Fund enters into index-related swap transactions, under which the Fund
incurs fees payable to its counterparties and other costs. The level of an
index itself may also be reduced by a number of assumed expenses and
charges. Those fees and costs reduce the index-based returns to the Fund
under the swaps. During the Fund’s most recent fiscal year, those expenses
and charges were estimated to be approximately 1.06% of the Fund’s net
assets. Swap returns or the level of an index are typically also reduced
by amounts based on short-term interest rates (applied, in the case of
swaps, against the notional amounts of the swaps) and potentially by other
amounts, such as a spread above the short-term interest rate. None of
these fees and costs are reflected in the table above or in the example
below. See “Index Risk – Note regarding Index-Based Swaps” for more
information regarding such fees and
costs. |
2 |
“Acquired Fund Fees and Expenses” are
expenses indirectly incurred by the Fund as a result of its investments in
one or more underlying funds, including exchange-traded funds (“ETFs”) and money market funds. Because
these costs are indirect, the Total Annual Fund Operating Expenses in this
fee table will not correlate to the expense ratio in the Fund’s financial
statements, since financial statements only include direct costs of the
Fund and not the indirect costs of investing in the underlying
funds. |
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds.
-150-
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would
be:
|
|
|
|
|
| |
|
|
Class I |
|
Class N |
|
Class R6 |
1 Year |
|
$56 |
|
$82 |
|
$50 |
3 Years |
|
$176 |
|
$255 |
|
$157 |
5 Years |
|
$307 |
|
$444 |
|
$274 |
10 Years |
|
$689 |
|
$990 |
|
$616 |
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 75% of the average value of its portfolio.
However, the portfolio turnover rate is determined using a required formula
which does not call for the inclusion of cash or cash equivalent instruments or
certain derivatives transactions. If the Fund’s transactions in cash and cash
equivalent instruments and derivatives were reflected in the calculation, the
Fund’s portfolio turnover rate shown would be
higher.
Principal
Investment Strategies
The
Fund seeks total return (capital appreciation and current income) in excess of
the benchmark index, currently the S&P 500® Index, over a full market
cycle.
The
Fund will seek to use derivatives, or a combination of derivatives and direct
investments, to provide a return (before fees and expenses) that approximates
the performance of the Shiller Barclays CAPE® US Sector TR USD Index (the
“Index”). The Fund will also invest in a
portfolio of debt securities to seek to provide additional total return over the
long term. The Fund uses investment leverage as
part of its principal investment strategies. The Fund expects normally to invest
an amount approximately equal to its net assets directly in a portfolio of debt
securities while also maintaining notional exposure to the Index providing the
Fund with economic exposure to the Index in an amount up to the value of the
Fund’s net assets. As a result, the Fund’s total investment exposure (direct
investments in debt securities plus notional exposure to the Index) will
typically be equal to approximately 200% of the Fund’s net asset value
(“NAV”).
It is possible that the Fund could lose money on both its investments in debt
securities and its exposure to the Index at the same
time.
The
Fund will normally use derivatives in an attempt to create an investment return
that approximates (before fees and expenses) the Index’s return. For example,
the Fund might enter into swap transactions or futures transactions designed to
provide the Fund a return before fees and expenses approximating the Index’s
return, including swap transactions or futures transactions where the reference
asset is the Index or a modified version of the Index, one or more components of
the Index, or an unrelated index or basket of securities. The transaction
pricing of any swap transaction will reflect a number of factors that will cause
the return on the swap transaction to underperform the Index. Please see “Index
Risk — Note regarding Index-Based Swaps” for more information. The Fund expects
to use only a small percentage of its assets to attain the desired exposure to
the Index because of the structure of the derivatives the Fund expects to use.
As a result, use of those derivatives along with the Fund’s investments in a
portfolio of debt securities will create investment leverage in the Fund’s
portfolio. In certain cases, derivatives based on the Index or that use the
Index as the reference asset might be unavailable or the pricing of those
derivatives might be unfavorable; in those cases, the Fund might attempt to
approximate the Index’s return by purchasing some or all of the securities
comprising the Index, or portions of the Index, at the time. If the Fund at any
time invests directly in the securities comprising the Index, the assets so
invested will be unavailable for investment in debt instruments, and the Fund’s
ability to pursue its investment strategy fully and achieve its investment
objective may be limited.
To
the extent use of the above-described derivatives strategy leaves a substantial
portion of the Fund’s assets available for other investment by the Fund, the
Fund expects to invest those assets in a portfolio of debt instruments managed
by DoubleLine Capital LP (“DoubleLine
Capital”) to seek to provide additional total return over the long term.
References to the “Adviser” in this section and in “Principal Risks” below shall
refer to DoubleLine Alternatives LP (“DoubleLine
Alternatives”), the Fund’s investment adviser, except in the case of the
discussion of the Fund’s principal investment strategies and principal risks
that relate to investing directly in debt securities, in which cases “Adviser”
shall refer to DoubleLine Capital, the sub‑adviser to the Fund and the entity
primarily responsible for the day‑to‑day management of the Fund’s fixed income
portfolio.
-151-
The Shiller Barclays CAPE® US Sector TR USD Index. The Index incorporates
the principles of long-term investing distilled by Dr. Robert Shiller and
expressed through the CAPE® (Cyclically Adjusted Price
Earnings) ratio (the “CAPE® Ratio”). The classic CAPE® Ratio assesses equity market
valuations and averages ten years of inflation adjusted earnings to account for
earnings and market cycles. Traditional valuation measures, such as the
price-earnings (PE) ratio, by contrast, typically rely on earnings information
from only the past year. The Index uses a relative version of the classic
CAPE® Ratio to identify
undervalued sectors while also seeking to exclude a sector that may appear
undervalued, but which may have also had recent relative price underperformance
due to fundamental issues with the sector that may negatively affect the
sector’s long-term total return. There can be no assurance that the Index will
provide a better measure of value than more traditional measures, over any
period or over the long term.
The
Index’s composition is determined monthly. Each month, the Index’s methodology
ranks eleven US sectors based on a modified CAPE® Ratio (a “value” factor) and
a twelve-month price momentum factor (a “momentum” factor). Each US sector is
represented by a sector ETF that tracks a sector index, which is an ETF in the
family of Select Sector SPDR Funds or, in the case of the real estate sector,
the iShares Dow Jones U.S. Real Estate Index Fund. The Index methodology selects
the five US sectors with the lowest modified CAPE® Ratio — the sectors that are
the most undervalued according to the CAPE® Ratio. Only four of these
five sectors, however, end up in the Index for a given month, as the sector with
the worst 12‑month price momentum among the five selected sectors is eliminated.
The Index methodology allocates an equally weighted long (i.e., investment) exposure to the four
remaining US sectors. As of the date of this Prospectus, the eleven sectors that
may be selected by the Index methodology include Communication Services,
Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care,
Industrials, Materials, Technology, Utilities and Real Estate. The Select Sector
SPDR Funds are typically comprised of issuers represented in the S&P 500
Index.
As
of June 30, 2024, the issuers represented in the S&P 500 Index had
market capitalizations ranging from $5.414 billion to $3.322
trillion.
Through
the Fund’s investments related to the Index, the Fund will have focused
exposures to the sectors making up the Index at any given time. As a result, the
Fund’s NAV may be affected to a greater degree by factors affecting those
sectors or industries than a fund that invests more
broadly.
If
derivatives designed to provide the Fund a return approximating the Index’s
return become unavailable or for other reasons, DoubleLine Alternatives may seek
investment exposure to the sectors comprising the Index by investing directly in
some or all of the sector ETFs or securities that correspond to those sectors,
or by utilizing derivatives that are designed to provide long exposure to either
the sector ETFs themselves or the indices that the sector ETFs seek to track.
DoubleLine Alternatives or the Fund’s Board of Trustees may in their sole
discretion and without advance notice to shareholders select, in place of the
Index, another index (such as the S&P 500® Index) or a basket of
investments. The Fund may gain exposure to any substitute index or basket of
investments in any manner DoubleLine Alternatives determines appropriate,
including those described above with respect to how the Fund may obtain exposure
to the Index.
Although
a portion of the Fund’s assets may be invested in instruments the performance of
which is based on an index, the Fund’s overall portfolio includes other
investments. Therefore, the Fund is not designed to replicate the performance of
any index. The Fund’s performance will deviate, potentially significantly, from
the performance of any index used by the
Fund.
During
the Fund’s most recent fiscal year, the Fund entered into swap transactions
related to the Index with a limited number of counterparties. The Fund will
likely enter into swap transactions related to the Index with a limited number
of counterparties for the foreseeable future. In selecting swap counterparties
for the Fund, DoubleLine Alternatives will normally consider a variety of
factors, including, without limitation: cost; the quality, reliability, and
responsiveness of a counterparty; the operational compatibility between a
counterparty and DoubleLine Alternatives; and a counterparty’s
creditworthiness.
The Fund’s Investments in Debt Instruments.
Under normal circumstances, to the extent use of the above-described
derivatives strategy leaves a substantial portion of the Fund’s assets available
for other investment by the Fund, the Fund intends to invest those assets in a
portfolio of debt instruments managed by DoubleLine Capital to seek to provide
additional total return over the long term. The Fund may invest directly in debt
instruments; alternatively, DoubleLine Capital may choose to invest all or a
portion of the Fund’s assets in one or more fixed income funds advised by
DoubleLine Capital or a related party of DoubleLine Capital. Debt instruments in
which the Fund may invest include, by way of example, (i) securities or
other income-producing instruments issued or guaranteed by the U.S. Government,
its agencies, instrumentalities or sponsored corporations (including
inflation-protected securities); (ii) corporate obligations;
(iii) mortgage-backed securities (including commercial and residential
mortgage-backed securities) and other asset-backed securities, collateralized
mortgage obligations, government mortgage pass-through securities, multiclass
pass-through securities, private mortgage pass-through securities, stripped
mortgage securities (e.g., interest-only
and principal-only securities), and inverse floaters;
-152-
(iv) collateralized
debt obligations (“CDOs”), including
collateralized loan obligations (“CLOs”);
(v) foreign securities (corporate and government, including foreign hybrid
securities), including emerging market securities; (vi) fixed and floating
rate loans of any kind (including, among others, bank loans, assignments,
participations, senior loans, second lien or other subordinated or unsecured
fixed or floating rate loans, debtor‑in‑possession loans, exit facilities,
delayed funding loans and revolving credit facilities), which may take the form
of loans that contain fewer or less restrictive constraints on the borrower than
certain other types of loans (“covenant-lite” loans); (vii) municipal securities
and other debt obligations issued by states, local governments, and
government-sponsored entities, including their agencies, authorities, and
instrumentalities; (viii) inflation-indexed bonds; (ix) convertible
securities; (x) preferred securities; (xi) real estate investment
trust (“REIT”) securities;
(xii) payment‑in‑kind bonds; (xiii) zero‑coupon bonds;
(xiv) custodial receipts, cash and cash equivalents; (xv) short-term,
high quality investments, including, for example, commercial paper, bankers’
acceptances, certificates of deposit, bank time deposits, repurchase agreements,
and investments in money market mutual funds or similar pooled investments; and
(xvi) other instruments bearing fixed, floating, or variable interest rates
of any maturity. The Fund may invest in any level of the capital structure of an
issuer of mortgage-backed or asset-backed securities, but does not intend to
invest in the equity or “first loss” tranche of such
investments.
In
managing the Fund’s portfolio of debt instruments, under normal market
conditions, the portfolio managers intend to seek to construct an investment
portfolio with an overall dollar-weighted average effective duration of between
one year and three years. Duration is a measure of the expected life of a fixed
income instrument that is used to determine the sensitivity of a security’s
price to changes in interest rates. Effective duration is a measure of the
Fund’s portfolio duration adjusted for the anticipated effect of interest rate
changes on bond and mortgage prepayment rates as determined by DoubleLine
Capital. The longer a portfolio’s effective duration, the more sensitive it will
be to changes in interest rates. The effective duration of the Fund’s portfolio
of debt instruments may vary materially from its target range, from time to
time, and there is no assurance that the effective duration of the portfolio
will always be within its target range. DoubleLine Capital monitors the
effective duration of the Fund’s portfolio of debt instruments to seek to assess
and, in its discretion, adjust the Fund’s exposure to interest rate
risk.
The
Fund may invest in debt instruments of any credit quality, which may include
securities that are at the time of investment unrated or rated BB+ or lower by
S&P Global Ratings or Ba1 or lower by Moody’s Investors Service, Inc. or the
equivalent by any other nationally recognized statistical rating organization or
unrated securities judged by DoubleLine Capital to be of comparable quality.
Corporate bonds and certain other fixed income instruments rated below
investment grade, or such instruments that are unrated and determined by
DoubleLine Capital to be of comparable quality, are high yield, high risk bonds,
commonly known as “junk bonds.” Generally, lower-rated debt securities offer a
higher yield than higher-rated debt securities of similar maturity but are
subject to greater risk of loss of principal and interest than higher-rated
securities of similar maturity. The Fund may invest up to 331/3% of its net assets in junk
bonds, bank loans and assignments rated below investment grade or unrated but
determined by DoubleLine Capital to be of comparable quality, and credit default
swaps of companies in the high yield universe. DoubleLine Capital does not
consider the term “junk bonds” to include any mortgage-backed securities or any
other asset-backed securities, regardless of their credit rating or credit
quality, and accordingly may invest without limit in such
investments.
The
Fund may invest a portion of its assets in inverse floater securities and
interest-only and principal-only securities. An inverse floater is a type of
instrument, which may be backed by or related to a mortgage-backed security,
that bears a floating or variable interest rate that moves in the opposite
direction to movements in interest rates generally or the interest rate on
another security or index. Because an inverse floater inherently carries
financial leverage in its coupon rate, it can change very substantially in value
in response to changes in interest rates. Interest-only and principal-only
securities may also be backed by or related to a mortgage-backed security.
Holders of interest-only securities are entitled to receive only the interest on
the underlying obligations but none of the principal, while holders of
principal-only securities are entitled to receive all of the principal but none
of the interest on the underlying obligations. As a result, they are highly
sensitive to actual or anticipated changes in prepayment rates on the underlying
securities.
The
Fund may invest a portion of its assets in debt instruments (including hybrid
securities) issued or guaranteed by companies, financial institutions and
government entities in emerging market countries. An “emerging market country”
is a country that, at the time the Fund invests in the related fixed income
instruments, is classified as an emerging or developing economy by any
supranational organization such as an institution in the World Bank Group or the
United Nations, or an agency thereof, or is considered an emerging market
country for purposes of constructing a major emerging market securities
index.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including those sponsored or managed by DoubleLine Capital or its related
parties. The Fund may engage in short sales or take short positions, either to
earn additional return or to hedge existing investments.
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In
managing the Fund’s debt instruments, the portfolio managers typically use a
controlled risk approach. The techniques of this approach attempt to control the
principal risk components of the fixed income markets and may include, among
other factors, consideration of DoubleLine Capital’s view of the following: the
potential relative performance of various market sectors, security selection
available within a given sector, the risk/reward equation for different asset
classes, liquidity conditions in various market sectors, the shape of the yield
curve and projections for changes in the yield curve, potential fluctuations in
the overall level of interest rates, and current fiscal
policy.
The
portfolio managers utilize active asset allocation in managing the Fund’s
investments in debt instruments.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell
target.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
• |
|
collateralized
debt obligations risk: the risks of an investment in a CDO
depend largely on the quality and type of the collateral and the tranche
of the CDO in which the Fund invests. Normally, collateralized bond
obligations, CLOs and other CDOs are privately offered and sold, and thus
are not registered under the securities laws. As a result, investments in
CDOs may be illiquid. In addition to the risks associated with debt
instruments (e.g., interest rate
risk and credit risk), CDOs carry additional risks including, but not
limited to: (i) the possibility that distributions from collateral
will not be adequate to make interest or other payments; (ii) the
quality of the collateral may decline in value or default; (iii) the
possibility that the Fund may invest in CDOs that are subordinate to other
classes of the issuer’s securities; and (iv) the complex structure of
the security may not be fully understood at the time of investment and may
produce disputes with the issuer or unexpected investment
results. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a counterparty (or an affiliate of a counterparty) becomes bankrupt,
the Fund may experience significant delays in obtaining any recovery or
may obtain limited or no recovery in a bankruptcy or other insolvency
proceeding. The Fund has historically obtained exposure to the Index
through swap transactions with a limited number of counterparties and will
likely enter into swap transactions related to the Index with a limited
number of counterparties for the foreseeable future. To the extent that
the Fund enters into multiple transactions with a small set of
counterparties, it will be subject to increased counterparty
risk. |
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|
¡ |
|
credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
|
extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
|
interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
|
¡ |
|
prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by an Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a return that corresponds
precisely or at all with that of the cash investment; that the positions
may be improperly executed or constructed; that the Fund’s counterparty
will be unable or unwilling to perform its obligations; or that, when used
for hedging purposes, derivatives will not provide the anticipated
protection, causing the Fund to lose money on both the derivatives
transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the |
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|
security;
higher brokerage costs; different accounting, auditing and financial
reporting standards; less developed legal systems and thinner trading
markets; the possibility of currency blockages or transfer restrictions;
an emerging market country’s dependence on revenue from particular
commodities or international aid; and expropriation, nationalization or
other adverse political or economic
developments. |
• |
|
equity issuer
risk: the risk that the market price of common stocks and
other equity securities may go up or down, sometimes rapidly or
unpredictably, including due to factors affecting equity securities
markets generally, particular industries represented in those markets, or
the issuer itself. |
• |
|
financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both
the amounts and the types of loans and other financial commitments
financial services companies can make, the interest rates and fees they
can charge, the scope of their activities, the prices they can charge and
the amount of capital they must maintain; (ii) fluctuations,
including as a result of interest rate changes or increased competition,
in the availability and cost of capital funds on which the profitability
of financial services companies is largely dependent;
(iii) deterioration of the credit markets; (iv) credit losses
resulting from financial difficulties of borrowers, especially when
financial services companies are exposed to non‑diversified or
concentrated loan portfolios; (v) financial losses associated with
investment activities, especially when financial services companies are
exposed to financial leverage; (vi) the risk that any financial
services company experiences substantial declines in the valuations of its
assets, takes action to raise capital, or ceases operations;
(vii) the risk that a market shock or other unexpected market,
economic, political, regulatory, or other event might lead to a sudden
decline in the values of most or all companies in the financial services
sector; (viii) events leading to limited liquidity, defaults,
non‑performance or other adverse developments that affect financial
institutions or the financial services industry generally, or concerns or
rumors about any events of these kinds or other similar risks, leading to
market-wide liquidity problems; and (ix) the interconnectedness or
interdependence among financial services companies, including the risk
that the financial distress or failure of one financial services company
may materially and adversely affect a number of other financial services
companies. |
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
index risk:
the risk that the Fund’s investments in derivatives based on
the Index or that use the Index as the reference asset, or other
substitute investment exposure to the Index, may underperform the return
of the Index for a number of reasons, including, for example, (i) the
performance of derivatives related to the Index may not correlate with the
Index and/or may underperform the Index due to transaction costs, fees, or
other aspects of the transaction’s pricing; (ii) the Fund may not be
able to find counterparties willing to enter into derivative instruments
whose returns are based on the return of the Index or find parties who are
willing to do so at an acceptable cost or level of risk to the Fund; and
(iii) errors may arise in carrying out the Index’s methodology, or
the Index provider may incorrectly report information concerning the
Index. Although the Adviser has licensed from the Index’s sponsor the
right to use the Index as part of implementing the Fund’s principal
investment strategies, there can be no guarantee that the Index will be
maintained indefinitely or that the Fund will be able to continue to
utilize the Index to implement the Fund’s principal investment strategies
indefinitely. If the |
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|
sponsor
of the Index ceases to maintain the Index, the Fund no longer has the
ability to utilize the Index to implement its principal investment
strategies, or other circumstances exist that the Adviser or the Fund’s
Board of Trustees concludes substantially limit the Fund’s ability to
create cost-effective synthetic investment exposure to the Index, the
Adviser or the Fund’s Board of Trustees may substitute the Index with
another index that it chooses in its sole discretion and without advance
notice to shareholders. There can be no assurance that any substitute
index so selected will be similar to the Index or will perform in a manner
similar to the Index. Unavailability of the Index could affect adversely
the ability of the Fund to achieve its investment
objective. |
• |
|
inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
• |
|
investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other DoubleLine funds over investment companies sponsored or managed
by others and to maintain such investments once made due to its own
financial interest in those products and other business
considerations. |
• |
|
large
shareholder risk: the risk that certain account holders,
including the Adviser or funds or accounts over which the Adviser (or
related parties of the Adviser) has investment discretion, may from time
to time own or control a significant percentage of the Fund’s shares. The
Fund is subject to the risk that a redemption by those shareholders of all
or a portion of their Fund shares, including as a result of an asset
allocation decision made by the Adviser (or related parties of the
Adviser), will adversely affect the Fund’s performance if it is forced to
sell portfolio securities or invest cash when the Adviser would not
otherwise choose to do so. Redemptions of a large number of shares may
affect the liquidity of the Fund’s portfolio, increase the Fund’s
transaction costs, and accelerate the realization of taxable income and/or
gains to shareholders. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of that financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral relating to a loan; (v) there may be limited
public information available regarding the loan and the relevant
borrower(s); (vi) the use of a particular interest rate benchmark may
limit the Fund’s ability to achieve a net return to shareholders that
consistently approximates the average published Prime Rate of U.S. banks;
(vii) the prices of certain floating rate loans that include a
feature that prevents their interest rates from adjusting if market
interest rates are below a specified minimum level may appreciate less
than other instruments in response to changes in interest rates should
interest rates rise but remain below the applicable minimum level;
(viii) if a borrower fails to comply with various restrictive
covenants that may be found in loan agreements, the borrower may default
in payment of the loan; (ix) if the Fund invests in loans that
contain fewer or less restrictive constraints on the borrower than certain
other types of loans (“covenant-lite” loans), it may have fewer rights
against the borrowers of such loans, including fewer protections against
the possibility of default and fewer remedies in the event of default;
(x) the loan is unsecured; (xi) there is a limited secondary
market; (xii) transactions in loans may settle on a delayed basis,
and the Fund may not receive the proceeds from the sale of a
loan |
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|
for
a substantial period of time after the sale, which may result in sale
proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the Fund. The Fund may invest in loans
directly or indirectly by investing in shares of the DoubleLine Floating
Rate Fund and in either case will be subject to the risks described
above. |
• |
|
market
capitalization risk: the risk that investing substantially
in issuers in one market capitalization category (large, medium or small)
may adversely affect the Fund because of unfavorable market conditions
particular to that category of issuers, such as larger, more established
companies being unable to respond quickly to new competitive challenges or
attain the high growth rates of successful smaller companies, or,
conversely, stocks of smaller companies being more volatile than those of
larger companies due to, among other things, narrower product lines, more
limited financial resources, fewer experienced managers and there
typically being less publicly available information about small
capitalization companies. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
• |
|
models and data
risk: the risk that the quantitative models or related data
used in managing the Fund fail to identify profitable opportunities. In
addition, failures to properly gather, organize, and analyze large amounts
of data or errors in a model or data, or in the application of such
models, may result in, among other things, execution and investment
allocation failures and investment losses. For example, the models may
incorrectly identify opportunities or data used in the construction and
application of models may prove to be inaccurate or stale, which may
result in misidentified opportunities that may lead to substantial losses
for the Fund. A given model may be more effective with certain instruments
or strategies than others, and there can be no assurance that any model
can identify and incorporate all factors that will affect an investment’s
price or performance. |
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of any of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
portfolio
turnover risk: the risk that frequent purchases and sales of
portfolio securities may result in higher Fund expenses and may result in
larger distributions of taxable capital gains to investors as compared to
a fund that trades less
frequently. |
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• |
|
real estate
sector risk: the risk that real estate-related investments
may decline in value as a result of factors affecting the real estate
sector, such as the supply of real property in certain markets, changes in
zoning laws, delays in completion of construction, changes in real estate
values, changes in property taxes, levels of occupancy, and local,
regional, and general market conditions. Along with the risks common to
different types of real estate-related investments, REITs, no matter the
type, involve additional risk factors, including poor performance by the
REIT’s manager, adverse changes to the tax laws, and the possible failure
by the REIT to qualify for the favorable tax treatment available to REITs
under the Internal Revenue Code of 1986, as amended, or the exemption from
registration under the Investment Company Act of 1940, as amended. REITs
are not diversified and are heavily dependent on cash flow earned on the
property interests they hold. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
• |
|
short position
risk: the risk that an increase in the value of an
instrument, index or interest rate with respect to which the Fund has
established a short position will result in a loss to the
Fund. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
CDOs, mortgage-backed securities, other types of asset-backed securities
and certain types of structured notes, may decline in value due to changes
in the underlying instruments, indexes, interest rates or other factors on
which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s NAV.
The valuation of the Fund’s investments involves subjective judgment.
Certain securities in which the Fund may invest may be more difficult to
value accurately, especially during periods of market disruptions or
extreme market volatility. Incorrect valuations of the Fund’s portfolio
holdings could result in the Fund’s shareholder transactions being
effected at an NAV that does not accurately reflect the underlying value
of the Fund’s portfolio, resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index and another performance
benchmark. The Fund’s past
performance (before and after taxes) is not necessarily
an
-159-
indication of how the Fund will
perform in the future. Absent any applicable fee waivers
and/or expense limitations (which have applied to the Fund since inception),
performance would have been lower. Updated information on the Fund’s investment
results can be obtained at no charge by calling 877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
25.46% |
|
Quarter
ended 6/30/2020 |
Lowest: |
|
-27.69% |
|
Quarter
ended 3/31/2020 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
4.13%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Shiller
Enhanced CAPE® |
|
One Year |
|
Five Years |
|
Ten Years |
|
Since Inception
(October 31, 2013) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
27.01% |
|
|
|
|
13.56% |
|
|
|
|
12.57% |
|
|
|
|
12.81% |
|
Return
After Taxes on Distributions |
|
|
|
24.46% |
|
|
|
|
10.32% |
|
|
|
|
9.81% |
|
|
|
|
10.06% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
15.83% |
|
|
|
|
10.07% |
|
|
|
|
9.46% |
|
|
|
|
9.69% |
|
Class N |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
26.72% |
|
|
|
|
13.28% |
|
|
|
|
12.30% |
|
|
|
|
12.53% |
|
Class R61 |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
27.17% |
|
|
|
|
13.62% |
|
|
|
|
12.61% |
|
|
|
|
12.84% |
|
S&P 500® Index (reflects no deduction for fees, expenses or
taxes) |
|
|
|
26.29% |
|
|
|
|
15.69% |
|
|
|
|
12.03% |
|
|
|
|
12.43% |
|
1 |
Class R6
shares were not available for purchase until July 31, 2019. The
performance shown for Class R6 shares prior to that date is that of
the Class I shares of the Fund, another class of the Fund that is
invested in the same portfolio of securities as Class R6 shares.
Annual returns of Class R6 shares would have differed from that shown
for the period prior to July 31, 2019 only to the extent that
Class R6 shares and Class I shares have different
expenses. |
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual after‑tax returns depend on your tax
situation and may differ from those shown. If you own shares of the Fund in a
tax‑advantaged account, such as a 401(k) plan or an individual retirement
account (IRA), after‑tax returns shown are not relevant to your
investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The S&P
500® Index is an
unmanaged capitalization-weighted index of 500 stocks designed to measure
performance of the broad domestic economy through changes in the aggregate
market value of 500 stocks representing all major industries. It is not possible
to invest directly in an index.
-160-
Investment
Adviser
DoubleLine
Alternatives is the investment adviser to the Fund. DoubleLine Capital is the
sub‑adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience with the Fund |
|
Primary
Title with the
Investment
Adviser |
Jeffrey E. Gundlach |
|
Since
the Fund’s
inception
in October 2013 |
|
Chief
Executive Officer —
DoubleLine
Capital |
Jeffrey
J. Sherman |
|
Since
the Fund’s inception in October 2013 |
|
Deputy Chief Investment Officer
— DoubleLine Capital; President —
DoubleLine Alternatives |
Purchase
and Sale of Shares
You
may purchase or redeem Class I, Class N and Class R6 shares on
any business day when the New York Stock Exchange opens for regular trading. You
may purchase or redeem shares by written request via mail (DoubleLine Funds, c/o
U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire
transfer, by telephone at 877‑DLine11 (877‑354‑6311), or through authorized
dealers, brokers, or other service providers (“financial intermediaries”). Telephone
transactions will be permitted unless you decline this privilege on your initial
purchase application. The minimum initial and subsequent investment amounts for
different types of accounts are shown below, although the Fund may reduce or
waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum
Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and
Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
Class R6
Shares |
|
|
None* |
|
|
|
N/A |
|
|
|
N/A |
|
* |
See
eligibility limitations below. |
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Eligibility for Class R6
Shares. Only authorized dealers, brokers, or other service providers who
have an agreement with the Fund’s distributor to make Class R6 shares
available to their clients who are Class R6 eligible plans or other
eligible investors are authorized to accept, on behalf of the Fund, purchase and
exchange orders and redemption requests for Class R6 shares placed by or on
behalf of Class R6 eligible plans or other eligible investors. In addition,
Class R6 shares may also be purchased directly from the Fund’s transfer
agent by a Class R6 eligible plan if such shares are held in an omnibus
account opened in the plan’s name directly with the Fund’s transfer agent.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
-161-
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, an Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-162-
Fund
Summary
DoubleLine
Shiller Enhanced International CAPE®
Investment
Objective
The
Fund’s investment objective is to seek total return which exceeds the total
return of its benchmark index over a full market
cycle.
Fees
and Expenses of the Fund
This
table describes the fees and expenses you may pay if you buy, hold and sell
shares of the Fund. You may pay other fees, such
as brokerage commissions and other fees to financial intermediaries (defined
below), including when purchasing Class I shares
through a broker or other financial intermediary acting as an agent on your
behalf. Such commissions and other fees, if any, are not charged by the
Fund and are not reflected in the fee table or expense example
below.
Shareholder Fees (fees paid directly from your
investment)
|
|
|
| |
Share Class |
|
Class I |
|
Class N |
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of the offering price) |
|
None |
|
None |
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price) |
|
None |
|
None |
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends |
|
None |
|
None |
Redemption Fee (as a percentage of shares
redeemed within 90 days of purchase) |
|
None |
|
None |
Fee for Redemption by Wire |
|
$15 |
|
$15 |
Exchange Fee |
|
None |
|
None |
Account
Fee |
|
None |
|
None |
Annual Fund Operating Expenses1
(expenses that you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
|
| |
Share Class |
|
Class I |
|
|
Class N |
|
Management Fees |
|
|
0.50% |
|
|
|
0.50% |
|
Distribution and/or Service (12b‑1)
Fees |
|
|
None |
|
|
|
0.25% |
|
Other Expenses (includes sub‑transfer
agent accounting or administrative services expenses) |
|
|
0.42% |
|
|
|
0.42% |
|
Acquired Fund Fees and Expenses2 |
|
|
0.04% |
|
|
|
0.04% |
|
Total Annual Fund Operating Expenses
Before Fee Waiver and/or Expense Reimbursement |
|
|
0.96% |
|
|
|
1.21% |
|
Fee
Waiver and/or Expense Reimbursement2,3 |
|
|
-0.30% |
|
|
|
-0.30% |
|
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement2,3 |
|
|
0.66% |
|
|
|
0.91% |
|
1 |
The
Fund enters into index-related swap transactions, under which the Fund
incurs fees payable to its counterparties and other costs. The level of an
index itself may also be reduced by a number of assumed expenses and
charges. Those fees and costs reduce the index-based returns to the Fund
under the swaps. During the Fund’s most recent fiscal year, those expenses
and charges were approximately 0.65% of the Fund’s net assets. Swap
returns or the level of an index are typically also reduced by amounts
based on short-term interest rates (applied, in the case of swaps, against
the notional amounts of the swaps) and by other amounts, such as a spread
above the short-term interest rate. None of these fees and costs are
reflected in the table above or in the example below. See “Index Risk —
Note regarding Index-Based Swaps” for more information regarding such fees
and costs. |
2 |
“Acquired Fund Fees and Expenses” are
expenses indirectly incurred by the Fund as a result of its investments in
one or more underlying funds, including exchange-traded funds (“ETFs”) and money market funds. Because
these costs are indirect, the Total Annual Fund Operating Expenses in this
fee table will not correlate to the expense ratio in the Fund’s financial
statements, since financial statements only include direct costs of the
Fund and not the indirect costs of investing in the underlying
funds. When the Fund invests in other investment vehicles
sponsored or advised by DoubleLine Capital LP (the “Adviser” or “DoubleLine Capital”) or a related party
of the Adviser (“other DoubleLine funds”), the Adviser has
contractually agreed to waive its advisory fee in an amount equal to the
advisory fees paid by the other DoubleLine funds in respect of Fund assets
so invested. The Adviser waived advisory fees in the amount of 0.03%
pursuant to this waiver agreement in respect of investments made in other
DoubleLine funds during the Fund’s most recent fiscal year. The effects of
this waiver agreement are reflected in the last two rows of the table
above. This waiver agreement will apply until at least August 1, 2025, except that
it may be terminated at any time with the consent of the Board of
Trustees. |
-163-
3 |
The
Adviser has contractually agreed to waive its investment advisory fee and
to reimburse the Fund for other ordinary operating expenses to the extent
necessary to limit ordinary operating expenses to an amount not to exceed
0.65% for Class I shares and 0.90% for Class N shares. Ordinary
operating expenses exclude taxes, commissions, mark‑ups, litigation
expenses, indemnification expenses, interest expenses, Acquired Fund Fees
and Expenses, and any extraordinary expenses. These expense limitations
will apply until at least August 1, 2025, except that they may be
terminated by the Board of Trustees at any time. To the extent that the
Adviser waives its investment advisory fee and/or reimburses the Fund for
other ordinary operating expenses, it may seek reimbursement of a portion
or all of such amounts at any time within three fiscal years after the
fiscal year in which such amounts were waived or reimbursed. Any such
recoupment may not cause the Fund’s ordinary operating expenses to exceed
the expense limitation that was in place when the fees were waived or
expenses were reimbursed. Additionally, the Adviser would generally seek
recoupment only in accordance with the terms of any expense limitation
that is in place at the time of
recoupment. |
Example
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other mutual
funds.
This
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (taking into account the Fund’s
expense limitation or recoupment for the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
|
|
|
|
|
|
|
| |
|
|
Class I |
|
|
Class N |
|
1 Year |
|
|
$67 |
|
|
|
$93 |
|
3 Years |
|
|
$276 |
|
|
|
$354 |
|
5 Years |
|
|
$502 |
|
|
|
$636 |
|
10 Years |
|
$ |
1,151 |
|
|
$ |
1,439 |
|
Portfolio
Turnover
The
Fund incurs transaction costs when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 85% of the average value of its portfolio.
However, the portfolio turnover rate is determined using a required formula
which does not call for the inclusion of cash or cash equivalent instruments or
certain derivatives transactions. If those transactions were reflected in the
calculation, the Fund’s portfolio turnover rate shown would be
higher.
Principal
Investment Strategies
The
Fund seeks total return (capital appreciation and current income) in excess of
the benchmark index, currently the MSCI Europe Net Return USD Index (the “MSCI Europe Index”), over a full market
cycle.
The
Fund will seek to use derivatives, or a combination of derivatives and direct
investments, to provide a return (before fees and expenses) that approximates
the performance of the Shiller Barclays CAPE® Europe Sector Net TR NoC USD
Index (the “Index”). The Fund, through
its investment exposure to the Index, will have exposure to investments tied
economically to a number of countries throughout the world. The Index is
currently composed of issuers in fifteen different countries, generally in
Europe; the number and location of countries represented in the Index may change
without notice. The Fund will also invest in a portfolio of debt securities to
seek to provide additional total return over the long term. The Fund uses investment leverage as part of its
principal investment strategies. The Fund expects normally to invest an amount
approximately equal to its net assets directly in a portfolio of debt securities
while also maintaining notional exposure to the Index providing the Fund with
economic exposure to the Index in an amount up to the value of the Fund’s net
assets. As a result, the Fund’s total investment exposure (direct investments in
debt securities plus notional exposure to the Index) will typically be equal to
approximately 200% of the Fund’s net asset value (“NAV”).
The actual notional amounts of derivatives used for this purpose may be
greater than the desired amount of Index exposure, since in some cases it may be
necessary to use additional derivatives to obtain the desired currency exposure.
It is possible that the Fund could lose money on both its investments in debt
securities and its exposure to the Index, including through the Index’s exposure
to non‑U.S. currencies, all at the same
time.
The
Fund will normally use derivatives in an attempt to create an investment return
that approximates (before fees and expenses) the Index’s return. For example,
the Fund might enter into swap transactions or futures transactions designed
to
-164-
provide
the Fund a return before fees and expenses approximating the Index’s return,
including swap transactions or futures transactions where the reference asset is
the Index or a modified version of the Index, one or more components of the
Index or an unrelated index or basket of securities. The transaction pricing of
any swap transaction will reflect a number of factors that will cause the return
on the swap transaction to underperform the Index. Please see “Index Risk — Note
regarding Index-Based Swaps” for more information. The Fund expects to use only
a small percentage of its assets to attain the desired exposure to the Index
because of the structure of the derivatives the Fund expects to use. As a
result, use of those derivatives along with the Fund’s investments in a
portfolio of debt securities will create investment leverage in the Fund’s
portfolio. In certain cases, derivatives based on the Index or that use the
Index as the reference asset might be unavailable or the pricing of those
derivatives might be unfavorable; in those cases, the Fund might attempt to
approximate the Index’s return by purchasing some or all of the securities
comprising the Index, or portions of the Index, at the time. If the Fund at any
time invests directly in the securities comprising the Index, the assets so
invested will be unavailable for investment in debt instruments, and the Fund’s
ability to pursue its investment strategy fully and achieve its investment
objective may be limited.
To
the extent use of the above-described derivatives strategy leaves a substantial
portion of the Fund’s assets available for other investment by the Fund, the
Fund expects to invest those assets in a portfolio of debt instruments managed
by the Adviser to seek to provide additional total return over the long
term.
The Shiller Barclays CAPE® Europe Sector Net TR NoC USD Index. The Index
incorporates the principles of long-term investing distilled by Dr. Robert
Shiller and expressed through the CAPE® (Cyclically Adjusted Price
Earnings) ratio (the “CAPE® Ratio”). The classic CAPE® Ratio assesses equity market
valuations and averages ten years of inflation adjusted earnings to account for
earnings and market cycles. Traditional valuation measures, such as the
price-earnings (PE) ratio, by contrast, typically rely on earnings information
from only the past year. The Index uses a relative version of the classic
CAPE® Ratio to identify
undervalued sectors while also seeking to exclude a sector that may appear
undervalued, but which may have also had recent relative price underperformance
due to fundamental issues with the sector that may negatively affect the
sector’s long-term total return. There can be no assurance that the Index will
provide a better measure of value than more traditional measures, over any
period or over the long term.
The
Index’s composition is determined monthly. Each month, the Index’s methodology
ranks ten sectors within the European equity markets based on a modified
CAPE® Ratio (a “value”
factor) and a twelve-month price momentum factor (a “momentum” factor). The
Index methodology selects the five European sectors with the lowest modified
CAPE® Ratio — the
sectors that are the most undervalued according to the CAPE® Ratio. Only four of these
five sectors, however, end up in the Index for a given month, as the sector with
the worst 12‑month price momentum among the five selected sectors is eliminated.
The Index methodology allocates an equally weighted long (i.e., investment) exposure to the four
remaining European sectors.
The
Index is denominated in U.S. dollars even though most or all of the securities
comprising the Index may be denominated in foreign currencies. The Fund’s
exposure to the Index may be achieved through derivative instruments providing
returns either in U.S. dollars or in one or more foreign currencies. The Fund
may enter into Index-related derivative instruments denominated either in U.S.
dollars or in foreign currencies. If the Fund enters into Index-related
derivative instruments denominated in foreign currencies, it will likely engage
in foreign currency transactions to produce an Index-based return denominated in
U.S. dollars.
Through
the Fund’s investments related to the Index, the Fund will have focused
exposures to the sectors making up the Index at any given time. As a result, the
Fund’s NAV may be affected to a greater degree by factors affecting those
sectors or industries than a fund that invests more
broadly.
If
derivatives designed to provide the Fund a return approximating the Index’s
return become unavailable or for other reasons, the Adviser may seek investment
exposure to the sectors comprising the Index by investing directly in some or
all of the securities that correspond to those sectors. The Adviser or the
Fund’s Board of Trustees may in their sole discretion and without advance notice
to shareholders select, in place of the Index, another index (such as the MSCI
Europe Index) or a basket of investments. The Fund may gain exposure to any
substitute index or basket of investments in any manner the Adviser determines
appropriate, including those described above with respect to how the Fund may
obtain exposure to the Index.
Although
a portion of the Fund’s assets may be invested in instruments the performance of
which is based on an index, the Fund’s overall portfolio includes other
investments. Therefore, the Fund is not designed to replicate the performance of
any index. The Fund’s performance will deviate, potentially significantly, from
the performance of any index used by the
Fund.
During
the Fund’s most recent fiscal year, the Fund entered into swap transactions
related to the Index with a limited number of counterparties. The Fund will
likely enter into swap transactions related to the Index with a single or a
limited number of counterparties for the foreseeable future. In selecting swap
counterparties for the Fund, the Adviser will normally consider a variety of
factors, including, without limitation: cost; the quality, reliability, and
responsiveness of a counterparty; the operational compatibility between a
counterparty and the Adviser; and a counterparty’s
creditworthiness.
-165-
The Fund’s Investments in Debt Instruments.
Under normal circumstances, to the extent use of the above-described derivatives
strategy leaves a substantial portion of the Fund’s assets available for other
investment by the Fund, the Fund intends to invest those assets in a portfolio
of debt instruments managed by the Adviser to seek to provide additional total
return over the long term. The Fund may invest directly in debt instruments;
alternatively, the Adviser may choose to invest all or a portion of the Fund’s
assets in one or more fixed income funds advised by DoubleLine Capital or a
related party of DoubleLine Capital. Debt instruments in which the Fund may
invest include, by way of example, (i) securities or other income-producing
instruments issued or guaranteed by the U.S. Government, its agencies,
instrumentalities or sponsored corporations (including inflation-protected
securities); (ii) corporate obligations; (iii) mortgage-backed
securities (including commercial and residential mortgage-backed securities) and
other asset-backed securities, collateralized mortgage obligations, government
mortgage pass-through securities, multiclass pass-through securities, private
mortgage pass-through securities, stripped mortgage securities (e.g., interest-only and principal-only
securities), and inverse floaters; (iv) collateralized debt obligations
(“CDOs”), including collateralized loan
obligations; (v) foreign securities (corporate and government, including
foreign hybrid securities), including emerging market securities;
(vi) fixed and floating rate loans of any kind (including, among others,
bank loans, assignments, participations, senior loans, second lien or other
subordinated or unsecured fixed or floating rate loans, debtor‑in‑possession
loans, exit facilities, delayed funding loans and revolving credit facilities),
which may take the form of loans that contain fewer or less restrictive
constraints on the borrower than certain other types of loans (“covenant-lite”
loans); (vii) municipal securities and other debt obligations issued by
states, local governments, and government-sponsored entities, including their
agencies, authorities, and instrumentalities; (viii) inflation-indexed
bonds; (ix) convertible securities; (x) preferred securities;
(xi) real estate investment trust (“REIT”) securities; (xii) payment‑in‑kind
bonds; (xiii) zero‑coupon bonds; (xiv) custodial receipts, cash and
cash equivalents; (xv) short-term, high quality investments, including, for
example, commercial paper, bankers’ acceptances, certificates of deposit, bank
time deposits, repurchase agreements, and investments in money market mutual
funds or similar pooled investments; and (xvi) other instruments bearing
fixed, floating, or variable interest rates of any maturity. The Fund may invest
in any level of the capital structure of an issuer of mortgage-backed or
asset-backed securities, but does not intend to invest in the equity or “first
loss” tranche of such investments.
In
managing the Fund’s portfolio of debt instruments, under normal market
conditions the portfolio managers intend to seek to construct an investment
portfolio with an overall dollar-weighted average effective duration of between
one and three years. Duration is a measure of the expected life of a fixed
income instrument that is used to determine the sensitivity of a security’s
price to changes in interest rates. Effective duration is a measure of the
Fund’s portfolio duration adjusted for the anticipated effect of interest rate
changes on bond and mortgage prepayment rates as determined by the Adviser. The
longer a portfolio’s effective duration, the more sensitive it will be to
changes in interest rates. The effective duration of the Fund’s portfolio of
debt instruments may vary materially from its target range, from time to time,
and there is no assurance that the effective duration of the portfolio will
always be within its target range. The Adviser monitors the effective duration
of the Fund’s portfolio of debt instruments to seek to assess and, in its
discretion, adjust the Fund’s exposure to interest rate
risk.
The
Fund may invest in debt instruments of any credit quality, which may include
securities that are at the time of investment unrated or rated BB+ or lower by
S&P Global Ratings or Ba1 or lower by Moody’s Investors Service, Inc. or the
equivalent by any other nationally recognized statistical rating organization or
unrated securities judged by the Adviser to be of comparable quality. Corporate
bonds and certain other fixed income instruments rated below investment grade,
or such instruments that are unrated and determined by the Adviser to be of
comparable quality, are high yield, high risk bonds, commonly known as “junk
bonds.” Generally, lower-rated debt securities offer a higher yield than
higher-rated debt securities of similar maturity but are subject to greater risk
of loss of principal and interest than higher-rated securities of similar
maturity. The Fund may invest up to 331⁄3%
of its net assets in junk bonds, bank loans and assignments rated below
investment grade or unrated but determined by the Adviser to be of comparable
quality, and credit default swaps of companies in the high yield universe. The
Adviser does not consider the term “junk bonds” to include any mortgage-backed
securities or any other asset-backed securities, regardless of their credit
rating or credit quality, and accordingly may invest without limit in such
investments.
The
Fund may invest a portion of its assets in inverse floater securities and
interest-only and principal-only securities. An inverse floater is a type of
instrument, which may be backed by or related to a mortgage-backed security,
that bears a floating or variable interest rate that moves in the opposite
direction to movements in interest rates generally or the interest rate on
another security or index. Because an inverse floater inherently carries
financial leverage in its coupon rate, it can change very substantially in value
in response to changes in interest rates. Interest-only and principal-only
securities may also be backed by or related to a mortgage-backed security.
Holders of interest-only securities are entitled to receive only the interest on
the underlying obligations but none of the principal, while holders of
principal-only securities are entitled to receive all of the principal but none
of the interest on the underlying obligations. As a result, they are highly
sensitive to actual or anticipated changes in prepayment rates on the underlying
securities.
The
Fund may invest a portion of its assets in debt instruments (including hybrid
securities) issued or guaranteed by companies, financial institutions and
government entities in emerging market countries. An “emerging market country”
is a country that, at the time the Fund invests in the related fixed income
instruments, is classified as an emerging or developing
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economy
by any supranational organization such as an institution in the World Bank Group
or the United Nations, or an agency thereof, or is considered an emerging market
country for purposes of constructing a major emerging market securities
index.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including those sponsored or managed by the Adviser or its related
parties. The Fund may engage in short sales or take short positions, either to
earn additional return or to hedge existing
investments.
In
managing the Fund’s debt instruments, the portfolio managers typically use a
controlled risk approach. The techniques of this approach attempt to control the
principal risk components of the fixed income markets and may include, among
other factors, consideration of the Adviser’s view of the following: the
potential relative performance of various market sectors, security selection
available within a given sector, the risk/reward equation for different asset
classes, liquidity conditions in various market sectors, the shape of the yield
curve and projections for changes in the yield curve, potential fluctuations in
the overall level of interest rates, and current fiscal
policy.
The
portfolio managers utilize active asset allocation in managing the Fund’s
investments in debt instruments.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell
target.
Principal
Risks
The
value of the Fund’s shares will vary as its portfolio investments increase or
decrease in value. Therefore, the value of your investment in the Fund could go
down as well as up. You can lose money by investing in the Fund. The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
The
principal risks affecting the Fund that can cause a decline in value are:
• |
|
active
management risk: the risk that the Fund will fail to meet
its investment objective and that the Fund’s investment performance will
depend, at least in part, on how its assets are allocated and reallocated
among asset classes, sectors, underlying funds and/or investments and that
such allocation will focus on asset classes, sectors, underlying funds,
and/or investments that perform poorly or underperform other asset
classes, sectors, underlying funds, and/or available investments. Any
given investment strategy may fail to produce the intended results, and
the Fund’s portfolio may underperform other comparable funds because of
portfolio management decisions related to, among other things, the
selection of investments, portfolio construction, risk assessments, and/or
the outlook on market trends and
opportunities. |
• |
|
asset-backed
securities investment risk: the risk that borrowers may
default on the obligations that underlie the asset-backed security and
that, during periods of falling interest rates, asset-backed securities
may be called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate, and the risk that
the impairment of the value of the collateral underlying a security in
which the Fund invests (due, for example, to non‑payment of loans) will
result in a reduction in the value of the
security. |
• |
|
collateralized
debt obligations risk: the risks of an investment in a CDO
depend largely on the quality and type of the collateral and the tranche
of the CDO in which the Fund invests. Normally, collateralized bond
obligations, CLOs and other CDOs are privately offered and sold, and thus
are not registered under the securities laws. As a result, investments in
CDOs may be illiquid. In addition to the risks associated with debt
instruments (e.g., interest rate
risk and credit risk), CDOs carry additional risks including, but not
limited to: (i) the possibility that distributions from collateral
will not be adequate to make interest or other payments; (ii) the
quality of the collateral may decline in value or default; (iii) the
possibility that the Fund may invest in CDOs that are subordinate to other
classes of the issuer’s securities; and (iv) the complex structure of
the security may not be fully understood at the time of investment and may
produce disputes with the issuer or unexpected investment
results. |
• |
|
counterparty
risk: the risk that the Fund will be subject to credit risk
with respect to the counterparties to the derivative contracts and other
instruments entered into by the Fund; that the Fund’s counterparty will be
unable or unwilling to perform its obligations; that the Fund will be
unable to enforce contractual remedies if its counterparty defaults; that
if a |
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counterparty
(or an affiliate of a counterparty) becomes bankrupt, the Fund may
experience significant delays in obtaining any recovery or may obtain
limited or no recovery in a bankruptcy or other insolvency proceeding. The
Fund has historically obtained exposure to the Index through swap
transactions with a single or a limited number of counterparties and will
likely enter into swap transactions related to the Index with a single or
a limited number of counterparties for the foreseeable future. To the
extent that the Fund enters into multiple transactions with a single or a
small set of counterparties, it will be subject to increased counterparty
risk. |
|
¡ |
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credit risk:
the risk that an issuer, counterparty or other obligor to
the Fund will fail to pay its obligations to the Fund when they are due,
which may reduce the Fund’s income and/or reduce, in whole or in part, the
value of the Fund’s investment. Actual or perceived changes in the
financial condition of an obligor, changes in economic, social or
political conditions that affect a particular type of security,
instrument, or obligor, and changes in economic, social or political
conditions generally can increase the risk of default by an obligor, which
can affect a security’s or other instrument’s credit quality or value and
an obligor’s ability to honor its obligations when due. The values of
lower-quality debt securities (including debt securities commonly known as
“high yield” securities or “junk bonds”), including floating rate loans,
tend to be particularly sensitive to these changes. Certain debt
securities in the lowest investment grade category also may be considered
to possess some speculative characteristics by certain rating agencies.
The values of securities or instruments also may decline for a number of
other reasons that relate directly to the obligor, such as management
performance, financial leverage, and reduced demand for the obligor’s
goods and services, as well as the historical and prospective earnings of
the obligor and the value of its
assets. |
|
¡ |
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extension risk:
the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to,
floating rate loans and mortgage-related securities, may occur at a slower
rate than expected and the expected maturity of those securities could
lengthen as a result. Securities that are subject to extension risk
generally have a greater potential for loss when prevailing interest rates
rise, which could cause their values to fall
sharply. |
|
¡ |
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interest rate
risk: the risk that debt instruments will change in value
because of changes in interest rates. The value of an instrument with a
longer duration (whether positive or negative) will be more sensitive to
changes in interest rates than a similar instrument with a shorter
duration. Bonds and other debt instruments typically have a positive
duration. The value of a debt instrument with positive duration will
generally decline if interest rates increase. Certain other investments,
such as inverse floaters and certain derivative instruments, may have a
negative duration. The value of instruments with a negative duration will
generally decline if interest rates decrease. Inverse floaters,
interest-only and principal-only securities are especially sensitive to
interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. The risks associated with
rising interest rates are heightened under current market conditions given
that the U.S. Federal Reserve has raised interest rates from historically
low levels and may continue to do so. Fiscal, economic, monetary or other
government policies or measures have in the past, and may in the future,
cause or exacerbate risks associated with interest rates, including
changes in interest rates. Further, in market environments where interest
rates are rising, issuers may be less willing or able to make principal
and interest payments on fixed-income investments when
due. |
|
¡ |
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prepayment
risk: the risk that the issuer of a debt security, including
floating rate loans and mortgage-related securities, repays all or a
portion of the principal prior to the security’s maturity. In times of
declining interest rates, there is a greater likelihood that the Fund’s
higher yielding securities will be pre‑paid with the Fund being unable to
reinvest the proceeds in an investment with as great a yield. Prepayments
can therefore result in lower yields to shareholders of the
Fund. |
• |
|
defaulted
securities risk: the significant risk of the uncertainty of
repayment of defaulted securities (e.g., a security on which a principal or
interest payment is not made when due) and obligations of distressed
issuers (including insolvent issuers or issuers in payment or covenant
default, in workout or restructuring or in bankruptcy or similar
proceedings). Such investments entail high risk and have speculative
characteristics. |
• |
|
derivatives
risk: the risk that an investment in derivatives will not
perform as anticipated by the Adviser, may not be available at the time or
price desired, cannot be closed out at a favorable time or price, will
increase the Fund’s transaction costs, or will increase the Fund’s
volatility; that derivatives may create investment leverage; that, when a
derivative is used as a substitute for or alternative to a direct cash
investment, the transaction may not provide a
return |
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that
corresponds precisely or at all with that of the cash investment; that the
positions may be improperly executed or constructed; that the Fund’s
counterparty will be unable or unwilling to perform its obligations; or
that, when used for hedging purposes, derivatives will not provide the
anticipated protection, causing the Fund to lose money on both the
derivatives transaction and the exposure the Fund sought to
hedge. |
• |
|
emerging market
country risk: the risk that investing in emerging markets,
as compared to foreign developed markets, increases the likelihood that
the Fund will lose money, due to more limited information about the issuer
and/or the security; higher brokerage costs; different accounting,
auditing and financial reporting standards; less developed legal systems
and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue
from particular commodities or international aid; and expropriation,
nationalization or other adverse political or economic
developments. |
• |
|
equity issuer
risk: the risk that the market price of common stocks and
other equity securities may go up or down, sometimes rapidly or
unpredictably, including due to factors affecting equity securities
markets generally, particular industries represented in those markets, or
the issuer itself. |
• |
|
financial
services risk: the risk that an investment in issuers in the
financial services sector or transactions with one or more counterparties
in the financial services sector may be adversely affected by, among other
things: (i) changes in governmental regulation, which may limit both
the amounts and the types of loans and other financial commitments
financial services companies can make, the interest rates and fees they
can charge, the scope of their activities, the prices they can charge and
the amount of capital they must maintain; (ii) fluctuations,
including as a result of interest rate changes or increased competition,
in the availability and cost of capital funds on which the profitability
of financial services companies is largely dependent;
(iii) deterioration of the credit markets; (iv) credit losses
resulting from financial difficulties of borrowers, especially when
financial services companies are exposed to non‑diversified or
concentrated loan portfolios; (v) financial losses associated with
investment activities, especially when financial services companies are
exposed to financial leverage; (vi) the risk that any financial
services company experiences substantial declines in the valuations of its
assets, takes action to raise capital, or ceases operations;
(vii) the risk that a market shock or other unexpected market,
economic, political, regulatory, or other event might lead to a sudden
decline in the values of most or all companies in the financial services
sector; (viii) events leading to limited liquidity, defaults,
non‑performance or other adverse developments that affect financial
institutions or the financial services industry generally, or concerns or
rumors about any events of these kinds or other similar risks, leading to
market-wide liquidity problems; and (ix) the interconnectedness or
interdependence among financial services companies, including the risk
that the financial distress or failure of one financial services company
may materially and adversely affect a number of other financial services
companies. |
• |
|
foreign
currency risk: the risk that fluctuations in exchange rates
may adversely affect the value of the Fund’s investments denominated in
foreign currencies. |
• |
|
foreign
investing risk: the risk that investments in foreign
securities or in issuers with significant exposure to foreign markets, as
compared to investments in U.S. securities or in issuers with
predominantly domestic market exposure, may be more vulnerable to
economic, political, and social instability and subject to less government
supervision, less protective custody practices, lack of transparency,
inadequate regulatory and accounting standards, delayed or infrequent
settlement of transactions, and foreign taxes. If the Fund buys securities
denominated in a foreign currency, receives income in foreign currencies,
or holds foreign currencies from time to time, the value of the Fund’s
assets, as measured in U.S. dollars, can be affected unfavorably by
changes in exchange rates relative to the U.S. dollar or other foreign
currencies. Foreign markets are also subject to the risk that a foreign
government could restrict foreign exchange transactions or otherwise
implement unfavorable currency regulations. In addition, foreign
securities may be subject to currency exchange rates or regulations, the
imposition of economic sanctions, tariffs or other government
restrictions, higher transaction and other costs, reduced liquidity, and
delays in settlement. |
• |
|
high yield
risk: the risk that debt instruments rated below investment
grade or debt instruments that are unrated and of comparable or lesser
quality are predominantly speculative. These instruments, commonly known
as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to
greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity, negative perceptions of high
yield investments generally, and less secondary market
liquidity. |
• |
|
index risk:
the risk that the Fund’s investments in derivatives based on
the Index or that use the Index as the reference asset, or other
substitute investment exposure to the Index, may underperform the return
of the Index for a number of reasons, including, for example, (i) the
performance of derivatives related to the Index may not correlate with the
Index |
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|
and/or
may underperform the Index due to transaction costs, fees, or other
aspects of the transaction’s pricing; (ii) the Fund may not be able
to find counterparties willing to enter into derivative instruments whose
returns are based on the return of the Index or find parties who are
willing to do so at an acceptable cost or level of risk to the Fund; and
(iii) errors may arise in carrying out the Index’s methodology, or
the Index provider may incorrectly report information concerning the
Index. Although the Adviser has licensed from the Index’s sponsor the
right to use the Index as part of implementing the Fund’s principal
investment strategies, there can be no guarantee that the Index will be
maintained indefinitely or that the Fund will be able to continue to
utilize the Index to implement the Fund’s principal investment strategies
indefinitely. If the sponsor of the Index ceases to maintain the Index,
the Fund no longer has the ability to utilize the Index to implement its
principal investment strategies, or other circumstances exist that the
Adviser or the Fund’s Board of Trustees concludes substantially limit the
Fund’s ability to create cost-effective synthetic investment exposure to
the Index, the Adviser or the Fund’s Board of Trustees may substitute the
Index with another index that it chooses in its sole discretion and
without advance notice to shareholders. There can be no assurance that any
substitute index so selected will be similar to the Index or will perform
in a manner similar to the Index. Unavailability of the Index could affect
adversely the ability of the Fund to achieve its investment
objective. |
• |
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inflation-indexed bond risk: the
risk that such bonds will change in value in response to actual or
anticipated changes in inflation rates in a manner unanticipated by the
Fund’s portfolio management team or investors generally. Inflation-indexed
bonds are subject to debt securities
risks. |
• |
|
investment
company and exchange-traded fund risk: the risk that an
investment company or other pooled investment vehicle, including any ETFs
or money market funds, in which the Fund invests will not achieve its
investment objective or execute its investment strategies effectively or
that significant purchase or redemption activity by shareholders of such
an investment company might negatively affect the value of its shares. The
Fund must pay its pro rata portion of an investment company’s fees and
expenses. To the extent the Adviser determines to invest Fund assets in
other investment companies, the Adviser will have an incentive to invest
in other DoubleLine funds over investment companies sponsored or managed
by others and to maintain such investments once made due to its own
financial interest in those products and other business
considerations. |
• |
|
large
shareholder risk: the risk that certain account holders,
including the Adviser or funds or accounts over which the Adviser (or
related parties of the Adviser) has investment discretion, may from time
to time own or control a significant percentage of the Fund’s shares. The
Fund is subject to the risk that a redemption by those shareholders of all
or a portion of their Fund shares, including as a result of an asset
allocation decision made by the Adviser (or related parties of the
Adviser), will adversely affect the Fund’s performance if it is forced to
sell portfolio securities or invest cash when the Adviser would not
otherwise choose to do so. Redemptions of a large number of shares may
affect the liquidity of the Fund’s portfolio, increase the Fund’s
transaction costs, and accelerate the realization of taxable income and/or
gains to shareholders. |
• |
|
leveraging
risk: the risk that certain investments by the Fund
involving leverage may have the effect of increasing the volatility of the
value of the Fund’s portfolio, and the risk of loss in excess of invested
capital. |
• |
|
liquidity risk:
the risk that the Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment. Illiquidity may be the result of, for example, low trading
volume, lack of a market maker, or contractual or legal restrictions that
limit or prevent the Fund from selling securities or closing derivative
positions. During periods of substantial market disruption, a large
portion of the Fund’s assets could potentially experience significant
levels of illiquidity. The values of illiquid investments are often more
volatile than the values of more liquid investments. It may be more
difficult for the Fund to determine a fair value of an illiquid investment
than that of a more liquid comparable
investment. |
• |
|
loan
risk: the risk that (i) if the Fund holds a loan
through another financial intermediary, or relies on a financial
intermediary to administer the loan, its receipt of principal and interest
on the loan may be subject to the credit risk of that financial
intermediary; (ii) any collateral securing a loan may be insufficient
or unavailable to the Fund, because, for example, the value of the
collateral securing a loan can decline, be insufficient to meet the
obligations of the borrower, or be difficult to liquidate, and the Fund’s
rights to collateral may be limited by bankruptcy or insolvency laws;
(iii) investments in highly leveraged loans or loans of stressed,
distressed, or defaulted issuers may be subject to significant credit and
liquidity risk; (iv) a bankruptcy or other court proceeding could
delay or limit the ability of the Fund to collect the principal and
interest payments on that borrower’s loans or adversely affect the Fund’s
rights in collateral relating to a loan; (v) there may be limited
public information available regarding the loan and the relevant
borrower(s); (vi) the use of a particular interest rate benchmark may
limit the Fund’s ability to achieve a net return to shareholders that
consistently approximates the average published Prime Rate of U.S. banks;
(vii) the prices of certain floating rate
loans |
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that
include a feature that prevents their interest rates from adjusting if
market interest rates are below a specified minimum level may appreciate
less than other instruments in response to changes in interest rates
should interest rates rise but remain below the applicable minimum level;
(viii) if a borrower fails to comply with various restrictive
covenants that may be found in loan agreements, the borrower may default
in payment of the loan; (ix) if the Fund invests in loans that
contain fewer or less restrictive constraints on the borrower than certain
other types of loans (“covenant-lite” loans), it may have fewer rights
against the borrowers of such loans, including fewer protections against
the possibility of default and fewer remedies in the event of default;
(x) the loan is unsecured; (xi) there is a limited secondary
market; (xii) transactions in loans may settle on a delayed basis,
and the Fund may not receive the proceeds from the sale of a loan for a
substantial period of time after the sale, which may result in sale
proceeds related to the sale of loans not being available to make
additional investments or to meet the Fund’s redemption obligations until
potentially a substantial period after the sale of the loans; and
(xiii) loans may be difficult to value and may be illiquid, which may
adversely affect an investment in the Fund. The Fund may invest in loans
directly or indirectly by investing in shares of the DoubleLine Floating
Rate Fund and in either case will be subject to the risks described
above. |
• |
|
market
capitalization risk: the risk that investing substantially
in issuers in one market capitalization category (large, medium or small)
may adversely affect the Fund because of unfavorable market conditions
particular to that category of issuers, such as larger, more established
companies being unable to respond quickly to new competitive challenges or
attain the high growth rates of successful smaller companies, or,
conversely, stocks of smaller companies being more volatile than those of
larger companies due to, among other things, narrower product lines, more
limited financial resources, fewer experienced managers and there
typically being less publicly available information about small
capitalization companies. |
• |
|
market risk:
the risk that markets will perform poorly or that the
returns from the securities in which the Fund invests will underperform
returns from the general securities markets or other types of investments.
Markets may, in response to governmental actions or intervention or
general market conditions, including real or perceived adverse political,
economic or market conditions, tariffs and trade disruptions, inflation,
recession, changes in interest or currency rates, lack of liquidity in the
bond markets or adverse investor sentiment, or other external factors,
experience periods of high volatility and reduced liquidity. During those
periods, the Fund may experience high levels of shareholder redemptions,
and may have to sell securities at times when the Fund would otherwise not
do so, and potentially at unfavorable prices. Certain securities may be
difficult to value during such periods. Market risk involves the risk that
the value of the Fund’s investment portfolio will change, potentially
frequently and in large amounts, as the prices of its investments go up or
down. During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid.
Recently, there have been inflationary price movements, which have caused
the fixed income securities markets to experience heightened levels of
interest rate volatility and liquidity risk. Please see “debt securities
risks — interest rate risk” herein for more
information. |
• |
|
models and data
risk: the risk that the quantitative models or related data
used in managing the Fund fail to identify profitable opportunities. In
addition, failures to properly gather, organize, and analyze large amounts
of data or errors in a model or data, or in the application of such
models, may result in, among other things, execution and investment
allocation failures and investment losses. For example, the models may
incorrectly identify opportunities or data used in the construction and
application of models may prove to be inaccurate or stale, which may
result in misidentified opportunities that may lead to substantial losses
for the Fund. A given model may be more effective with certain instruments
or strategies than others, and there can be no assurance that any model
can identify and incorporate all factors that will affect an investment’s
price or performance. |
• |
|
mortgage-backed
securities risk: the risk that borrowers may default on
their mortgage obligations or the guarantees underlying the
mortgage-backed securities will default or otherwise fail and that, during
periods of falling interest rates, mortgage-backed securities will be
called or prepaid, which may result in the Fund having to reinvest
proceeds in other investments at a lower interest rate. During periods of
rising interest rates, the average life of a mortgage-backed security may
extend, which may lock in a below-market interest rate, increase the
security’s duration, and reduce the value of the security. Enforcing
rights against the underlying assets or collateral may be difficult, or
the underlying assets or collateral may be insufficient if the issuer
defaults. The values of certain types of mortgage-backed securities, such
as inverse floaters and interest-only and principal-only securities, may
be extremely sensitive to changes in interest rates and prepayment rates.
The Fund may invest in mortgage-backed securities that are subordinate in
their right to receive payment of interest and repayment of principal to
other classes of the issuer’s
securities. |
• |
|
operational and
information security risks: an investment in the Fund, like
any fund, can involve operational risks arising from factors such as
processing errors, human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel and
errors caused by third-party service providers. The occurrence of
any |
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of
these failures, errors or breaches could result in investment losses to
the Fund, a loss of information, regulatory scrutiny, reputational damage
or other events, any of which could have a material adverse effect on the
Fund. While the Fund seeks to minimize such events through controls and
oversight, there may still be failures that could cause losses to the
Fund. |
• |
|
portfolio
turnover risk: the risk that frequent purchases and sales of
portfolio securities may result in higher Fund expenses and may result in
larger distributions of taxable capital gains to investors as compared to
a fund that trades less
frequently. |
• |
|
real estate
sector risk: the risk that real estate-related investments
may decline in value as a result of factors affecting the real estate
sector, such as the supply of real property in certain markets, changes in
zoning laws, delays in completion of construction, changes in real estate
values, changes in property taxes, levels of occupancy, and local,
regional, and general market conditions. Equity REITs, which invest
primarily in direct fee ownership or leasehold ownership of real property
and derive most of their income from rents, are generally affected by
changes in the values of and incomes from the properties they own.
Mortgage REITs invest mostly in mortgages on real estate, which may
secure, for example, construction, development or long-term loans, and the
main source of their income is mortgage interest payments. Mortgage REITs
may be affected by the credit quality of the mortgage loans they hold. A
hybrid REIT combines the characteristics of equity REITs and mortgage
REITs, generally by holding both ownership interests and mortgage
interests in real estate, and thus may be subject to risks associated with
both real estate ownership and mortgage-related investments. Along with
the risks common to different types of real estate-related investments,
REITs, no matter the type, involve additional risk factors, including poor
performance by the REIT’s manager, adverse changes to the tax laws, and
the possible failure by the REIT to qualify for the favorable tax
treatment available to REITs under the Internal Revenue Code of 1986, as
amended, or the exemption from registration under the Investment Company
Act of 1940, as amended. REITs are not diversified and are heavily
dependent on cash flow earned on the property interests they
hold. |
• |
|
securities or
sector selection risk: the risk that the securities held by
the Fund will underperform securities held in other funds investing in
similar asset classes or comparable benchmarks because of the portfolio
managers’ choice of securities or sectors for investment. To the extent
the Fund allocates a higher percentage of its investment portfolio to a
particular sector or related sectors, the Fund will be more susceptible to
events or factors affecting companies in that sector or related sectors.
For example, the values of securities of companies in the same or related
sectors may be negatively affected by the common characteristics they
share, the common business risks to which they are subject, common
regulatory burdens, or regulatory changes that affect them similarly. Such
characteristics, risks, burdens or changes include, but are not limited
to, changes in governmental regulation, inflation or deflation, rising or
falling interest rates, competition from new entrants, and other economic,
market, political or other developments specific to that sector or related
sectors. |
• |
|
short position
risk: the risk that an increase in the value of an
instrument, index or interest rate with respect to which the Fund has
established a short position will result in a loss to the
Fund. |
• |
|
structured
products and structured notes risk: the risk that an
investment in a structured product, which includes, among other things,
CDOs, mortgage-backed securities, other types of asset-backed securities
and certain types of structured notes, may decline in value due to changes
in the underlying instruments, indexes, interest rates or other factors on
which the product is based (“reference measure”). Depending on the reference
measure used and the use of multipliers or deflators (if any), changes in
interest rates and movement of the reference measure may cause significant
price and cash flow fluctuations. Application of a multiplier is
comparable to the use of financial leverage, a speculative technique.
Holders of structured products indirectly bear risks associated with the
reference measure, are subject to counterparty risk and typically do not
have direct rights against the reference measure. Structured products are
generally privately offered and sold, and thus, are not registered under
the securities laws and may be thinly traded or have a limited trading
market and may have the effect of increasing the Fund’s illiquidity,
reducing the Fund’s income and the value of the investment. At a
particular point in time, the Fund may be unable to find qualified buyers
for these securities. Investments in structured notes involve risks
including interest rate risk, credit risk and market
risk. |
• |
|
U.S. Government
securities risk: the risk that debt securities issued or
guaranteed by certain U.S. Government agencies, instrumentalities, and
sponsored enterprises are not supported by the full faith and credit of
the U.S. Government, and so investments in their securities or obligations
issued by them involve credit risk greater than investments in other types
of U.S. Government securities. |
• |
|
valuation
risk: the risk that the Fund will not value its investments
in a manner that accurately reflects their market values or that the Fund
will not be able to sell any investment at a price equal to the valuation
ascribed to that investment for purposes of calculating the Fund’s NAV.
The valuation of the Fund’s investments involves subjective judgment.
Certain |
-172-
|
securities
in which the Fund may invest may be more difficult to value accurately,
especially during periods of market disruptions or extreme market
volatility. Incorrect valuations of the Fund’s portfolio holdings could
result in the Fund’s shareholder transactions being effected at an NAV
that does not accurately reflect the underlying value of the Fund’s
portfolio, resulting in the dilution of shareholder
interests. |
Please
see “Additional Information About Principal Investment Strategies and Principal
Risks — Principal Risks” for a more detailed description of the principal risks
of investing in the Fund.
Performance
The
following performance information provides some indication of the risks of
investing in the Fund. The bar chart shows the performance of the Fund’s
Class I shares for each full calendar year since the Fund’s inception.
The table below shows how the average annual total
returns of the Fund’s shares for the periods shown compare to those of a
broad-based securities market index. The
Fund’s past performance (before and after taxes) is not necessarily an
indication of how the Fund will perform in the future. Absent
any applicable fee waivers and/or expense limitations (which have applied to the
Fund since inception), performance would have been lower. Updated information on
the Fund’s investment results can be obtained at no charge by calling
877‑DLine11
(877‑354‑6311) or by visiting the Fund’s website at
www.doubleline.com.
Class I
Shares
During
the periods shown above, the highest and lowest quarterly returns earned by the
Fund’s Class I shares were:
|
|
|
| |
Highest: |
|
24.77% |
|
Quarter
ended 6/30/2020 |
Lowest: |
|
-28.64% |
|
Quarter
ended 3/31/2020 |
The
year‑to‑date total
return for the Fund’s Class I shares as of June 30, 2024 was
1.97%.
Average
Annual Total Returns (for the periods ended December 31,
2023)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Shiller
Enhanced International CAPE® |
|
One Year |
|
Five Years |
|
Since Inception
(December 23, 2016) |
Class I |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
17.31% |
|
|
|
|
9.38% |
|
|
|
|
7.65% |
|
Return
After Taxes on Distributions |
|
|
|
14.64% |
|
|
|
|
7.83% |
|
|
|
|
5.83% |
|
Return
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
10.14% |
|
|
|
|
6.66% |
|
|
|
|
5.22% |
|
Class N |
|
|
|
|
| |
|
|
|
| |
|
|
| |
Return
Before Taxes |
|
|
|
16.80% |
|
|
|
|
9.08% |
|
|
|
|
7.37% |
|
MSCI Europe Net Total Return USD
Index (reflects no deduction
for fees, expenses or taxes) |
|
|
|
19.89% |
|
|
|
|
9.09% |
|
|
|
|
7.59% |
|
The Fund’s after‑tax returns as shown in the above
table are calculated using the historical highest applicable individual U.S.
federal marginal income tax rates for the period and do not reflect the impact
of state and local taxes. Your actual
after‑tax returns depend on your tax situation and may differ from those shown.
If you own shares of the Fund in a
tax‑advantaged
-173-
account, such as a 401(k) plan
or an individual retirement account (IRA), after‑tax returns shown are not
relevant to your investment. The “Return After Taxes on Distributions and Sale
of Fund Shares” may be higher than other return figures because when a capital
loss occurs upon the redemption of shares of the Fund, a tax deduction is
provided that may benefit the investor. After‑tax returns are for Class I shares
only. After‑tax returns for other classes may vary. The MSCI
Europe Net Total Return USD Index captures large and mid‑cap representation
across 15 developed market countries in Europe. It is not possible to invest
directly in an index.
Investment
Adviser
DoubleLine
Capital is the investment adviser to the Fund.
Portfolio
Managers
The
portfolio managers for the Fund are:
|
|
|
| |
Name |
|
Experience
with
the
Fund |
|
Primary Title with the
Investment
Adviser |
Jeffrey E. Gundlach |
|
Since
the Fund’s
inception
in December 2016 |
|
Chief Executive
Officer |
Jeffrey
J. Sherman |
|
Since
the Fund’s
inception
in December 2016 |
|
Deputy
Chief Investment Officer |
Purchase
and Sale of Shares
You
may purchase or redeem Class I and Class N shares on any business day
when the New York Stock Exchange opens for regular trading. You may purchase or
redeem shares by written request via mail (DoubleLine Funds, c/o U.S. Bank
Global Fund Services, P.O. Box 701, Milwaukee, WI 53201-0701), by wire transfer,
by telephone at 877‑DLine11 (877‑354‑6311), or through authorized dealers,
brokers, or other service providers (“financial
intermediaries”). Telephone transactions will be permitted unless you
decline this privilege on your initial purchase application. The minimum initial
and subsequent investment amounts for different types of accounts are shown
below, although the Fund may reduce or waive the minimums in some cases.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular Accounts |
|
|
IRAs/HSAs |
|
|
All Accounts and Automatic
Investment
Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
The
minimum investment may be modified for certain financial intermediaries that
submit trades on behalf of underlying investors. Certain financial
intermediaries also may have their own investment minimums, which may differ
from the Fund’s minimums, and may be waived at the intermediaries’ discretion.
The Fund reserves the right to change or waive the minimum initial and
subsequent investment amounts without prior notice or to waive the minimum
investment amounts for certain intermediaries or individual investors in its
discretion.
Tax
Information
The
Fund’s distributions generally are taxable to you as ordinary income or capital
gains, unless you are investing through a tax‑advantaged arrangement, such as a
401(k) plan or individual retirement account (IRA). If you invest through such
tax‑advantaged arrangements, you may be taxed later upon withdrawal from those
arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund, the Adviser, and the Fund’s distributor
or any of their affiliates may pay the financial intermediary for the sale of
Fund shares and related services. These payments may create a conflict of
interest by influencing the financial intermediary and your salesperson to
recommend the Fund over another investment. Ask your individual salesperson or
visit your financial intermediary’s website for more information.
-174-
Additional
Information About
Principal
Investment Strategies and Principal Risks
Investment
Objectives
Each
Fund’s investment objective described in the respective Summary Section is
non‑fundamental, which means each Fund may change its investment objective
without shareholder approval or prior notice.
Principal
Investment Strategies
References
to an “Adviser” below in the discussion of a Fund’s principal investment
strategies or principal risks shall generally refer to a Fund’s investment
adviser, which is DoubleLine Alternatives in respect of DoubleLine Multi-Asset
Trend Fund, DoubleLine Strategic Commodity Fund and DoubleLine Shiller Enhanced
CAPE®, and is DoubleLine
Capital in respect of each other Fund. In respect of DoubleLine Multi-Asset
Trend Fund and DoubleLine Shiller Enhanced CAPE®, references to the “Adviser”
in the context of those Funds’ principal investment strategies and principal
risks that relate to debt securities shall generally refer to DoubleLine
Capital, the sub‑adviser to those Funds and the entity primarily responsible for
the day‑to‑day management of those Funds’ fixed income portfolios.
DoubleLine Total Return Bond Fund
Under
normal circumstances, the Fund intends to invest more than 50% of its net assets
in residential and commercial mortgage-backed securities and U.S. Treasury
obligations rated at the time of investment Aa3 or higher by Moody’s Investors
Service, Inc. (“Moody’s”) or
AA‑ or higher by S&P Global Ratings (“S&P”) or the equivalent by any other
nationally recognized statistical rating organization or unrated securities that
are determined by DoubleLine Capital LP (“DoubleLine Capital”) to be of comparable
quality. These investments may include mortgage-backed securities of any
maturity or type, including those guaranteed by, or secured by collateral that
is guaranteed by, the United States Government, its agencies, instrumentalities
or sponsored corporations, and privately issued mortgage-backed securities.
These investments also include, among others, government mortgage pass-through
securities, collateralized mortgage obligations (“CMOs”), multiclass pass-through securities,
private mortgage pass-through securities, stripped mortgage securities
(interest-only and principal-only securities) and inverse floaters. The Fund’s
investments in derivatives and other synthetic instruments that provide
exposures comparable, in the judgment of the Adviser, to any of the foregoing
instruments described in this paragraph will be counted toward satisfaction of
the Fund’s 50% policy (using, where determined appropriate in the Adviser’s
discretion, an instrument’s notional amount).
Since
the Fund’s inception, the Fund has historically invested substantially all of
its assets in mortgage-backed securities; short term investments, such as notes
issued by U.S. Government agencies and shares of money market funds; and other
asset-backed obligations, collateralized loan obligations (“CLOs”), obligations of the U.S. Government and
its agencies, instrumentalities and sponsored corporations, and futures
contracts. The Fund may invest in other instruments as part of its principal
investment strategies as described below, but it has not historically done so to
a significant extent and there can be no assurance it will do so in the
future.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal policy.
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of borrowings for investment purposes) in bonds. Please see
“Other Information Regarding Principal Investment Strategies” on page 220 of
this Prospectus. If the Fund changes this investment policy, it will notify
shareholders at least 60 days in advance of the change. For purposes of the
policy to provide notice, clarifications or revisions to the Fund’s 80%
investment policy that are not expected to alter how the Fund is managed are not
considered changes that require notice.
The
Fund may invest in bonds of any credit quality, including those that are at the
time of investment unrated or rated BB+ or lower by S&P or Ba1 or lower by
Moody’s or the equivalent by any other nationally recognized statistical rating
organization. Bonds and fixed income instruments rated below investment grade,
or such instruments that are unrated and determined by the Adviser to be of
comparable quality, are high yield, high risk bonds, commonly known as “junk
bonds.” Generally, lower-rated debt securities offer a higher yield than higher
rated debt securities of similar maturity but are subject to greater risk of
loss of principal and interest than higher rated securities of similar maturity.
The Fund may invest up to 331/3% of its net
-175-
assets
in junk bonds, bank loans and assignments rated below investment grade or
unrated but determined by the Adviser to be of comparable quality, and credit
default swaps of companies in the high yield universe. The Adviser does not
consider the term “junk bonds” to include any mortgage-backed securities or any
other asset-backed securities, regardless of their credit rating or credit
quality, and accordingly may invest without limit in such investments.
Investment
in secured or unsecured fixed or floating rate loans arranged through private
negotiations between a borrowing corporation, government or other entity and one
or more financial institutions may be in the form of participations in loans or
assignments of all or a portion of loans from third parties.
The
Fund may enter into credit default swaps. In a credit default swap, one party
makes a stream of payments to another party in exchange for the right to receive
a specified return in the event of a default by a third party on its obligation
or other credit event. The Fund may enter into a credit default swap on either
side (making such a stream of payments or agreeing to provide the specified
return).
The
Fund may invest a portion of its assets in inverse floater securities and
interest-only and principal-only securities. An inverse floater is a type of
instrument, which may be backed by or related to a mortgage-backed security,
that bears a floating or variable interest rate that moves in the opposite
direction to movements in interest rates generally or the interest rate on
another security or index. Because an inverse floater inherently carries
financial leverage in its coupon rate, it can change very substantially in value
in response to changes in interest rates. Interest-only and principal-only
securities may also be backed by or related to a mortgage-backed security.
Holders of interest-only securities are entitled to receive only the interest on
the underlying obligations but none of the principal, while holders of
principal-only securities are entitled to receive all of the principal but none
of the interest on the underlying obligations. As a result, interest-only and
principal-only securities are highly sensitive to actual or anticipated changes
in prepayment rates on the underlying securities.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Adviser may seek to manage the dollar-weighted average effective duration of
the Fund’s portfolio through the use of derivative instruments and other
investments (including, among others, inverse floaters, futures contracts, U.S.
Treasury swaps, interest rate swaps, total return swaps and options, including
options on swap agreements (“swaptions”).
The Fund incurs costs in implementing duration management strategies, and there
can be no assurance that the Fund will engage in duration management strategies
or that any duration management strategy employed by the Fund will be
successful. In managing the Fund’s investments, under normal market conditions,
the portfolio managers intend to seek to construct an investment portfolio with
a dollar-weighted average effective duration of no less than one year and no
more than eight years. Duration is a measure of the expected life of a fixed
income instrument that is used to determine the sensitivity of a security’s
price to changes in interest rates. For example, the value of a portfolio of
fixed income securities with an average duration of three years would generally
be expected to decline by approximately 3% if interest rates rose by one
percentage point. Effective duration is a measure of the Fund’s portfolio
duration adjusted for the anticipated effect of interest rate changes on bond
and mortgage prepayment rates as determined by the Adviser. The effective
duration of the Fund’s investment portfolio may vary materially from its target
range, from time to time, and there is no assurance that the effective duration
of the Fund’s investment portfolio will always be within its target range.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. The Fund may use derivatives transactions
with the purpose or effect of creating investment leverage. For example, the
Fund may use futures contracts and options on futures contracts, in order to
gain efficient long or short investment exposures as an alternative to cash
investments or to hedge against portfolio exposures; interest rate swaps, to
gain indirect long or short exposures to interest rates, issuers, or currencies,
or to hedge against portfolio exposures; and total return swaps and credit
derivatives (such as credit default swaps), put and call options, and
exchange-traded and structured notes, to take indirect long or short positions
on indexes, securities, currencies, or other indicators of value, or to hedge
against portfolio exposures. The Fund may also engage in short sales or take
short positions, either to adjust its duration or for other investment
purposes.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the portfolio
managers believe it would be appropriate to do so in order to readjust the
duration of the Fund’s investment portfolio.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or
exists
-176-
immediately
after and as a result of such investment. Accordingly, any later increase or
decrease resulting from a change in values, net assets or other circumstances
will not be considered in determining whether any investment complies with the
Fund’s limitation or requirement.
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its net asset value (“NAV”), yield, and total return are (in
alphabetical order) the following:
• |
|
Asset-Backed
Securities Investment Risk |
• |
|
Defaulted
Securities Risk |
• |
|
Financial
Services Risk |
• |
|
Inflation-Indexed
Bond Risk |
• |
|
Mortgage-Backed
Securities Risk |
• |
|
Operational
and Information Security Risks |
• |
|
Real
Estate Sector Risk |
• |
|
Restricted
Securities Risk |
• |
|
Securities
or Sector Selection Risk |
• |
|
Structured
Products and Structured Notes Risk |
• |
|
U.S.
Government Securities Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Core Fixed Income Fund
Under
normal circumstances, the DoubleLine Core Fixed Income Fund intends to invest at
least 80% of its net assets (plus the amount of borrowings for investment
purposes) in fixed income instruments. Please see “Other Information Regarding
Principal Investment Strategies” on page 220 of this Prospectus. These fixed
income instruments include but are not limited to securities issued or
guaranteed by the United States Government, its agencies, instrumentalities or
sponsored corporations; corporate obligations; mortgage-backed securities of any
kind, including commercial and residential mortgage-backed securities;
asset-backed securities; foreign securities (corporate and government, including
foreign hybrid securities); emerging market securities (corporate and
government); fixed and floating rate loans of any kind (including, among others,
bank loans, assignments, participations, subordinated loans,
debtor‑in‑possession loans, exit facilities, delayed funding loans and revolving
credit facilities); and other securities bearing fixed or variable interest
rates of any maturity. If the Fund changes this investment policy, it will
notify shareholders at least 60 days in advance of the change. For purposes of
the policy to provide notice, clarifications or revisions to the Fund’s 80%
investment policy that are not expected to alter how the Fund is managed are not
considered changes that require notice.
Mortgage-backed
securities include, among others, government mortgage pass-through securities,
CMOs, multiclass pass-through securities, private mortgage pass-through
securities, stripped mortgage securities and inverse floaters. Asset-backed
securities in which a Fund may invest may have underlying assets which may
include a wide variety of items, including, without limitation, motor vehicle
installment sales or installment loan contracts, leases of various types of
real, personal and other property (including those relating to aircrafts,
containers, railroads, telecommunication, energy, and/or other infrastructure
assets and infrastructure-related assets), receivables from credit card
agreements and automobile finance agreements, home equity sharing agreements,
student loans, consumer loans, home equity loans, mobile home loans, boat loans,
and income from other non‑mortgage‑related income streams, such as income from
business and small business loans, project finance loans, renewable energy
projects, personal financial assets, timeshare receivables and franchise
rights.
The
Fund may invest in fixed income instruments of any credit quality, including
those that are at the time of investment unrated or rated BB+ or lower by
S&P or Ba1 or lower by Moody’s or the equivalent by any other nationally
recognized statistical rating organization. Corporate bonds and certain other
fixed income instruments rated below investment grade, or such instruments that
are unrated and determined by the Adviser to be of comparable quality, are high
yield, high risk bonds, commonly known as “junk bonds.” Generally, lower-rated
debt securities offer a higher yield than higher rated debt securities of
similar maturity but are subject to greater risk of loss of principal and
interest than higher rated securities of similar maturity. The Fund may invest
up to 331/3% of its net
assets in junk bonds, bank loans and assignments rated below investment grade or
unrated but determined by the Adviser to be of comparable quality, and credit
default swaps of companies in the high yield universe. The Adviser does not
consider the term “junk bonds” to include any mortgage-backed securities or any
other asset-backed securities, regardless of their credit rating or credit
quality, and accordingly may invest without limit in such investments.
-177-
Investment
in secured or unsecured fixed or floating rate loans arranged through private
negotiations between a borrowing corporation, government or other entity and one
or more financial institutions may be in the form of participations in loans or
assignments of all or a portion of loans from third parties.
The
Fund may enter into credit default swaps. In a credit default swap, one party
makes a stream of payments to another party in exchange for the right to receive
a specified return in the event of a default by a third party on its obligation
or other credit event. The Fund may enter into a credit default swap on either
side (making such a stream of payments or agreeing to provide the specified
return).
The
Fund may invest up to 5% of its net assets in defaulted corporate securities.
The Fund might do so, for example, where the portfolio managers believe the
restructured enterprise valuations or liquidation valuations may exceed current
market values. The Fund may invest a portion of its assets in inverse floater
securities and interest-only and principal-only securities. An inverse floater
is a type of instrument, which may be backed by or related to a mortgage-backed
security, that bears a floating or variable interest rate that moves in the
opposite direction to movements in interest rates generally or the interest rate
on another security or index. Because an inverse floater inherently carries
financial leverage in its coupon rate, it can change very substantially in value
in response to changes in interest rates. Interest-only and principal-only
securities may also be backed by or related to a mortgage-backed security.
Holders of interest-only securities are entitled to receive only the interest on
the underlying obligations but none of the principal, while holders of
principal-only securities are entitled to receive all of the principal but none
of the interest on the underlying obligations. As a result, they are highly
sensitive to actual or anticipated changes in prepayment rates on the underlying
securities.
The
Fund may invest a portion of its assets in fixed income instruments (including
hybrid securities) issued or guaranteed by companies, financial institutions and
government entities in emerging market countries. An “emerging market country”
is a country that, at the time the Fund invests in the related fixed income
instruments, is classified as an emerging or developing economy by any
supranational organization such as an institution in the World Bank Group or the
United Nations, or an agency thereof, or is considered an emerging market
country for purposes of constructing a major emerging market securities
index.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
exchange-traded funds (“ETFs”), including
investment companies sponsored or managed by the Adviser or its related parties.
The amount of the Fund’s investment in certain investment companies may be
limited by law or by tax considerations.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal policy.
The
portfolio managers utilize active asset allocation in managing the Fund’s
investments.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
In managing the Fund’s investments, under normal market conditions, the
portfolio managers intend to seek to construct an investment portfolio with a
dollar-weighted average effective duration of no less than two years and no more
than eight years. Duration is a measure of the expected life of a fixed income
instrument that is used to determine the sensitivity of a security’s price to
changes in interest rates. For example, the value of a portfolio of fixed income
securities with an average duration of three years would generally be expected
to decline by approximately 3% if interest rates rose by one percentage point.
Effective duration is a measure of the Fund’s portfolio duration adjusted for
the anticipated effect of interest rate changes on bond and mortgage prepayment
rates as determined by the Adviser. The effective duration of the Fund’s
investment portfolio may vary materially from its target range, from time to
time, and there is no assurance that the effective duration of the Fund’s
investment portfolio will always be within its target range.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. The Fund may use derivatives transactions
with the purpose or effect of creating investment leverage. For example, the
Fund may use futures contracts and options on futures contracts, in order to
gain efficient long or short investment exposures as an alternative to cash
investments or to hedge against portfolio exposures; interest rate swaps, to
gain indirect long or short exposures to interest rates, issuers, or currencies,
or to hedge against portfolio exposures; and total return swaps and credit
derivatives (such as credit default swaps), put and call options, and
exchange-traded and structured notes, to take indirect long or short positions
on indexes, securities, currencies, or other indicators of value, or to hedge
against portfolio exposures. The Fund may also engage in short sales or take
short positions, either to adjust its duration or for other investment
purposes.
-178-
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell target.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield, and total return are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Financial
Services Risk
• Foreign
Currency Risk
• Foreign
Investing Risk |
|
• High
Yield Risk
• Inflation-Indexed
Bond Risk
• Investment
Company and Exchange-Traded Fund Risk
• Leveraging
Risk
• Liquidity
Risk
• Loan
Risk
• Market
Risk
• Mortgage-Backed
Securities Risk |
|
• Operational
and Information Security Risks
• Portfolio
Turnover Risk
• Real
Estate Sector Risk
• Restricted
Securities Risk
• Securities
or Sector Selection Risk
• Structured
Products and Structured Notes Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Emerging Markets Fixed Income Fund
Under
normal circumstances, the DoubleLine Emerging Markets Fixed Income Fund intends
to invest at least 80% of its net assets (plus the amount of borrowings for
investment purposes) in fixed income instruments. Please see “Other Information
Regarding Principal Investment Strategies” on page 220 of this Prospectus. These
fixed income instruments include but are not limited to securities (including
hybrid securities) issued or guaranteed by companies, financial institutions and
government entities in emerging market countries and other securities bearing
fixed or variable interest rates of any maturity. If the Fund changes this
investment policy, it will notify shareholders at least 60 days in advance of
the change. For purposes of the policy to provide notice, clarifications or
revisions to the Fund’s 80% investment policy that are not expected to alter how
the Fund is managed are not considered changes that require notice.
An
“emerging market country” is a country that, at the time the Fund invests in the
related fixed income instruments, is classified as an emerging or developing
economy by any supranational organization such as an institution in the World
Bank Group or the United Nations, or an agency thereof, or is considered an
emerging market country for purposes of constructing a major emerging market
securities index.
The
Fund will generally invest in at least four emerging market countries. In
allocating investments among various emerging market countries, the portfolio
managers attempt to analyze internal political, market and economic factors.
These factors may include:
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• |
|
foreign
investment regulations; |
• |
|
stability
of exchange rate policy; and |
The
Fund may invest in hybrid securities relating to emerging market
countries.
The
Fund may invest, without limitation, in fixed income instruments of any credit
quality, including those that at the time of investment are unrated or rated BB+
or lower by S&P or Ba1 or lower by Moody’s or the equivalent by any other
nationally recognized statistical rating organization. Corporate bonds and
certain other fixed income instruments rated below investment grade, or such
instruments that are unrated and determined by the Adviser to be of comparable
quality, are high yield, high risk bonds, commonly known as “junk bonds.”
Generally, lower-rated debt securities offer a higher yield than higher rated
debt securities of similar maturity but are subject to greater risk of loss of
principal and interest than higher rated securities of similar maturity.
The
Fund may invest up to 20% of its net assets in defaulted corporate securities.
The Fund might do so, for example, where the portfolio managers believe the
restructured enterprise valuations or liquidation valuations may exceed current
market values. In addition, the Fund may invest in defaulted sovereign
investments, including, for example, where the portfolio managers believe the
expected debt sustainability of the country is not reflected in current market
valuations.
The
Fund may invest in fixed and floating rate loans of any kind (including, among
others, bank loans, assignments, participations, subordinated loans,
debtor‑in‑possession loans, exit facilities, delayed funding loans and revolving
credit facilities) and other securities bearing fixed or variable interest rates
of any maturity.
The
Fund may invest in derivatives, which are financial contracts whose values
depend on changes in the value of one or more underlying assets, reference
rates, or indexes. Derivatives include, among others options, swaps (including
credit default swaps), futures, structured investments, foreign currency futures
and forward contracts. In a credit default swap, one party makes a stream of
payments to another party in exchange for the right to receive a specified
return in the event of a default by a third party on its obligation or other
credit event. The Fund may enter into a credit default swap on either side
(making such a stream of payments or agreeing to provide the specified return).
These practices may be used to hedge the Fund’s portfolio as well as for
investment purposes; however, such practices sometimes may reduce returns or
increase volatility.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
In managing the Fund’s investments, under normal market conditions, the
portfolio managers intend to seek to construct an investment portfolio with a
dollar-weighted average effective duration of no less than two years and no more
than eight years. Duration is a measure of the expected life of a fixed income
instrument that is used to determine the sensitivity of a security’s price to
changes in interest rates. For example, the value of a portfolio of fixed income
securities with an average duration of three years would generally be expected
to decline by approximately 3% if interest rates rose by one percentage point.
Effective duration is a measure of the Fund’s portfolio duration adjusted for
the anticipated effect of interest rate changes on bond and mortgage prepayment
rates as determined by the Adviser. The effective duration of the Fund’s
investment portfolio may vary materially from its target range, from time to
time, and there is no assurance that the effective duration of the Fund’s
investment portfolio will always be within its target range.
The
Fund may invest without limit in investments denominated in any currency,
including securities denominated in the local currencies of an emerging market,
but currently expects to invest a substantial amount of its assets in
investments denominated in the U.S. dollar.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers perceive deterioration in the credit fundamentals of
the issuer, when the portfolio managers believe there are negative macro
geo‑political considerations that may affect the issuer, when the portfolio
managers determine to take advantage of a better investment opportunity, or when
the individual security has reached the portfolio managers’ sell target.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including investment companies sponsored or managed by the Adviser or its
related parties. The amount of the Fund’s investment in certain investment
companies may be limited by law or by tax considerations.
-180-
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield, and total return are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Financial
Services Risk |
|
• Foreign
Currency Risk
• Foreign
Investing Risk
• High
Yield Risk
• Leveraging
Risk
• Liquidity
Risk
• Market
Risk
• Operational
and Information Security Risks |
|
• Restricted
Securities Risk
• Securities
or Sector Selection Risk
• Sovereign
Debt Obligations Risk
• Structured
Products and Structured Notes Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Low Duration Bond Fund
The
DoubleLine Low Duration Bond Fund seeks current income by investing principally
in debt securities of any kind.
The
Fund may invest without limit in mortgage-backed securities of any maturity or
type, including those guaranteed by, or secured by collateral that is guaranteed
by, the United States Government, its agencies, instrumentalities or sponsored
corporations, as well as those of private issuers not subject to any guarantee.
Mortgage-backed securities include, among others, government mortgage
pass-through securities, CMOs, multiclass pass-through securities, private
mortgage pass-through securities, stripped mortgage securities (e.g., interest-only and principal-only
securities) and inverse floaters. The Fund may also invest in corporate debt
obligations; asset-backed securities; foreign securities (corporate and
government, including foreign hybrid securities); emerging market securities
(corporate and government); inflation-indexed bonds; bank loans and assignments;
income-producing securitized products, including CLOs; preferred securities; and
other instruments bearing fixed or variable interest rates of any
maturity.
The
Adviser will normally seek to construct an investment portfolio for the Fund
with a dollar-weighted average effective duration of three years or less.
Duration is a measure of the expected life of a fixed income instrument that is
used to determine the sensitivity of a security’s price to changes in interest
rates. For example, the value of a portfolio of fixed income securities with an
average duration of three years would generally be expected to decline by
approximately 3% if interest rates rose by one percentage point. Effective
duration is a measure of the Fund’s portfolio duration adjusted for the
anticipated effect of interest rate changes on bond and mortgage prepayment
rates as determined by the Adviser. The effective duration of the Fund’s
investment portfolio may vary significantly from time to time, and there is no
assurance that the effective duration of the Fund’s investment portfolio will
not exceed three years at any time. The Fund may invest in individual securities
of any maturity or duration.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal policy.
Under
normal circumstances, the Fund intends to invest primarily in fixed income and
other income-producing instruments rated investment grade and unrated securities
considered by the Adviser to be of comparable credit quality. The Fund
may,
-181-
however,
invest up to 50% of its total assets in fixed income and other income-producing
instruments rated below investment grade and those that are unrated but
determined by the Adviser to be of comparable credit quality. Those instruments
include high yield, high risk bonds, commonly known as “junk bonds.”
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Adviser may seek to manage the dollar-weighted average effective duration of
the Fund’s portfolio through the use of derivatives and other instruments
(including, among others, inverse floaters, futures contracts, U.S. Treasury
swaps, interest rate swaps, total return swaps and options, including
swaptions). The Fund may incur costs in implementing duration management
strategies, and there can be no assurance that the Fund will engage in duration
management strategies or that any duration management strategy employed by the
Fund will be successful.
The
Fund may also enter into derivatives transactions and other instruments of any
kind for hedging purposes or otherwise to gain, or reduce, long or short
exposure to one or more asset classes or issuers. A derivative is a financial
contract whose value depends on changes in the value of one or more underlying
assets, reference rates, or indexes. These instruments include, among others,
options, futures contracts, forward currency contracts, swap agreements and
similar instruments. For example, the Fund may use futures contracts and options
on futures contracts, in order to gain efficient long or short investment
exposures as an alternative to cash investments or to hedge against portfolio
exposures; interest rate swaps, to gain indirect long or short exposures to
interest rates, issuers, or currencies, or to hedge against portfolio exposures;
and total return swaps and credit derivatives (such as credit default swaps),
put and call options, and exchange-traded and structured notes, to take indirect
long or short positions on indexes, securities, currencies, or other indicators
of value, or to hedge against portfolio exposures. The Fund may also use
derivatives transactions with the purpose or effect of creating investment
leverage.
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of borrowings for investment purposes) in bonds. Please see
“Other Information Regarding Principal Investment Strategies” on page 220 of
this Prospectus. If the Fund changes its 80% policy, it will notify shareholders
at least 60 days in advance of the change. For purposes of the policy to provide
notice, clarifications or revisions to the Fund’s 80% investment policy that are
not expected to alter how the Fund is managed are not considered changes that
require notice.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including investment companies sponsored or managed by the Adviser or its
related parties. The amount of the Fund’s investment in certain investment
companies may be limited by law or by tax considerations.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell target.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
-182-
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield, and total return are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Collateralized
Debt Obligations Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Financial
Services Risk
• Foreign
Currency Risk |
|
• Foreign
Investing Risk
• High
Yield Risk
• Inflation-Indexed
Bond Risk
• Investment
Company and Exchange-Traded Fund Risk
• Leveraging
Risk
• Liquidity
Risk
• Loan
Risk
• Market
Risk
• Mortgage-Backed
Securities Risk |
|
• Operational
and Information Security Risks
• Real
Estate Sector Risk
• Restricted
Securities Risk
• Securities
or Sector Selection Risk
• Structured
Products and Structured Notes Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Floating Rate Fund
The
DoubleLine Floating Rate Fund invests primarily in floating rate loans and other
floating rate investments. Floating rate loans are typically debt obligations
with interest rates that adjust or “float” periodically, often on a daily,
monthly, quarterly, or semiannual basis by reference to a base lending rate plus
a premium. Certain floating rate loans are secured by specific collateral of the
borrower and are senior to most other securities of the borrower (e.g., common stock and other debt instruments)
in the event of bankruptcy (referred to herein as “senior loans”). Other floating rate loans may
be unsecured obligations of the borrower. A floating rate loan may be structured
and administered by a financial institution that acts as the agent of the
lenders participating in the floating rate loan. Such floating rate loans may be
acquired through the agent or from the borrower, as an assignment from another
lender who holds a direct interest in the floating rate loan, or as a
participation interest in another lender’s portion of the floating rate
loan.
Floating
rate investments include, without limitation, bank loans, including assignments
and participations; floating rate debt securities; inflation-indexed securities;
certain mortgage- and asset-backed securities, and collateralized debt
obligations (“CDOs”), including CLOs and
CMOs, backed by floating rate instruments or structured as floating rate
investments and having, in the judgment of the Adviser, characteristics similar
to those of other floating rate investments; adjustable rate mortgages;
floaters; inverse floaters; money market securities of all types; repurchase
agreements; shares of money market and short-term bond funds; and floating rate
loans of any kind (including, among others, subordinated loans,
debtor‑in‑possession loans, exit facilities, delayed funding loans and revolving
credit facilities).
The
Fund normally will invest at least 80% of its net assets (plus the amount of
borrowings for investment purposes) in floating rate loans and other floating
rate investments. If the Fund changes this investment policy, it will notify
shareholders at least 60 days in advance of the change. For purposes of this
policy, any security or instrument will be considered a floating rate investment
if it has a maturity of six months or less even if it pays a rate of interest
rate that does not reset or adjust prior to maturity. The Fund’s investments in
derivatives and other synthetic instruments that provide exposure comparable, in
the judgment of the Adviser, to floating rate investments will be counted toward
satisfaction of this 80% policy as well. For purposes of the policy to provide
notice, clarifications or revisions to the Fund’s 80% investment policy that are
not expected to alter how the Fund is managed are not considered changes that
require notice.
The
Fund may invest in securities or instruments of any credit quality. The Fund
expects that many or all of the Fund’s investments will be rated below
investment grade or unrated but of comparable credit quality. Corporate bonds
and other fixed income instruments, including certain floating rate investments,
rated below investment grade, or such instruments that are unrated and
determined by the Adviser to be of comparable quality, are high yield, high risk
securities, commonly known as “junk bonds.” The Fund may invest in securities of
stressed, distressed, and defaulted issuers (including issuers involved in
bankruptcy proceedings, reorganizations, financial restructurings, or otherwise
experiencing financial hardship). Such investments entail high risk and have
speculative characteristics.
Subject
to the Fund’s policy to invest at least 80% of its net assets in floating rate
loans and other floating rate investments, the Fund may invest any portion of
its assets in bonds, debentures, notes and other debt instruments, preferred
securities, money market securities, investment-grade debt securities,
repurchase agreements, and any security or instrument bearing a fixed, floating
or adjustable rate of interest, including by investing in other investment
companies, ETFs, and domestic or foreign private investment vehicles, including
investment companies sponsored or managed by the Adviser or its related parties.
Money market securities include, among other things, bank certificates of
deposit, bankers’ acceptances, bank time deposits,
-183-
notes,
commercial paper, and U.S. Government securities. A repurchase agreement is an
agreement to buy a security at one price and a simultaneous agreement to sell it
back at an agreed-upon price (representing return of principal plus interest).
The amount of the Fund’s investment in certain investment companies may be
limited by law or by tax considerations.
The
Fund may invest in obligations of corporate and governmental issuers of any
maturity. The Fund may invest in foreign investments, including obligations of
issuers in emerging markets, without limit.
The
Fund’s investments in loans may include loans issued in an offering that has
been oversubscribed. The Fund may be able to sell such investments at a gain
shortly after those investments are made. If the Fund seeks to take advantage of
such opportunities, it may lead to higher levels of portfolio turnover,
increased transaction costs and greater amounts of taxable distributions to
shareholders. There can be no assurance that the Adviser will be able to
identify such opportunities successfully or sell any investments at a
gain.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Fund may enter into derivatives transactions and other instruments of any
kind for duration management purposes, hedging purposes or otherwise to gain, or
reduce, long or short exposure to one or more asset classes or issuers. A
derivative is a financial contract whose value depends on changes in the value
of one or more underlying assets, reference rates, or indexes. These instruments
include, among others, options, futures contracts, forward currency contracts,
swap agreements and similar instruments. The Fund also may use derivatives
transactions with the purpose or effect of creating investment leverage. For
example, the Fund may use futures contracts and options on futures contracts in
order to gain efficient long or short investment exposures as an alternative to
cash investments, to adjust the Fund’s duration, or to hedge against portfolio
exposures; interest rate swaps, to gain indirect long or short exposures to
interest rates, issuers, or currencies, to adjust the Fund’s duration, or to
hedge against portfolio exposures; and total return swaps and credit derivatives
(such as credit default swaps), put and call options, and exchange-traded and
structured notes, to take indirect long or short positions on indexes,
securities, currencies, or other indicators of value, or to hedge against
portfolio exposures. The Fund may use futures contracts and other derivatives to
gain long or short exposure to one or more physical commodities or indexes of
commodities.
The
Fund’s portfolio managers may consider a wide variety of factors in purchasing
and selling investments for the Fund, including, without limitation, liquidity
of the investment, fundamental analysis of the issuer, the credit quality of the
issuer and any collateral securing the investment, the issuer’s management,
capital structure, leverage, and operational performance, and the business
outlook for the industry of the issuer. The Fund also may consider available
credit ratings. However, credit ratings are based largely on the issuer’s
historical financial condition and the rating agencies’ investment analysis at
the time of rating. The rating assigned to any particular investment does not
necessarily reflect the issuer’s current financial condition, and does not
reflect an assessment of an investment’s volatility or liquidity. Although the
Fund’s portfolio managers may review credit ratings in making investment
decisions, they typically perform their own investment analysis and generally do
not rely upon the independent credit rating agencies in making investment
decisions.
Proceeds
from the sale of a loan may not be available to the Fund for a substantial
period of time after the sale. As a result, it is possible that, during a period
of substantial shareholder redemptions, proceeds from sales of loans by the Fund
will not be available to the Fund on a timely basis for payment to redeeming
shareholders. The Fund might as a result incur significant borrowing or other
expenses, be forced to sell other securities with shorter settlement periods at
unfavorable times or prices, or be forced to delay payment of redemption
proceeds beyond the customary period.
Portfolio
securities may be sold at any time. By way of example, the Fund’s portfolio
managers may sell a Fund investment in order to take advantage of what the
portfolio managers consider to be a better investment opportunity, when the
portfolio managers believe the investment no longer represents a relatively
attractive investment opportunity, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
investment has reached the portfolio managers’ sell target.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Additionally, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
-184-
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield and total return, are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Collateralized
Debt Obligations Risk
• Confidential
Information Access Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Financial
Services Risk |
|
• Focused
Investment Risk
• Foreign
Currency Risk
• Foreign
Investing Risk
• High
Yield Risk
• Inflation-Indexed
Bond Risk
• Investment
Company and Exchange-Traded Fund Risk
• Large
Shareholder Risk
• Leveraging
Risk
• Liquidity
Risk |
|
• Loan
Risk
• Market
Risk
• Mortgage-Backed
Securities Risk
• Operational
and Information Security Risks
• Securities
or Sector Selection Risk
• Structured
Products and Structured Notes Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Flexible Income Fund
The
DoubleLine Flexible Income Fund seeks to achieve its investment objective by
active asset allocation among market sectors in the fixed income universe. These
sectors may include, for example, U.S. Government securities, corporate debt
securities, mortgage- and other asset-backed securities, foreign debt
securities, including emerging market debt securities, loans, and high yield
debt securities. The Adviser has broad flexibility to use various investment
strategies and to invest in a wide variety of fixed income instruments that the
Adviser believes offer the potential for current income, capital appreciation,
or both. The Fund is not constrained by management against any index.
The
Adviser expects to allocate the Fund’s assets in response to changing market,
financial, economic, and political factors and events that the Fund’s portfolio
managers believe may affect the values of the Fund’s investments. The allocation
of the Fund’s assets to different sectors and issuers will change over time,
sometimes rapidly, and the Fund may invest without limit in a single sector or a
small number of sectors of the fixed income universe.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal policy.
The
Fund may invest in securities of any credit quality. The Fund may invest without
limit in securities rated below investment grade (securities rated Ba1 or below
by Moody’s and BB+ or below by S&P and Fitch Ratings, Inc. (“Fitch”)) or unrated securities judged by the
Adviser to be of comparable quality. Corporate bonds and certain other fixed
income instruments rated below investment grade, or such instruments that are
unrated and determined by the Adviser to be of comparable quality, are high
yield, high risk bonds, commonly known as “junk bonds.” Generally, lower-rated
debt securities offer a higher yield than higher-rated debt securities of
similar maturity but are subject to greater risk of loss of principal and
interest than higher-rated securities of similar maturity.
The
Fund may invest without limit in foreign securities, including emerging market
securities and securities denominated in foreign currencies, including the local
currencies of emerging markets.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Adviser seeks to manage the Fund’s duration based on the Adviser’s view of,
among other things, future interest rates and market conditions. While the
Adviser retains broad discretion to modify the Fund’s duration within a wide
range, the Adviser will normally seek to construct an investment portfolio for
the Fund with a dollar-weighted
-185-
average
effective duration of zero or greater. Duration is a measure of the expected
life of a fixed income instrument that is used to determine the sensitivity of a
security’s price to changes in interest rates. For example, the value of a
portfolio of fixed income securities with an average duration of three years
would generally be expected to decline by approximately 3% if interest rates
rose by one percentage point. Effective duration is a measure of the Fund’s
portfolio duration adjusted for the anticipated effect of interest rate changes
on bond and mortgage prepayment rates as determined by the Adviser.
Under
normal circumstances, the Fund intends to invest significantly in instruments
the Adviser expects to produce current income (i.e., fixed income obligations and other
income-producing instruments). Please see “Other Information Regarding Principal
Investment Strategies” on page 220 of this Prospectus. These might include, by
way of example, (i) securities or other income-producing instruments issued
or guaranteed by the U.S. Government, its agencies, instrumentalities or
sponsored corporations (including inflation-protected securities); (ii)
corporate obligations; (iii) foreign securities (corporate and government,
including foreign hybrid securities), including emerging market securities;
(iv) fixed and floating rate loans of any kind (including, among others,
bank loans, assignments, participations, senior loans, second lien or other
subordinated or unsecured fixed or floating rate loans, debtor‑in‑possession
loans, exit facilities, delayed funding loans and revolving credit facilities),
which may take the form of loans that contain fewer or less restrictive
constraints on the borrower than certain other types of loans (“covenant-lite”
loans); (v) municipal securities and other debt obligations issued by states,
local governments, and government-sponsored entities, including their agencies,
authorities, and instrumentalities; (vi) distressed and defaulted
securities; (vii) custodial receipts, cash and cash equivalents;
(viii) short-term, high quality investments, including, for example,
commercial paper, bankers’ acceptances, certificates of deposit, bank time
deposits, repurchase agreements, and investments in money market mutual funds or
similar pooled investments; and (ix) other instruments bearing fixed,
floating, or variable interest rates of any maturity. Fixed income obligations
may also include, among others, the following types of investments:
Mortgage-backed
securities (including commercial and residential mortgage-backed securities) and
other asset-backed securities, CDOs, including CLOs and CMOs, government
mortgage pass-through securities, multiclass pass-through securities, private
mortgage pass-through securities, stripped mortgage securities (e.g., interest-only and principal-only
securities), and inverse floaters. Asset-backed securities are structured like
mortgage-backed securities, but instead of mortgage loans or interests in
mortgage loans, the underlying assets may include a wide variety of items,
including, without limitation, motor vehicle installment sales or installment
loan contracts, leases of various types of real, personal and other property
(including those relating to aircrafts, containers, railroads,
telecommunication, energy, and/or other infrastructure assets and
infrastructure-related assets), receivables from credit card agreements and
automobile finance agreements, home equity sharing agreements, student loans,
consumer loans, home equity loans, mobile home loans, boat loans, and income
from other non‑mortgage‑related income streams, such as income from business and
small business loans, project finance loans, renewable energy projects, personal
financial assets, timeshare receivables and franchise rights. The Fund may
invest in any level of the capital structure of an issuer of mortgage-backed or
asset-backed securities, including the equity or “first loss” tranche.
Inflation-indexed
bonds, which are fixed income securities whose principal values are periodically
adjusted according to a measure of inflation.
Convertible
securities, which include bonds, debentures, notes, preferred stock and other
securities that may be converted into or exchanged for, at a specific price or
formula within a particular period of time, a prescribed amount of common stock
or other equity securities of the same or a different issuer.
Preferred
securities, which represent an equity or ownership interest in an issuer that
pays dividends at a specified rate and that has priority over common stock in
the payment of dividends.
Real
estate investment trust (“REIT”)
securities, which are pooled investment vehicles that own, and typically
operate, income-producing real estate or interests in real estate, such as, but
not limited to, interests in agency mortgage REITs, non‑agency mortgage REITs,
commercial mortgage REITs, and equity REITs.
Zero-coupon
and payment‑in‑kind bonds. Zero-coupon bonds are issued at a significant
discount from their principal amount in lieu of paying interest periodically.
Payment‑in‑kind bonds allow the issuer, at its option, to make current interest
payments on the bonds either in cash or in additional bonds.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. A derivative is a financial contract whose
value depends on changes in the value of one or more underlying assets,
reference rates, or indexes. These instruments include, among others, options,
futures contracts, forward currency contracts, swap agreements and similar
instruments. The Fund
-186-
also
may use derivatives transactions with the purpose or effect of creating
investment leverage. For example, the Fund may use futures contracts and options
on futures contracts, in order to gain efficient long or short investment
exposures as an alternative to cash investments or to hedge against portfolio
exposures; interest rate swaps, to gain indirect long or short exposures to
interest rates, issuers, or currencies, or to hedge against portfolio exposures;
and total return swaps and credit derivatives (such as credit default swaps),
put and call options, and exchange-traded and structured notes, to take indirect
long or short positions on indexes, securities, currencies, or other indicators
of value, or to hedge against portfolio exposures. The Adviser may seek to
manage the dollar-weighted average effective duration of the Fund’s portfolio
through the use of derivatives and other instruments (including, among others,
inverse floaters, futures contracts, U.S. Treasury swaps, interest rate swaps,
total return swaps and options, including swaptions). The Fund may incur costs
in implementing duration management strategies, and there can be no assurance
that the Fund will engage in duration management strategies or that any duration
management strategy employed by the Fund will be successful. The Fund may enter
into currency-related transactions, including forward exchange contracts and
futures contracts. The Fund may, but will not necessarily, enter into foreign
currency exchange transactions to hedge against currency exposure in its
portfolio. Any use of derivatives strategies entails the risks of investing
directly in the securities, instruments or assets underlying the derivatives
strategies, as well as the risks of using derivatives generally, and in some
cases the risks of leverage, described in this Prospectus and in the Fund’s
Statement of Additional Information (“SAI”).
The
Fund may implement short positions, including through the use of derivative
instruments, such as swaps or futures, or through short sales of instruments
that are eligible investments for the Fund. For example, the Fund may enter into
a futures contract pursuant to which it agrees to sell an asset (that it does
not currently own) at a specified price in the future in anticipation that the
asset’s value will decrease between the time the position is established and the
agreed date of sale.
The
Fund may purchase or sell securities on a when-issued, delayed delivery or
forward commitment basis and may engage in short sales, either to earn
additional return or to hedge existing investments. The Fund may seek to obtain
market exposure to the securities in which it primarily invests by entering into
a series of purchase and sale contracts or by using other investment techniques
(such as buy backs or dollar rolls), which may create investment leverage.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including investment companies sponsored or managed by the Adviser or its
related parties. The amount of the Fund’s investment in certain investment
companies may be limited by law or by tax considerations.
The
Fund may invest in equity securities, of any kind, and of U.S. or foreign
issuers of any size. Equity securities include common stocks, preferred stocks,
and securities convertible into common or preferred stocks, and options and
warrants to purchase common or preferred stocks.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell target.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
-187-
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield and total return, are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Cash
Position Risk
• Collateralized
Debt Obligations Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Financial
Services Risk
• Focused
Investment Risk |
|
• Foreign
Currency Risk
• Foreign
Investing Risk
• High
Yield Risk
• Inflation-Indexed
Bond Risk
• Investment
Company and Exchange-Traded Fund Risk
• Leveraging
Risk
• Liquidity
Risk
• Loan
Risk
• Market
Risk
• Mortgage-Backed
Securities Risk |
|
• Operational
and Information Security Risks
• Real
Estate Sector Risk
• Restricted
Securities Risk
• Securities
or Sector Selection Risk
• Short
Position Risk
• Sovereign
Debt Obligations Risk
• Structured
Products and Structured Notes Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Low Duration Emerging Markets Fixed Income
Fund
The
DoubleLine Low Duration Emerging Markets Fixed Income Fund normally invests
primarily in debt obligations issued by sovereign, quasi-sovereign and private
(non‑government) emerging market issuers. Sovereign and quasi-sovereign emerging
market issuers include governments of emerging market countries, and
governmental entities or agencies, and issuers that are owned, in whole or in
part, or whose obligations are guaranteed, in whole or in part, by a government
or governmental entity or agency of an emerging market country. Private emerging
market issuers include private (non‑governmental) issuers domiciled or located
in emerging market countries, issuers with their principal place of business or
corporate headquarters located in an emerging market country, or issuers the
Adviser has determined are emerging market issuers based on a consideration of a
number of qualitative factors, including the relative importance of emerging
markets to the issuer’s business, including the issuer’s profits, revenues,
assets and/or future potential growth.
Although
the Fund may invest in individual securities of any maturity or duration, the
Adviser will normally seek to construct an investment portfolio for the Fund
with a dollar-weighted average effective duration of three years or less.
Duration is a measure of the expected life of a fixed income instrument that is
used to determine the sensitivity of a security’s price to changes in interest
rates. For example, the value of a portfolio of fixed income securities with an
average duration of three years would generally be expected to decline by
approximately 3% if interest rates rose by one percentage point. Effective
duration is a measure of the Fund’s portfolio duration adjusted for the
anticipated effect of interest rate changes on prepayment rates as determined by
the Adviser. The effective duration of the Fund’s investment portfolio may vary
significantly from time to time, and there is no assurance that the effective
duration of the Fund’s investment portfolio will not exceed three years at any
time.
An
“emerging market country” is a country that, at the time the Fund invests in the
related fixed income instruments, is classified as an emerging or developing
economy by any supranational organization such as an institution in the World
Bank Group or the United Nations, or an agency thereof, or is considered an
emerging market country for purposes of constructing a major emerging market
securities index.
The
Fund may invest without limit in investments denominated in any currency, but
currently expects to invest a substantial amount of its assets in investments
denominated in the U.S. dollar.
The
Fund generally will invest in at least three emerging market countries. In
allocating investments among various emerging market countries, the portfolio
managers attempt to analyze internal political, market and economic factors.
These factors may include:
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• |
|
foreign
investment regulations; |
• |
|
stability
of exchange rate policy; and |
The
Fund may invest in obligations of any credit quality, including those that at
the time of investment are rated BB+ or lower by S&P or Ba1 or lower by
Moody’s or the equivalent by any other nationally recognized statistical rating
organization or in unrated securities that are determined by the Adviser to be
of comparable quality. Corporate bonds and certain other fixed income
instruments rated below investment grade, or such instruments that are unrated
and determined by the Adviser to be of comparable quality, are high yield, high
risk bonds, commonly known as “junk bonds.” Generally, lower-rated debt
securities offer a higher yield than higher-rated debt securities of similar
maturity but are subject to greater risk of loss of principal and interest than
higher-rated securities of similar maturity.
The
Fund may invest in fixed income and debt obligations of any kind. Please see
“Other Information Regarding Principal Investment Strategies” on page 220 of
this Prospectus. The Fund’s fixed-income investments may include, by way of
example, corporate debt obligations; fixed and floating rate loans of any kind
(including, among others, bank loans, and assignments, participations,
subordinated loans, debtor‑in‑possession loans, exit facilities, delayed funding
loans and revolving credit facilities); and income-producing securitized
products.
The
Fund may invest in mortgage-backed securities (including commercial and
residential mortgage-backed securities) and asset-backed securities.
Asset-backed securities are structured like mortgage-backed securities, but
instead of mortgage loans or interests in mortgage loans, the underlying assets
may include a wide variety of items, including, without limitation, motor
vehicle installment sales or installment loan contracts, leases of various types
of real, personal and other property (including those relating to aircrafts,
containers, railroads, telecommunication, energy, and/or other infrastructure
assets and infrastructure-related assets), receivables from credit card
agreements and automobile finance agreements, home equity sharing agreements,
student loans, consumer loans, home equity loans, mobile home loans, boat loans,
and income from other non‑mortgage‑related income streams, such as income from
business and small business loans, project finance loans, renewable energy
projects, personal financial assets, timeshare receivables and franchise
rights.
The
Fund also may invest in inflation-indexed bonds, which are fixed income
securities whose principal values are periodically adjusted according to a
measure of inflation. The Fund may invest in preferred securities, which
represent an equity or ownership interest in an issuer that pays dividends at a
specified rate and that has priority over common stock in the payment of
dividends.
Under
normal circumstances, the Fund invests at least 80% of its net assets (plus the
amount of borrowings for investment purposes) in fixed income instruments. If
the Fund changes this investment policy, it will notify shareholders at least 60
days in advance of the change.
For
purposes of the policy to provide notice, clarifications or revisions to the
Fund’s 80% investment policy that are not expected to alter how the Fund is
managed are not considered changes that require notice. The Fund may invest in
hybrid securities relating to emerging market countries.
The
Fund may invest up to 20% of its net assets in defaulted corporate securities.
The Fund might do so, for example, where the portfolio managers believe the
restructured enterprise valuations or liquidation valuations may exceed current
market values. In addition, the Fund may invest in defaulted sovereign
investments, including, for example, where the portfolio managers believe the
expected debt sustainability of the country is not reflected in current market
valuations.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Adviser may seek to manage the dollar-weighted average effective duration of
the Fund’s portfolio through the use of derivatives and other instruments
(including, among others, inverse floaters, futures contracts, U.S. Treasury
swaps, interest rate swaps, total return swaps and options, including
swaptions). The Fund may incur costs in implementing duration management
strategies, and there can be no assurance that the Fund will engage in duration
management strategies or that any duration management strategy employed by the
Fund will be successful.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. A derivative is a financial contract whose
value depends on changes in the value of one or more underlying assets,
reference rates, or indexes. These instruments include, among others, options,
futures contracts, forward currency contracts, swap agreements and similar
instruments. The Fund also may use derivatives transactions with the purpose or
effect of creating investment leverage. For example, the Fund may use futures
contracts and options on futures contracts, in order to gain efficient long or
short investment exposures as an alternative to cash investments or to hedge
against portfolio exposures; interest rate swaps, to gain indirect long or
short
-189-
exposures
to interest rates, issuers, or currencies, or to hedge against portfolio
exposures; and total return swaps and credit derivatives (such as credit default
swaps), put and call options, and exchange-traded and structured notes, to take
indirect long or short positions on indexes, securities, currencies, or other
indicators of value, or to hedge against portfolio exposures. The Fund may enter
into currency-related transactions, including spot transactions, forward
exchange contracts and futures contracts. The Fund may, but will not
necessarily, enter into foreign currency exchange transactions to take a “long”
or “short” position in a currency or to hedge against currency exposure in its
portfolio. The results of such transactions also may represent, from time to
time, a significant component of the Fund’s investment returns. The Adviser
considers various factors, such as availability and cost, in deciding whether,
when and to what extent to enter into derivative transactions. Any use of
derivatives strategies entails the risks of investing directly in the
securities, instruments or assets underlying the derivatives strategies, as well
as the risks of using derivatives generally, and in some cases the risks of
leverage, described in this Prospectus and in the Fund’s SAI.
There
is no limit on the amount of the Fund’s assets that may be allocated to one or
more specific asset classes or market sectors.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including investment companies sponsored or managed by the Adviser or its
related parties. The amount of the Fund’s investment in certain investment
companies may be limited by law or by tax considerations.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell target.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield and total return, are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Cash
Position Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Financial
Services Risk
• Foreign
Currency Risk |
|
• Foreign
Investing Risk
• High
Yield Risk
• Inflation-Indexed
Bond Risk
• Investment
Company and Exchange-Traded Fund Risk
• Large
Shareholder Risk
• Leveraging
Risk
• Liquidity
Risk
• Market
Risk |
|
• Operational
and Information Security Risks
• Restricted
Securities Risk
• Securities
or Sector Selection Risk
• Sovereign
Debt Obligations Risk
• Structured
Products and Structured Notes Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Long Duration Total Return Bond Fund
The
DoubleLine Long Duration Total Return Bond Fund seeks long-term total return
comprised of capital growth and current income by investing principally in debt
securities of any kind.
-190-
The
Fund may invest without limit in mortgage-backed securities of any maturity or
type, including those guaranteed by, or secured by collateral that is guaranteed
by, the United States Government, its agencies, instrumentalities or sponsored
corporations, as well as those of private issuers not subject to any guarantee.
Mortgage-backed securities include, among others, government mortgage
pass-through securities, CMOs, multiclass pass-through securities, private
mortgage pass-through securities, stripped mortgage securities (e.g., interest-only and principal-only
securities) and inverse floaters. The Fund may also invest in corporate debt
obligations; asset-backed securities; foreign securities (corporate and
government, including foreign hybrid securities); emerging market securities
(corporate and government); inflation-indexed bonds; bank loans and assignments;
income-producing securitized products, including CLOs; preferred securities; and
other instruments bearing fixed or variable interest rates of any
maturity.
Under
normal circumstances, the Adviser expects to construct an investment portfolio
for the Fund with a dollar-weighted average effective duration of at least ten
years. Duration is a measure of the expected life of a fixed income instrument
that is used to determine the sensitivity of a security’s price to changes in
interest rates. For example, the value of a portfolio of fixed income securities
with an average duration of ten years would generally be expected to decline by
approximately 10% if interest rates rose by one percentage point. Effective
duration is a measure of the Fund’s portfolio duration adjusted for the
anticipated effect of interest rate changes on bond and mortgage prepayment
rates as determined by the Adviser. The effective duration of the Fund’s
investment portfolio may vary significantly from time to time based on, among
other things, fluctuations in interest rates, changes in the rate of prepayments
on mortgages underlying the Fund’s mortgage-related investments, and the
Adviser’s expectations with respect to future interest rates. There can be no
assurance that the effective duration of the Fund’s investment portfolio will
equal or exceed ten years at all times. The Fund may invest in individual
securities of any maturity or duration. Because
the Fund will usually have a relatively long duration, the value of its shares
will be especially sensitive to changes in interest rates.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal policy.
Under
normal circumstances, the Fund intends to invest primarily in fixed income and
other income-producing instruments rated investment grade and unrated securities
considered by the Adviser to be of comparable credit quality. The Fund may,
however, invest up to 20% of its total assets in fixed income and other
income-producing instruments rated below investment grade and those that are
unrated but determined by the Adviser to be of comparable credit quality. Those
instruments include high yield, high risk bonds, commonly known as “junk
bonds.”
The
Fund will normally limit its foreign currency exposure (from non‑U.S. dollar
denominated securities or currencies) to 30% of its total assets, and may invest
without limit in U.S. dollar-denominated securities of foreign issuers. The Fund
may invest up to 25% of its total assets in obligations of governmental or
private obligors in emerging market countries. The Adviser considers an
“emerging market country” to be a country that, at the time of investment is
classified as an emerging or developing economy by any supranational
organization such as an institution in the World Bank Group or the United
Nations, or an agency thereof, or is considered an emerging market country for
purposes of constructing a major emerging market securities index.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion and subject to the duration parameters described
above, adjust the Fund’s exposure to interest rate risk. The Adviser may seek to
manage the dollar-weighted average effective duration of the Fund’s portfolio
through the use of derivatives and other instruments (including, among others,
inverse floaters, futures contracts, U.S. Treasury swaps, interest rate swaps,
total return swaps and options, including swaptions). The Fund may incur costs
in implementing duration management strategies, and there can be no assurance
that the Fund will engage in duration management strategies or that any duration
management strategy employed by the Fund will be successful.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. A derivative is a financial contract whose
value depends on changes in the value of one or more underlying assets,
reference rates, or indexes. These instruments include, among others, options,
futures contracts, forward currency contracts, swap agreements and similar
instruments. For example, the Fund may use futures contracts and options on
futures contracts, in order to gain efficient long or short investment exposures
as an alternative to cash investments or to hedge against portfolio exposures;
interest rate swaps, to gain indirect long or short exposures to interest rates,
issuers, or currencies, or to hedge against portfolio exposures; and total
-191-
return
swaps and credit derivatives (such as credit default swaps), put and call
options, and exchange-traded and structured notes, to take indirect long or
short positions on indexes, securities, currencies, or other indicators of
value, or to hedge against portfolio exposures. The Fund may also engage in
short sales or take short positions, either to adjust its duration or for other
investment purposes. The Fund may use derivatives transactions with the purpose
or effect of creating investment leverage.
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of borrowings for investment purposes) in bonds. Please see
“Other Information Regarding Principal Investment Strategies” on page 220 of
this Prospectus. If the Fund changes its 80% policy, it will notify shareholders
at least 60 days in advance of the change. For purposes of the policy to provide
notice, clarifications or revisions to the Fund’s 80% investment policy that are
not expected to alter how the Fund is managed are not considered changes that
require notice.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including investment companies sponsored or managed by the Adviser or its
related parties. The amount of the Fund’s investment in certain investment
companies may be limited by law or by tax considerations.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell target.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield and total return, are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Cash
Position Risk
• Collateralized
Debt Obligations Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Financial
Services Risk
• Focused
Investment Risk
• Foreign
Currency Risk |
|
• Foreign
Investing Risk
• High
Yield Risk
• Inflation-Indexed
Bond Risk
• Investment
Company and Exchange-Traded Fund Risk
• Large
Shareholder Risk
• Leveraging
Risk
• Liquidity
Risk
• Loan
Risk
• Market
Risk
• Mortgage-Backed
Securities Risk |
|
• Operational
and Information Security Risks
• Portfolio
Turnover Risk
• Real
Estate Sector Risk
• Securities
or Sector Selection Risk
• Short
Position Risk
• Sovereign
Debt Obligations Risk
• Structured
Products and Structured Notes Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Global Bond Fund
The
DoubleLine Global Bond Fund seeks long-term total return by investing primarily
in debt obligations issued by governments and governmental agencies, authorities
or instrumentalities, located anywhere in the world. The Fund expects to
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invest
significantly in obligations of members of the G20, an organization of
governments composed of 20 of the major economies in the world, including
developed markets and emerging market economies. The members of the G20 include:
Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia,
Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa,
Turkey, the United Kingdom, the United States, and the European Union (“EU”).
The
Adviser expects to allocate the Fund’s assets among a variety of debt
instruments based on the Adviser’s view of their potential to provide current
income, capital appreciation, or both, as well as the Adviser’s view of changing
global macroeconomic conditions such as, but not limited to, broad dollar
trends, commodity cycles, cross border trade and portfolio flows, and relative
growth and inflation differentials. The Adviser will also consider changes in a
specific country’s market, economic, monetary and political factors and other
developments that the Adviser believes may affect the values of the Fund’s
investments.
The
Fund’s investment universe includes, without limitation, sovereign debt,
including U.S. Government securities; quasi-sovereign debt, such as obligations
issued by governmental agencies and instrumentalities; and supra-national
obligations. The Fund may also invest in obligations of private,
non‑governmental issuers. The Fund’s investments may include government and
private high yield and defaulted debt securities; inflation-indexed securities;
mortgage- and asset-backed securities; bank loans; and securities or structured
products that are linked to or derive their values from another security, asset
or currency of any country or issuer in which the Fund may otherwise
invest.
The
Fund expects normally to have significant exposure to foreign currencies, which
may be achieved by investing in bonds denominated in the local currencies of
foreign issuers or by investing in currencies directly or in currency-related
instruments, such as forward contracts. The Fund may enter into foreign currency
exchange transactions, including foreign currency futures and forward contracts
and foreign currency swaps and options, to take long or short positions in
various currencies, including currencies to which the Fund might not otherwise
have exposure, in order to benefit from changes in the values of those
currencies anticipated by the Adviser. The Fund may also, but will not
necessarily, enter into foreign currency exchange transactions in order to hedge
against changes in the values of its portfolio investments due to declines in
the values of the currencies in which those investments are denominated against
the U.S. dollar. The Fund may use any of the instruments, or any combination of
the instruments, above (e.g., an
interest rate swap combined with a long forward currency contract) to create
long or short synthetic positions as a substitute for a cash investment. Foreign
currency exchange transactions may have the effect of creating investment
leverage in the Fund’s portfolio and the returns from such transactions may
represent, from time to time, a significant component of the Fund’s investment
returns.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, and current fiscal policy.
Under
normal market conditions, the Fund will generally invest in securities that
provide exposure to at least three different countries, not including the United
States. There is no limit on the percentage of the Fund that may be invested in
emerging market countries or in any single or small number of currencies or
issuers.
The
Fund normally invests principally in “investment grade” securities (i.e., those rated above Ba1 by Moody’s or
above BB+ by S&P or Fitch or, if unrated, determined by the Adviser to be of
comparable quality). The Fund normally will not invest more than 25% of its
total assets in fixed income instruments that are, at the time of purchase,
rated or determined by the Adviser to be below investment grade. Fixed income
instruments rated below investment grade, or unrated securities that are
determined by the Adviser to be of comparable quality, are high yield, high risk
bonds, commonly known as “junk bonds.” Generally, lower-rated debt securities
offer a higher yield than higher rated debt securities of similar maturity but
are subject to greater risk of loss of principal and interest than higher rated
securities of similar maturity.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
In managing the Fund’s investments, under normal market conditions, the
portfolio managers intend to seek to construct an investment portfolio with a
dollar-weighted average effective duration of no less than one year and no more
than ten years. Duration is a measure of the expected life of a fixed income
instrument that is used to determine the sensitivity of a security’s price to
changes in interest rates. All other things remaining equal, for each one
percentage point increase in interest rates, the value of a portfolio of fixed
income securities would generally be expected to decline by one percent for
every year of the portfolio’s average duration above zero. For example, the
value of a portfolio of fixed income securities with an average duration of
three years would generally be expected to decline by approximately 3% if
interest rates
-193-
rose
by one percentage point. Effective duration is a measure of the Fund’s portfolio
duration adjusted for the anticipated effect of interest rate changes on bond
and mortgage prepayment rates as determined by the Adviser. The effective
duration of the Fund’s investment portfolio may vary materially from its target
range, from time to time, and there is no assurance that the effective duration
of the Fund’s investment portfolio will always be within its target range.
The
Adviser may also seek to manage the dollar-weighted average effective duration
of the Fund’s portfolio through the use of derivatives and other instruments
(including, among others, inverse floaters, futures contracts, U.S. Treasury
swaps, interest rate swaps, total return swaps and options, including
swaptions). The Fund may incur costs in implementing duration management
strategies, and there can be no assurance that the Fund will engage in duration
management strategies or that any duration management strategy employed by the
Fund will be successful.
In
addition to its use of foreign currency exchange transactions, the Fund may use
other derivatives transactions with the purpose or effect of creating investment
leverage or for other purposes. For example, the Fund may use futures contracts
and options on futures contracts, in order to gain efficient long or short
investment exposures as an alternative to cash investments or to hedge against
portfolio exposures; swaps, to gain indirect long or short exposures to interest
rates, issuers, or currencies, or to hedge against portfolio exposures; and
total return swaps and credit derivatives (such as credit default swaps), put
and call options, and exchange-traded and structured notes, to take indirect
long or short positions on indexes, securities, or other indicators of value, or
to hedge against portfolio exposures. The Fund may use any of the instruments,
or any combination of the instruments, above (e.g., an interest rate swap combined with a
long forward currency contract) to create long or short synthetic positions as a
substitute for a cash investment. The Adviser considers various factors, such as
availability and cost, in deciding whether, when and to what extent to enter
into derivative transactions. The Fund will incur costs in implementing
derivatives strategies, and there can be no assurance that the Fund will engage
in derivatives strategies or that any such strategy will be successful. Any use
of derivatives strategies entails the risks of investing directly in the
securities, instruments or assets underlying the derivatives strategies, as well
as the risks of using derivatives generally, and in some cases the risks of
leverage, described in this Prospectus and in the Fund’s SAI.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including investment companies sponsored or managed by the Adviser or its
related parties. The amount of the Fund’s investment in certain investment
companies may be limited by law or by tax considerations.
The
Fund may from time to time hold a portion of its assets in cash, cash
equivalents, or other short-term investments for a number of reasons, including,
for example, for temporary defensive purposes, to satisfy future redemption
requests, pending the investment of subscription proceeds, or when the Adviser
otherwise determines for investment purposes to hold a portion of the Fund’s
assets in cash or similar investments.
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of borrowings for investment purposes) in bonds. Please see
“Other Information Regarding Principal Investment Strategies” on page 220 of
this Prospectus. For purposes of the Fund’s 80% policy, bonds also include
instruments that are intended to provide one or more of the characteristics of a
direct investment in one or more debt securities, such as an ETF that invests in
bonds. If the Fund changes its 80% policy, it will notify shareholders at least
60 days in advance of the change. For purposes of the policy to provide notice,
clarifications or revisions to the Fund’s 80% investment policy that are not
expected to alter how the Fund is managed are not considered changes that
require notice.
The
Fund is classified as a non‑diversified fund under the Investment Company Act of
1940, as amended (the “1940 Act”), and
may invest in the securities of a smaller number of issuers than a diversified
fund.
Portfolio
securities may be sold at any time. Sales may occur when the Fund’s portfolio
managers determine to take advantage of what the portfolio managers consider to
be a better investment opportunity, when the portfolio managers believe the
portfolio securities no longer represent relatively attractive investment
opportunities, when the portfolio managers perceive deterioration in the credit
fundamentals of the issuer, or when the portfolio managers believe it would be
appropriate to do so in order to adjust the duration of the Fund’s investment
portfolio.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
-194-
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield and total return, are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Cash
Position Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Focused
Investment Risk
• Foreign
Currency Risk |
|
• Foreign
Investing Risk
• High
Yield Risk
• Inflation-Indexed
Bond Risk
• Investment
Company and Exchange-Traded Fund Risk
• Large
Shareholder Risk
• Leveraging
Risk
• Liquidity
Risk
• Loan
Risk
• Market
Risk
• Mortgage-Backed
Securities Risk |
|
• Non‑diversification
Risk
• Operational
and Information Security Risks
• Portfolio
Turnover Risk
• Restricted
Securities Risk
• Securities
or Sector Selection Risk
• Short
Position Risk
• Sovereign
Debt Obligations Risk
• Structured
Products and Structured Notes Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Infrastructure Income Fund
The
DoubleLine Infrastructure Income Fund seeks long-term total return while
striving to generate current income. Under normal market conditions, the
DoubleLine Infrastructure Income Fund intends to invest at least 80% of its net
assets (plus the amount of borrowings for investment purposes) in
“Infrastructure Investments.” Infrastructure Investments include any assets or
projects that support the operation, function, growth or development of a
community or economy.
The
Infrastructure Investments in which the Fund may invest include, without
limitation, fixed or floating-rate debt instruments, loans or other
income-producing instruments issued:
• |
|
by
companies or other issuers to finance (or re‑finance) the ownership,
development, construction, maintenance, renovation, enhancement, or
operation of infrastructure assets; |
• |
|
by
companies or other issuers that invest in, own, lease or hold
infrastructure assets; and |
• |
|
by
companies or other issuers that operate infrastructure assets or provide
services, products or raw materials related to the development,
construction, maintenance, renovation, enhancement or operation of
infrastructure assets. |
The
Fund may hold instruments issued by a wide range of entities including, among
others, operating companies, holding companies, special purpose vehicles,
including vehicles created to hold or finance infrastructure assets, municipal
issuers, and governments and governmental agencies, authorities or
instrumentalities.
The
infrastructure assets to which the Fund may have exposure through its
investments include, without limitation, assets related to:
• |
|
transportation
(e.g., airports, metro systems,
subways, railroads, ports, toll roads); |
• |
|
transportation
equipment (e.g., shipping,
aircraft, railcars, containers); |
• |
|
electric
utilities and power (e.g., power
generation, transmission and distribution); |
• |
|
energy
(e.g., exploration and production,
pipeline, storage, refining and distribution of energy), including
renewable energies (e.g., wind,
solar, hydro, geothermal); |
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• |
|
communication
networks and equipment; |
• |
|
water
and sewage treatment; |
• |
|
social
infrastructure (e.g., health care
facilities, government buildings and other public service facilities);
and |
• |
|
metals,
mining, and other resources and services related to infrastructure assets
(e.g., cement, chemical
companies). |
The
Fund may invest without limit in Infrastructure Investments in the United States
or in foreign countries, including emerging market countries. However, the Fund
generally seeks to invest principally in instruments denominated in U.S.
dollars.
Although,
under normal circumstances, the Fund intends to invest more than 50% of its net
assets in investment grade investments (i.e., those rated above Ba1 by Moody’s or
above BB+ by S&P, Fitch, Kroll Bond Rating Agency or the equivalent by any
other nationally recognized rating organization) and unrated instruments
considered by the Adviser to be of comparable credit quality, the Fund may
purchase investments of any credit quality, including investments that are rated
below investment grade or unrated instruments considered by the Adviser to be of
comparable credit quality. Instruments rated below investment grade and unrated
instruments of comparable quality, are high yield, high risk bonds, commonly
known as “junk bonds.” Generally, lower-rated debt securities offer the
potential for a higher yield than higher rated debt securities of similar
maturity but are subject to greater risk of loss of principal and interest than
higher rated securities of similar maturity.
The
Fund may invest without limit in debt obligations, loans and other
income-producing instruments where the obligation to repay principal and pay
interest or otherwise make payments to the Fund is secured by underlying
infrastructure asset(s) (e.g., a power
generating facility, aircraft, railcars, and/ or containers) or secured solely
by an equity ownership stake in a particular asset or project. Alternatively,
the Fund may invest in income-producing instruments where the obligation to
repay principal and pay interest is unsecured and backed only by the
creditworthiness of the issuer.
The
Fund may invest in debt obligations, income-producing instruments and
infrastructure-related investments of any kind, including, without limitation,
(i) project bonds; (ii) corporate obligations; (iii) loans; (iv)
mortgage-backed securities; (v) asset-backed securities (including
securities collateralized by installment loan contracts and/or leases of various
types of real and personal property such as aircraft and cellular towers); (vi)
foreign corporate securities, including emerging market securities;
(vii) enhanced equipment trust certificates (“EETCs”) and equipment trust certificates
(“ETCs”); (viii) debt obligations issued
or guaranteed by governments or governmental agencies; (ix) credit-linked
notes; (x) municipal bonds; (xi) pass-through notes;
(xii) perpetual maturity bonds; and (xiii) other instruments bearing
fixed, floating, or variable interest rates of any maturity. The Fund may invest
in any level of the capital structure of an issuer of asset-backed securities,
including the equity or “first loss” tranche. Loans include, without limitation,
secured and unsecured senior loans, term loan Bs, mezzanine, second lien, and
other subordinated loans, loan participations and assignments, and other fixed
and floating rate loans.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The Adviser intends, under normal market conditions, to construct an investment
portfolio with a dollar-weighted average effective duration of no less than two
years and no more than ten years. Duration is a measure of the expected life of
a fixed income instrument that is used to determine the sensitivity of a
security’s price to changes in interest rates. All other things remaining equal,
for each one percentage point increase in interest rates, the value of a
portfolio of fixed income securities would generally be expected to decline by
one percent for every year of the portfolio’s average duration above zero. For
example, the value of a portfolio of fixed income securities with an average
duration of three years would generally be expected to decline by approximately
3% if interest rates rose by one percentage point. Effective duration is a
measure of the Fund’s portfolio duration adjusted for the anticipated effect of
interest rate changes on bond and loan prepayment rates as determined by the
Adviser. The effective duration of the Fund’s investment portfolio may vary
materially from its target range, from time to time, and there is no assurance
that the effective duration of the Fund’s investment portfolio will always be
within its target range.
The
Fund may use derivative transactions with the purpose or effect of creating
investment leverage or for other purposes. For example, the Fund may use futures
contracts and options on futures contracts, in order to gain efficient long or
short investment exposures as an alternative to cash investments or to hedge
against portfolio exposures; swaps, to gain indirect long or short exposures to
interest rates, issuers, or currencies, or to hedge against portfolio exposures;
and total return swaps and credit derivatives (such as credit default swaps),
put and call options, and exchange-traded and structured notes, to take indirect
long or short positions on indexes, securities, or other indicators of value, or
to hedge against portfolio exposures. The Fund may use any of the instruments,
or any combination of the instruments, above (e.g., an interest rate swap combined with a
long forward currency contract) to create long or short synthetic positions as a
substitute for a cash investment. The
-196-
Fund
may also use derivatives transactions to manage the Fund’s duration or adjust
the Fund’s exposure to changes in market interest rates. The Adviser considers
various factors, such as availability and cost, in deciding whether, when and to
what extent to enter into derivative transactions. The Fund will incur costs in
implementing derivatives strategies, and there can be no assurance that the Fund
will engage in derivatives strategies or that any such strategy will be
successful. Any use of derivatives strategies entails the risks of investing
directly in the securities, instruments or assets underlying the derivatives
strategies, as well as the risks of using derivatives generally, and in some
cases the risks of leverage, described in this Prospectus and in the Fund’s
SAI.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies, and
ETFs, including investment companies sponsored or managed by the Adviser or its
related parties. The amount of the Fund’s investment in certain investment
companies may be limited by law or by tax considerations.
The
Fund may from time to time hold a significant portion of its assets in cash,
cash equivalents, or other short-term investments for a number of reasons,
including, for example, for temporary defensive purposes, to satisfy future
redemption requests, pending the investment of subscription proceeds, or when
the Adviser otherwise determines for investment purposes to hold a portion of
the Fund’s assets in cash or similar investments.
Portfolio
securities may be sold at any time. Sales may occur to increase available cash
for purposes of honoring redemption requests or when the Fund’s portfolio
managers determine to take advantage of what the portfolio managers consider to
be a better investment opportunity, when the portfolio managers believe the
portfolio securities no longer represent relatively attractive investment
opportunities, when the portfolio managers perceive deterioration in the credit
fundamentals of the issuer, or when the portfolio managers believe it would be
appropriate to do so in order to adjust the duration of the Fund’s investment
portfolio.
The
Fund’s investments in derivatives and other synthetic instruments that provide
exposure comparable, in the judgment of the Adviser, to Infrastructure
Investments will be counted toward satisfaction of the Fund’s policy to invest
in Infrastructure Investments. If the Fund changes its 80% investment policy
described above, it will notify shareholders at least 60 days in advance of the
change. For purposes of the policy to provide notice, clarifications or
revisions to the Fund’s 80% investment policy that are not expected to alter how
the Fund is managed are not considered changes that require notice.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield, and total return are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Cash
Position Risk
• Confidential
Information Access Risk
• Counterparty
Risk
• Debt
Securities Risks
• Derivatives
Risk
• Emerging
Market Country Risk
• Focused
Investment Risk
• Foreign
Investing Risk |
|
• High
Yield Risk
• Infrastructure
Sector Risk
• Investment
Company and Exchange-Traded Fund Risk
• Large
Shareholder Risk
• Leveraging
Risk
• Liquidity
Risk
• Loan
Risk
• Market
Risk
• Mortgage-Backed
Securities Risk
• Municipal
Bond Risk |
|
• Operational
and Information Security Risks
• Restricted
Securities Risk
• Securities
or Sector Selection Risk
• Structured
Products and Structured Notes Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
-197-
DoubleLine Income Fund
The
DoubleLine Income Fund seeks to maximize total return
through investment principally in income-producing securities.
The
Fund will also seek to construct a portfolio that provides yield and duration
characteristics that are attractive relative to those offered by a portfolio of
corporate debt instruments by investing principally in a combination of
mortgage-backed securities, other asset-backed securities, and CLOs.
The
Fund expects normally to invest in a combination of investment grade, below
investment grade and unrated debt instruments. The Fund may invest in securities
of any credit quality and may invest without limit in securities rated below
investment grade (securities rated Ba1 or below by Moody’s and BB+ or below by
S&P and Fitch and unrated securities, including those judged by the Adviser
to be of below investment grade quality. High yield corporate bonds and certain
other fixed income instruments in which the Fund may invest are commonly known
as “junk bonds.”
Mortgage-backed
securities in which the Fund may invest include, without limitation:
mortgage-related securities of any maturity or type, including residential or
commercial mortgage-backed securities, those guaranteed by, or secured by
collateral that is guaranteed by, the United States Government, its agencies,
instrumentalities or sponsored corporations, and privately issued
mortgage-backed securities; pass-through securities, including government,
private, and multiclass pass-through securities; stripped mortgage securities
(interest-only and principal-only securities); inverse floaters; commercial real
estate CLOs; REMICs and Re‑REMICs (which are REMICs that have been
re‑securitized); and those backed by collateral such
as non‑performing and/or re‑performing loans, non‑qualifying mortgage
loans, and single asset, single borrower loans.
The
other asset-backed securities in which the Fund will invest include, without
limitation: securities backed by motor vehicle installment sales or installment
loan contracts; obligations backed or supported by leases of various types,
including leases of real, personal and other property (including those relating
to aircrafts, containers, railroads, telecommunication, energy, and/or other
infrastructure assets and infrastructure-related assets); securities backed by
receivables from credit card agreements and automobile finance agreements; home
equity sharing agreements; student loans; consumer loans; home equity loans;
mobile home loans; boat loans; loans of any type that contain fewer or less
restrictive constraints on the borrower than certain other types of loans
(“covenant-lite” loans); income from other non‑mortgage‑related income streams,
such as income from business and small business loans, project finance loans,
renewable energy projects, personal financial assets, timeshare receivables and
franchise rights; and CLOs, including CLOs backed by any of the previously
mentioned assets or instruments, such as CLOs backed by covenant-lite
loans.
In
pursuing its investment objective, the Fund may also invest directly in
residential or commercial real estate loans, individually or in pools of loans,
which loans may include senior mortgage loans and mezzanine loans, second lien
loans or other types of subordinated loans, any of which may be
covenant-lite.
In
selecting among available residential or commercial mortgage-backed securities,
the Fund expects to consider, among other things, available yield, duration
characteristics, collateral quality, level of correlation to other risk assets,
supply/demand technicals, and sponsor quality. With respect to asset-backed
securities, the Fund also expects to seek diversified opportunities with varying
risk/return profiles across different sectors of that market. The Fund will seek
CLOs that offer, among other characteristics, attractive yields, diversification
within the underlying pool of loans, and quality management. The Fund may invest
in any level of the capital structure of an issuer of mortgage-backed or
asset-backed securities, including subordinated or residual tranches and the
equity or “first loss” tranche.
The
Adviser has broad discretion to manage the Fund’s portfolio duration; however,
the Adviser expects normally to construct an investment portfolio with a
dollar-weighted average effective duration similar to, or shorter than, that of
its benchmark index, the Bloomberg U.S. Aggregate Bond Index, which was 6.13
years as of June 30, 2024. The Adviser monitors the duration of the Fund’s
portfolio securities to seek to assess and, in its discretion, adjust the Fund’s
exposure to interest rate risk. The Adviser seeks to manage the Fund’s duration
based on the Adviser’s view of, among other things, future interest rates and
market conditions. Duration is a measure of the expected life of a fixed income
instrument that is used to determine the sensitivity of a security’s price to
changes in interest rates. Effective duration is a measure of the Fund’s
portfolio duration adjusted for the anticipated effect of interest rate changes
on bond and mortgage prepayment rates as determined by the Adviser. The
Fund may invest in individual securities of any maturity or duration. The
effective duration of the Fund’s investment portfolio may vary significantly
from time to time and may be negative at certain times, and there is no
assurance that the effective duration of the Fund’s investment portfolio will
remain within the targeted range described above.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include consideration of
the
-198-
Adviser’s
view of the following factors, among others: the potential for current income
and capital appreciation presented by various market sectors, security selection
available within a given sector, the risk/reward equation for different fixed
income investments, liquidity conditions in various market sectors, the shape of
the yield curve and projections for changes in the yield curve, potential
fluctuations in the overall level of interest rates, and current fiscal
policy.
Although
the Fund will normally invest principally in mortgage-backed securities, other
asset-backed securities and CLOs, the Fund may invest in other debt instruments
of any kind. The Adviser expects to allocate and re‑allocate the
Fund’s assets among income-producing investments with varying characteristics in
response to changing market, financial, economic, and other conditions in an
attempt to construct a portfolio that maximizes total return. In addition to the
instruments described above, the Fund’s principal investments may include,
without limitation, (i) U.S. Treasury obligations, (ii) bank loans,
(iii) other securities or other income-producing instruments issued or
guaranteed by the U.S. Government, its agencies, instrumentalities or sponsored
corporations (including inflation-protected securities); (iv) CDOs;
(v) pass through certificates or other participation rights with respect to
warehouse lending facilities; (vi) municipal securities and other debt
obligations issued by states, local governments, and government-sponsored
entities, including their agencies, authorities, and instrumentalities;
(vii) inflation-indexed bonds; (viii) REIT securities (equity,
preferred or debt); (ix) distressed and defaulted
securities; (x) payment‑in‑kind bonds; (xi) zero‑coupon bonds;
(xii) corporate bonds and other corporate obligations, including high yield
debt; (xiii) custodial receipts; (xiv) short-term, high quality
investments, including, for example, cash equivalents, commercial paper,
bankers’ acceptances, certificates of deposit, bank time deposits, repurchase
agreements, and investments in money market mutual funds or similar pooled
investments; and (xv) other instruments bearing fixed, floating, or
variable interest rates of any maturity. The allocation of the Fund’s assets to
different sectors and issuers will change over time, sometimes rapidly, and the
Fund may invest without limit in a single sector or a small number of sectors of
the fixed income universe.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. A derivative is a financial contract whose
value depends on changes in the value of one or more underlying assets,
reference rates, or indexes. These instruments include, among others, options,
futures contracts, forward currency contracts, swap agreements and similar
instruments. The Fund may use derivatives transactions with the effect of
creating investment leverage. For example, the Fund may use futures contracts
and options on futures contracts, in order to gain efficient long or short
investment exposures as an alternative to cash investments or to hedge against
portfolio exposures; interest rate swaps, to gain indirect long or short
exposures to interest rates, issuers, or currencies, or to hedge against
portfolio exposures; and total return swaps and credit derivatives (such as
credit default swaps), put and call options, and exchange-traded and structured
notes, to take indirect long or short positions on indexes, securities,
currencies, or other indicators of value, or to hedge against portfolio
exposures. The Adviser may seek to manage the dollar-weighted average effective
duration of the Fund’s portfolio through the use of derivatives and other
instruments (including, among others, inverse floaters, futures contracts, U.S.
Treasury swaps, interest rate swaps, total return swaps and options, including
swaptions). The Fund may incur costs in implementing hedging or duration
management strategies, and there can be no assurance that the Fund will engage
in hedging or duration management strategies or that any hedging or duration
management strategy employed by the Fund will be successful. Any use of
derivatives strategies entails the risks of investing directly in the
securities, instruments or assets underlying the derivatives strategies, as well
as the risks of using derivatives generally, and in some cases the risks of
leverage, described in this Prospectus and in the SAI.
The
Fund may implement short positions through short sales of instruments that are
eligible investments for the Fund in order to adjust the Fund’s interest rate or
credit exposure.
The
Adviser expects to allocate the Fund’s assets principally to domestic securities
denominated in U.S. dollars; however, the Fund may invest in debt instruments of
foreign issuers, including emerging market issuers, and debt instruments
denominated in foreign currencies. The Fund does not normally expect to invest
more than 20% of its assets in securities denominated in a foreign
currency.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example,
other open‑end or closed‑end investment companies, ETFs, and
domestic or foreign private investment vehicles, including investment companies
sponsored or managed by the Adviser or its related parties.
The
Fund may from time to time hold a portion of its assets in cash, cash
equivalents, or other short-term investments for a number of reasons, including,
for example, for temporary defensive purposes, to satisfy future redemption
requests, pending the investment of subscription proceeds, or when the Adviser
otherwise determines for investment purposes to hold a portion of the Fund’s
assets in cash or similar investments.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers perceive deterioration in the credit fundamentals of
the issuer, when the portfolio managers consider that changes or
anticipated
-199-
changes
in currency values favor the sale of the security, when the portfolio managers
believe there are negative macro geo‑political considerations that may
affect the issuer, when the portfolio managers determine to take advantage of a
better investment opportunity, or when the individual security has reached the
portfolio managers’ sell target. The portfolio managers may engage in active and
frequent trading of the Fund’s portfolio investments. To the extent that it does
so, the Fund may incur greater transaction costs and may make greater
distributions of income and gains, which will be taxable to shareholders who do
not hold their shares through
a tax‑advantaged or tax‑deferred account.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield and total return, are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Cash
Position Risk
• Collateralized
Debt Obligations Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Financial
Services Risk
• Focused
Investment Risk
• Foreign
Currency Risk |
|
• Foreign
Investing Risk
• High
Yield Risk
• Inflation-Indexed
Bond Risk
• Investment
Company and Exchange-Traded Fund Risk
• Large
Shareholder Risk
• Leveraging
Risk
• Limited
Operating History Risk
• Liquidity
Risk
• Loan
Risk
• Market
Risk
• Mortgage-Backed
Securities Risk |
|
• Operational
and Information Security Risks
• Real
Estate Sector Risk
• Restricted
Securities Risk
• Securities
or Sector Selection Risk
• Short
Position Risk
• Structured
Products and Structured Notes Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Emerging Markets Local Currency Bond Fund
The
DoubleLine Emerging Markets Local Currency Bond Fund
seeks high total return from current income and capital appreciation.
The
Fund intends to invest principally in bonds of issuers in emerging market
countries denominated in local (non‑U.S.) currencies. These bonds include but
are not limited to sovereign debt; quasi-sovereign debt, such as obligations
issued by governmental agencies and instrumentalities; supra-national
obligations; and obligations of private, non‑governmental issuers. Bonds may pay
interest at fixed or variable rates and may be of any maturity. The Fund’s
investments may include government and private high yield and defaulted debt
securities; inflation-indexed securities; mortgage- and asset-backed securities;
bank loans; hybrid securities; and securities or structured products that are
linked to or derive their values from another security, asset, or currency of
any country or issuer in which the Fund may otherwise invest. High yield
corporate bonds and certain other fixed income instruments in which the Fund may
invest are commonly known as “junk bonds.”
The
Adviser interprets the term “bond” broadly as an instrument or security
evidencing what is commonly referred to as an IOU rather than evidencing the
corporate ownership of equity unless that equity represents an indirect or
derivative interest in one or more debt securities, such as the interests in the
equity tranche of a trust collateralized by debt securities.
An
“emerging market country” is a country that, at the time the Fund invests in the
related instruments, is classified as an emerging or developing economy by any
supranational organization such as an institution in the World Bank Group or
the
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United
Nations, or an agency thereof, or is considered an emerging market country for
purposes of constructing a major emerging market securities index, such as the
J.P. Morgan or Bank of America suite of emerging market indices (e.g., the JP Morgan GBI‑EM Global Diversified
Index or the ICE Bank of America Broad Local Emerging Markets non‑Sovereign
Index). In allocating investments among various emerging market countries, the
portfolio managers attempt to analyze political, market, and economic factors
affecting a country. These factors may include public finances; monetary policy;
external accounts; financial markets; foreign investment regulations; stability
of exchange rate policy; and labor conditions. Although the Fund invests
principally in investments denominated in local currencies, the Fund may invest
in investments denominated in the U.S. dollar (including U.S. Government
securities). There is no limit on the percentage of the Fund’s assets that may
be invested in any single emerging market country, currency, or issuer or any
group of emerging market countries, currencies, or issuers.
The
Fund expects normally to have significant exposure to foreign currencies, which
may be achieved by investing in bonds denominated in the local currencies of
foreign issuers or by investing in currencies directly or in currency-related
instruments, such as forward contracts. The Fund may enter into foreign currency
exchange transactions, including foreign currency futures and forward contracts
and foreign currency swaps and options, to take long or short positions in
various currencies, including currencies to which the Fund might not otherwise
have exposure, in order to benefit from changes in the values of those
currencies anticipated by the Adviser. The Fund may also enter into foreign
currency exchange transactions in order to hedge against changes in the values
of its portfolio investments due to declines in the values of the currencies in
which those investments are denominated against the U.S. dollar (although the
Fund does not expect typically to hedge portfolio currency exposures). The Fund
may use any of the instruments, or any combination of the instruments, described
above (e.g., an interest rate swap
combined with a long forward currency contract) to create long or short
synthetic positions as a substitute for a cash investment. Foreign currency
exchange transactions may have the effect of creating investment leverage in the
Fund’s portfolio, and the returns from such transactions may represent, from
time to time, a significant component of the Fund’s investment returns.
The
Fund may invest without limitation in fixed income instruments of any credit
quality, which may include securities that are at the time of investment rated
BB+ or lower by S&P or Ba1 or lower by Moody’s or the equivalent by any
other nationally recognized statistical rating organization or unrated
securities judged by the Adviser to be of comparable quality. The Fund may
invest up to 20% of its net assets in defaulted securities (including defaulted
corporate and sovereign securities). The Fund may invest in defaulted corporate
securities, for example, when the portfolio managers believe the restructured
enterprise valuations or liquidation valuations may exceed current market
values. The Fund may invest in defaulted sovereign securities, for example, when
the portfolio managers believe the expected recovery value is not reflected in
current market valuations.
In
managing the Fund’s portfolio, the portfolio managers typically use a controlled
risk approach. The techniques of this approach attempt to control the principal
risk components of the fixed income markets and may include, among other
factors, consideration of the Adviser’s view of the following: the potential
relative performance of various market sectors, security selection available
within a given sector, the risk/reward equation for different asset classes,
liquidity conditions in various market sectors, the shape of the yield curve and
projections for changes in the yield curve, potential fluctuations in the
overall level of interest rates, current fiscal policy, and the Adviser’s views
on currency values.
The
Adviser monitors the duration of the Fund’s portfolio securities to seek to
assess and, in its discretion, adjust the Fund’s exposure to interest rate risk.
In managing the Fund’s investments, under normal market conditions, the
portfolio managers intend to seek to construct an investment portfolio with a
dollar-weighted average effective duration of no less than two years and no more
than eight years. Duration is a measure of the expected life of a fixed income
instrument that is used to determine the sensitivity of a security’s price to
changes in interest rates. Effective duration is a measure of the Fund’s
portfolio duration adjusted for the anticipated effect of interest rate changes
on bond and mortgage pre‑payment rates as determined by the Adviser. The
effective duration of the Fund’s investment portfolio may vary materially from
its target range, from time to time, and there is no assurance that the
effective duration of the Fund’s investment portfolio will always be within its
target range. The Adviser may seek to manage the dollar-weighted average
effective duration of the Fund’s portfolio through the purchase and sale of
securities of different durations and through the use of derivatives and other
instruments (including, among others, inverse floaters, futures contracts, U.S.
Treasury swaps, interest rate swaps, total return swaps and options, including
swaptions). The Fund may incur costs in implementing duration management
strategies, and there can be no assurance that the Fund will engage in duration
management strategies or that any duration management strategy employed by the
Fund will be successful.
The
Fund may use derivatives transactions for a variety of purposes. For example,
the Fund may use futures contracts and options on futures contracts, in order to
gain efficient long or short investment exposures as an alternative to cash
investments or to hedge against portfolio exposures; swaps, in order to gain
indirect long or short exposures to interest rates or issuers or to hedge
against portfolio exposures; and total return swaps and credit derivatives (such
as credit default swaps), put and call options, and exchange-traded and
structured notes, in order to take indirect long or short positions on
indexes,
-201-
securities,
or other indicators of value or to hedge against portfolio exposures. The
Adviser considers various factors, such as availability and cost, in deciding
whether, when, and to what extent to enter into derivatives transactions. The
Fund will incur costs in implementing derivatives strategies, and there can be
no assurance that the Fund will engage in derivatives strategies or that any
such strategy will be successful. Any use of derivatives strategies entails the
risks of investing directly in the securities, instruments or assets underlying
the derivatives strategies, as well as the risks of using derivatives generally,
and in some cases the risks of leverage, described in this Prospectus and in the
Fund’s SAI.
Under
normal circumstances, the Fund intends to invest at least 80% of its net assets
(plus the amount of any borrowings for investment purposes) in bonds of issuers
in emerging market countries denominated in the currencies of emerging market
countries. Issuers in emerging market countries include governmental,
quasi-governmental, and private (non‑governmental) emerging market issuers.
Private emerging market issuers include non‑governmental issuers organized under
the laws of or domiciled in an emerging market country, issuers with their
principal places of business or corporate headquarters located in an emerging
market country, or issuers where the Adviser considers the principal country
risk of such issuer to stem from one or more emerging market countries. In
assessing an issuer’s principal country risk, the Adviser will consider one or
more factors it considers significant in assessing the risk of an investment in
the issuer. Those factors will typically include one or more of the following:
the source of an issuer’s earnings, revenues, EBITDA, cash flow, or assets. The
Fund’s investments in derivatives and other synthetic instruments that provide
exposures comparable, in the judgment of the Adviser, to local currency bonds of
emerging market issuers will be counted toward satisfaction of the Fund’s 80%
policy (using, where determined appropriate in the Adviser’s discretion, an
instrument’s notional amount). Instruments, such as an ETF that invests in
bonds, that, in the judgment of the Adviser, provide characteristics of a direct
investment in one or more debt securities will also be counted toward
satisfaction of the Fund’s 80% policy. If the Fund changes its 80% policy, it
will notify shareholders at least 60 days in advance of the change. For purposes
of the policy to provide notice, clarifications or revisions to the Fund’s 80%
investment policy that are not expected to alter how the Fund is managed are not
considered changes that require notice.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers perceive deterioration in the credit fundamentals of
the issuer, when the portfolio managers consider that changes or anticipated
changes in currency values favor the sale of the security, when the portfolio
managers believe there are negative macro geo‑political considerations that may
affect the issuer, when the portfolio managers determine to take advantage of a
better investment opportunity, or when the individual security has reached the
portfolio managers’ sell target. The Adviser may engage in active and frequent
trading of the Fund’s portfolio investments. To the extent that it does so, the
Fund may incur greater transaction costs and may make greater distributions of
income and gains, which will be taxable to shareholders who do not hold their
shares through a tax‑advantaged or tax‑deferred account.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including those sponsored or managed by the Adviser or its related
parties. The amount of the Fund’s investment in certain investment companies may
be limited by law or by tax considerations.
The
Fund may from time to time hold a portion of its assets in cash, cash
equivalents, or other short-term investments for a number of reasons, including,
for example, for temporary defensive purposes, to satisfy future redemption
requests, pending the investment of subscription proceeds, or when the Adviser
otherwise determines for investment purposes to hold a portion of the Fund’s
assets in cash or similar investments.
The
Fund is classified as a non‑diversified fund under the 1940 Act, and may invest
in the securities of a smaller number of issuers than a diversified fund.
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
-202-
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield and total return, are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Cash
Position Risk
• Collateralized
Debt Obligations Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Financial
Services Risk
• Focused
Investment Risk |
|
• Foreign
Currency Risk
• Foreign
Investing Risk
• High
Yield Risk
• Inflation-Indexed
Bond Risk
• Investment
Company and Exchange-Traded Fund Risk
• Large
Shareholder Risk
• Leveraging
Risk
• Limited
Operating History Risk
• Liquidity
Risk
• Loan
Risk
• Market
Risk |
|
• Mortgage-Backed
Securities Risk
• Non‑Diversification
Risk
• Operational
and Information Security Risks
• Restricted
Securities Risk
• Securities
or Sector Selection Risk
• Short
Position Risk
• Sovereign
Debt Obligations Risk
• Structured
Products and Structured Notes Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Multi-Asset Trend Fund
The
DoubleLine Multi-Asset Trend Fund seeks total return (capital appreciation and
current income) which exceeds the total return of its benchmark index over a
full market cycle. The Fund’s current benchmark index is the Credit Suisse
Managed Futures Liquid Total Return USD Index, which was selected as a broad
measure of the performance of a number of trend following investment strategies.
Trend following is an investment approach that seeks to invest in a manner that
will benefit from persistent trends in price movements, whether that trend is
the appreciation or depreciation of an asset’s value.
With
a portion of its assets, the Fund will seek to use derivatives, or a combination
of derivatives and direct investments, to provide a return that approximates,
before fees and expenses, the performance of the BNP Paribas Multi-Asset Trend
Index (referred to in this discussion as the “Index”). The Index has been designed to seek
investment exposure to trends in price movements of a broad universe of assets
across different markets, including domestic, foreign and emerging market
equities, sovereign bonds and other debt securities, interest rates, currencies
and commodities (e.g., energy and precious and industrial metals). The Index was
selected, in significant part, because it reflects trend following strategies
using a broadly diversified set of investments. The Fund’s investment adviser
believes an investment program that includes exposure to the Index as well as
the other investments described below provides the potential to earn incremental
return that is not highly correlated with the performance of traditional
investment strategies and asset classes.
The
Fund will separately invest in a portfolio of debt securities to seek to provide
additional total return over the long term. The Fund may invest directly in debt
instruments or it may invest all or a portion of the Fund’s assets in one or
more fixed income funds advised by DoubleLine Capital or a related party of
DoubleLine Capital.
The Fund uses investment leverage as part of its
principal investment strategies. The Fund expects normally to invest an amount
approximately equal to its net assets in a portfolio of debt securities while
also maintaining notional exposure to the Index, providing the Fund with
economic exposure to the Index in an amount up to the value of the Fund’s net
assets. As a result, the Fund’s total investment exposure (investments in debt
securities plus notional exposure to the Index) will typically be equal to
approximately 200% of the Fund’s NAV. It is possible that the Fund could lose
money on both its investments in debt securities and its exposure to the Index
at the same time.
The
Fund intends to use derivatives in an attempt to create an investment return
that approximates (before fees and expenses) the Index’s return. The Fund will
use primarily swap transactions, although the Fund may also use futures
transactions, where the reference asset is the Index or a modified version of
the Index, one or more components of the Index, or an unrelated index or basket
of securities. The transaction pricing of any swap transaction will reflect a
number of factors that will cause the return on the swap transaction to
underperform the Index. Please see “Index Risk — Note regarding Index-Based
Swaps” in the Fund’s Prospectus for more information. The Fund expects to use
only a small percentage of its assets to attain the desired exposure to the
Index because of the structure of the derivatives the Fund will use. As a
result, use of those derivatives, combined with the Fund’s investments in a
portfolio of debt securities, will create investment leverage in the Fund’s
portfolio. In certain cases, derivatives based on the Index or that use the
Index as the reference asset might be unavailable or the pricing of those
derivatives might be unfavorable; in those cases, the Fund may attempt to
approximate the Index’s return by purchasing some or all of the components of
the Index, or portions of the Index, at the time. If the Fund at any time
invests directly in the components of the Index, the assets so invested will be
unavailable for investment in debt instruments, and the Fund’s ability to pursue
its investment strategy fully and achieve its investment objective may be
limited.
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To
the extent use of the above-described derivatives strategy leaves a substantial
portion of the Fund’s assets available for other investment by the Fund, the
Fund will invest those assets in a portfolio of debt instruments managed by
DoubleLine Capital, the Fund’s sub‑adviser, to seek to provide additional total
return over the long term.
The BNP Paribas Multi-Asset Trend Index. The
Index is an index the performance of which is designed to reflect exposure to a
diverse range of asset classes and geographic regions, weighted based on
performance trends and historical volatility. These asset classes and
instruments include equities, bonds, commodities, foreign exchange rates and
credit default swap instruments. The asset classes are represented in the Index
by futures contracts on 19 domestic, foreign and emerging market equity indices,
15 developed market interest rates, 13 commodities (including energy and
precious and industrial metals), and 7 developed market currencies, as well as 4
credit indices (each an “Index
Component”). The Index’s composition is determined daily based on
historical trends in the price or level of each Index Component, the short-term
and long-term variance of the Index Components, and the covariance between the
Index Components, all subject to weighting constraints and a targeted volatility
level for the Index of 8%. The Index is denominated in U.S. dollars (“USD”). For all Index Components that are not
denominated in USD, non‑U.S. currencies will be converted to USD for purposes of
determining the composition of the Index. There can be no assurance that the
Index will provide a better measure of momentum or trend investing across the
different asset classes represented in the Index than other measures, over any
period or over the long term. In addition, while the Index has a targeted
volatility level, the Fund is not managed to have a targeted volatility and
there can be no assurance that the Fund’s volatility will be limited in any
manner or that it will be similar to that of the Index. The Fund invests in
securities outside of the Index and therefore is not expected to have a
volatility similar to the Index. The Fund’s actual or realized volatility for
any particular period may be materially higher or lower than the Index’s
targeted or actual volatility level depending on market conditions. The Index
reflects certain fees or other expenses that are deducted from the Index
Components based on information available at the time of calculation of the
Index. The calculation of the level of the Index is also reduced by a number of
assumed expenses or charges; see footnote 1 to the table above entitled “Annual
Fund Operating Expenses” in the Fund Summary.
If
derivatives designed to provide the Fund a return approximating the Index’s
return become unavailable or cost prohibitive or DoubleLine Alternatives
determines against investing in them for any reason, DoubleLine Alternatives may
seek investment exposure to the asset classes and instruments comprising the
Index by investing directly in some or all of the components of the Index or in
other investments that, in DoubleLine Alternatives’ view, provide similar
investment exposure to that provided by one or more components of or asset
classes represented in the Index. DoubleLine Alternatives or the Fund’s Board of
Trustees may in their sole discretion and without advance notice to shareholders
select, in place of the Index, another trend following index or a basket of
investments. The Fund may gain exposure to any substitute index or basket of
investments in any manner DoubleLine Alternatives determines appropriate,
including those described above with respect to how the Fund may obtain exposure
to the Index.
The
Fund intends to invest only a portion of its assets to obtain exposure to the
Index; the Fund’s overall portfolio is not designed to replicate the performance
of any index. Even if the Fund’s investments in derivative instruments perform
in‑line with the Index, the Fund’s performance will deviate, potentially
significantly, from the performance of any index used by the Fund because of,
among other factors, the performance of the Fund’s investments in fixed income
instruments and the investment, operational and other expenses that the Fund
incurs.
The
Fund will likely enter into swap transactions related to the Index with a
limited number of counterparties for the foreseeable future and, until the Fund
grows significantly, the Fund expects to obtain exposure to the Index through
swap transactions with a single counterparty, BNP Paribas. In selecting swap
counterparties for the Fund, DoubleLine Alternatives will normally consider a
variety of factors, including, without limitation: cost; the quality,
reliability, and responsiveness of a counterparty; the operational compatibility
between a counterparty and DoubleLine Alternatives; and a counterparty’s
creditworthiness.
The Fund’s Investments in Debt Instruments.
Under normal circumstances, to the extent use of the above-described derivatives
strategy leaves a substantial portion of the Fund’s assets available for other
investment by the Fund, the Fund intends to invest those assets in a portfolio
of debt instruments managed by DoubleLine Capital to seek to provide additional
total return over the long term. The Fund expects that it will, at least
initially, invest all or substantially all of its cash available for investment
in debt securities in one or more fixed income funds advised by DoubleLine
Capital, including DoubleLine Low Duration Bond Fund, DoubleLine Floating Rate
Fund, and/or DoubleLine Income Fund.
As
the Fund achieves greater scale, the Fund expects to invest to a greater extent
directly in debt instruments. Debt instruments in which the Fund may invest
include, by way of example, (i) securities or other income-producing
instruments issued or guaranteed by the U.S. Government, its agencies,
instrumentalities or sponsored corporations (including inflation-protected
securities); (ii) corporate obligations; (iii) mortgage-backed securities
(including commercial
-204-
and
residential mortgage-backed securities) and other asset-backed securities, CMOs,
government mortgage pass-through securities, multiclass pass-through securities,
private mortgage pass-through securities, stripped mortgage securities (e.g.,
interest-only and principal-only securities), and inverse floaters;
(iv) CDOs, including CLOs; (v) foreign securities (corporate and
government, including foreign hybrid securities), including emerging market
securities; (vi) fixed and floating rate loans of any kind (including,
among others, bank loans, assignments, participations, senior loans, second lien
or other subordinated or unsecured fixed or floating rate loans,
debtor‑in‑possession loans, exit facilities, delayed funding loans and revolving
credit facilities), which may take the form of loans that contain fewer or less
restrictive constraints on the borrower than certain other types of loans
(“covenant-lite” loans); (vii) municipal securities and other debt obligations
issued by states, local governments, and government-sponsored entities,
including their agencies, authorities, and instrumentalities;
(viii) inflation-indexed bonds; (ix) convertible securities;
(x) preferred securities; (xi) REIT securities;
(xii) payment‑in‑kind bonds; (xiii) zero‑coupon bonds;
(xiv) custodial receipts, cash and cash equivalents; (xv) short-term,
high quality investments, including, for example, commercial paper, bankers’
acceptances, certificates of deposit, bank time deposits, repurchase agreements,
and investments in money market mutual funds or similar pooled investments; and
(xvi) other instruments bearing fixed, floating, or variable interest rates
of any maturity. The Fund may invest in any level of the capital structure of an
issuer of mortgage-backed or asset-backed securities, but does not intend to
invest in the equity or “first loss” tranche of such investments.
In
managing the Fund’s portfolio of debt instruments, under normal market
conditions, the portfolio managers will seek to construct an investment
portfolio with an overall dollar-weighted average effective duration of between
one year and three years. Duration is a measure of the expected life of a fixed
income instrument that is used to determine the sensitivity of a security’s
price to changes in interest rates. Effective duration is a measure of the
Fund’s portfolio duration adjusted for the anticipated effect of interest rate
changes on bond and mortgage prepayment rates as determined by DoubleLine
Capital. The longer a portfolio’s effective duration, the more sensitive it will
be to changes in interest rates. The effective duration of the Fund’s portfolio
of debt instruments may vary materially from its target range, from time to
time, and there is no assurance that the effective duration of the portfolio
will always be within its target range. DoubleLine Capital monitors the
effective duration of the Fund’s portfolio of debt instruments to seek to assess
and, in its discretion, adjust the Fund’s exposure to interest rate risk.
The
Fund may invest in debt instruments of any credit quality, which may include
securities that are at the time of investment unrated or rated BB+ or lower by
S&P or Ba1 or lower by Moody’s or the equivalent by any other nationally
recognized statistical rating organization or unrated securities judged by
DoubleLine Capital to be of comparable quality. Corporate bonds and certain
other fixed income instruments rated below investment grade, or such instruments
that are unrated and determined by DoubleLine Capital to be of comparable
quality, are high yield, high risk bonds, commonly known as “junk bonds.”
Generally, lower-rated debt securities offer a higher yield than higher-rated
debt securities of similar maturity but are subject to greater risk of loss of
principal and interest than higher-rated securities of similar maturity. The
Fund may invest up to 331/3% of its net assets in junk
bonds, bank loans and assignments rated below investment grade or unrated but
determined by DoubleLine Capital to be of comparable quality, and credit default
swaps of companies in the high yield universe. DoubleLine Capital does not
consider the term “junk bonds” to include any mortgage-backed securities or any
other asset-backed securities, regardless of their credit rating or credit
quality, and accordingly may invest without limit in such investments.
The
Fund may invest a portion of its assets in inverse floater securities and
interest-only and principal-only securities. An inverse floater is a type of
instrument, which may be backed by or related to a mortgage-backed security,
that bears a floating or variable interest rate that moves in the opposite
direction to movements in interest rates generally or the interest rate on
another security or index. Because an inverse floater inherently carries
financial leverage in its coupon rate, it can change very substantially in value
in response to changes in interest rates. Interest-only and principal-only
securities may also be backed by or related to a mortgage-backed security.
Holders of interest-only securities are entitled to receive only the interest on
the underlying obligations but none of the principal, while holders of
principal-only securities are entitled to receive all of the principal but none
of the interest on the underlying obligations. As a result, they are highly
sensitive to actual or anticipated changes in prepayment rates on the underlying
securities.
The
Fund may invest a portion of its assets in debt instruments (including hybrid
securities) issued or guaranteed by companies, financial institutions and
government entities in emerging market countries. An “emerging market country”
is a country that, at the time the Fund invests in the related fixed income
instruments, is classified as an emerging or developing economy by any
supranational organization such as an institution in the World Bank Group or the
United Nations, or an agency thereof, or is considered an emerging market
country for purposes of constructing a major emerging market securities
index.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies
and
-205-
ETFs,
including those sponsored or managed by DoubleLine Capital or its related
parties. The Fund may engage in short sales or take short positions, either to
earn additional return or to hedge existing investments.
In
managing the Fund’s debt instruments, the portfolio managers typically use a
controlled risk approach. The techniques of this approach attempt to control the
principal risk components of the fixed income markets and may include, among
other factors, consideration of DoubleLine Capital’s view of the following: the
potential relative performance of various market sectors, security selection
available within a given sector, the risk/reward equation for different asset
classes, liquidity conditions in various market sectors, the shape of the yield
curve and projections for changes in the yield curve, potential fluctuations in
the overall level of interest rates, and current fiscal policy.
The
portfolio managers utilize active asset allocation in managing the Fund’s
investments in debt instruments.
The Fund’s Investments in Commodities. The Fund
may obtain commodities exposures by investing in one or more subsidiary private
investment vehicles organized outside the United States that invest directly or
indirectly in commodities and commodity-related investments or in derivatives
transactions relating to commodities where DoubleLine Alternatives determines
that it may benefit the Fund if the subsidiary invests in those transactions.
The Subsidiary is currently expected to participate in such investments. The
Fund does not expect to invest more than 25% of its assets in a subsidiary,
though its investments in the Subsidiary may exceed 25% of its assets from time
to time. To the extent the Fund’s swap investments involve commodities, the
Subsidiary typically will engage in the swap transactions and the Fund will
obtain commodities exposure indirectly.
The
Fund may enter into derivatives transactions and other instruments of any kind
for hedging purposes or otherwise to gain, or reduce, long or short exposure to
one or more asset classes or issuers. The Fund may use derivatives transactions
with the purpose or effect of creating investment leverage. For example, the
Fund may use futures contracts and options on futures contracts, in order to
gain efficient long or short investment exposures as an alternative to cash
investments or to hedge against portfolio exposures; interest rate swaps, to
gain indirect long or short exposures to interest rates, issuers, or currencies,
or to hedge against portfolio exposures; and total return swaps and credit
derivatives (such as credit default swaps), put and call options, and
exchange-traded and structured notes, to take indirect long or short positions
on indexes, securities, currencies, or other indicators of value, or to hedge
against portfolio exposures. The Fund may also engage in short sales or take
short positions, either to adjust its duration or for other investment
purposes.
Portfolio
investments may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio investments no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell target. The portfolio managers
may engage in active and frequent trading of the Fund’s portfolio investments.
To the extent that they do so, the Fund may incur greater transaction costs and
may make greater distributions of income and gains, which will be taxable to
shareholders who do not hold their shares through a tax‑advantaged or
tax‑deferred account.
The
Fund may from time to time hold a portion of its assets in cash, cash
equivalents, or other short-term investments for a number of reasons, including,
for example, for temporary defensive purposes, to satisfy future redemption
requests, pending the investment of subscription proceeds, or when the Adviser
otherwise determines for investment purposes to hold a portion of the Fund’s
assets in cash or similar investments.
Description
of the BNP Paribas Index Methodology
The following summary of the Index was prepared by
the sponsor of the Index and is subject to change. Neither the Fund nor
DoubleLine Alternatives have verified its accuracy or completeness or assume any
responsibility for its accuracy or completeness.
The
objective of the BNP Paribas Index and its methodology is to provide exposure to
a diverse range of asset classes and geographic regions. These asset classes
include equity, government bond and commodity futures as well as forex forwards
and credit default swap instruments. The strategy is implemented by
synthetically investing in a dynamic basket of indices and each as set out in
the table below.
The
BNP Paribas Index Methodology seeks to identify on a daily basis a hypothetical
portfolio comprised of BNP Paribas Index Components based on the “Modern
Portfolio Theory” approach to asset allocation, which is a framework for
assembling a portfolio of certain assets to maximize the expected portfolio
return for a given level of portfolio risk, or alternatively, to minimize
portfolio risk for a given level of expected portfolio return. The portfolio is
determined based on historical trends of
-206-
the
price or level of each BNP Paribas Index Component, the short-term and long-term
variance of the BNP Paribas Index Components and the covariance between the BNP
Paribas Index Components, subject to weighting constraints and a specified level
of volatility. The identified hypothetical portfolio is used as the basis for
the construction of the portfolio comprised in the BNP Paribas Index, subject to
additional weighting constraints and a volatility control mechanism based on the
realized volatility of the selected hypothetical portfolio.
The
BNP Paribas Index is denominated in USD. For all BNP Paribas Index Components
that are not denominated in USD, the BNP Paribas Index Methodology implements a
currency hedge mechanism designed to mitigate the foreign currency risk
associated with the conversion to the USD prior to the calculation of the BNP
Paribas Index. The currency hedge mechanism for the BNP Paribas Index is
intended to offset the daily fluctuation in the exchange rate between the USD
and the currency in which the BNP Paribas Index Component is denominated.
The
BNP Paribas Index does not reflect interest from cash instruments or other
related returns that might be realized by actual investments in the BNP Paribas
Index Components (or sub‑components thereof). The calculation of the level of
the BNP Paribas Index will be reduced by a number of assumed expenses or
charges; see footnote 1 to the table above entitled “Annual Fund Operating
Expenses.”
The
tables below reflect the BNP Paribas Index Components as of the Index’s
inception in January 2021. The BNP Paribas Index Components are not expected to
change absent regulatory changes, market disruptions, unavailability of an index
component or other similar events.
|
| |
BNP Paribas Index Components |
|
Futures Contract |
BNP Paribas Eurozone Equity Futures
Index |
|
Eurostoxx 50 |
BNP Paribas US Equity Futures Index |
|
S&P 500 |
BNP Paribas Japan Equity Futures Index |
|
Nikkei |
BNP Paribas China Equity Futures Index |
|
HSCEI |
BNP Paribas France Equity Futures Index |
|
CAC 40 |
BNP Paribas Germany Equity Futures
Index |
|
Dax |
BNP Paribas UK Equity Futures Index |
|
FTSE 100 |
BNP Paribas Swiss Equity Futures Index |
|
SMI |
BNP Paribas Korea Equity Futures Index |
|
Kospi |
BNP Paribas US Small Caps Equity Futures
Index |
|
Russell 2000 |
BNP Paribas Australia Equity Futures
Index |
|
ASX SPI 200 |
BNP Paribas Honk Kong Equity Futures
Index |
|
HSI |
BNP Paribas Taiwan Equity Futures Index |
|
MSCI Taiwan |
BNP Paribas Italy Equity Futures Index |
|
FTSE MIB |
BNP Paribas Sweden Equity Futures Index |
|
OMX |
BNP Paribas Netherlands Equity Futures
Index |
|
AEX |
BNP Paribas Canada Equity Futures Index |
|
TSX 60 |
BNP Paribas Emerging Equity Futures
Index |
|
MSCI Emerging |
BNP Paribas BNP Paribas Japan Tokyo
Futures Index |
|
TOPIX |
BNP Paribas Bond Futures Germany 10Y
(Bund) ER Index |
|
Bund |
BNP Paribas Bond Futures Germany 2Y
(Schatz) ER Index |
|
Schatz |
BNP Paribas Bond Futures Germany 5Y (Bobl)
ER Index |
|
Bobl |
BNP Paribas Bond Futures Germany 30Y (Long
Bund) ER Index |
|
Buxl |
BNP Paribas Bond Futures Japan JGB 10Y ER
Index |
|
10‑Year Japanese
Government Bond |
BNP Paribas Bond Futures US Tsy 10Y ER
Index |
|
10‑Year US Treasury
Note |
BNP Paribas Bond Futures US Tsy 2Y ER
Index |
|
2‑Year US Treasury
Note |
BNP Paribas Bond Futures US Tsy 30Y ER
Index |
|
US Treasury Bond
Futures |
BNP Paribas Bond Futures US Tsy 5Y ER
Index |
|
5‑Year US Treasury
Note |
BNP Paribas AUD 10Y Futures Index |
|
10‑Year Australian
Treasury Bond |
BNP Paribas AUD 3Y Futures Index |
|
3‑Year Australian
Treasury Bond |
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|
| |
BNP Paribas Index Components |
|
Futures Contract |
BNP Paribas Bond Futures Italy BTP 10Y ER
Index |
|
10‑Year BTP |
BNP Paribas Bond France OAT 10Y ER
Index |
|
10‑Year OAT |
BNP Paribas Bond Futures UK Long Gilt ER
Index |
|
Long Gilt |
BNP
Paribas Bond Futures Canada 10Y ER Index |
|
Ten
Year Government of Canada Bond |
|
| |
BNP Paribas Index Component |
|
Currency |
BNP Paribas EUR FX Spot Index |
|
European Euro
(EUR) |
BNP Paribas GBP FX Spot Index |
|
British Pound
(GBP) |
BNP Paribas CHF FX Spot Index |
|
Swiss Franc
(CHF) |
BNP Paribas JPY FX Spot Index |
|
Japanese Yen
(JPY) |
BNP Paribas AUD FX Spot Index |
|
Australian Dollar
(AUD) |
BNP Paribas NZD FX Spot Index |
|
New Zealand Dollar
(NZD) |
BNP
Paribas CAD FX Spot Index |
|
Canadian
Dollar (CAD) |
|
BNP Paribas Index Component —
Commodities |
BNP Paribas Rolling Futures G0 CL Index
(futures contract for West Texas Intermediate Crude Oil) |
BNP Paribas Rolling Futures G0 HO Index
(futures contract for Heating Oil) |
BNP Paribas Rolling Futures G0 QS Index
(futures contract for Gas Oil) |
BNP Paribas Rolling Futures G0 CO Index
(futures contract for Brent Crude Oil) |
BNP Paribas Rolling Futures G0 XB Index
(futures contract for Unleaded Gasoline) |
BNP Paribas Rolling Futures G0 NG Index
(futures contract for Natural Gas) |
BNP Paribas Rolling Futures G0 LA Index
(futures contract for London Metal Exchange – Aluminium) |
BNP Paribas Rolling Futures G0 HG Index
(futures contract for U.S. High Grade Copper) |
BNP Paribas Rolling Futures G0 LX Index
(futures contract for London Metal Exchange — Zinc) |
BNP Paribas Rolling Futures G0 LN Index
(futures contract for London Metal Exchange — Nickel) |
BNP Paribas Rolling Futures G0 LL Index
(futures contract for London Metal Exchange — Lead) |
BNP Paribas Rolling Futures G0 GC Index
(futures contract for Gold) |
BNP
Paribas Rolling Futures G0 SI Index (futures contract for
Silver) |
|
| |
BNP Paribas Index Component |
|
Credit Index Tracked |
BNP Paribas Investment Grade Europe 5Y
Credit Index |
|
Markit iTraxx Europe Main Index |
BNP Paribas High Yield Europe 5Y Credit
Index |
|
Markit iTraxx Europe Crossover
Index |
BNP Paribas Investment Grade US 5Y Credit
Index |
|
Markit CDX North America Investment
Grade Index |
BNP
Paribas High Yield US 5Y Credit Index |
|
Markit
CDX North America High Yield Index |
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
-208-
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield, and total return are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Collateralized
Debt Obligations Risk
• Commodities
Risk
• Confidential
Information Access Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Equity
Issuer Risk
• Foreign
Currency Risk |
|
• Foreign
Investing Risk
• High
Yield Risk
• Index
Risk
• Investment
Company and Exchange-Traded Fund Risk
• Large
Shareholder Risk
• Leveraging
Risk
• Limited
Operating History Risk
• Liquidity
Risk
• Loan
Risk
• Market
Risk
• Models
and Data Risk
• Mortgage-Backed
Securities Risk |
|
• Operational
and Information Security Risks
• Portfolio
Turnover Risk
• Restricted
Securities Risk
• Securities
or Sector Selection Risk
• Short
Position Risk
• Structured
Products and Structured Notes Risk
• Tax
Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Strategic Commodity Fund
The
DoubleLine Strategic Commodity Fund normally seeks to generate long term total
return through long and short exposures to commodity-related investments. The
commodities to which the Fund may have investment exposure may include, without
limitation, industrial metals (e.g.,
copper and nickel); precious metals (e.g., gold and silver); oil, gas and other
energy commodities (e.g., crude oil,
brent oil, gasoil, RBOB (reformulated blendstock for oxygenate blending) oil,
and heating oil); agricultural products (e.g., soybeans, sugar, and cotton); and
livestock (e.g., live cattle).
Commodity-related investments may include investments in commodities,
investments in instruments tied or related to one or more commodities or
commodity-related indices or investments in companies with direct or indirect
exposure to commodities (e.g., an
investment in an oil production company or a mining company). As of the date of
this Prospectus, the Fund expects to gain commodity-related investment exposure
primarily through derivatives contracts, securities, or other instruments that
provide a return tied to a commodities index, a basket of commodities, or a
single commodity. The Fund generally uses instruments that involve investment
leverage to achieve commodity exposures and expects to have, under normal
circumstances, investment exposure to commodities in an amount up to the value
of the Fund’s total assets.
The
Fund expects to obtain its commodities exposures through swap contracts, futures
contracts and/or other derivatives not requiring significant investments of the
Fund’s cash. As a result, the Fund expects to have free cash available to invest
in other assets. The Fund currently expects that those other investments will
comprise principally fixed-income investments. See “Fixed Income Investments”
below. It is possible that the Fund might lose money on both its commodity
exposures and on its fixed-income investments. The use of derivatives to gain
commodities exposure will create investment leverage in the Fund’s
portfolio.
The
Fund’s adviser, DoubleLine Alternatives, may use a variety of commodity-related
investment strategies in pursuing the Fund’s investment objective, including the
following principal approaches:
|
- |
|
Long Basket or Index-Related Exposure.
The Adviser may create one or more long commodity-related positions in the
Fund’s portfolio, representing what the Adviser considers from time to
time to be efficient, broad-based exposure to a number of commodities. For
example, the Adviser may identify one or more baskets or indexes of
commodities, which will typically be administered and maintained by a
third party, although the Adviser may provide recommendations to the
basket or index sponsor during the construction of the basket or index or
from time to time thereafter as to the exposures to be reflected in the
basket or index. In pursuit of this strategy, the Adviser will normally
attempt to replicate within the Fund’s portfolio the commodity exposures
of the basket or index. These basket- or index-based exposures will
typically comprise at least 50% of the Fund’s commodity exposures, and may
constitute as much as 100% of the Fund’s commodity exposures. The Adviser,
in its discretion, may add to or replace the baskets or indexes, or may
determine to implement the Fund’s investment program without relying on
any baskets or indexes. In the latter case, the Adviser would rely
principally on the investment techniques described under “Tactical
Commodity Exposure,” below. |
As
of the date of this Prospectus, the Adviser has licensed the right to use the
Morgan Stanley Backwardation-Focused Multi-Commodity Index (“BFMCISM”) (described below)
(the “Morgan Stanley Index”), and the
Fund invests in
-209-
derivative
instruments intended to provide exposure to the Morgan Stanley Index in
implementing this aspect of the Fund’s principal investment strategies. However,
the Adviser at any time may discontinue the use of the Morgan Stanley Index or
may use other commodities-related indices at any time and without notice or may
work with another index sponsor to create a custom commodities-related index.
There can be no assurance that the Fund will continue to use the Morgan Stanley
Index in implementing its principal investment strategies. For more information
regarding the Morgan Stanley Index, see “The Morgan Stanley Index” below.
|
- |
|
Tactical Commodity Exposure. The Adviser
may seek to generate additional returns or modify the Fund’s broad-based
commodities exposures by taking long and/or short positions in individual
commodities or in other baskets of commodities or commodity indexes. These
investments may be made in commodities, such as precious metals, that are
not represented in the basket or index of commodities through which the
Fund may be obtaining broad-based commodities exposures. The Adviser will
determine whether to take such positions based on the Adviser’s
quantitative models as well as the Adviser’s views of changing market,
economic and political factors, market fundamentals, macroeconomic trends,
and global or local events. The Adviser may also seek to pursue “market
neutral” returns by creating roughly equal “long” and “short” exposures on
different commodities of any kind. The Fund’s tactical commodity exposures
will be actively managed, and the allocation of the Fund’s assets to
various commodities will change over time, sometimes
rapidly. |
The
Fund may also employ commodity roll-timing strategies. “Rolling”
derivative-related exposure is the process by which the holder of a particular
derivative instrument (such as a futures contract) or other instrument providing
investment exposure will sell or close out the instrument on or before the
termination or expiration date and simultaneously purchase or enter into a new
instrument with identical terms except for a later termination date.
“Roll-timing” is a process by which the Fund may seek to add incremental return
through the timing of its commodity roll activities. For example, if the
structure of an index reflects the effect of derivative rolls in the markets,
the Fund might attempt to time its own roll activities to gain a pricing
advantage over the pricing reflected in the index. The Adviser may consider the
historical “backwardation” of commodity-related futures contracts in
constructing the Fund’s portfolio and as part of any roll-timing strategies it
uses. (Backwardation can occur when a futures contract calling for delivery of a
commodity in the future has a lower value than the current “spot” or market
price of the commodity. The value of such a futures contract may have the
potential to appreciate to the value of the underlying commodity’s spot price
(current market price) as the contract approaches expiration, although there can
be no assurance that it will.)
The Morgan Stanley Index. The Morgan Stanley
Index is expected to track the performance of futures contracts on eleven
commodities, selected by the Morgan Stanley Index Sponsor based on (i) the
contracts’ historical backwardation relative to other commodity-related futures
contracts and (ii) the contracts’ historical liquidity. Of the commodities
represented in the Morgan Stanley Index, currently five are in the energy
sector, two are in the industrial metals sector, and four are in the
agricultural sector or livestock sector. As of June 30, 2024, the Morgan
Stanley Index’s exposure was weighted approximately 34% to the energy sector,
35% to the industrial metals sector, 26% to the agricultural sector, and 5% to
the livestock sector. The Morgan Stanley Index’s actual exposure to futures
contracts and sectors will change throughout the year based on changes in the
market values of the futures contracts. The Morgan Stanley Index Sponsor also
may alter the commodities that comprise the Morgan Stanley Index or the
parameters that determine the futures contracts that comprise the Morgan Stanley
Index. The Morgan Stanley Index is normally rebalanced annually during the month
of January. In addition, the Morgan Stanley Index Sponsor may make interim
changes to the Morgan Stanley Index in its discretion if it determines that a
disruption event has occurred that requires modification of the Morgan Stanley
Index; such events may include, but are not limited to market or trading
disruptions in the commodities underlying the Morgan Stanley Index, changes in
law, or other events or circumstances beyond the reasonable anticipation or
control of the Morgan Stanley Index Sponsor.
The
Fund has historically entered into swap transactions, including those related to
the Morgan Stanley Index, with a limited number of counterparties and will
likely enter into swap transactions, including those related to the Morgan
Stanley Index, with a limited number of counterparties for the foreseeable
future. In selecting swap counterparties for the Fund, the Adviser will normally
consider a variety of factors, including, without limitation: cost; the quality,
reliability, and responsiveness of a counterparty; the operational compatibility
between a counterparty and the Adviser; and a counterparty’s
creditworthiness.
The
Adviser may seek to effect the Fund’s commodity-related investment strategies by
investing in a variety of instruments, such as total and excess return swaps,
futures contracts, options on futures, forward contracts, exchange traded
products, including exchange traded funds and exchange traded notes, structured
notes, common or preferred stocks of subsidiaries of the Fund that invest
directly or indirectly in commodities, and other investments intended to provide
long or short exposure to one or more commodities.
The
Fund expects that many of the instruments in which it will invest will involve
leverage. When the Fund utilizes leverage, small changes in the values of the
underlying commodity prices may result in significant changes in the values of
the Fund’s investments, and the Fund can lose significantly more than the amount
it invests in an instrument, or the margin it supplies to its counterparty on
the instrument.
-210-
Fixed Income Investments. The Fund will
normally create its commodities exposures using derivatives and other
instruments that allow the Fund to achieve those exposures without significant
upfront investment of cash. As a result, the Fund expects to have available to
it cash assets to invest in securities or other instruments. The Fund may invest
directly in debt instruments; alternatively, the Adviser may choose to invest
all or a portion of the Fund’s assets in one or more fixed income funds advised
by DoubleLine Capital or a related party of DoubleLine Capital. Fixed income
investments in which the Fund may invest include, by way of example,
(i) securities or other income-producing instruments issued or guaranteed
by the U.S. Government, its agencies, instrumentalities or sponsored
corporations (including inflation-protected securities); (ii) other investment
companies that invest principally in debt securities; or (iii) short-term
investments, such as commercial paper, repurchase agreements and money market
funds.
The
Adviser will normally seek to construct the fixed-income portion of the
investment portfolio for the Fund with a dollar-weighted average effective
duration of three years or less. Duration is a measure of the expected life of a
fixed income instrument that is used to determine the sensitivity of a
security’s price to changes in interest rates. Effective duration is a measure
of the Fund’s portfolio duration adjusted for the anticipated effect of interest
rate changes on bond and mortgage prepayment rates as determined by the
Adviser.
Under
normal circumstances, the Fund’s portfolio of fixed income investments is
expected to include primarily fixed income and other income-producing
instruments rated investment grade and unrated securities considered by the
Adviser to be of comparable credit quality. The Fund may, however, invest up to
20% of its total assets in fixed income and other income-producing instruments
rated below investment grade and those that are unrated but determined by the
Adviser to be of comparable credit quality.
Other Information. The Fund may pursue its
investment objective and obtain exposures to some or all of the asset classes
described in this Prospectus by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies, ETFs,
and domestic or foreign private investment vehicles, including investment
companies sponsored or managed by the Adviser or its related parties. The Fund
may from time to time invest in one or more subsidiary private investment
vehicles organized outside the United States that invest directly or indirectly
in commodities and commodity-related investments or in derivatives transactions
relating to commodities where the Adviser determines that it may benefit the
Fund if the subsidiary invests in those transactions. The investment objective
and strategies of any subsidiary the Fund invests in will be substantially
similar or identical to those of the Fund, except that the subsidiary will not
ordinarily expect to have significant cash assets available to invest in
securities or other instruments other than commodity-related investments. The
amount of the Fund’s investment in certain investment companies or investment
pools may be limited by law or by tax considerations.
Except
as expressly prohibited by the Fund’s Prospectus or its SAI, the Fund may make
any investment or use any investment strategy consistent with applicable law.
The Fund may engage in short sales, either to earn additional return or to hedge
existing investments. The Fund may enter into derivatives transactions of any
kind for hedging purposes or otherwise to gain, or reduce, long or short
exposure to one or more asset classes or issuers. A derivative is a financial
contract whose value depends upon or is derived from the value of one or more
underlying assets, reference rates, or indexes. These instruments include, among
others, options, futures contracts, forward currency contracts, swap agreements
and similar instruments. The Fund may use derivatives transactions with the
purpose or effect of creating investment leverage. Although the Fund reserves
the right to invest in derivatives of any kind, it currently expects that it may
use the following types of derivatives: futures contracts and options on futures
contracts, in order to gain efficient long or short investment exposures as an
alternative to cash investments or to hedge against portfolio exposures;
interest rate swaps, to gain indirect long or short exposures to interest rates,
issuers, or currencies, or to hedge against portfolio exposures; and total and
excess return swaps and credit derivatives (such as credit default swaps), put
and call options, and exchange-traded and structured notes, to take indirect
long or short positions on indexes, commodities, securities, currencies, or
other indicators of value, or to hedge against portfolio exposures. Any use of
derivatives strategies entails the risks of investing directly in the
securities, instruments or assets underlying the derivatives strategies, as well
as the risks of using derivatives generally, and in some cases the risks of
leverage, described in this Prospectus and in the Fund’s SAI. There is no limit
on the amount of the Fund’s assets that may be allocated to one or more
commodities, specific asset classes or market sectors, and the Fund may at times
have significant exposure to a single commodity or a limited number of
commodities. The Fund may invest without limit in obligations of issuers in any
country or group of countries, including emerging market countries, and
investments denominated in foreign currencies. The amount of the Fund’s
investment in a particular asset class, or the types of investments it may make
in a particular asset class, may be limited by tax considerations or limitations
imposed by applicable law.
The
Adviser may engage in active and frequent trading of the Fund’s portfolio
investments. To the extent that it does so, the Fund may incur greater
transaction costs and may make greater distributions of income and gains, which
will be taxable to shareholders who do not hold their shares through a
tax‑advantaged or tax‑deferred account. Any percentage limitation and
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requirement
as to investments will apply only at the time of an investment to which the
limitation or requirement is applicable and shall not be considered violated
unless an excess or deficiency occurs or exists immediately after and as a
result of such investment. Accordingly, any later increase or decrease resulting
from a change in values, net assets or other circumstances will not be
considered in determining whether any investment complies with the Fund’s
limitation or requirement.
Portfolio
investments may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio investments no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell target.
Although
a portion of the Fund’s assets may be invested in instruments the performance of
which is based on an index, the Fund’s overall portfolio is not designed to
replicate the performance of any index. The Fund’s performance will deviate,
potentially significantly, from the performance of any index used by the
Fund.
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield and total return, are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Cash
Position Risk
• Commodities
Risk
• Counterparty
Risk
• Debt
Securities Risks
• Derivatives
Risk
• Emerging
Market Country Risk
• Focused
Investment Risk
• Foreign
Investing Risk
• Index
Risk |
|
• Investment
Company and Exchange-Traded Fund Risk
• Large
Shareholder Risk
• Leveraging
Risk
• Liquidity
Risk
• Market
Risk
• Models
and Data Risk
• Operational
and Information Security Risks
• Securities
or Sector Selection Risk |
|
• Short
Position Risk
• Structured
Products and Structured Notes Risk
• Tax
Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Shiller Enhanced CAPE®
DoubleLine
Shiller Enhanced CAPE® seeks
total return (capital appreciation and current income) in excess of the
benchmark index, currently the S&P 500® Index, over a full market
cycle.
The
Fund will seek to use derivatives, or a combination of derivatives and direct
investments, to provide a return (before fees and expenses) that approximates
the performance of the Shiller Barclays CAPE® US Sector TR USD Index (the
“Index”). The Fund will also invest in a
portfolio of debt securities to seek to provide additional total return over the
long term. The Fund uses investment leverage as
part of its principal investment strategies. The Fund expects normally to invest
an amount approximately equal to its net assets directly in a portfolio of debt
securities while also maintaining notional exposure to the Index providing the
Fund with economic exposure to the Index in an amount up to the value of the
Fund’s net assets. As a result, the Fund’s total investment exposure (direct
investments in debt securities plus notional exposure to the Index) will
typically be equal to approximately 200% of the Fund’s NAV. It is possible that
the Fund could lose money on both its investments in debt securities and its
exposure to the Index at the same time.
The
Fund will normally use derivatives in an attempt to create an investment return
that approximates (before fees and expenses) the Index’s return. For example,
the Fund might enter into swap transactions or futures transactions designed to
provide the Fund a return before fees and expenses approximating the Index’s
return, including swap transactions or futures transactions where the reference
asset is the Index or a modified version of the Index, one or more components of
the Index, or an unrelated index or basket of securities. The transaction
pricing of any swap transaction will reflect a number of factors that will cause
the return on the swap transaction to underperform the Index. Please see “Index
Risk — Note regarding Index-Based Swaps” for more information. The Fund expects
to use only a small percentage of its assets to attain the desired exposure to
the Index because of the structure of the derivatives the Fund expects to use.
As a result, use of those derivatives
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along
with the Fund’s investments in a portfolio of debt securities will create
investment leverage in the Fund’s portfolio. In certain cases, derivatives based
on the Index or that use the Index as the reference asset might be unavailable
or the pricing of those derivatives might be unfavorable; in those cases, the
Fund might attempt to approximate the Index’s return by purchasing some or all
of the securities comprising the Index, or portions of the Index, at the time.
If the Fund at any time invests directly in the securities comprising the Index,
the assets so invested will be unavailable for investment in debt instruments,
and the Fund’s ability to pursue its investment strategy fully and achieve its
investment objective may be limited.
To
the extent use of the above described derivatives strategy leaves a substantial
portion of the Fund’s assets available for other investment by the Fund, the
Fund expects to invest those assets in a portfolio of debt instruments managed
by DoubleLine Capital, the Fund’s sub‑adviser, to seek to provide additional
total return over the long term.
The Shiller Barclays CAPE® US Sector TR USD Index. The Index incorporates
the principles of long-term investing distilled by Dr. Robert Shiller and
expressed through the CAPE® (Cyclically Adjusted Price
Earnings) ratio (the “CAPE® Ratio”). The classic CAPE® Ratio assesses equity market
valuations and averages ten years of inflation adjusted earnings to account for
earnings and market cycles. Traditional valuation measures, such as the
price-earnings (PE) ratio, by contrast, typically rely on earnings information
from only the past year. The Index uses a relative version of the classic
CAPE® Ratio to identify undervalued
sectors while also seeking to exclude a sector that may appear undervalued, but
which may have also had recent relative price underperformance due to
fundamental issues with the sector that may negatively affect the sector’s
long-term total return. There can be no assurance that the Index will provide a
better measure of value than more traditional measures, over any period or over
the long term.
The
Index’s composition is determined monthly. Each month, the Index’s methodology
ranks eleven US sectors based on a modified CAPE® Ratio (a “value” factor) and
a twelve-month price momentum factor (a “momentum” factor). Each US sector is
represented by a sector ETF that tracks a sector index, which is an ETF in the
family of Select Sector SPDR Funds or, in the case of the real estate sector,
the iShares Dow Jones U.S. Real Estate Index Fund. The Index methodology selects
the five US sectors with the lowest modified CAPE® Ratio — the sectors that are
the most undervalued according to the CAPE® Ratio. Only four of these
five sectors, however, end up in the Index for a given month, as the sector with
the worst 12‑month price momentum among the five selected sectors is eliminated.
The Index methodology allocates an equally weighted long (i.e., investment) exposure to the four
remaining US sectors. As of the date of this Prospectus, the eleven sectors that
may be selected by the Index methodology include Communication Services,
Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care,
Industrials, Materials, Technology, Utilities and Real Estate.
The
Select Sector SPDR Funds are typically comprised of issuers represented in the
S&P 500 Index. As of June 30, 2024, the issuers represented in the
S&P 500 Index had market capitalizations ranging from $5.414 billion to
$3.322 trillion.
Through
the Fund’s investments related to the Index, the Fund will have focused
exposures to the sectors making up the Index at any given time. As a result, the
Fund’s NAV may be affected to a greater degree by factors affecting those
sectors or industries than a fund that invests more broadly.
If
derivatives designed to provide the Fund a return approximating the Index’s
return become unavailable or for other reasons, DoubleLine Alternatives may seek
investment exposure to the sectors comprising the Index by investing directly in
some or all of the sector ETFs or securities that correspond to those sectors,
or by utilizing derivatives that are designed to provide long exposure to either
the sector ETFs themselves or the indices that the sector ETFs seek to track.
DoubleLine Alternatives or the Fund’s Board of Trustees may in their sole
discretion and without advance notice to shareholders select, in place of the
Index, another index (such as the S&P 500® Index) or a basket of
investments. The Fund may gain exposure to any substitute index or basket of
investments in any manner DoubleLine Alternatives determines appropriate,
including those described above with respect to how the Fund may obtain exposure
to the Index.
Although
a portion of the Fund’s assets may be invested in instruments the performance of
which is based on an index, the Fund’s overall portfolio includes other
investments. Therefore, the Fund is not designed to replicate the performance of
any index. The Fund’s performance will deviate, potentially significantly, from
the performance of any index used by the Fund.
During
the Fund’s most recent fiscal year, the Fund entered into swap transactions
related to the Index with a limited number of counterparties. The Fund will
likely enter into swap transactions related to the Index with a limited number
of counterparties for the foreseeable future. In selecting swap counterparties
for the Fund, DoubleLine Alternatives will normally consider a variety of
factors, including, without limitation: cost; the quality, reliability, and
responsiveness of a counterparty; the operational compatibility between a
counterparty and DoubleLine Alternatives; and a counterparty’s
creditworthiness.
The Fund’s Investments in Debt Instruments.
Under normal circumstances, to the extent use of the above-described
derivatives strategy leaves a substantial portion of the Fund’s assets available
for other investment by the Fund, the Fund
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intends
to invest those assets in a portfolio of debt instruments managed by DoubleLine
Capital to seek to provide additional total return over the long term. The Fund
may invest directly in debt instruments; alternatively, DoubleLine Capital may
choose to invest all or a portion of the Fund’s assets in one or more fixed
income funds advised by DoubleLine Capital or a related party of DoubleLine
Capital. Debt instruments in which the Fund may invest include, by way of
example, (i) securities or other income-producing instruments issued or
guaranteed by the U.S. Government, its agencies, instrumentalities or sponsored
corporations (including inflation-protected securities); (ii) corporate
obligations; (iii) mortgage-backed securities (including commercial and
residential mortgage-backed securities) and other asset-backed securities, CMOs,
government mortgage pass-through securities, multiclass pass-through securities,
private mortgage pass-through securities, stripped mortgage securities (e.g., interest-only and principal-only
securities), and inverse floaters; (iv) CDOs, including CLOs;
(v) foreign securities (corporate and government, including foreign hybrid
securities), including emerging market securities; (vi) fixed and floating
rate loans of any kind (including, among others, bank loans, assignments,
participations, senior loans, second lien or other subordinated or unsecured
fixed or floating rate loans, debtor‑in‑possession loans, exit facilities,
delayed funding loans and revolving credit facilities), which may take the form
of loans that contain fewer or less restrictive constraints on the borrower than
certain other types of loans (“covenant-lite” loans); (vii) municipal securities
and other debt obligations issued by states, local governments, and
government-sponsored entities, including their agencies, authorities, and
instrumentalities; (viii) inflation-indexed bonds; (ix) convertible
securities; (x) preferred securities; (xi) REIT securities;
(xii) payment‑in‑kind bonds; (xiii) zero‑coupon bonds;
(xiv) custodial receipts, cash and cash equivalents; (xv) short-term,
high quality investments, including, for example, commercial paper, bankers’
acceptances, certificates of deposit, bank time deposits, repurchase agreements,
and investments in money market mutual funds or similar pooled investments; and
(xvi) other instruments bearing fixed, floating, or variable interest rates
of any maturity. The Fund may invest in any level of the capital structure of an
issuer of mortgage-backed or asset-backed securities, but does not intend to
invest in the equity or “first loss” tranche of such investments.
In
managing the Fund’s portfolio of debt instruments under normal market
conditions, the portfolio managers intend to seek to construct an investment
portfolio with an overall dollar-weighted average effective duration of between
one year and three years. Duration is a measure of the expected life of a fixed
income instrument that is used to determine the sensitivity of a security’s
price to changes in interest rates. Effective duration is a measure of the
Fund’s portfolio duration adjusted for the anticipated effect of interest rate
changes on bond and mortgage prepayment rates as determined by DoubleLine
Capital. The longer a portfolio’s effective duration, the more sensitive it will
be to changes in interest rates. The effective duration of the Fund’s portfolio
of debt instruments may vary materially from its target range, from time to
time, and there is no assurance that the effective duration of the portfolio
will always be within its target range. DoubleLine Capital monitors the
effective duration of the Fund’s portfolio of debt instruments to seek to assess
and, in its discretion, adjust the Fund’s exposure to interest rate risk.
Please
see “Other Information Regarding Principal Investment Strategies” on page 220 of
this Prospectus. Mortgage-backed securities include, among others, government
mortgage pass-through securities, CMOs, multiclass pass-through securities,
private mortgage pass-through securities, stripped mortgage securities and
inverse floaters. Asset-backed securities are structured like mortgage-backed
securities, but instead of mortgage loans or interests in mortgage loans, the
underlying assets may include a wide variety of items, including, without
limitation, motor vehicle installment sales or installment loan contracts,
leases of various types of real, personal and other property (including those
relating to aircrafts, containers, railroads, telecommunication, energy, and/or
other infrastructure assets and infrastructure-related assets), receivables from
credit card agreements and automobile finance agreements, home equity sharing
agreements, student loans, consumer loans, home equity loans, mobile home loans,
boat loans, and income from other non‑mortgage‑related income streams, such as
income from business and small business loans, project finance loans, renewable
energy projects, personal financial assets, timeshare receivables and franchise
rights.
The
Fund may invest in debt instruments of any credit quality, which may include
securities that are at the time of investment unrated or rated BB+ or lower by
S&P or Ba1 or lower by Moody’s or the equivalent by any other nationally
recognized statistical rating organization or unrated securities judged by
DoubleLine Capital to be of comparable quality. Corporate bonds and certain
other fixed income instruments rated below investment grade, or such instruments
that are unrated and determined by DoubleLine Capital to be of comparable
quality, are high yield, high risk bonds, commonly known as “junk bonds.”
Generally, lower-rated debt securities offer a higher yield than higher-rated
debt securities of similar maturity but are subject to greater risk of loss of
principal and interest than higher-rated securities of similar maturity. The
Fund may invest up to 331/3% of its net assets in junk
bonds, bank loans and assignments rated below investment grade or unrated but
determined by DoubleLine Capital to be of comparable quality, and credit default
swaps of companies in the high yield universe. DoubleLine Capital does not
consider the term “junk bonds” to include any mortgage-backed securities or any
other asset-backed securities, regardless of their credit rating or credit
quality, and accordingly may invest without limit in such investments.
Investment
in secured or unsecured fixed or floating rate loans arranged through private
negotiations between a borrowing corporation, government or other entity and one
or more financial institutions may be in the form of participations in loans or
assignments of all or a portion of loans from third parties.
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The
Fund may invest a portion of its assets in inverse floater securities and
interest-only and principal-only securities. An inverse floater is a type of
instrument, which may be backed by or related to a mortgage-backed security,
that bears a floating or variable interest rate that moves in the opposite
direction to movements in interest rates generally or the interest rate on
another security or index. Because an inverse floater inherently carries
financial leverage in its coupon rate, it can change very substantially in value
in response to changes in interest rates. Interest-only and principal-only
securities may also be backed by or related to a mortgage-backed security.
Holders of interest-only securities are entitled to receive only the interest on
the underlying obligations but none of the principal, while holders of
principal-only securities are entitled to receive all of the principal but none
of the interest on the underlying obligations. As a result, they are highly
sensitive to actual or anticipated changes in prepayment rates on the underlying
securities.
The
Fund may invest a portion of its assets in debt instruments (including hybrid
securities) issued or guaranteed by companies, financial institutions and
government entities in emerging market countries. An “emerging market country”
is a country that, at the time the Fund invests in the related fixed income
instruments, is classified as an emerging or developing economy by any
supranational organization such as an institution in the World Bank Group or the
United Nations, or an agency thereof, or is considered an emerging market
country for purposes of constructing a major emerging market securities
index.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including investment companies sponsored or managed by an Adviser or its
related parties. The Fund may engage in short sales or take short positions,
either to earn additional return or to hedge existing investments. The amount of
the Fund’s investments in certain investment companies may be limited by law or
by tax considerations.
In
managing the Fund’s debt instruments, the portfolio managers typically use a
controlled risk approach. The techniques of this approach attempt to control the
principal risk components of the fixed income markets and may include, among
other factors, consideration of DoubleLine Capital’s view of the following: the
potential relative performance of various market sectors, security selection
available within a given sector the risk/reward equation for different asset
classes, liquidity conditions in various market sectors, the shape of the yield
curve and projections for changes in the yield curve, potential fluctuations in
the overall level of interest rates, and current fiscal policy.
The
portfolio managers utilize active asset allocation in managing the Fund’s
investments in debt instruments.
Except
as expressly prohibited by the Fund’s Prospectus or its SAI, the Fund may make
any investment or use any investment strategy consistent with applicable law.
The Fund may engage in short sales, either to earn additional return or to hedge
existing investments. The Fund may enter into derivatives transactions of any
kind for hedging purposes or otherwise to gain, or reduce, long or short
exposure to one or more asset classes or issuers. The Fund may use derivatives
transactions with the purpose or effect of creating investment leverage.
Although the Fund reserves the right to invest in derivatives of any kind, it
currently expects that it may use the following types of derivatives: excess
return swaps, total return swaps, futures contracts and options on futures
contracts, in order to gain efficient long or short investment exposures as an
alternative to cash investments or to hedge against portfolio exposures;
interest rate swaps, to gain indirect long or short exposures to interest rates,
issuers, or currencies, or to hedge against portfolio exposures; and excess
return swaps, total return swaps and credit derivatives (such as credit default
swaps), put and call options, and exchange-traded and structured notes, to take
indirect long or short positions on indexes, securities, currencies, commodities
or other indicators of value, or to hedge against portfolio exposures. Any use
of derivatives strategies entails the risks of investing directly in the
securities, instruments or assets underlying the derivatives strategies, as well
as the risks of using derivatives generally, and in some cases the risks of
leverage, described in this Prospectus and in the Fund’s SAI.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell target.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
-215-
Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield and total return, are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Collateralized
Debt Obligations Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Equity
Issuer Risk
• Financial
Services Risk
• Foreign
Currency Risk |
|
• Foreign
Investing Risk
• High
Yield Risk
• Index
Risk
• Inflation-Indexed
Bond Risk
• Investment
Company and Exchange-Traded Fund Risk
• Large
Shareholder Risk
• Leveraging
Risk
• Liquidity
Risk
• Loan
Risk
• Market
Capitalization Risk
• Market
Risk
• Mortgage-Backed
Securities Risk |
|
• Models
and Data Risk
• Operational
and Information Security Risks
• Portfolio
Turnover Risk
• Real
Estate Sector Risk
• Securities
or Sector Selection Risk
• Short
Position Risk
• Structured
Products and Structured Notes Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
DoubleLine Shiller Enhanced International CAPE®
DoubleLine
Shiller Enhanced International CAPE® seeks
total return (capital appreciation and current income) in excess of the
benchmark index, currently the MSCI Europe Index, over a full market
cycle.
The
Fund will seek to use derivatives, or a combination of derivatives and direct
investments, to provide a return (before fees and expenses) that approximates
the performance of the Shiller Barclays CAPE® Europe Sector Net TR NoC USD
Index (the “Index”). The Fund, through
its investment exposure to the Index, will have exposure to investments tied
economically to a number of countries throughout the world. The Index is
currently composed of issuers in fifteen different countries, generally in
Europe; the number and location of countries represented in the Index may change
without notice. The Fund will also invest in a portfolio of debt securities to
seek to provide additional total return over the long term. The Fund uses investment leverage as part of its
principal investment strategies. The
Fund expects normally to invest an amount approximately equal to its net assets
directly in a portfolio of debt securities while also maintaining notional
exposure to the Index providing the Fund with economic exposure to the Index in
an amount up to the value of the Fund’s net assets. As a result, the Fund’s
total investment exposure (direct investments in debt securities plus notional
exposure to the Index) will typically be equal to approximately 200% of the
Fund’s NAV. The actual notional amounts of derivatives used for this purpose may
be greater than the desired amount of Index exposure, since in some cases it may
be necessary to use additional derivatives to obtain the desired currency
exposure. It is possible that the Fund could lose money on both its investments
in debt securities and its exposure to the Index, including through the Index’s
exposure to non‑U.S. currencies, all at the same time.
The
Fund will normally use derivatives in an attempt to create an investment return
that approximates (before fees and expenses) the Index’s return. For example,
the Fund might enter into swap transactions or futures transactions designed to
provide the Fund a return before fees and expenses approximating the Index’s
return, including swap transactions or futures transactions where the reference
asset is the Index or a modified version of the Index, one or more components of
the Index or an unrelated index or basket of securities. The transaction pricing
of any swap transaction will reflect a number of factors that will cause the
return on the swap transaction to underperform the Index. Please see “Index Risk
— Note regarding Index-Based Swaps” for more information. The Fund expects to
use only a small percentage of its assets to attain the desired exposure to the
Index because of the structure of the derivatives the Fund expects to use. As a
result, use of those derivatives along with the Fund’s investments in a
portfolio of debt securities will create investment leverage in the Fund’s
portfolio. In certain cases, derivatives based on the Index or that use the
Index as the reference asset might be unavailable or the pricing of those
derivatives might be unfavorable; in those cases, the Fund might attempt to
approximate the Index’s return by purchasing some or all of the securities
comprising the Index, or portions of the Index, at the time. If the Fund at any
time invests directly in the securities comprising the Index, the assets so
invested will be unavailable for investment in debt instruments, and the Fund’s
ability to pursue its investment strategy fully and achieve its investment
objective may be limited.
-216-
To
the extent use of the above described derivatives strategy leaves a substantial
portion of the Fund’s assets available for other investment by the Fund, the
Fund expects to invest those assets in a portfolio of debt instruments managed
by the Adviser to seek to provide additional total return over the long
term.
The Shiller Barclays CAPE® Europe Sector Net TR NoC USD Index. The Index
incorporates the principles of long-term investing distilled by Dr. Robert
Shiller and expressed through the CAPE® Ratio. The classic CAPE® Ratio assesses equity market
valuations and averages ten years of inflation adjusted earnings to account for
earnings and market cycles. Traditional valuation measures, such as the
price-earnings (PE) ratio, by contrast, typically rely on earnings information
from only the past year. The Index uses a relative version of the classic
CAPE® Ratio to identify
undervalued sectors while also seeking to exclude a sector that may appear
undervalued, but which may have also had recent relative price underperformance
due to fundamental issues with the sector that may negatively affect the
sector’s long-term total return. There can be no assurance that the Index will
provide a better measure of value than more traditional measures, over any
period or over the long term.
The
Index’s composition is determined monthly. Each month, the Index’s methodology
ranks ten sectors within the European equity markets based on a modified
CAPE® Ratio (a “value”
factor) and a twelve-month price momentum factor (a “momentum” factor). The
Index methodology selects the five European sectors with the lowest modified
CAPE® Ratio — the sectors
that are the most undervalued according to the CAPE® Ratio. Only four of these
five sectors, however, end up in the Index for a given month, as the sector with
the worst 12‑month price momentum among the five selected sectors is eliminated.
The Index methodology allocates an equally weighted long (i.e., investment) exposure to the four
remaining European sectors. The sectors are typically comprised of issuers
represented in the MSCI Europe Index, which captures large and mid‑cap stocks
across 15 developed market countries in Europe. As of June 30, 2024, the
ten sectors that may be selected include Consumer Discretionary, Consumer
Staples, Energy, Financials incorporating Real Estate, Healthcare, Industrial,
Materials, Communication Services, Information Technology and Utilities.
As
of June 30, 2024, the issuers represented in the MSCI Europe Index had
market capitalizations ranging from EUR 2.140 billion to EUR
440.439 billion.
The
Index is denominated in U.S. dollars even though most or all of the securities
comprising the Index may be denominated in foreign currencies. The Fund’s
exposure to the Index may be achieved through derivative instruments providing
returns either in U.S. dollars or in one or more foreign currencies. The Fund
may enter into Index-related derivative instruments denominated either in U.S.
dollars or in foreign currencies. If the Fund enters into Index-related
derivative instruments denominated in foreign currencies, it will likely engage
in foreign currency transactions to produce an Index-based return denominated in
U.S. dollars.
Through
the Fund’s investments related to the Index, the Fund will have focused
exposures to the sectors making up the Index at any given time. As a result, the
Fund’s NAV may be affected to a greater degree by factors affecting those
sectors or industries than a fund that invests more broadly.
If
derivatives designed to provide the Fund a return approximating the Index’s
return become unavailable or for other reasons, the Adviser may seek investment
exposure to the sectors comprising the Index by investing directly in some or
all of the securities that correspond to those sectors. The Adviser or the
Fund’s Board of Trustees may in their sole discretion and without advance notice
to shareholders select, in place of the Index, another index (such as the MSCI
Europe Index) or a basket of investments. The Fund may gain exposure to any
substitute index or basket of investments in any manner the Adviser determines
appropriate, including those described above with respect to how the Fund may
obtain exposure to the Index.
Although
a portion of the Fund’s assets may be invested in instruments the performance of
which is based on an index, the Fund’s overall portfolio includes other
investments. Therefore, the Fund is not designed to replicate the performance of
any index. The Fund’s performance will deviate, potentially significantly, from
the performance of any index used by the Fund.
During
the Fund’s most recent fiscal year, the Fund entered into swap transactions
related to the Index with a limited number of counterparties. The Fund will
likely enter into swap transactions related to the Index with a single or a
limited number of counterparties for the foreseeable future. In selecting swap
counterparties for the Fund, the Adviser will normally consider a variety of
factors, including, without limitation: cost; the quality, reliability, and
responsiveness of a counterparty; the operational compatibility between a
counterparty and the Adviser; and a counterparty’s creditworthiness.
The Fund’s Investments in Debt Instruments.
Under normal circumstances, to the extent use of the above-described derivatives
strategy leaves a substantial portion of the Fund’s assets available for other
investment by the Fund, the Fund intends to invest those assets in a portfolio
of debt instruments managed by the Adviser to seek to provide additional total
return over the long term. The Fund may invest directly in debt instruments;
alternatively, the Adviser may choose to invest all
-217-
or
a portion of the Fund’s assets in one or more fixed income funds advised by
DoubleLine Capital or a related party of DoubleLine Capital. Debt instruments in
which the Fund may invest include, by way of example, (i) securities or
other income-producing instruments issued or guaranteed by the U.S. Government,
its agencies, instrumentalities or sponsored corporations (including
inflation-protected securities); (ii) corporate obligations;
(iii) mortgage-backed securities (including commercial and residential
mortgage-backed securities) and other asset-backed securities, CMOs, government
mortgage pass-through securities, multiclass pass-through securities, private
mortgage pass-through securities, stripped mortgage securities (e.g., interest-only and principal-only
securities), and inverse floaters; (iv) CDOs, including CLOs;
(v) foreign securities (corporate and government, including foreign hybrid
securities), including emerging market securities; (vi) fixed and floating
rate loans of any kind (including, among others, bank loans, assignments,
participations, senior loans, second lien or other subordinated or unsecured
fixed or floating rate loans, debtor‑in‑possession loans, exit facilities,
delayed funding loans and revolving credit facilities), which may take the form
of loans that contain fewer or less restrictive constraints on the borrower than
certain other types of loans (“covenant-lite” loans); (vii) municipal
securities and other debt obligations issued by states, local governments, and
government-sponsored entities, including their agencies, authorities, and
instrumentalities; (viii) inflation-indexed bonds; (ix) convertible
securities; (x) preferred securities; (xi) REIT securities;
(xii) payment‑in‑kind bonds; (xiii) zero‑coupon bonds;
(xiv) custodial receipts, cash and cash equivalents; (xv) short-term,
high quality investments, including, for example, commercial paper, bankers’
acceptances, certificates of deposit, bank time deposits, repurchase agreements,
and investments in money market mutual funds or similar pooled investments; and
(xvi) other instruments bearing fixed, floating, or variable interest rates
of any maturity. The Fund may invest in any level of the capital structure of an
issuer of mortgage-backed or asset-backed securities, but does not intend to
invest in the equity or “first loss” tranche of such investments.
In
managing the Fund’s portfolio of debt instruments, under normal market
conditions the portfolio managers intend to seek to construct an investment
portfolio with an overall dollar-weighted average effective duration of between
one and three years. Duration is a measure of the expected life of a fixed
income instrument that is used to determine the sensitivity of a security’s
price to changes in interest rates. Effective duration is a measure of the
Fund’s portfolio duration adjusted for the anticipated effect of interest rate
changes on bond and mortgage prepayment rates as determined by the Adviser. The
longer a portfolio’s effective duration, the more sensitive it will be to
changes in interest rates. The effective duration of the Fund’s portfolio of
debt instruments may vary materially from its target range, from time to time,
and there is no assurance that the effective duration of the portfolio will
always be within its target range. The Adviser monitors the effective duration
of the Fund’s portfolio of debt instruments to seek to assess and, in its
discretion, adjust the Fund’s exposure to interest rate risk.
Please
see “Other Information Regarding Principal Investment Strategies” on page 220 of
this Prospectus. Mortgage-backed securities include, among others, government
mortgage pass-through securities, CMOs, multiclass pass-through securities,
private mortgage pass-through securities, stripped mortgage securities and
inverse floaters. Asset-backed securities are structured like mortgage-backed
securities, but instead of mortgage loans or interests in mortgage loans, the
underlying assets may include a wide variety of items, including, without
limitation, motor vehicle installment sales or installment loan contracts,
leases of various types of real, personal and other property (including those
relating to aircrafts, containers, railroads, telecommunication, energy, and/or
other infrastructure assets and infrastructure-related assets), receivables from
credit card agreements, and automobile finance agreements, home equity sharing
agreements, student loans, consumer loans, home equity loans, mobile home loans,
boat loans, and income from other non‑mortgage‑related income streams, such as
income from business and small business loans, project finance loans, renewable
energy projects, personal financial assets, timeshare receivables and franchise
rights.
The
Fund may invest in debt instruments of any credit quality, which may include
securities that are at the time of investment unrated or rated BB+ or lower by
S&P or Ba1 or lower by Moody’s or the equivalent by any other nationally
recognized statistical rating organization or unrated securities judged by the
Adviser to be of comparable quality. Corporate bonds and certain other fixed
income instruments rated below investment grade, or such instruments that are
unrated and determined by the Adviser to be of comparable quality, are high
yield, high risk bonds, commonly known as “junk bonds.” Generally, lower-rated
debt securities offer a higher yield than higher-rated debt securities of
similar maturity but are subject to greater risk of loss of principal and
interest than higher-rated securities of similar maturity. The Fund may invest
up to 331/3% of its net
assets in junk bonds, bank loans and assignments rated below investment grade or
unrated but determined by the Adviser to be of comparable quality, and credit
default swaps of companies in the high yield universe. The Adviser does not
consider the term “junk bonds” to include any mortgage-backed securities or any
other asset-backed securities, regardless of their credit rating or credit
quality, and accordingly may invest without limit in such investments.
Investment
in secured or unsecured fixed or floating rate loans arranged through private
negotiations between a borrowing corporation, government or other entity and one
or more financial institutions may be in the form of participations in loans or
assignments of all or a portion of loans from third parties.
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The
Fund may invest a portion of its assets in inverse floater securities and
interest-only and principal-only securities. An inverse floater is a type of
instrument, which may be backed by or related to a mortgage-backed security,
that bears a floating or variable interest rate that moves in the opposite
direction to movements in interest rates generally or the interest rate on
another security or index. Because an inverse floater inherently carries
financial leverage in its coupon rate, it can change very substantially in value
in response to changes in interest rates. Interest-only and principal-only
securities may also be backed by or related to a mortgage-backed security.
Holders of interest-only securities are entitled to receive only the interest on
the underlying obligations but none of the principal, while holders of
principal-only securities are entitled to receive all of the principal but none
of the interest on the underlying obligations. As a result, they are highly
sensitive to actual or anticipated changes in prepayment rates on the underlying
securities.
The
Fund may invest a portion of its assets in debt instruments (including hybrid
securities) issued or guaranteed by companies, financial institutions and
government entities in emerging market countries. An “emerging market country”
is a country that, at the time the Fund invests in the related fixed income
instruments, is classified as an emerging or developing economy by any
supranational organization such as an institution in the World Bank Group or the
United Nations, or an agency thereof, or is considered an emerging market
country for purposes of constructing a major emerging market securities
index.
The
Fund may pursue its investment objective and obtain exposures to some or all of
the asset classes described above by investing in other investment companies,
including, for example, other open‑end or closed‑end investment companies and
ETFs, including those sponsored or managed by the Adviser or its related
parties. The Fund may engage in short sales or take short positions, either to
earn additional return or to hedge existing investments.
In
managing the Fund’s debt instruments, the portfolio managers typically use a
controlled risk approach. The techniques of this approach attempt to control the
principal risk components of the fixed income markets and may include, among
other factors, consideration of the Adviser’s view of the following: the
potential relative performance of various market sectors, security selection
available within a given sector, the risk/reward equation for different asset
classes, liquidity conditions in various market sectors, the shape of the yield
curve and projections for changes in the yield curve, potential fluctuations in
the overall level of interest rates, and current fiscal policy.
The
portfolio managers utilize active asset allocation in managing the Fund’s
investments in debt instruments.
Except
as expressly prohibited by the Fund’s Prospectus or its SAI, the Fund may make
any investment or use any investment strategy consistent with applicable law.
The Fund may engage in short sales, either to earn additional return or to hedge
existing investments. The Fund may enter into derivatives transactions of any
kind for hedging purposes or otherwise to gain, or reduce, long or short
exposure to one or more asset classes or issuers. The Fund may use derivatives
transactions with the purpose or effect of creating investment leverage.
Although the Fund reserves the right to invest in derivatives of any kind, it
currently expects that it may use the following types of derivatives: excess
return swaps, total return swaps, futures contracts and options on futures
contracts, in order to gain efficient long or short investment exposures as an
alternative to cash investments or to hedge against portfolio exposures;
interest rate swaps, to gain indirect long or short exposures to interest rates,
issuers, or currencies, or to hedge against portfolio exposures; and excess
return swaps, total return swaps and credit derivatives (such as credit default
swaps), put and call options, and exchange-traded and structured notes, to take
indirect long or short positions on indexes, securities, currencies, commodities
or other indicators of value, or to hedge against portfolio exposures. Any use
of derivatives strategies entails the risks of investing directly in the
securities, instruments or assets underlying the derivatives strategies, as well
as the risks of using derivatives generally, and in some cases the risks of
leverage, described in this Prospectus and in the Fund’s SAI.
Portfolio
securities may be sold at any time. By way of example, sales may occur when the
Fund’s portfolio managers determine to take advantage of what the portfolio
managers consider to be a better investment opportunity, when the portfolio
managers believe the portfolio securities no longer represent relatively
attractive investment opportunities, when the portfolio managers perceive
deterioration in the credit fundamentals of the issuer, or when the individual
security has reached the portfolio managers’ sell target.
Any
percentage limitation and requirement as to investments will apply only at the
time of an investment to which the limitation or requirement is applicable and
shall not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Accordingly, any later
increase or decrease resulting from a change in values, net assets or other
circumstances will not be considered in determining whether any investment
complies with the Fund’s limitation or requirement.
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Principal
Risks
The
Fund’s principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in the Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. You should read all of the risk
information presented below carefully, because any one or more of these risks
may result in losses to the Fund.
It is possible to lose money on an investment in the
Fund. Among the principal risks of investing in the Fund, which could
adversely affect its NAV, yield and total return, are (in alphabetical order)
the following:
|
|
|
| |
• Active
Management Risk
• Asset-Backed
Securities Investment Risk
• Collateralized
Debt Obligations Risk
• Counterparty
Risk
• Debt
Securities Risks
• Defaulted
Securities Risk
• Derivatives
Risk
• Emerging
Market Country Risk
• Equity
Issuer Risk
• Financial
Services Risk
• Foreign
Currency Risk
• Foreign
Investing Risk |
|
• High
Yield Risk
• Index
Risk
• Inflation-Indexed
Bond Risk
• Investment
Company and Exchange-Traded Fund Risk
• Large
Shareholder Risk
• Leveraging
Risk
• Liquidity
Risk
• Loan
Risk
• Market
Capitalization Risk
• Market
Risk
• Models
and Data Risk
• Mortgage-Backed
Securities Risk |
|
• Operational
and Information Security Risk
• Portfolio
Turnover Risk
• Real
Estate Sector Risk
• Securities
or Sector Selection Risk
• Short
Position Risk
• Structured
Products and Structured Notes Risk
• U.S.
Government Securities Risk
• Valuation
Risk |
Please
see the section titled “Principal Risks” below for more information regarding
these risks.
Other
Information Regarding Principal Investment Strategies
All percentage limitations and requirements as to
investments will apply only at the time of an investment to which the limitation
or requirement is applicable and shall not be considered violated unless an
excess or deficiency occurs or exists immediately after and as a result of such
investment. Accordingly, any later increase or decrease resulting from a change
in values, net assets or other circumstances will not be considered in
determining whether any investment complies with a Fund’s limitation or
requirement.
For purposes of applying any limitations on a Fund’s
investments in such bonds, when an investment is rated by more than one
nationally recognized securities rating organization, the Adviser will utilize
the highest credit rating for that security for purposes of applying any
investment policies that incorporate credit ratings (e.g., a policy to invest a
certain percentage of a Fund’s assets in securities rated investment grade)
except where a Fund has a policy to invest a certain minimum percentage of its
assets in securities that are rated below investment grade, in which case the
Fund will utilize the lowest credit rating that applies to that investment.
Generally, this Prospectus uses the terms debt
security, debt obligation, debt instrument, bond, fixed-income instrument, fixed-income
obligation and fixed-income security interchangeably. These terms should be
considered to include any evidence of indebtedness, including, by way of
example, a security or instrument having one or more of the following
characteristics: a security or instrument issued at a discount to its face
value, a security or instrument that pays interest at a fixed, floating, or
variable rate, or a security or instrument with a stated principal amount that
requires repayment of some or all of that principal amount to the holder of the
security. Each of these terms is interpreted broadly and would include any
instrument or security evidencing a payment obligation, such as an IOU.
Interests representing corporate ownership may also be a debt obligation for
these purposes if, for example, the interest represents an indirect or
derivative interest in one or more payment obligations. For this purpose, the
terms also include instruments that are intended to provide one or more of the
characteristics of a direct investment in one or more debt securities. This
Prospectus also uses the term hybrid security to refer to a security that
DoubleLine Capital LP, DoubleLine Alternatives LP or a third party
creates by combining an income-producing debt security and the right to receive
payment based on the change in the price of an equity security.
Principal
Risks
Risk
is the chance that you will lose money on your investment or that it will not
earn as much as you expect. In general, the greater the risk, the more money
your investment may earn for you — and the more you can lose. The value of each Fund’s shares will vary as its
portfolio investments increase or decrease in value. Therefore, the value of
your investment in a Fund could go down as well as up. You can lose money by
investing in a Fund. When you sell your shares of a Fund, they could be
worth more or less than what you paid for them.
-220-
Each
Fund is affected by changes in the economy, in portfolio securities and in the
various markets for financial instruments. There is also the possibility that
investment decisions an Adviser makes with respect to the investments of the
Fund will not accomplish what they were designed to achieve or that the
investments will have disappointing performance.
The
Funds’ principal risks are listed below in alphabetical order, not in order of
importance. The significance of any specific risk to an investment in a Fund
will vary over time, depending on the composition of the Fund’s portfolio,
market conditions, and other factors. Your investment in a Fund may be
subject (in varying degrees) to the following risks discussed below. Each Fund
may be more susceptible to some of the risks than others. You should read all of
the risk information for your Fund presented below carefully, because any one or
more of these risks may result in losses to the Fund. References to an
“Adviser” below in the discussion of a Fund’s principal risks shall generally
refer to a Fund’s investment adviser, which is DoubleLine Alternatives in
respect of DoubleLine Multi-Asset Trend Fund, DoubleLine Strategic Commodity
Fund, and DoubleLine Shiller Enhanced CAPE®, and is DoubleLine Capital
in respect of each other Fund. In respect of DoubleLine Multi-Asset Trend Fund
and DoubleLine Shiller Enhanced CAPE®, references to the “Adviser”
in the context of those Funds’ principal risks that relate to debt securities
shall generally refer to DoubleLine Capital, the sub‑adviser to those Funds and
the entity primarily responsible for the day‑to‑day management of those Funds’
fixed income portfolios.
Active
Management Risk
The
risk that a Fund may fail to meet its investment objective and that a Fund’s
investment performance will depend, at least in part, on how its assets are
allocated and reallocated among the asset classes, sectors, underlying funds
and/or investments in which it invests. It is possible that the Adviser’s
judgements about the attractiveness, value and potential performance of asset
classes, sectors, underlying funds, and/or investments may prove to be incorrect
and may not anticipate actual market movements or the impact of economic
conditions generally. You could lose money on your investment in a Fund as a
result of these judgements and allocation decisions. To the extent that a Fund
invests a significant portion of its assets in a single or limited number of
asset classes, sectors, underlying funds, or investments, it will be
particularly sensitive to the risks associated with the asset classes, sectors,
funds, or investments in which it invests. Any given investment strategy may
fail to produce the intended results, and a Fund’s portfolio may underperform
other comparable funds because of portfolio management decisions related to,
among other things, the selection of investments, portfolio construction, risk
assessments, and/or the outlook on market trends and opportunities.
Asset-Backed
Securities Investment Risk
Asset-backed
investments tend to increase in value less than other debt securities of similar
maturity and credit quality when interest rates decline, but are subject to a
similar or greater risk of decline in market value during periods of rising
interest rates. In a period of declining interest rates, prepayments on
asset-backed securities may increase, and a Fund may be unable to reinvest those
prepaid amounts in investments providing the same rate of interest as the
pre‑paid obligations. Asset-backed securities are structured like
mortgage-backed securities, but instead of mortgage loans or interests in
mortgage loans, the underlying assets may include a wide variety of items,
including, without limitation, motor vehicle installment sales or installment
loan contracts, leases of various types of real, personal and other property
(including those relating to aircrafts, containers, railroads,
telecommunication, energy, and/or other infrastructure assets and
infrastructure-related assets), receivables from credit card agreements and
automobile finance agreements, home equity sharing agreements, student loans,
consumer loans, home equity loans, mobile home loans, boat loans, and income
from other non‑mortgage‑related income streams, such as income from business and
small business loans, project finance loans, renewable energy projects, personal
financial assets, timeshare receivables and franchise rights. They may also
include asset-backed securities backed by whole loans or fractions of whole
loans issued by alternative lending platforms and securitized by those platforms
or other entities (such as third-party originators or brokers). There is a risk
that borrowers may default on their obligations in respect of those underlying
obligations.
Asset-backed
securities involve the risk that borrowers may default on the obligations
backing them and that the values of and interest earned on such investments will
decline as a result. Loans made to lower quality borrowers, including those of
sub‑prime quality, involve a higher risk of default. Therefore, the values of
asset-backed securities backed by lower quality loans, including those of
sub‑prime quality, may suffer significantly greater declines in value due to
defaults, payment delays or a perceived increased risk of default, especially
during periods when economic conditions worsen.
Certain
assets underlying asset-backed securities are subject to prepayment, which may
reduce the overall return to asset-backed security holders. Holders also may
experience delays in payment or losses on the securities if the full amounts due
on underlying sales contracts or receivables are not realized by the issuing
trust because of, among others, unanticipated legal or administrative costs of
enforcing the contracts or because of depreciation or damage to the collateral
securing certain contracts, or other factors. The values of asset-backed
securities may be substantially dependent on the servicing of the
-221-
underlying
asset pools, and are therefore subject to risks associated with the negligence
or malfeasance by their servicers and to the credit risk or insolvency of their
servicers. In certain circumstances, the mishandling of related documentation
also may affect the rights of security holders in and to the underlying
collateral. The insolvency of entities that generate receivables or that utilize
the assets may result in added costs and delays in addition to losses associated
with a decline in the value of underlying assets. Certain asset-backed
securities do not have the benefit of the same security interest in the related
collateral as do mortgage-backed securities; nor are they provided government
guarantees of repayment as are some mortgage-backed securities. For example,
credit card receivables generally are unsecured, and the debtors are entitled to
the protection of a number of state and federal consumer credit laws, many of
which give such debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the balance due. In addition, some issuers of automobile
receivables permit the servicers to retain possession of the underlying
obligations. If the servicer were to sell these obligations to another party,
there is a risk that the purchaser would acquire an interest superior to that of
the holders of the related automobile receivables. The impairment of the value
of collateral or other assets underlying an asset-backed security, such as a
result of non‑payment of loans or non‑performance of other collateral or
underlying assets, may result in a reduction in the value of such asset-backed
securities and losses to a Fund. It is possible that many or all asset-backed
securities will fall out of favor at any time or over time with investors,
affecting adversely the values and liquidity of the securities.
During
periods of deteriorating economic conditions, such as recessions or periods of
rising unemployment, delinquencies and losses generally increase, sometimes
dramatically, with respect to securitizations involving loans, sales contracts,
receivables and other obligations underlying asset-backed securities.
The
values of asset-backed securities may also be substantially dependent on the
servicing of and diligence performed by their servicers or sponsors. For
example, a Fund may suffer losses due to a servicer’s, sponsor’s or platform’s
negligence or malfeasance, such as through the mishandling of certain
documentation affecting security holders’ rights in and to underlying collateral
or the failure to update or collect accurate and complete borrower information.
In addition, the values of asset-backed securities may be adversely affected by
the credit quality of the servicer or sponsor, as applicable. Certain servicers
or sponsors may have limited operating histories to evaluate. The insolvency of
a servicer or sponsor may result in added costs and delays in addition to losses
associated with a decline in the value of underlying assets. A Fund also may
experience delays in payment or losses on its investments if the full amount due
on underlying collateral is not realized, which may occur because of
unanticipated legal or administrative costs of enforcing the contracts,
depreciation or damage to the collateral securing certain contracts,
under-collateralization or other factors.
Equipment Trust
Certificates (ETCs) and Enhanced Equipment Trust Certificates (EETCs) Risk:
ETCs and EETCs are types of asset-backed securities that generally
represent undivided fractional interests in a trust whose assets consist of a
pool of equipment retail installment contracts or leased equipment. EETCs are
similar to ETCs, except that the securities have been divided into two or more
classes, each with different payment priorities and asset claims (see
“—Collateralized Debt Obligations Risk” in the Fund’s SAI for information
regarding how different classes or tranches of interests issued by an issuer can
affect the risks of an investment in EETCs). ETCs and EETCs are typically issued
by specially-created trusts established by airlines, railroads, or other
transportation firms. The assets of ETCs and EETCs are used to purchase
equipment, such as airplanes, railroad cars, or other equipment, which may in
turn serve as collateral for the related issue of the ETCs or EETCs, and the
title to such equipment is held in trust for the holders of the issue. The
equipment generally is leased from the specially-created trust by the airline,
railroad or other firm, which makes rental or lease payments to the
specially-created trust to provide cash flow for payments to ETC and EETC
holders. Holders of ETCs and EETCs must look to the collateral securing the
certificates, typically together with a guarantee provided by the lessee firm or
its parent company for the payment of lease obligations, in the case of default
in the payment of principal and interest on the ETCs or EETCs. ETCs and EETCs
are subject to the risk that the lessee or payee defaults on its payments, and
risks related to potential declines in the value of the equipment that serves as
collateral for the issue. ETCs and EETCs are generally regarded as obligations
of the company that is leasing the equipment and may be shown as liabilities in
its balance sheet as a capitalized lease in accordance with generally accepted
accounting principles. The lessee company, however, does not own the equipment
until all the certificates are redeemed and paid. In the event the company
defaults under its lease, the trustee may terminate the lease. If another lessee
is not available, then payments on the certificates would cease until another
lessee is available.
Cash
Position Risk
A
Fund may hold any portion of its assets in cash, cash equivalents, or other
short-term investments at any time or for an extended time. The Adviser will
determine the amount of a Fund’s assets to be held in cash or cash equivalents
at its sole discretion, based on such factors as it may consider appropriate
under the circumstances. To the extent that a Fund holds assets in cash or is
otherwise uninvested, the Fund’s ability to meet its objective may be
limited.
-222-
In
addition, a Fund may maintain substantially all of its cash and cash equivalents
in accounts with U.S. or foreign financial institutions, and its deposits at
certain of these institutions may exceed insured limits, where applicable.
Volatility in the banking system may impact the viability of such banking and
financial services institutions. In the event of failure of any of the financial
institutions where a Fund maintains its cash and cash equivalents, there can be
no assurance that the Fund would be able to access uninsured funds in a timely
manner or at all and the Fund may incur losses. Any such event could adversely
affect the business, liquidity, financial position and performance of such Fund.
See “Market Risk” in this section for more information.
Collateralized
Debt Obligations Risk
CDOs
are a type of asset-backed security, and include collateralized bond obligations
(“CBOs”), CLOs, and other similarly
structured securities. A CBO is a trust which may be backed by a diversified
pool of high risk, below investment grade fixed income securities. A CLO is a
trust typically collateralized by a pool of loans, which may include, among
others, domestic and foreign senior secured loans, senior unsecured loans,
second lien loans or other types of subordinate loans, and mezzanine loans,
including loans that may be rated below investment grade or equivalent unrated
loans and including loans that may be covenant-lite. CDOs may charge management
fees and administrative expenses. The cash flows from the CDO trust are
generally split into two or more portions, called tranches, varying in risk and
yield. Senior tranches are paid from the cash flows from the underlying assets
before the junior tranches and equity or “first loss” tranches. Losses are first
borne by the equity tranches, next by the junior tranches, and finally by the
senior tranches. Holders of interests in the senior tranches are entitled to the
lowest interest rate payments but those interests generally involve less credit
risk as they are typically paid before junior tranches. The holders of interests
in the most junior tranches, such as equity tranches, typically are entitled to
be paid the highest interest rate payments but suffer the highest risk of loss
should the holder of an underlying debt instrument default. If some debt
instruments default and the cash collected by the CDO is insufficient to pay all
of its investors, those in the lowest, most junior tranches suffer losses first.
Since it is partially protected from defaults, a senior tranche from a CDO trust
typically has higher ratings and lower potential yields than the underlying
securities, and can be rated investment grade. Despite the protection from the
equity tranche, more senior CDO tranches can experience substantial losses due
to actual defaults, increased sensitivity to defaults due to collateral default
and disappearance of protecting tranches, market anticipation of defaults and
aversion to CDO securities as a class.
The
risks of an investment in a CDO depend largely on the quality and type of the
collateral and the tranche of the CDO in which a Fund invests. Normally, CBOs,
CLOs and other CDOs are privately offered and sold, and thus are not registered
under the securities laws. As a result, there may be a limited secondary market
for investments in CDOs and such investments may be illiquid. In addition to the
risks associated with debt instruments (e.g., interest rate risk and credit risk),
CDOs carry additional risks including, but not limited to: (i) the
possibility that distributions from collateral will not be adequate to make
interest or other payments; (ii) the quality of the collateral may decline
in value or default; (iii) the possibility that a Fund may invest in CDOs
that are subordinate to other classes of the issuer’s securities; and
(iv) the complex structure of the security may not be fully understood at
the time of investment and may produce disputes with the issuer or unexpected
investment results.
During
periods of deteriorating economic conditions, such as recessions or periods of
rising unemployment, delinquencies and losses generally increase, sometimes
dramatically, with respect to debt obligations.
Commodities
Risk
A
Fund may directly or indirectly have exposure to global commodity markets or
particular commodities and the value of its shares may be affected by changes in
the values of the Fund’s investment exposures to commodities or
commodity-related instruments. The values of such investments may be extremely
volatile and may be difficult to determine, are subject to the risk of possible
illiquidity, and are subject to the risks and costs associated with delivery,
storage, and maintenance of physical commodities themselves. The values of
commodities and commodity-related instruments may be affected by a wide range of
factors, including overall market movements, speculative activity of other
investors, real or perceived inflationary trends, commodity index volatility,
changes in interest rates or currency exchange rates, population growth and
changing demographics, nationalization, expropriation or other confiscation,
economic or other sanctions, international regulatory, political, and economic
developments (for example, regime changes, trade disputes, wars and changes in
economic activity levels), environmental issues or regulation, and developments
affecting supply, demand and/or other market fundamentals with respect to a
particular sector, industry, or commodity, such as drought, floods, or other
weather conditions, livestock disease, trade embargoes, competition from
substitute products, transportation bottlenecks or shortages, insufficient
storage capacity, fluctuations in supply and demand, tariffs, and international
economic, political and regulatory developments. Certain Funds will likely at
times have significant exposure to particular sectors through its
commodities-related investments, including, for example, the energy, industrial
metals, precious metals, and agricultural and livestock sectors and may be
exposed to greater risk associated with events affecting those sectors. Certain
commodities may originate from or be produced in countries or regions that are
experiencing or may experience social and political unrest and may be subject to
risks associated with economic, social or political developments in those
countries or regions.
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The
energy sector can be significantly affected by changes in the prices and
supplies of oil and other energy fuels, energy conservation, the success of
exploration projects, and tax and other government regulations, policies of the
Organization of the Petroleum Exporting Countries (“OPEC”) and relationships among OPEC members and
between OPEC and oil‑importing nations. A Fund may be affected by the volume of
natural gas, oil or other energy commodities available for transporting,
processing or distribution, and a significant increase or decrease in the
production of energy commodities could impact the value of the Fund’s
commodity-related investments within the energy sector. Commodities-related
investments in the energy sector may also be affected by other factors, such as
declines or increases in the demand for crude oil, natural gas, refined
petroleum products or other energy commodities. Supply and demand for energy
commodities may be affected by a number of factors, including general market
conditions, major weather events and natural disasters, reliability or energy
infrastructure, increases in the values of the underlying commodities, taxes or
other regulatory or legislative actions, and consumer sentiment.
The
industrial metals sector can be affected by sharp price volatility over short
periods caused by global economic, financial and political factors, resource
availability, government regulation, economic cycles, changes in inflation or
expectations about inflation in various countries, interest rates, currency
fluctuations, metal sales by governments, central banks, international agencies,
or other large market participants and investment speculation and fluctuations
in industrial and commercial supply and demand. Commodities-related investments
in the industrial metals sector may also be affected by other factors, including
extraction, storage and production costs and by changes in supply and demand for
certain metals.
The
agricultural and livestock sector may be particularly impacted by weather
conditions, such as drought, flood, or other natural disasters, seasonal demand
and availability of products, competition from substitute products,
transportation bottlenecks or shortages, and fluctuations in supply and demand.
The agricultural and livestock sector may also be regulated by environmental,
health and safety laws and regulations and may be impacted by other political or
regulatory developments.
Commodity-related
investments are often offered by companies in the financial services sector,
including the banking, brokerage and insurance sectors. As a result, events
affecting issuers in the financial services sector may cause a Fund’s share
value to fluctuate. The values of investments in commodities may fluctuate in a
manner that is highly correlated with the values of traditional equity or debt
securities, especially during adverse economic conditions, and at certain times
the price movements of commodity-related investments have been highly correlated
to those of debt or equity securities.
A
Fund may from time to time invest in one or more subsidiaries organized outside
the United States that invest directly or indirectly in, among other things,
commodities or commodity-related investments. A Fund’s investment in any one
subsidiary (or in two or more subsidiaries that are engaged in the same, similar
or a related trade or business) is generally limited to 25% of the value of the
Fund’s total assets, and the value of such an investment will be especially
subject to the risks of commodities-related investments described herein. Any
such subsidiary will not be registered under the 1940 Act, and will not be
subject to all the investor protections of the 1940 Act. Changes in the laws of
the United States and/or the jurisdiction where the subsidiary is organized (for
example, the Cayman Islands) could result in the inability of a Fund and/or its
subsidiary to operate as described in this Prospectus and the SAI and could
adversely affect the Fund.
A
Fund may also directly or indirectly use commodity-related derivatives. The
values of these derivatives may fluctuate more than the relevant underlying
commodity, commodities or commodity index, particularly if the instruments
involve leverage. A Fund’s ability to invest in commodity-linked derivative
instruments may be limited by the Fund’s intention to qualify as a regulated
investment company, and investments in such instruments could adversely affect
the Fund’s ability to so qualify. If a Fund’s investments in commodity-linked
derivative instruments were to exceed applicable limits or if such investments
were to be recharacterized for U.S. federal income tax purposes, the Fund might
be unable to qualify as a regulated investment company for one or more years,
which would adversely affect the value of the Fund.
No
active trading market may exist for certain commodity-related investments, which
may impair the ability of a Fund to value, sell or to realize the full intrinsic
value of such investments in the event of the need to liquidate such
investments. In addition, adverse market conditions may impair the liquidity of
actively traded commodity-related investments.
Confidential
Information Access Risk
In
managing a Fund, the Adviser may seek to avoid the receipt of Confidential
Information about the issuers of floating rate loans or other investments being
considered for acquisition by a Fund or held in a Fund’s portfolio if the
receipt of the Confidential Information would restrict one or more of the
Adviser’s clients, including, potentially, a Fund, from trading in securities
they hold or in which they may invest. In many instances, issuers offer to
furnish Confidential Information to prospective purchasers or holders of the
issuer’s loans or other securities. In circumstances when the Adviser declines
to receive Confidential Information from these issuers, a Fund may be
disadvantaged in comparison to other investors, including with respect to
evaluating the issuer and the price the Fund would pay or receive when it buys
or sells those investments, and the Fund may not take advantage of investment
opportunities that it otherwise might have if it had received such
Confidential
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Information.
Further, in situations when a Fund is asked, for example, to grant consents,
waivers or amendments with respect to such investments, the Adviser’s ability to
assess such consents, waivers and amendments may be compromised.
In
certain circumstances, the Adviser may determine to receive Confidential
Information, including on behalf of clients other than a Fund. Receipt of
Confidential Information by the Adviser could limit a Fund’s ability to sell
certain investments held by the Fund or pursue certain investment opportunities
on behalf of a Fund, potentially for a substantial period of time. In certain
situations, the Adviser may create information walls around persons having
access to the Confidential Information to limit the restrictions on others at
the Adviser. Those measures could impair the ability of those persons to assist
in managing a Fund. Also, certain issuers of floating rate loans, other bank
loans and related investments may not have any publicly traded securities
(“Private Issuers”) and may offer private
information pursuant to confidentiality agreements or similar arrangements. An
Adviser may access such private information, while recognizing that the receipt
of that information could potentially limit a Fund’s ability to trade in certain
securities if the Private Issuer later issues publicly traded securities. If an
Adviser intentionally or unintentionally comes into possession of Confidential
Information, it may be unable, potentially for a substantial period of time, to
sell certain investments held by a Fund.
Counterparty
Risk
A
Fund will be subject to credit risk presented by another party (whether a
clearing corporation in the case of exchange-traded or cleared instruments or
another third party in the case of over‑the‑counter instruments) that promises
to honor an obligation to a Fund with respect to the derivative contracts and
other instruments entered into by a Fund. There can be no assurance that a
counterparty will be able or willing to meet its obligations. If such a party
becomes bankrupt or insolvent or otherwise fails or is unwilling to perform its
obligations to a Fund due to financial difficulties or for other reasons, the
Fund may experience significant losses or delays in enforcing contractual
remedies and/or obtaining any recovery from the counterparty, including
realizing on any collateral the counterparty has provided in respect of the
counterparty’s obligations to the Fund or recovering collateral that a Fund has
provided and is entitled to recover. If a Fund’s claim against a counterparty is
unsecured, the Fund will likely be treated as a general creditor of such
counterparty to the extent of such unsecured claim. A Fund may obtain only a
limited recovery or may obtain no recovery in such circumstances. New regulatory
requirements may also limit the ability of the Fund to protect its interests in
the event of an insolvency of a derivatives counterparty. In the event of a
counterparty’s (or its affiliate’s) insolvency, the Fund’s ability to exercise
remedies, such as the termination of transactions, netting of obligations and
realization on collateral, could be stayed or eliminated under special
resolution regimes adopted in the United States, the EU, the United Kingdom (the
“UK”) and various other jurisdictions.
Such regimes provide government authorities with broad authority to intervene
when a financial institution is experiencing financial difficulty. In
particular, with respect to counterparties who are subject to such proceedings
in the EU or the UK, the liabilities of such counterparties to the Fund could be
reduced, eliminated, or converted to equity in such counterparties (sometimes
referred to as a “bail in”).
Subject
to certain U.S. federal income tax limitations, the Funds are not subject to any
limit with respect to the number or the value of transactions they can enter
into with a single counterparty.
Each
of DoubleLine Strategic Commodity Fund, DoubleLine Shiller Enhanced CAPE®, DoubleLine Shiller Enhanced
International CAPE®, and
DoubleLine Multi-Asset Trend Fund has historically obtained exposure to an index
through swap transactions with a single or limited number of counterparties and
will likely do so for the foreseeable future. Counterparty risks may be more
pronounced for these Funds due to the single or limited number of counterparties
used by them.
Debt
Securities Risks
Debt
securities are subject to various risks including, among others, credit risk and
interest rate risk. These risks can affect a security’s price volatility to
varying degrees, depending upon the nature of the instrument.
Credit risk:
refers to the risk that an issuer, counterparty or other obligor
to the Fund will fail to pay its obligations to a Fund when they are due. If an
investment’s issuer, counterparty or other obligor fails to pay interest or
otherwise fails to meet its obligations to a Fund, the value of the investment
might be lost entirely. Financial strength and solvency of an issuer are the
primary factors influencing credit risk. Actual or perceived changes in the
financial condition of an obligor, changes in specific economic, social or
political conditions that affect a particular type of security, other instrument
or an obligor, and changes in economic, social or political conditions generally
can increase the risk of default by an obligor, which can affect a security’s or
other instrument’s credit quality or value and an obligor’s ability to honor its
obligations when due. The values of lower-quality debt securities (including
debt securities commonly known as “high yield” securities or “junk bonds”),
including floating rate loans, tend to be particularly sensitive to these
changes. Certain debt securities in the lowest investment grade category also
may be considered to possess some speculative characteristics by certain rating
agencies. The values of securities or instruments also may decline for a number
of other reasons that relate
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directly
to the obligor, such as management performance, financial leverage, and reduced
demand for the obligor’s goods and services, as well as the historical and
prospective earnings of the obligor and the value of its assets. Credit risk is
heightened to the extent a Fund has fewer counterparties.
In
addition, lack of or inadequacy of collateral or credit enhancements for a fixed
income security may affect its credit risk. Credit risk of a security may change
over time, and securities which are rated by rating agencies may be subject to
downgrade, which may have an indirect impact on the market price of securities.
Ratings are only opinions of the agencies issuing them as to the likelihood of
repayment. They are not guarantees as to quality and they do not reflect market
risk.
Extension risk:
refers to the risk that if interest rates rise, repayments of
principal on certain debt securities, including, but not limited to, floating
rate loans and mortgage-related securities, may occur at a slower rate than
expected and the expected maturity of those securities could lengthen as a
result. Securities that are subject to extension risk generally have a greater
potential for loss when prevailing interest rates rise, which could cause their
values to fall sharply. The values of interest-only and principal-only
securities are especially sensitive to interest rate changes, which can affect
not only their prices but can also change the income flows and repayment
assumptions about those investments.
Interest rate risk:
refers to the risk that the values of debt instruments held by a
Fund will change in response to changes in interest rates. Interest rate changes
may affect the value of a fixed income instrument directly (especially in the
case of fixed rate instruments) and indirectly (especially in the case of
adjustable-rate instruments). In general, the value of a fixed-income instrument
with positive duration will generally decline if interest rates increase,
whereas the value of an instrument with negative duration will generally decline
if interest rates decrease. The value of an instrument with a longer duration
(whether positive or negative) will be more sensitive to changes in interest
rates than a similar instrument with a shorter duration. Duration is a measure
of the expected life of a bond that is used to determine the sensitivity of an
instrument’s price to changes in interest rates. For example, the price of a
bond fund with an average duration of three years generally would be expected to
fall approximately 3% if interest rates rose by one percentage point. Inverse
floaters, interest-only and principal-only securities are especially sensitive
to interest rate changes, which can affect not only their prices but can also
change the income flows and repayment assumptions about those investments.
Recently, there have been inflationary price movements, which have caused the
fixed income securities markets to experience heightened levels of interest rate
volatility and liquidity risk. The risks associated with rising interest rates
are heightened under current market conditions given that the U.S. Federal
Reserve has raised interest rates from historically low levels and may continue
to do so. Further, in market environments where interest rates are rising,
issuers may be less willing or able to make principal and interest payments on
fixed-income investments when due.
The
values of variable and floating rate debt securities are generally less
sensitive to interest rate changes, as compared to fixed rate debt instruments,
but may decline in value if their interest rates do not rise as much, or as
quickly, as interest rates in general. A floating rate debt security’s interest
rate depends on the characteristics of the reset terms, including the index
chosen and the frequency of reset and any caps or floors, among other things.
Conversely, floating rate securities will not generally increase in value at all
or to the same extent as fixed rate instruments when interest rates decline.
Inverse floating rate debt securities may decrease in value if interest rates
increase. Inverse floating rate debt securities also may exhibit greater price
volatility than a fixed rate debt obligation with similar credit quality. When a
Fund holds variable or floating rate securities, a decrease (or, in the case of
inverse floating rate securities, an increase) in market interest rates will
adversely affect the income received from such securities and a Fund’s
NAV.
Prepayment/Reinvestment Risk: Many
types of debt securities, including floating rate loans, mortgage-backed
securities and asset-backed securities, may reflect an interest in periodic
payments made by borrowers. Although debt securities and other obligations
typically mature after a specified period of time, borrowers may pay them off
sooner. When a prepayment happens, all or a portion of the obligation will be
prepaid. A borrower is more likely to prepay an obligation which bears a
relatively high rate of interest. This means that in times of declining interest
rates, there is a greater likelihood that a Fund’s higher yielding securities
will be pre‑paid and the Fund will probably be unable to reinvest those proceeds
in an investment with as great a yield, causing the Fund’s yield to decline.
Securities subject to prepayment risk generally offer less potential for gains
when prevailing interest rates fall. If a Fund buys those investments at a
premium, accelerated prepayments on those investments could cause a Fund to lose
a portion of its principal investment and result in lower yields to
shareholders. The increased likelihood of prepayment when interest rates decline
also limits market price appreciation, especially with respect to certain loans,
mortgage-backed securities and asset-backed securities. The effect of
prepayments on the price of a security may be difficult to predict and may
increase the security’s price volatility. Interest-only and principal-only
securities are especially sensitive to interest rate changes, which can affect
not only their prices but can also change the income flows and repayment
assumptions about those investments. Income from a Fund’s portfolio may decline
when a Fund invests the proceeds from investment income, sales of portfolio
securities or matured, traded or called debt obligations. A decline in income
received by a Fund from its investments is likely to have a negative effect on
the dividend levels, NAV and/or overall return of a Fund.
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Defaulted
Securities Risk
Defaulted
securities risk refers to the significant risk of the uncertainty of repayment
of defaulted securities (e.g., a
security on which a principal or interest payment is not made when due) and
obligations of distressed issuers (including insolvent issuers or issuers in
payment or covenant default, in workout or restructuring or in bankruptcy or
similar proceedings). Because the issuer of such securities is in default and is
likely to be in distressed financial condition, repayment of defaulted
securities and obligations of distressed issuers is subject to significant
uncertainties. Insolvency laws and practices in foreign markets, and especially
emerging market countries are different than those in the U.S. and the effect of
these laws and practices cannot be predicted with certainty. Investments in
defaulted securities and obligations of distressed issuers are considered
speculative and entail high risk.
Derivatives
Risk
A
Fund’s use of derivatives may involve risks different from, or greater than, the
risks associated with investing in more traditional investments, such as stocks
and bonds. Any use of derivatives strategies entails the risks of investing
directly in the securities, instruments or assets underlying the derivatives
strategies, as well as the risks of using derivatives generally. Derivatives can
be highly complex and may perform in ways unanticipated by the Adviser and may
not be available at the time or price desired. Derivatives positions may also be
improperly executed or constructed.
A
Fund’s use of derivatives involves the risk that the other party to the
derivative contract will fail to make required payments or otherwise to comply
with the terms of the contract. In the event the counterparty to a derivative
instrument defaults and/or becomes insolvent, a Fund potentially could lose all
or a large portion of the value of its investment in the derivative instrument.
Derivatives transactions can create investment leverage and may be highly
volatile, and a Fund could lose significantly more than the amount it invests.
Because most derivatives involve contractual arrangements with a counterparty, a
Fund’s ability to enter into them requires a willing counterparty. A Fund’s
ability to close out or unwind a derivatives position prior to expiration or
maturity may also depend on the ability and willingness of the counterparty to
enter into a transaction closing out the position.
Derivatives
may be difficult to value, illiquid and/or volatile. A Fund may not be able to
close out or sell a derivative position at an advantageous price or time.
Use
of derivatives may affect the amount, timing and character of distributions to
shareholders and, therefore, may increase the amount of taxes payable by taxable
shareholders.
A
Fund may use derivatives to create investment leverage and the Fund’s use of
derivatives may otherwise cause its portfolio to be leveraged. Leverage
increases a Fund’s portfolio losses when the value of its investments declines.
Since many derivatives involve leverage, adverse changes in the value or level
of the underlying asset, rate, or index may result in a loss substantially
greater than the amount invested in the derivative itself. Some derivatives have
the potential for unlimited loss, regardless of the size of the initial
investment.
When
a Fund enters into a derivatives transaction as a substitute for or alternative
to a direct cash investment, that Fund is exposed to the risk that the
derivative transaction may not provide a return that corresponds precisely or at
all with that of the underlying investment. When a Fund uses a derivative for
hedging purposes, it is possible that the derivative will not in fact provide
the anticipated protection, and the Fund could lose money on both the derivative
transaction and the exposure the Fund sought to hedge. While hedging strategies
involving derivatives can reduce the risk of loss, they can also reduce the
opportunity for gain or even result in losses by offsetting favorable price
movements in other Fund investments.
The
derivatives markets are subject to various global regulations, and additional
future regulation of the derivatives markets may make derivatives more costly,
may limit the availability or liquidity of derivatives, or may otherwise
adversely affect the value or performance of derivatives. Any such regulation
could impair the effectiveness of a Fund’s derivatives transactions or its
ability to effect its investment strategy and cause a Fund to lose value. In
particular, the U.S. government, the United Kingdom, the European Union and
various other jurisdictions have adopted mandatory minimum margin requirements
for bilateral derivatives. Such requirements could increase the amount of margin
required to be provided by a Fund in connection with its derivatives
transactions and, therefore, make its derivatives transactions more expensive
and potentially impair its ability to effect its investment strategy. U.S.
government legislation providing for regulation of the derivatives market also
includes clearing, reporting, and registration requirements, which could
restrict a Fund’s ability to engage in derivatives transactions or increase the
cost or uncertainty involved in such transactions. The European Union and the
United Kingdom (and some other jurisdictions) have implemented or are in the
process of implementing similar requirements, which will affect a Fund when it
enters into a derivatives transaction with a counterparty subject to such
requirements.
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A
Fund typically will be required to post collateral or make margin payments in
connection with entering into derivatives transactions. Assets that are used as
margin or collateral may be required to be in the form of cash or liquid
securities. If markets move against a Fund’s position, the Fund will generally
be required to post additional assets and may have to dispose of existing
investments to obtain assets acceptable as collateral or margin. This may
prevent a Fund from pursuing its investment objective. Assets that are used as
margin or collateral typically may be invested, and these investments are
subject to risk and may result in losses to a Fund. These losses may be
substantial, and may be in addition to losses incurred by using the derivative
in question. If a Fund is unable to close out its position, it may be required
to continue to maintain such accounts and fulfill its payment obligations until
the position expires or matures, and the Fund will continue to be subject to
investment risk on the assets. In addition, a Fund may not be able to recover
the full amount of its margin from its counterparty or an intermediary if such
entity were to experience financial difficulty. Margin and collateral
requirements may impair a Fund’s ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or require a
Fund to sell a portfolio security or close out a derivatives position at a
disadvantageous time or price.
Rule
18f-4 governs a Fund’s use of derivative investments and certain financing
transactions. Among other things, Rule 18f-4 requires funds that invest in
derivative instruments beyond a specified limited amount to apply a
value-at-risk based limit to their use of certain derivative instruments and
financing transactions and to adopt and implement a derivatives risk management
program. Funds that use derivative instruments (beyond certain currency and
interest rate hedging transactions) to a limited degree are not subject to the
full requirements of Rule 18f-4. Regulatory limitations on derivatives
transactions could have the effect of restricting the Fund’s use of derivative
investments and financing transactions and prevent the Fund from implementing
its principal investment strategies as described herein, which may result in
changes to the Fund’s principal investment strategies and could adversely affect
the Fund’s performance and its ability to achieve its investment
objective.
Historically,
LIBOR may have been a significant factor in determining a Fund’s payment
obligations under a derivative investment and a derivative investment’s value.
LIBOR may also have been used in other ways in respect of derivatives in which a
Fund may invest. In connection with the global transition away from LIBOR led by
regulators and market participants, LIBOR is no longer published on a
representative basis. There are obstacles to converting certain securities and
transactions to new reference rates. The potential effect of the transition away
from LIBOR on the Fund or the financial instruments in which the Fund invests
cannot yet be determined.
While
legislative and regulatory measures may provide protections for some market
participants, they are evolving and still being implemented and their effects on
derivatives markets activities cannot be reliably predicted. Current and
future
regulation
of the derivatives markets may make derivatives more costly, may limit the
availability or liquidity of derivatives, or may otherwise adversely affect the
value or performance of derivatives. Any such adverse developments could impair
the effectiveness of the Fund’s derivatives transactions and cause the Fund to
lose value.
Emerging
Market Country Risk
Investing
in the securities of emerging market countries, as compared to foreign developed
markets, involves substantial additional risk due to more limited information
about the issuer and/or the security; higher brokerage costs; different
accounting, auditing and financial reporting standards; less developed legal
systems and thinner trading markets; the possibility of currency blockages or
transfer restrictions; an emerging market country’s dependence on revenue from
particular commodities or international aid; and expropriation, nationalization
or other adverse political or economic developments, such as the imposition of
economic sanctions, tariffs or other governmental restrictions.
Political
and economic structures in many emerging market countries may undergo
significant evolution and rapid development, and such countries may lack the
social, political and economic stability characteristics of more developed
countries. Emerging market countries tend to have a greater degree of economic,
political and social instability than the U.S. and other developed countries.
Such social, political and economic instability could disrupt the financial
markets in which a Fund invests and adversely affect the value of its investment
portfolio. Some of these countries may have in the past failed to recognize
private property rights and have at times nationalized or expropriated the
assets of private companies. In addition, unanticipated political or social
developments may affect the value of investments in emerging markets and the
availability of additional investments in these markets. The small size, limited
trading volume and relative inexperience of the securities markets in these
countries may make investments in securities traded in emerging markets illiquid
and more volatile than investments in securities traded in more developed
countries, and a Fund may be required to establish special custodial or other
arrangements before making investments in securities traded in emerging markets.
There may be little financial or accounting information available with respect
to issuers of emerging market securities, and it may be difficult as a result to
assess the value or prospects of an investment in such securities.
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The
securities markets of emerging market countries may be substantially smaller,
less developed, less liquid and more volatile than the major securities markets
in the United States and other developed nations. The limited size of many
securities markets in emerging market countries and limited trading volume in
issuers compared to the volume in U.S. securities or securities of issuers in
other developed countries could cause prices to be erratic for reasons other
than factors that affect the quality of the securities and investments in
emerging markets can become illiquid. For example, limited market size may cause
prices to be unduly influenced by traders who control large positions. Adverse
publicity and investors’ perceptions, whether or not based on fundamental
analysis, may decrease the value and liquidity of portfolio securities,
especially in these markets. In addition, emerging market countries’ exchanges
and broker-dealers may generally be subject to less regulation than their
counterparts in developed countries. Emerging market securities markets,
exchanges and market participants may lack the regulatory oversight and
sophistication necessary to deter or detect market manipulation in such
exchanges or markets, which may result in losses to the Fund to the extent it
holds investments trading in such exchanges or markets. Brokerage commissions
and dealer mark‑ups, custodial expenses and other transaction costs are
generally higher in emerging market countries than in developed countries. As a
result, funds that invest in emerging market countries have operating expenses
that are higher than funds investing in other securities markets.
Emerging
market countries may have different clearance and settlement procedures than in
the U.S., including significantly longer settlement cycles for purchases and
sales of securities, and in certain markets there may be times when settlements
fail to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Further, custody practices abroad may
offer less protection generally to investors, such as a Fund, and satisfactory
custodial services for investment securities may not be available in some
emerging market countries, which may result in a Fund incurring additional costs
and delays in transporting and custodying such securities outside such
countries. Delays in settlement or other problems could result in periods when
assets of a Fund are uninvested and no return is earned thereon. The inability
of a Fund to make intended security purchases due to settlement problems or the
risk of intermediary counterparty failures could cause the Fund to miss
attractive investment opportunities. The inability to dispose of a portfolio
security due to settlement problems could result either in losses to a Fund due
to subsequent declines in the value of such portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser.
The
Public Company Accounting Oversight Board, which regulates auditors of U.S.
public companies, is unable to inspect audit work papers in certain foreign
countries. Investors in foreign countries often have limited rights and few
practical remedies to pursue shareholder claims, including class actions or
fraud claims, and the ability of the SEC, the U.S. Department of Justice and
other authorities to bring and enforce actions against foreign issuers or
foreign persons is limited. Regulatory regimes outside of the U.S. may not
require or enforce corporate governance standards comparable to that of the
U.S., which may result in less protections for investors in such issuers and
make such issuers more susceptible to actions not in the best interest of the
issuer or its investors.
In
certain emerging market countries, governments participate to a significant
degree, through ownership or regulation, in their respective economies. Action
by these governments could have a significant adverse effect on market prices of
securities and payment of dividends. In addition, most emerging market countries
have experienced substantial, and in some periods extremely high, rates of
inflation. Inflation and rapid fluctuation in inflation rates have had and may
continue to have very negative effects on the economies and securities markets
of certain emerging market countries.
The
currencies of certain emerging market countries have sometimes experienced
devaluations relative to the U.S. dollar, and future devaluations may adversely
affect the value of assets denominated in such currencies. A devaluation of the
currency in which portfolio securities are denominated will negatively impact
the value of those securities. Many emerging market countries have experienced
substantial, and in some periods extremely high, rates of inflation or deflation
for many years, and future inflation may adversely affect the economies and
securities markets of such countries. When debt and similar obligations issued
by foreign issuers are denominated in a currency (e.g., the U.S. dollar or the Euro) other than
the local currency of the issuer, the subsequent strengthening of the non‑local
currency against the local currency will generally increase the burden of
repayment on the issuer and may increase significantly the risk of default by
the issuer.
Emerging
market countries have and may in the future impose capital controls, foreign
currency controls and repatriation controls. In addition, some currency hedging
techniques may be unavailable in emerging market countries, and the currencies
of emerging market countries may experience greater volatility in exchange rates
as compared to those of developed countries.
A
Fund may invest in commodities or commodity-related investments that are found
in or exported from emerging market countries or the values of which are
affected significantly by economic or other conditions in emerging market
countries.
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Equity
Issuer Risk
The
market price of common stocks and other equity securities may go up or down,
sometimes rapidly or unpredictably. Equity securities may decline in value due
to factors affecting equity securities markets generally, particularly
industries represented in those markets, or the issuer itself. The values of
equity securities may decline due to general market conditions that are not
specifically related to a particular company, such as real or perceived adverse
economic conditions, changes in the general outlook for corporate earnings,
changes in interest or currency rates, or adverse investor sentiment generally.
They also may decline due to factors which affect a particular industry or
industries, such as labor shortages or increased production costs and
competitive conditions within an industry. In addition, the values of equity
securities may decline for a number of reasons that may relate directly to the
issuer, such as management performance, financial leverage, non‑compliance with
regulatory requirements, and reduced demand for the issuer’s goods or services.
Equity securities generally have greater price volatility than bonds and other
debt securities, although under certain market conditions various fixed income
investments may have comparable or greater price volatility. The values of
equity securities paying dividends at high rates may be more sensitive to change
in interest rates than are other equity securities.
A
Fund may also invest in preferred securities, which represent an equity or
ownership interest in an issuer that pays dividends at a specified rate and that
has priority over common stock in the payment of dividends. In addition to many
of the risks associated with both debt securities (e.g., interest rate risk and
credit risk) and common shares or other equity securities, preferred securities
typically contain provisions that allow an issuer, at its discretion, to defer
distributions for an extended period. Preferred securities also may contain
provisions that allow an issuer, under certain conditions, to skip (in the case
of noncumulative preferred securities) or defer (in the case of cumulative
preferred securities), dividend payments. If a Fund owns a preferred security
that is deferring its distributions, the Fund may be required to report income
for tax purposes while it is not receiving any distributions. Preferred stock in
some instances is convertible into common shares or other securities. Preferred
securities typically contain provisions that allow for redemption in the event
of tax or security law changes in addition to call features at the option of the
issuer. In the event of a redemption, a Fund may not be able to reinvest the
proceeds at comparable or favorable rates of return.
Preferred
securities typically do not provide any voting rights, except in cases in which
dividends are in arrears beyond a certain time period, which varies by issue.
Preferred securities are generally subordinated to bonds and other debt
instruments in a company’s capital structure in terms of priority to corporate
income and liquidation payments, and therefore will be subject to greater credit
risk than those debt instruments. Preferred securities may be substantially less
liquid than many other securities.
Financial
Services Risk
Financial
services companies are subject to extensive governmental regulation which may
limit both the amounts and the types of loans and other financial commitments
they can make, the interest rates and fees they can charge, the scope of their
activities, the prices they can charge and the amount of capital they must
maintain. Profitability is largely dependent on the availability and cost of
capital funds and can fluctuate significantly when interest rates change or due
to increased competition. In addition, deterioration of the credit markets
generally may cause an adverse impact in a broad range of markets, including
U.S. and international credit and interbank money markets generally, thereby
affecting a wide range of financial institutions and markets. Certain events in
the financial sector may cause an unusually high degree of volatility in the
financial markets, both domestic and foreign, and cause certain financial
services companies to incur large losses. Interconnectedness or interdependence
among financial services companies increases the risk that the financial
distress or failure of one financial services company may materially and
adversely affect a number of other financial services companies. Securities of
financial services companies may experience a dramatic decline in value when
such companies experience substantial declines in the valuations of their
assets, take action to raise capital (such as the issuance of debt or equity
securities), or cease operations. Events leading to limited liquidity, defaults,
non‑performance or other adverse developments that affect the financial services
industry, or concerns or rumors about any events of these kinds, have in the
past and may in the future lead to market-wide liquidity problems, may spread to
other industries, and could negatively affect the value and liquidity of the
Fund’s investments. For example, in response to the rapidly declining financial
condition of regional banks Silicon Valley Bank (“SVB”) and Signature Bank (“Signature”), the California Department of
Financial Protection and Innovation (the “CDFPI”) and the New York State Department of
Financial Services (the “NYSDFS”) closed
SVB and Signature on March 10, 2023 and March 12, 2023, respectively,
and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver for SVB and
Signature. Although the U.S. Department of the Treasury, the Federal Reserve and
the FDIC have taken measures to stabilize the financial system, uncertainty and
liquidity concerns in the broader financial services industry remain.
Additionally, should there be additional systemic pressure on the financial
system and capital markets, there can be no assurances of the response of any
government or regulator, and any response may not be as favorable to industry
participants as the measures currently being pursued. In addition, highly
publicized issues related to the U.S. and global capital markets in the past
have led to significant and widespread investor concerns over the integrity of
the capital markets. The situation related to SVB, Signature and other
regional
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banks
could in the future lead to further rules and regulations for public companies,
banks, financial institutions and other participants in the U.S. and global
capital markets, and complying with the requirements of any such rules or
regulations may be burdensome. Even if not adopted, evaluating and responding to
any such proposed rules or regulations could result in increased costs and
require significant attention from the Advisers. Separately, credit losses
resulting from financial difficulties of borrowers can negatively impact the
sector, especially when financial services companies are exposed to
non‑diversified or concentrated loan portfolios. Financial losses associated
with investment activities can negatively impact the sector, especially when
financial services companies are exposed to financial leverage. Insurance
companies may be subject to severe price competition. Adverse economic, business
or political developments could adversely affect financial institutions engaged
in mortgage finance or other lending or investing activities directly or
indirectly connected to the value of real estate.
Focused
Investment Risk
A
Fund that invests a substantial portion of its assets in a particular market,
industry, sector, group of industries or sectors, country, region, group of
countries or asset class is subject to greater risk than a fund that invests in
a more diverse investment portfolio. In addition, the value of such a fund is
more susceptible to any single economic, market, political, regulatory or other
occurrence affecting, for example, the particular markets, industries, regions,
sectors or asset classes in which the Fund is invested. This is because, for
example, issuers in a particular market, industry, region, sector or asset class
may react similarly to specific economic, market, regulatory, political or other
developments. The particular markets, industries, regions, sectors or asset
classes in which a Fund may focus its investments may change over time and a
Fund may alter its focus at inopportune times.
To
the extent a Fund invests in the securities of a limited number of issuers or
assets related to particular commodities, it is particularly exposed to adverse
developments affecting those issuers or commodities, and a decline in the market
value of a particular security or commodity held by the Fund may affect the
Fund’s performance more than if the Fund invested in the securities of a larger
number of issuers or assets related to a broader group of commodities. In
addition, the limited number of issuers or commodities to which a Fund may be
exposed may provide the Fund exposure to substantially the same market,
industry, sector, group of industries or sectors, country, region, group of
countries, or asset class, which may increase the risk of loss as a result of
focusing the Fund’s investments, as discussed above.
Foreign
Currency Risk
Currency
risk is the risk that fluctuations in exchange rates may adversely affect the
value of a Fund’s investments. Currency risk includes both the risk that
currencies in which a Fund’s investments are traded and/or in which the Fund
receives income, or currencies in which the Fund has taken an active investment
position, will decline in value relative to other currencies. In the case of
hedging positions, currency risk includes the risk that the currency a Fund is
seeking exposure to will decline in value relative to the foreign currency being
hedged. Currency exchange rates fluctuate significantly for many reasons,
including changes in supply and demand in the currency exchange markets, actual
or perceived changes in interest rates, intervention (or the failure to
intervene) by U.S. or foreign governments, central banks, or supranational
agencies such as the International Monetary Fund, and currency controls or other
political and economic developments in the U.S. or abroad. Currencies of
emerging market countries have sometimes experienced devaluations relative to
the U.S. dollar, and major devaluations have historically occurred in certain
countries. A devaluation of the currency in which portfolio securities are
denominated will negatively impact the value of those securities.
Except
as otherwise provided in a Fund’s principal investment strategies, a Fund may
take derivatives (or spot) positions in currencies to which the Fund is exposed
through its investments. This presents the risk that a Fund could lose money on
both its currency exposure through a portfolio investment and its currency
exposure through a derivatives (or spot) position. A Fund may take overweighted
or underweighted currency positions and/or hedge the currency exposure of the
securities in which it has invested. A Fund may take positions in currencies
different from the currencies in which its portfolio investments are
denominated. As a result, a Fund’s currency exposure may differ (in some cases
significantly) from the currency exposure of its investments and/or its
benchmarks.
Exposure
to emerging market currencies may entail greater risk than exposure to developed
market currencies. Please see “Emerging Market Country Risk” in this section for
more information.
Foreign
Investing Risk
Investments
in foreign securities or in issuers with significant exposure to foreign markets
may involve greater risks than investments in domestic securities. To the extent
that investments are made in a limited number of countries, events in those
countries will have a more significant impact on the Fund.
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As
compared to U.S. companies, foreign issuers generally disclose less financial
and other information publicly and are subject to less stringent and less
uniform accounting, auditing, and financial reporting standards. In addition,
there may be limited information generally regarding factors affecting a
particular foreign market, issuer, or security.
Foreign
countries typically impose less thorough regulations on brokers, dealers, stock
exchanges, corporate insiders and listed companies than does the United States
and foreign securities markets may be less liquid and more volatile than
domestic markets. Investment in foreign securities involves higher costs than
investment in U.S. securities, including higher transaction and custody costs as
well as the imposition of additional taxes by foreign governments, and as a
result investments in foreign securities may be subject to issues relating to
security registration or settlement. In addition, security trading and custody
practices abroad may offer less protection to investors such as the Funds.
Political, social or financial instability, civil unrest, geopolitical tensions,
wars and acts of terrorism are other potential risks that could adversely affect
an investment in a foreign security or in foreign markets or issuers generally.
Settlement of transactions in some foreign markets may be delayed or may be less
frequent than in the United States which could affect the liquidity of a Fund’s
portfolio. Custody practices and regulations abroad may offer less protection to
investors, such as the Funds, and a Fund may be limited in its ability to
enforce contractual rights or obligations.
Because
foreign securities generally are denominated and pay dividends or interest in
foreign currencies, and a Fund may hold various foreign currencies from time to
time, the value of a Fund’s assets, as measured in U.S. dollars, can be affected
unfavorably by changes in exchange rates with respect to the U.S. dollar or with
respect to other foreign currencies or by unfavorable currency regulations
imposed by foreign governments. If the Fund invests in securities issued by
foreign issuers, the Fund may be subject to these risks even if the investment
is denominated in United States dollars. This risk may be heightened with
respect to issuers whose revenues are principally earned in a foreign currency
but whose debt obligations have been issued in United States dollars or other
hard currencies.
Because
foreign securities generally are denominated and pay dividends or interest in
foreign currencies, and a Fund may hold various foreign currencies from time to
time, the value of the Fund’s assets, as measured in U.S. dollars, can be
affected unfavorably by changes in exchange rates with respect to the U.S.
dollar or with respect to other foreign currencies or by unfavorable currency
regulations imposed by foreign governments. If the Fund invests in securities
issued by foreign issuers, the Fund may be subject to these risks even if the
investment is denominated in United States dollars. This risk may be heightened
with respect to issuers whose revenues are principally earned in a foreign
currency but whose debt obligations have been issued in United States dollars or
other hard currencies.
Foreign
issuers may become subject to sanctions imposed by the U.S. or another country
or other governmental or non‑governmental organizations, which could result in
the immediate freeze of the foreign issuers’ assets or securities and/or make
their securities worthless. The imposition of such sanctions, such as sanctions
imposed against Russia, Russian entities and Russian individuals in 2022, could
impair the market value of the securities of such foreign issuers and limit a
Fund’s ability to buy, sell, receive or deliver the securities. Sanctions, or
the threat of sanctions, may cause volatility in regional and global markets and
may negatively impact the performance of various sectors and industries, as well
as companies in other countries, which could have a negative effect on the
performance of a Fund.
Continuing
uncertainty as to the status of the European Economic and Monetary Union (“EMU”) and the potential for certain countries
to withdraw from the institution has created significant volatility in currency
and financial markets generally. Any partial or complete dissolution of the EU
could have significant adverse effects on currency and financial markets, and on
the values of a Fund’s portfolio investments. On January 31, 2020, the UK
left the EU (commonly known as “Brexit”).
An agreement between the UK and the EU governing their future trade relationship
became effective January 1, 2021, but critical aspects of the relationship
remain unresolved and subject to further negotiation and agreement. Brexit has
resulted in volatility in European and global markets and could have negative
long-term impacts on financial markets in the UK and throughout Europe. There is
still considerable uncertainty relating to the potential consequences of the
exit and whether the UK’s exit will increase the likelihood of other countries
also departing the EU. During this period of uncertainty, the negative impact on
not only the UK and European economies, but the broader global economy, could be
significant, potentially resulting in increased market volatility and
illiquidity, political, economic, and legal uncertainty, and lower economic
growth for companies that rely significantly on Europe for their business
activities and revenues. Any further exits from the EU, or the possibility of
such exits, or the abandonment of the euro, may cause additional market
disruption globally and introduce new legal and regulatory uncertainties.
If
one or more EMU countries were to stop using the euro as its primary currency, a
Fund’s investments in such countries may be redenominated into a different or
newly adopted currency. As a result, the value of those investments could
decline significantly and unpredictably. In addition, securities or other
investments that are redenominated may be subject to liquidity risk and the risk
that a Fund may not be able to value investments accurately to a greater extent
than similar investments currently denominated in euros. To the extent a
currency used for redenomination purposes is not specified in respect of
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certain
EMU‑related investments, or should the euro cease to be used entirely, the
currency in which such investments are denominated may be unclear, making such
investments particularly difficult to value or dispose of. A Fund may incur
additional expenses to the extent it is required to seek judicial or other
clarification of the denomination or value of such securities.
High
Yield Risk
Debt
instruments rated below investment grade or debt instruments that are unrated
and of comparable or lesser quality are predominantly speculative. They are
usually issued by companies without long track records of sales and earnings or
by companies with questionable credit strength. These instruments, commonly
known as “junk bonds,” have a higher degree of default risk and may be less
liquid than higher-rated bonds. These instruments may be subject to greater
price volatility due to such factors as specific corporate developments,
interest rate sensitivity, negative perceptions of high yield investments
generally, general economic downturn, and less secondary market liquidity. This
potential lack of liquidity may make it more difficult for a Fund to value these
instruments accurately. An economic downturn could severely affect the ability
of issuers (particularly those that are highly leveraged) to service their debt
obligations or to repay their obligations upon maturity.
Index
Risk
There
are a number of reasons that a Fund’s investments in derivatives based on an
index or that use an index as the reference asset, or other substitute
investment exposure to an index, may underperform the return of the index.
Because an index used by a Fund may not be widely used and information regarding
its components and/or its methodology may not generally be known to industry
participants, it may be difficult for the Fund to find willing counterparties to
engage in total or excess return swaps or other derivative instruments based on
the return of such index, and the Fund might have to rely on a single
counterparty or a limited number of counterparties for this purpose, increasing
the credit and counterparty risk to the Fund and, potentially, the cost of such
transactions. The provider of an index may provide model portfolios of
securities or commodities in the index to a Fund’s swap counterparties to
facilitate the counterparties’ ability to provide swaps whose returns are based
on the index. Because an index may be privately licensed from an index sponsor,
not generally available for public use, or for other reasons, there may be only
a single or a limited number of counterparties willing or able to serve as
counterparties to a swap agreement where returns are based on the index,
especially if the provider of the index fails to provide the model portfolios
referred to above. Under some circumstances, there may not be any counterparties
willing or able to serve as a counterparty to a swap agreement where the returns
are based on those of an index, or willing to do so at an acceptable cost or
level of risk to a Fund. A Fund may only be able to enter into swap agreements
whose returns are based on the return of an index, or a modified version of an
index, with the sponsor of the index or a related person of the sponsor of the
index. In cases where the sponsor of the index is the only swap counterparty
available to a Fund or where other swap counterparties are required to obtain
information regarding the index from the sponsor of the index, the cost of the
swaps entered into by a Fund will typically be higher than in the case of swaps
where the index components are broadly known. If any such swap agreements are
not available for any reason, the Fund may have to invest in other derivative
instruments, “baskets” of stocks or commodities, or individual securities or
commodities in an attempt to replicate the performance of an index, whose
performance may be significantly less correlated to the performance of the index
and which, in the case of DoubleLine Shiller Enhanced CAPE®, DoubleLine Shiller Enhanced
International CAPE®,
DoubleLine Strategic Commodity Fund, and DoubleLine Multi-Asset Trend Fund,
would adversely affect their ability to also invest in debt instruments in
accordance with their principal investment strategies. It is possible that the
unavailability of such swap agreements would make it impossible for a Fund to
continue to pursue its principal investment strategies.
A
Fund may remain invested in derivatives related to an index or the underlying
components of an index even when the level of the index is declining or when the
Adviser believes the values of its component securities or commodities may be
overvalued. Accordingly, a decline in the level of a relevant index used by a
Fund should be expected to reduce the overall total return of the Fund. A Fund’s
performance could be lower than other types of funds that do not attempt to
track an index and may actively allocate their portfolio assets to take
advantage of market opportunities or to lessen the impact of a market decline.
With respect to the portion of a Fund invested to earn a return that relates to
the performance of an index, the Adviser does not typically expect to use
techniques or defensive strategies designed to lessen the effects of volatility
in the level of the index or to reduce the impact of periods when the level of
the index declines. Accordingly, a decline in the level of such an index should
be expected to reduce the overall total return of the Fund. It is possible that
DoubleLine Shiller Enhanced CAPE®, DoubleLine Shiller Enhanced
International CAPE®,
DoubleLine Strategic Commodity Fund, and DoubleLine Multi-Asset Trend Fund could
lose money on their investments in debt securities and their index exposures,
including, in the case of DoubleLine Shiller Enhanced International CAPE®, due to an index’s exposures
to non‑U.S. currencies, all at the same time.
While
index sponsors generally provide descriptions of what an index is designed to
achieve, index providers do not generally provide any warranty or guarantee or
accept any liability in relation to the quality, accuracy or completeness of
data in respect of their indexes, and do not guarantee that the published
indexes will be in line with their described index methodologies. The Funds and
the Advisers similarly do not provide any warranty, guarantee or acceptance of
liability for an index or the data used.
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Errors
in respect of the accuracy or completeness of the data underlying an index may
occur from time to time and may not be identified and corrected for a period of
time, if at all. In addition, errors may arise in carrying out an index’s
methodology, or an index provider may incorrectly report information concerning
the index. These risks may be particularly prevalent where an index is less
commonly used. For example, during a period where an index contains incorrect
constituents or when an index provider reports incorrect information regarding
index constituents, a Fund may have market exposure to investments that are not
constituents of the index and may have over- or under-exposure to the index’s
correct constituents. As such, errors may potentially result in a negative or
positive performance impact to a Fund and its shareholders, and may prevent the
Fund from achieving its investment objective. Further, apart from scheduled
rebalances, index providers may carry out additional ad hoc rebalances to their
underlying indexes in order, for example, to correct an error in the selection
of index constituents. Where an index is rebalanced and a Fund in turn
rebalances its portfolio to bring it in line with such index, any transaction
and trading costs (including among other things any bid/ask spreads) arising
from such portfolio rebalancing will be borne by the Fund.
With
respect to DoubleLine Shiller Enhanced CAPE®, DoubleLine Shiller Enhanced
International CAPE®,
DoubleLine Strategic Commodity Fund, and DoubleLine Multi-Asset Trend Fund,
calculation of an index’s return reflects the deduction of an amount intended to
represent an estimate of the transaction costs of buying and selling the index’s
constituents, which will have the effect of reducing the index’s
return.
In
certain cases, the values of derivatives may not correlate perfectly, or at all,
with the value of the assets, reference rates or indexes they are designed to
approximate. There are a number of factors that will prevent derivatives or
other strategies used by a Fund from fully achieving a desired correlation with
an index or a basket of securities or commodities, including, for example, the
impact of fees, expenses and transaction costs, including borrowing and
brokerage costs and bid‑ask spreads, which are not reflected in index returns
(see also “Note regarding Index-Based Swaps” in this risk below). Other factors
include, but are not limited to (i) in the case of DoubleLine Shiller
Enhanced International CAPE®, differences in the timing
of daily calculations of the level of an index and the timing of the valuation
of derivatives, securities, commodities and other assets held by the Fund and
the determination of the NAV of fund shares, including calculations of the
Fund’s NAV using fair value prices when the price of the index does not
incorporate fair value prices; (ii) disruptions or illiquidity in the
markets for derivative instruments, securities, or commodities in which a Fund
invests; (iii) certain indexed securities will create leverage to the
extent that they increase or decrease in value at a rate that is a multiple of
the changes in an index, which will result in increased risks associated with
leverage; (iv) performance of derivatives related to an index utilized by a
Fund may not correlate with the performance of the index and a Fund will incur
other operating and investing expenses that are not applicable to the index or
basket of securities or commodities that the Fund, or a component thereof, is
designed to track; (v) a Fund having exposure to or holding less than all
of the securities, commodities or other reference assets in the underlying index
and/or having exposure to or holding securities, commodities or reference assets
not included in the underlying index; (vi) large or unexpected movements of
assets into and out of a Fund (due to share purchases or redemptions, for
example), potentially resulting in the Fund being over- or under-exposed to the
index; (vii) the impact of accounting standards or changes thereto;
(viii) changes to the applicable index that are not disseminated in
advance; (ix) a possible need to conform a Fund’s portfolio holdings to
comply with investment restrictions or policies or regulatory or tax law
requirements; and (x) in the case of DoubleLine Shiller Enhanced
International CAPE®,
fluctuations in currency exchange rates.
Although
a Fund or an Adviser may license from an index’s sponsor the right to use an
index as part of implementing the Fund’s principal investment strategies, there
can be no guarantee that the index will be maintained indefinitely or that the
Fund will be able to continue to utilize the selected index to implement its
principal investment strategies indefinitely. In addition, other events could
result in the Fund no longer having the ability to utilize an index to implement
its principal investment strategies (e.g., a Fund may no longer be able to create
cost-effective synthetic investment exposure to an index to pursue all of its
principal investment strategies). In such instances, the Adviser or the Board of
Trustees may substitute an index with another index that they choose in their
sole discretion and without advance notice to the shareholders. If a Fund
selects and uses one or more other indices or other investments as part of its
principal investment strategies, there can be no assurance that any substitute
index, or basket of securities or commodities and other investments, selected
will be similar to an index or basket previously used by the Fund or will
perform in a manner similar to such index or basket. Unavailability of an index
(or a similar index) could affect adversely the ability of the Fund to achieve
its investment objective or desired exposures. The manner in and extent to which
a Fund gains exposure to an index may be limited by the Fund’s intention to
qualify for treatment as a regulated investment company for U.S. federal income
tax purposes and may bear on the Fund’s ability to so qualify.
With
respect to the DoubleLine Strategic Commodity Fund, an index or basket of
commodities may consist of futures contracts that are selected, in part, on the
basis of their historical backwardation in relation to the spot price for the
underlying commodity. The DoubleLine Strategic Commodity Fund is subject to the
risk that the historical behavior of the futures contracts comprising a basket
or index of commodities may not continue as expected and that the prices of the
futures contracts held by the Fund (or to which the Fund may have exposure) may
depreciate.
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To
the extent a Fund invests in one or more baskets of commodities, securities or
reference assets, including those administered or sponsored by third parties,
the Fund may be subject to many or all of the risks described above with respect
to its investments in an index.
Note regarding Index-Based Swaps. The
information presented in the tables entitled “Annual Fund Operating Expenses”
within the summary sections of this Prospectus and each Fund’s Summary
Prospectus is prescribed by the Securities and Exchange Commission (the “SEC”). In accordance with those requirements,
the tables include information regarding each Fund’s actual or estimated
operating expenses, but do not include all investment-related expenses (other
than any Acquired Fund Fees and Expenses) or all amounts that reduce a Fund’s
investment return. For example, investment-related expenses not shown in the
tables include brokerage commissions and undisclosed markups on principal
transactions, which reduce the return on your investment in a Fund and may be
significant. The tables also do not include expenses or amounts incurred in
connection with a Fund’s investments in swap agreements or certain other
derivative instruments, including derivative instruments that have an index as a
reference asset. In cases where a Fund enters into a swap transaction or certain
other transactions based on an index or that use an index as the reference
asset, the transaction pricing will typically reflect, among other things,
compensation to the counterparty for providing the investment exposure. A Fund
may also pay fees or incur costs each time it enters into, amends or terminates
a swap agreement. The calculation of the index itself over time may also be
reduced by a number of assumed expenses or charges. Such amounts have the effect
of reducing the level of the index and would be reflected also in the returns on
any index-based swaps or other derivative instruments that have the index as a
reference asset and also may reflect compensation to the counterparty for
providing the investment exposure. The transaction pricing also may reflect
charges by the Index sponsor for the use of the Index sponsor’s intellectual
property and/or index data (“Intellectual
Property”) in connection with the transaction. Swap returns are typically
also reduced by amounts based on short-term interest rates (applied against the
notional amounts of the swaps) and by other amounts. These costs may be
significant and will reduce the return on a Fund’s investments in a swap
transaction or other transaction based on the index or that uses the index as
the reference asset. The terms of these transactions may change over time,
potentially in response to market conditions, without notice to
shareholders.
Different
versions of the same index may be available, including a total return version
and an excess return version. The performance of an excess return index
typically represents the performance of the total return version of the index
that is in excess of a short-term interest rate including other amounts
determined by reference to estimated transaction costs associated with trading
in and rebalancing the components of the index. Accordingly, an excess
return version of an index should generally be expected to underperform the
total return version of the same index. As of the date of this Prospectus, each
of DoubleLine Shiller Enhanced CAPE®, DoubleLine Shiller Enhanced
International CAPE®,
DoubleLine Strategic Commodity Fund, and DoubleLine Multi-Asset Trend expect to
enter into swap transactions where the reference asset is the excess return
version of its respective Index; however, each such Fund may enter into swap
transactions where the reference asset is based on any other calculation of its
Index’s return. If markets move against a Fund’s swap positions, the Fund may be
required to maintain or post additional assets and may have to dispose of
existing investments to obtain assets acceptable as collateral or margin. This
may prevent the Fund from pursuing its investment objective.
Inflation-Indexed
Bond Risk
Inflation-indexed
bonds are fixed income securities whose principal values are periodically
adjusted according to a measure of inflation. If the index measuring inflation
falls, the principal value of inflation-indexed bonds will be adjusted downward,
and consequently the interest payable on these securities (calculated with
respect to a smaller principal amount) will be reduced. Repayment of the
original bond principal upon maturity (as adjusted for inflation) is guaranteed
in the case of U.S. Treasury inflation-indexed bonds. For bonds that do not
provide a similar guarantee, the adjusted principal value of the bond repaid at
maturity may be less than the original principal. With regard to municipal
inflation-indexed bonds and certain corporate inflation-indexed bonds, the
inflation adjustment is reflected in the semi-annual coupon payment. As a
result, the principal value of municipal inflation-indexed bonds and such
corporate inflation-indexed bonds does not adjust according to the rate of
inflation. The value of inflation-indexed bonds is expected to change in
response to changes in real interest rates. Real interest rates are tied to the
relationship between nominal interest rates and the rate of inflation. If
nominal interest rates increase at a faster rate than inflation, real interest
rates may rise, leading to a decrease in value of inflation-indexed bonds.
Inflation-indexed bonds may cause a potential cash flow mismatch to investors,
because an increase in the principal amount of an inflation-indexed bond will be
treated as interest income currently subject to tax at ordinary income rates
even though investors will not receive repayment of principal until maturity. If
a Fund invests in such bonds, it will be required to distribute such interest
income in order to qualify for treatment as a regulated investment company and
eliminate the Fund-level tax, without a corresponding receipt of cash, and
therefore may be required to dispose of portfolio securities at a time when it
may not be advantageous to do so in order to make such distributions.
Infrastructure
Sector Risk
The
values of a Fund’s investment in securities and other obligations of U.S. and
non‑U.S. issuers providing exposure to infrastructure investments (“Infrastructure Investments”) may be entirely
dependent upon the successful development,
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construction,
maintenance, renovation, enhancement or operation of infrastructure assets or
infrastructure-related projects. In the case of debt instruments or loans issued
to finance (or refinance) the ownership, development, construction, maintenance,
renovation, enhancement, or operation of infrastructure assets, a Fund may be
entirely dependent on revenues or profits earned in respect of the
infrastructure asset or project to receive the repayment of any principal and
interest owed to it. Accordingly, a Fund has significant exposure to adverse
economic, regulatory, political, legal, demographic, environmental and other
developments affecting the success of the infrastructure assets or projects in
which it directly or indirectly invests.
Infrastructure
Investments are subject to a variety of risk factors that may adversely affect
their success including significant use of leverage, high financing or interest
costs, costs associated with environmental and other regulations, the effects of
economic slowdown and surplus capacity, increased competition from other
providers of similar services, unfavorable demographic trends, obsolescence of
the related service or product it provides, cost over-runs, developmental
delays, uncertainties concerning the availability of fuel at reasonable prices,
the effects of energy conservation policies, poor planning, unexpected
maintenance capital expenditures, increased operating expenses, and other
factors. Additionally, infrastructure-related projects may be subject to
regulation by various governmental authorities, including with respect to the
rates they can charge for their products or services, and can be significantly
affected by government spending policies because infrastructure-related issuers
may rely, to a significant extent, on U.S. and foreign government demand for
their products and services.
Infrastructure
Investments (and related infrastructure assets) may also be adversely affected
by natural disasters, geopolitical tensions, wars, terrorism or other
catastrophes, legal challenges due to environmental, operational or other
issues, the imposition of special tariffs or changes in tax laws, changes in
exchange rates or interest rates, changes in prices for competitive services,
economic conditions, tax treatment, removal or diminution of governmental
subsidies, additional regulation, governmental intervention, litigation,
negative publicity and public perception and unfavorable events in the regions
where assets are located (e.g.,
expropriation, nationalization, confiscation of assets and property or
imposition of restrictions on foreign investments and repatriation of capital,
military coups, social unrest, violence or labor unrest). There is also the risk
that corruption may negatively affect infrastructure projects and other
infrastructure assets, especially in emerging markets, resulting in, among other
things, delays and cost overruns. Infrastructure projects may face competition
from government-sponsored projects, which could decrease the revenues generated
from the asset or the number of available investment opportunities for a
Fund.
A
significant portion of the revenues of certain infrastructure assets or projects
may be from one customer or a relatively small number of customers, including
governmental entities and utilities. Accordingly, the values of certain
Infrastructure Investments may be highly sensitive to the loss of one or more of
those customers, and the loss of any single client may result in the issuer’s
payment default.
A
Fund may make investments in infrastructure assets or projects that have not yet
completed the construction phases of their development and which are not yet
generating cash or revenue. Unexpected delays in completion of the construction
phase in relation to any such project, any “overrun” in the costs of
construction or any construction or maintenance defect, may adversely affect the
ability of the issuer of a Fund’s investments to service its debts. Any
resulting default may adversely affect the value of a Fund’s investment.
A
Fund may make investments from time to time in infrastructure loan assets which
are held on existing lenders’ books, which means that a default by the
counterparty may expose a Fund to losses regardless of the performance of the
underlying projects or loans. The market for infrastructure bonds and loans is
emerging but also rapidly developing, which means there may be fewer investment
opportunities than other fixed-income sectors. There also may be fewer market
participants willing to purchase infrastructure-related investments compared to
other debt markets. Infrastructure assets and related investment opportunities
may be more prevalent in developing or emerging markets, where certain of the
risks described above, including the risk of default, may be heightened. See
“—Emerging Market Country Risk.”
To
the extent that there are environmental liabilities arising in the future in
relation to any sites owned or used by an infrastructure company or project
(including, for example, clean‑up and remediation liabilities), a company may be
required to contribute financially towards any such liabilities which in turn
may increase its risk of defaulting and/or adversely affect the values of a
Fund’s investments.
Some
infrastructure-related projects may utilize relatively new or developing
technologies and there may be issues in relation to those technologies that
become apparent only in the future. Such issues may give rise to additional
costs for the relevant issuer or project or may otherwise result in the
financial performance of the infrastructure project being poorer than
anticipated. This may adversely affect the values of a Fund’s investments.
Additionally, technological advances in the future may reduce the competitive
efficiency of existing or commissioned infrastructure projects, services, or
networks.
Infrastructure
assets, including investments related to infrastructure projects and
infrastructure-related companies, may be more susceptible to adverse economic or
regulatory occurrences and other specific risks affecting their industries,
which may
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adversely
affect the development and success of the infrastructure companies and projects
related to assets in which a Fund invests; delay or limit repayment of the
principal and interest payments on a borrower’s loans or other debt; adversely
affect a Fund’s rights in collateral relating to a loan or other investment; or
otherwise adversely affect the value of a Fund’s investments.
A
Fund’s ability to recover in respect of a defaulted bond or loan may be limited.
Some infrastructure-related debt instruments may not be secured by any assets
and may not be supported by other credit enhancements. Where recourse to a
guarantor, or other third party, or other assets exists, recovery on a defaulted
bond or loan may require a Fund to incur significant costs and delay and/or
require participation in restructuring or bankruptcy proceedings. In certain
jurisdictions, a Fund may have limited or no rights in respect of such
proceedings. In the case of a defaulted bond or loan, a Fund may determine to
sell its investment or claim at a price substantially below what it might
receive if it participated in a restructuring or bankruptcy proceeding for a
variety of reasons, including to avoid incurring significant costs, delay or
uncertainty, or because of the potentially adverse consequences that may occur
if a Fund takes possession of certain types of assets.
In
addition to the risks described above, each of which may adversely affect the
values of a Fund’s investments, sector-specific risks may also adversely affect
the values of a Fund’s investments. A summary of some of the principal
sector-specific risks is included below. The inclusion of a specific risk below
with respect to a specific sector does not mean that that risk does not also
apply in respect of a Fund’s other investments:
Transportation. Transportation-related
infrastructure assets may be adversely affected by, among other things, economic
and market changes, fuel prices, labor relations, geo‑political concerns and
insurance costs. Transportation-related infrastructure assets and related
businesses may also be subject to significant government regulation and
oversight, which may adversely affect their businesses.
Electric Utilities and Power. Deregulation may
subject utility- and power-related infrastructure assets to greater competition
and may adversely affect their performance. Assets in the utilities and/or power
industries may have difficulty obtaining financing for large construction
projects during periods of inflation or unsettled capital markets; face
restrictions on operations and increased cost and delays attributable to
environmental considerations and regulation; find that existing plants,
equipment or products have been rendered obsolete by technological innovations;
or be subject to increased costs because of the scarcity of certain fuels or the
effects of man‑made or natural disasters. Existing and future regulations or
legislation may make it difficult for utility and power assets to operate
profitably. Government regulators monitor and control utility and power revenues
and costs, and therefore may limit utility-related profits. There is no
assurance that regulatory authorities will grant rate increases in the future.
Energy conservation and changes in climate or environmental policy may also have
a significant adverse impact on the revenues and expenses of utility and
power-related assets. Additionally, independent power producers may face other
risks such as but not limited to (i) market risks, (ii) project risks,
and (iii) structural risk.
Energy. Energy-related infrastructure assets
may be highly cyclical and highly dependent on energy prices. The success of
such assets can be strongly affected by one or more of the following: the levels
and volatility of global energy prices, energy supply and demand, capital
expenditures on exploration and production of energy sources, energy
conservation efforts, exchange rates, interest rates, economic conditions, tax
treatment, increased competition and technological advances. Infrastructure
assets and projects in this sector may be subject to substantial government
regulation and contractual fixed pricing, which may increase the cost of doing
business and limit the revenue or earnings available to support the assets’
financing. Energy-related projects face a significant risk of liability from
accidents resulting in injury or loss of life or property, pollution or other
environmental problems, equipment malfunctions or mishandling of materials and a
risk of loss from wars, terrorism, political strife, geopolitical tensions, and
natural disasters. Assets involving pipelines are subject to certain risks,
including pipeline and equipment leaks and ruptures, explosions, fires,
unscheduled downtime, transportation interruptions, discharges or releases of
toxic or hazardous gases and other environmental risks. Any such event could
have serious consequences for the general population of the affected area.
Energy-related projects can be significantly affected by the supply of, and
demand for, specific products (e.g., oil
and natural gas) and services, exploration and production spending, government
subsidization, world events and general economic conditions. Energy-related
assets may have relatively high levels of debt and may be more likely to have to
restructure their debt if there are downturns in energy markets or the economy
as a whole.
Renewable Energy. Governments may provide a
range of incentives and subsidies for specific types of assets, especially for
renewable energy assets. Changes in the application of government policy in
relation to the incentives and subsidies that they provide may have a material
impact upon the profitability or viability of renewable-energy related
infrastructure-related assets.
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The
generation of power from renewable energy sources tends to be reliant upon
relatively recent technological developments (or the application thereof), and
therefore unforeseen technical deficiencies with installations may occur.
Moreover, the reliance of any renewable energy project, or group of projects, on
a variable resource (for example, ambient light in the case of solar power
projects, wind speed in the case of wind power projects and waste in the case of
waste‑to‑energy projects) may affect the profitability of a site or sites. In
addition, in the event of a failure of a utility or other private company
contracted to purchase power produced by an installation or expiration of such a
contract, in which the Fund has invested, difficulties may arise in contracting
with a replacement power purchaser.
Communication Networks and Equipment. The
telecommunications market is characterized by increasing competition and
regulation by various regulatory authorities. Infrastructure assets in the
telecommunications sector may encounter distressed cash flows due to the need to
commit substantial capital to meet increasing competition, particularly in
developing new products and services using new technology. Technological
innovations may make the products and services of certain assets obsolete.
Telecommunication-related infrastructure assets may depend on franchises or
licenses in order to provide services in a given location. Licensing and
franchise rights in the telecommunications sector are limited, which may provide
an advantage to certain participants. Limited availability of such rights, high
barriers to market entry and increasing regulatory oversight, among other
factors, has led to consolidation within the sector, which could lead to further
regulation or other negative effects in the future. Various forms of cyber
attack, the sophistication and lethality of which continues to evolve, threaten
communication networks and could severely hamper any infrastructure project
dependent upon communication networks and equipment.
Public and Social Infrastructure. Public and
social infrastructure assets, such as hospitals, schools, government
accommodations, and other public service facilities projects, may be subject to
risks that include, but are not limited to, costs associated with governmental,
environmental and other regulations, the effects of economic slowdowns,
increased competition from other providers of such services, uncertainties
concerning costs, adverse political developments, and the level of government
spending on infrastructure projects.
Metals and Mining. Investments in metals and
mining related infrastructure assets may be speculative and subject to greater
price volatility than investments in other types of companies. The performance
of assets in this sector is related to, among other things, worldwide metal
prices, and extraction and production costs. Worldwide metal prices may
fluctuate substantially over short periods of time. Metals and mining assets may
also be subject to the effects of competitive pressures in the metals and mining
industry.
Industrial. Industrial-related infrastructure
assets may be adversely affected by supply and demand both for their specific
product or service and for industrial sector products in general. Government
regulation, world events, exchange rates and economic conditions, technological
developments and liabilities for environmental damage and general civil
liabilities will likewise affect the performance of these assets and their
ability to repay their debts. The industrials sector may also be adversely
affected by changes or trends in commodity prices, which can be highly
volatile.
A
Fund’s investments in Infrastructure Investments will expose it to the risks of
investing in the global commodity markets and particular commodities, and the
value of a Fund’s shares may be adversely affected by changes in the values of
commodity prices, which can be extremely volatile and difficult to value. The
values of commodities may be affected by a wide range of factors, including
changes in overall market movements, speculative activity of other investors,
real or perceived inflationary trends, commodity index volatility, changes in
interest rates or currency exchange rates, population growth and changing
demographics, nationalization, expropriation, or other confiscation, economic or
other sanctions, international regulatory, political, and economic developments
(for example, regime changes, trade disputes, wars and changes in economic
activity levels), environmental issues or regulation, and developments affecting
a particular sector, industry or commodity, such as drought, floods, or other
weather conditions, trade embargoes, competition from substitute products,
transportation bottlenecks or shortages, fluctuations in supply and demand,
tariffs and international economic, political and regulatory developments.
Investment
Company and Exchange-Traded Fund Risk
Investments
in open‑end and closed‑end investment companies, and other pooled investment
vehicles, including any ETFs or money market funds, involve substantially the
same risks as investing directly in the instruments held by these entities.
However, the total return from such investments will be reduced by the operating
expenses and fees of the investment company or ETF. A Fund must pay its pro rata
portion of an investment company’s or ETF’s fees and expenses. To the extent the
Adviser determines to invest Fund assets in other investment companies, the
Adviser will have an incentive to invest in other investment vehicles sponsored
or advised by the Adviser or a related party of the Adviser (“other DoubleLine funds”) or other investment
products sponsored or managed by DoubleLine or its related parties over
investment companies or products
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sponsored
or managed by others and to maintain such investments once made due to its own
financial interest in those products and other business considerations. For
example, the Adviser or its related parties may receive fees based on the amount
of assets invested in such other investment vehicles, which fees may be higher
than the fees the Adviser receives for managing a Fund. Investment by a Fund in
those other vehicles may be beneficial in the management of those other
vehicles, by helping to achieve economies of scale or enhancing cash flows. The
Funds’ Advisers have agreed to reduce their advisory fees to the extent of
advisory fees paid to an Adviser or its related parties by other investment
vehicles in respect of assets of a Fund invested in those vehicles. This
agreement will reduce, but will not eliminate, the conflicts described
above.
Any
investment company or ETF in which a Fund invests may not achieve its investment
objective or execute its investment strategy effectively, which may adversely
affect the Fund’s performance. Shares of a closed‑end investment company or ETF
may expose a Fund to risks associated with leverage and may trade at a premium
or discount to the NAV of the closed‑end fund’s or the ETF’s portfolio
securities depending on a variety of factors, including market supply and
demand. Money market mutual funds in which a Fund may invest are subject to Rule
2a‑7 of the 1940 Act, and invest in a variety of short-term, high quality,
dollar-denominated money market instruments. Money market funds are not designed
to offer capital appreciation. In addition, certain money market funds may
impose a fee upon the sale of shares or may temporarily suspend the ability of
investors to redeem shares if such a fund’s liquidity falls below required
minimums, which may adversely affect a Fund’s returns or liquidity.
The
provisions of the 1940 Act may impose certain limitations on a Fund’s
investments in other investment companies. In particular, each Fund’s
investments in investment companies are limited to, subject to certain
exceptions, (i) 3% of the total outstanding voting stock of any one investment
company; (ii) 5% of the Fund’s total assets with respect to any one investment
company; and (iii) 10% of the Fund’s total assets with respect to investment
companies in the aggregate (the “Fund‑of‑Funds
Limitations”). Rule 12d1‑4 of the 1940 Act permits a Fund to invest in
other investment companies beyond the Fund‑of‑Funds Limitations, subject to
certain conditions. Under Rule 12d1‑4, if shares of a Fund are purchased by
another fund beyond the Fund‑of‑Funds Limitations, and the Fund invests in
another investment company or private fund exempt from the definition of
“investment company” under the 1940 Act by Sections 3(c)(1) or 3(c)(7) thereof,
the Fund generally will not be able to make new investments in other funds or
other such private funds, if, as a result of such investment, more than 10% of
the Fund’s assets would be invested in other investment companies and other such
private funds. In addition, an affiliated fund‑of‑funds’ investment in
unaffiliated funds may be made only in accordance with Rule 12d1‑4. These
regulations may limit a Fund’s ability to pursue its principal investment
strategies by investing in other investment companies or private funds or to
invest in those investment companies or private funds it believes are most
desirable, including, potentially, other Funds. Separately, certain Funds may
limit or dispose of their investments in other investment companies and private
funds in anticipation of, or to remain eligible investments for, investment by
other Funds. Compliance with these regulations and the other matters discussed
above and in the SAI may adversely affect a Fund’s performance.
Large
Shareholder Risk
Certain
account holders, including the Adviser or funds or accounts over which the
Adviser (or a related party of the Adviser) has investment discretion, may from
time to time own or control a significant percentage of a Fund’s shares. For
example, the Adviser and/or its related parties currently provide asset
allocation investment advice, including recommending the purchase and/or sale of
shares of the Funds, to a number of large investors. The Funds are subject to
the risk that a redemption by large shareholders of all or a portion of their
Fund shares or a purchase of Fund shares in large amounts and/or on a frequent
basis, including as a result of asset allocation decisions made by the Adviser
(or a related party of the Adviser), will adversely affect a Fund’s performance
if it is forced to sell portfolio securities or invest cash when the Adviser
would not otherwise choose to do so. This risk will be particularly pronounced
if one shareholder owns a substantial portion of the Fund. Redemptions of a
large number of shares may affect the liquidity of a Fund’s portfolio, increase
the Fund’s transaction costs and/or lead to the liquidation of the Fund. Such
transactions also potentially limit the use of any capital loss carryforwards
and certain other losses to offset future realized capital gains (if
any).
Leveraging
Risk
The
Funds may use or create investment leverage in seeking to achieve their
respective investment objective. Certain transactions, including, for example,
when-issued, delayed-delivery, and forward commitment purchases, inverse
floaters, loans of portfolio securities, repurchase agreements (or reverse
repurchase agreements), and the use of some derivatives, can result in leverage.
In addition, a Fund may achieve investment leverage by borrowing money. Leverage
generally has the effect of increasing the amounts of loss or gain the Fund
might realize and creates the likelihood of greater volatility of the value of
the Fund’s investments. In transactions involving leverage, a relatively small
market movement or change in other underlying indicator can lead to
significantly larger losses to a Fund. There is risk of loss in excess of
invested capital. Certain derivatives have the potential for unlimited loss,
regardless of the size of the initial investment. The use of leverage may also
require a Fund to liquidate its other holdings at disadvantageous times and
prices in order to satisfy repayment, interest payment, or margin obligations.
See “Derivatives Risk” herein and “Borrowing Risk” in the SAI.
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The
DoubleLine Strategic Commodity Fund will typically use investment leverage to
obtain exposure to a basket or index of commodities and/or to other commodities
while it also holds other investments, such as fixed income instruments. In
addition, each of DoubleLine Shiller Enhanced International CAPE®, DoubleLine Shiller Enhanced
CAPE®, and DoubleLine
Multi-Asset Trend Fund uses investment leverage as part of its principal
investment strategies, and each such Fund’s total investment exposure (direct
investments in debt securities plus notional exposure to its respective index
(as described in the Fund’s principal investment policies)) will typically be
equal to approximately 200% of the Fund’s NAV. With respect to DoubleLine
Shiller Enhanced International CAPE®, the actual notional amounts
of derivatives used for this purpose may be greater than the desired amount of
index exposure, since in some cases it may be necessary to use additional
derivatives to obtain the desired currency exposure. DoubleLine Strategic
Commodity Fund, DoubleLine Shiller Enhanced International CAPE®, DoubleLine Shiller Enhanced
CAPE®, and DoubleLine
Multi-Asset Trend Fund may lose money on investments intended to achieve
performance similar to a basket or an index and, at the same time, may lose
money on their investments in debt instruments and other investments and, in the
case of DoubleLine Shiller Enhanced International CAPE®, through exposure to
non‑U.S. currencies or to currency exchange transactions.
Limited
Operating History Risk
Certain
Funds are recently formed and have limited operating history for investors to
evaluate. Such Funds may not attract sufficient assets to achieve or maximize
investment and operational efficiencies and remain viable. If the Funds fail to
achieve sufficient scale, they may be liquidated.
Liquidity
Risk
Liquidity
risk is the risk that a Fund may invest in securities that trade in lower
volumes and may be less liquid than other investments or that the Fund’s
investments may become less liquid in response to market developments or adverse
investor perceptions. Illiquidity may be the result of, for example, low trading
volumes, lack of a market maker, or contractual or legal restrictions that limit
or prevent a Fund from selling securities or closing positions. When there is no
willing buyer and investments cannot be readily sold or closed out, a Fund may
have to sell an investment at a lower price than the price at which the Fund is
carrying the investments, may not be able to sell the investments at all, may
miss other investment opportunities and may hold investments it would prefer to
sell, any of which would have a negative effect on the Fund’s performance and
may cause a Fund to hold an investment longer than the Adviser would otherwise
determine. It is possible that a Fund may be unable to sell a portfolio
investment at a desirable time or at the value the Fund has placed on the
investment or that the Fund may be forced to sell large amounts of securities
more quickly than it normally would in the ordinary course of business. In such
a case, the sale proceeds received by the Fund may be substantially less than if
the Fund had been able to sell the securities in more-orderly transactions, and
the sale price may be substantially lower than the price previously used by the
Fund to value the securities for purposes of determining the Fund’s NAV. In
addition, if a Fund sells investments with extended settlement times (e.g., certain kinds of loans (see “Loan
Risk”)), the settlement proceeds from the sales will not be available to meet
the Fund’s redemption obligations for a substantial period of time. In order to
honor redemptions pending settlement of such investments, a Fund may be forced
to sell other investment positions with shorter settlement cycles when the Fund
would not otherwise have done so, which may adversely affect a Fund’s
performance. If another fund or investment pool in which a Fund invests is not
publicly offered or there is no public market for its shares or accepts
investments subject to certain legal restrictions, such as lock‑up periods
implemented by private funds, a Fund will typically be prohibited by the terms
of its investment from selling or redeeming its shares in the fund or pool, or
may not be able to find a buyer for those shares at an acceptable price.
Additionally, the market for certain investments may become illiquid under
adverse market or economic conditions (e.g., if interest rates rise or fall
significantly, if there is significant inflation or deflation, increased selling
of debt securities generally across other funds, pools and accounts, changes in
investor perception, geopolitical events (such as trading halts, sanctions or
wars), or changes in government intervention in the financial markets)
independent of any specific adverse changes in the conditions of a particular
issuer. In such cases, shares of the Fund, due to limitations on investments in
illiquid securities and the difficulty in purchasing and selling such securities
or instruments, may decline in value or the Fund may be unable to achieve its
desired level of exposure to a certain issuer or sector. During periods of
substantial market disruption, a large portion of the Fund’s assets could
potentially experience significant levels of illiquidity. The values of illiquid
investments are often more volatile than the values of more liquid investments.
It may be more difficult for a Fund to determine a fair value of an illiquid
investment than those of more liquid comparable investments.
Bond
markets have consistently grown over the past three decades while the growth of
capacity for traditional dealer counterparties to engage in fixed income trading
has not kept pace and in some cases has decreased. As a result, dealer
inventories of certain types of bonds and similar instruments, which provide a
core indication of the ability of financial intermediaries to “make markets,”
are at or near historic lows in relation to market size. Because market makers
provide stability to a market through their intermediary services, the
significant reduction in dealer inventories could potentially lead to decreased
liquidity and increased volatility in the fixed income markets. Such issues may
be exacerbated during periods of economic uncertainty.
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Loan
Risk
Investments
in loans are generally subject to the same risks as investments in other types
of debt obligations, including, among others, credit risk, interest rate risk,
prepayment risk, and extension risk. In addition, in many cases loans are
subject to the risks associated with below-investment grade securities. This
means loans are often subject to significant credit risks, including a greater
possibility that the borrower will be adversely affected by changes in market or
economic conditions and may default or enter bankruptcy. This risk of default
will increase in the event of an economic downturn or a substantial increase in
interest rates (which will increase the cost of the borrower’s debt service).
The risks of investing in loans include the risk that the borrowers on loans
held by a Fund may be unable to honor their payment obligations due to adverse
conditions in the industry or industries in which they operate.
The
interest rates on floating rate loans typically adjust only periodically.
Accordingly, adjustments in the interest rate payable under a loan may trail
prevailing interest rates significantly, especially if there are limitations
placed on the amount the interest rate on a loan may adjust in a given period.
Certain floating rate loans have a feature that prevents their interest rates
from adjusting if market interest rates are below a specified minimum level.
When interest rates are low, this feature could result in the interest rates of
those loans becoming fixed at the applicable minimum level until interest rates
rise above that level. Although this feature is intended to result in these
loans yielding more than they otherwise would when interest rates are low, the
feature might also result in the prices of these loans becoming more sensitive
to changes in interest rates should interest rates rise but remain below the
applicable minimum level.
In
addition, investments in loans may be difficult to value and may be illiquid.
Floating rate loans generally are subject to legal or contractual restrictions
on resale. The liquidity of floating rate loans, including the volume and
frequency of secondary market trading in such loans, varies significantly over
time and among individual floating rate loans. For example, if the credit
quality of the borrower related to a floating rate loan unexpectedly declines
significantly, secondary market trading in that floating rate loan can also
decline. The secondary market for loans may be subject to irregular trading
activity, wide bid/ask spreads, and extended trade settlement periods, which may
increase the expenses of a Fund or cause the Fund to be unable to realize the
full value of its investment in the loan, resulting in a material decline in the
Fund’s NAV.
During
periods of severe market stress, it is possible that the market for loans may
become highly illiquid. In such an event, a Fund may find it difficult to sell
loans it holds, and, for loans it is able to sell in such circumstances, the
trade settlement period may be longer than anticipated.
Investments
in loans through a purchase of a loan, loan origination or a direct assignment
of a financial institution’s interests with respect to a loan may involve
additional risks to a Fund. For example, if a loan is foreclosed, a Fund could
become owner, in whole or in part, of any collateral, which could include, among
other assets, real estate or other real or personal property, and would bear the
costs and liabilities associated with owning and holding or disposing of the
collateral. In addition, it is conceivable that under emerging legal theories of
lender liability, a Fund as holder of a partial interest in a loan could be held
liable as co‑lender for acts of the agent lender.
Loans
and certain other forms of direct indebtedness may not be classified as
“securities” under the federal securities laws and, therefore, when a Fund
purchases such instruments, it may not be entitled to the protections against
fraud and misrepresentation contained in the federal securities laws. In
addition, a limited number of states require purchasers of certain loans,
primarily consumer loans, to be licensed or registered in order to own the loans
or, in certain states, to collect a rate of interest above a specified rate. As
of the date of this Prospectus, each Fund does not hold any such license or
registration in any states where a license or registration is required, and
there can be no assurance that any Fund will timely or ever obtain any such
licenses or registration.
During
periods of deteriorating economic conditions, such as recessions or periods of
rising unemployment, delinquencies and losses generally increase, sometimes
dramatically, with respect to loans.
Additional
risks of investments in loans may include:
Agent/Intermediary
Risk. If a Fund holds a loan through another financial
intermediary, as is the case with a participation, or relies on another
financial intermediary to administer the loan, as is the case with most
multi-lender facilities, the Fund’s receipt of principal and interest on the
loan and the value of the Fund’s loan investment will depend at least in part on
the credit standing of the financial intermediary and therefore will be subject
to the credit risk of the intermediary. The Fund will be required to rely upon
the financial intermediary from which it purchases a participation interest to
collect and pass on to the Fund such payments and to enforce the Fund’s rights
and may not be able to cause the financial intermediary to take what it
considers to be appropriate action. As a result, an insolvency, bankruptcy or
reorganization of the financial intermediary may delay or prevent the Fund from
receiving principal, interest and other amounts with respect
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to
the Fund’s interest in the loan. In addition, if a Fund relies on a financial
intermediary to administer a loan, the Fund is subject to the risk that the
financial intermediary may be unwilling or unable to demand and receive payments
from the borrower in respect of the loan, or otherwise unwilling or unable to
perform its administrative obligations.
Collateral Impairment
Risk. Even if a loan to which the Fund is exposed is secured,
there can be no assurance that the collateral will, when recovered and
liquidated, generate sufficient (or any) funds to offset any losses associated
with a defaulting loan. This risk is increased if the Fund’s loans are secured
by a single asset. In addition, a Fund’s interest in collateral securing a loan
may be found invalid or may be used to pay other outstanding obligations of the
borrower under applicable law. In the event that a borrower defaults, a Fund’s
access to the collateral may be limited by bankruptcy and other insolvency laws.
There is also the risk that the collateral may be difficult to liquidate, that
all or some of the collateral may be illiquid, or that a Fund’s rights to
collateral may be limited by bankruptcy or insolvency laws. A Fund may have to
participate in legal proceedings or take possession of and manage assets that
secure the issuer’s obligations. This could increase a Fund’s operating expenses
and decrease its NAV.
Highly Leveraged
Transactions Risk. A Fund may invest in loans made in connection
with highly leveraged transactions. These transactions may include operating
loans, leveraged buyout loans, leveraged capitalization loans and other types of
acquisition financing. Those loans are subject to greater credit and liquidity
risks than other types of loans. If a Fund voluntarily or involuntarily sold
those types of loans, it might not receive the full value it expected.
Stressed, Distressed
or Defaulted Borrowers Risk.
A Fund can also invest in loans of borrowers that are experiencing, or
are likely to experience, financial difficulty. These loans are subject to
greater credit and liquidity risks than other types of loans and are generally
considered speculative. In addition, a Fund can invest in loans of borrowers
that have filed for bankruptcy protection or that have had involuntary
bankruptcy petitions filed against them by creditors. Various laws enacted for
the protection of debtors may apply to loans. A bankruptcy proceeding or other
court proceeding could delay or limit the ability of a Fund to collect the
principal and interest payments on that borrower’s loans or adversely affect a
Fund’s rights in collateral relating to a loan. If a lawsuit is brought by
creditors of a borrower under a loan, a court or a trustee in bankruptcy could
take certain actions that would be adverse to a Fund. For example:
|
• |
|
Other
creditors might convince the court to set aside a loan or the
collateralization of the loan as a “fraudulent conveyance” or
“preferential transfer.” In that event, the court could recover from the
Fund the interest and principal payments that the borrower made before
becoming insolvent. There can be no assurance that the Fund would be able
to prevent that recapture. |
|
• |
|
A
bankruptcy court may restructure the payment obligations under the loan so
as to reduce the amount to which the Fund would be
entitled. |
|
• |
|
The
court might discharge the amount of the loan that exceeds the value of the
collateral. |
|
• |
|
The
court could subordinate the Fund’s rights to the rights of other creditors
of the borrower under applicable law, decreasing, potentially
significantly, the likelihood of any recovery on the Fund’s
investment. |
Limited Information
Risk. Because there is limited public information available
regarding loan investments, a Fund’s investments in such instruments are
particularly dependent on the analytical abilities of the Fund’s portfolio
managers.
Interest Rate
Benchmarks Risk. Interest rates on loans typically adjust
periodically, often based on changes in a benchmark rate plus a premium or
spread over the benchmark rate. The benchmark rate may be the Secured Overnight
Financing Rate, the Prime Rate, or other base lending rates used by commercial
lenders (each as defined in the applicable loan agreement).
Some
benchmark rates may reset daily; others reset less frequently. Certain floating
or variable rate loans may permit the borrower to select an interest rate reset
period of up to one year or longer. Investing in loans with longer interest rate
reset periods may increase fluctuations in a Fund’s NAV as a result of changes
in interest rates. Interest rates on loans with longer periods between benchmark
resets will typically trail market interest rates in a rising interest rate
environment.
Certain
loans may permit the borrower to change the base lending or benchmark rate
during the term of the loan. One benchmark rate may not adjust to changing
market or interest rates to the same degree or as rapidly as another, permitting
the borrower the option to select the benchmark rate that is most advantageous
to it and less advantageous to the Fund. To the extent the borrower elects this
option, the interest income and total return the Fund earns on the investment
may be adversely affected as compared to other investments where the borrower
does not have the option to change the base lending or benchmark rate.
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Restrictive Loan
Covenants Risk. Borrowers must comply with various restrictive
covenants that may be contained in loan agreements. They may include
restrictions on dividend payments and other distributions to stockholders,
provisions requiring the borrower to maintain specific financial ratios, and
limits on total debt. They may include requirements that the borrower prepay the
loan with any free cash flow. A break of a covenant that is not waived by the
agent bank (or the lenders) is normally an event of default that provides the
agent bank or the lenders the right to call the outstanding amount on the loan.
If a lender accelerates the repayment of a loan because of the borrower’s
violation of a restrictive covenant under the loan agreement, the borrower might
default in payment of the loan.
Some
of the loans in which a Fund may invest or to which a Fund may obtain exposure
may be “covenant-lite.” Such loans contain fewer or less restrictive constraints
on the borrower than certain other types of loans. Such loans generally do not
include terms which allow the lender to monitor the performance of the borrower
and declare a default or force a borrower into bankruptcy restructuring if
certain criteria are breached. Under such loans, lenders typically must rely on
covenants that restrict a borrower from incurring additional debt or engaging in
certain actions. Such covenants can be breached only by an affirmative action of
the borrower, rather than by a deterioration in the borrower’s financial
condition. Accordingly, a Fund may have fewer rights against a borrower when it
invests in or has exposure to such loans and so may have a greater risk of loss
on such investments as compared to investments in or exposure to loans with
additional or more conventional covenants.
Senior Loan and
Subordination Risk. In addition to the risks typically associated
with debt securities and loans generally, senior loans are also subject to the
risk that a court could subordinate a senior loan, which typically holds a
senior position in the capital structure of a borrower, to presently existing or
future indebtedness or take other action detrimental to the holders of senior
loans.
A
Fund’s investments in senior loans may be collateralized with one or more of
(1) working capital assets, such as accounts receivable and inventory,
(2) tangible fixed assets, such as real property, buildings and equipment,
(3) intangible assets such as trademarks or patents, or (4) security
interests in shares of stock of the borrower or its subsidiaries or affiliates.
In the case of loans to a non‑public company, the company’s shareholders or
owners may provide collateral in the form of secured guarantees and/or security
interests in assets they own. However, the value of the collateral may decline
after a Fund buys the senior loan, particularly if the collateral consists of
equity securities of the borrower or its affiliates. If a borrower defaults,
insolvency laws may limit a Fund’s access to the collateral, or the lenders may
be unable to liquidate the collateral. A bankruptcy court might find that the
collateral securing the senior loan is invalid or require the borrower to use
the collateral to pay other outstanding obligations. If the collateral consists
of stock of the borrower or its subsidiaries, the stock may lose all of its
value in the event of a bankruptcy, which would leave the Fund exposed to
greater potential loss. As a result, a collateralized senior loan may not be
fully collateralized and can decline significantly in value.
If
a borrower defaults on a collateralized senior loan, a Fund may receive assets
other than cash or securities in full or partial satisfaction of the borrower’s
obligation under the senior loan. Those assets may be illiquid, and a Fund might
not be able to realize the benefit of the assets for legal, practical or other
reasons. A Fund might hold those assets until an Adviser determined it was
appropriate to dispose of them. If the collateral becomes illiquid or loses some
or all of its value, the collateral may not be sufficient to protect a Fund in
the event of a default of scheduled interest or principal payments.
A
Fund can invest in senior loans that are not secured. If the borrower is unable
to pay interest or defaults in the payment of principal, there will be no
collateral on which the Fund can foreclose. Therefore, these loans typically
present greater risks than collateralized senior loans.
Due
to restrictions on transfers in loan agreements and the nature of the private
syndication of senior loans including, for example, the lack of
publicly-available information, some senior loans are not as easily purchased or
sold as publicly-traded securities. Some senior loans and other Fund investments
are illiquid, which may make it difficult for a Fund to value them or dispose of
them at an acceptable price. Direct investments in senior loans and investments
in participation interests in or assignments of senior loans may be
limited.
Settlement Risk.
Transactions in many loans settle on a delayed basis, and a Fund
may not receive the proceeds from the sale of such loans for a substantial
period after the sale. As a result, sale proceeds related to the sale of such
loans may not be available to make additional investments or to meet a Fund’s
redemption obligations until potentially a substantial period after the sale of
the loans.
Servicer Risk.
A Fund’s direct and indirect investments in loans are typically
serviced by the originating lender or a third-party servicer. In the event that
the servicer is unable to service the loan, there can be no guarantee that a
backup servicer
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will
be able to assume responsibility for servicing the loans in a timely or
cost-effective manner; any resulting disruption or delay could jeopardize
payments due to a Fund in respect of its investments or increase the costs
associated with a Fund’s investments.
Foreign Loan
Risk. Loans involving foreign borrowers may involve risks not
ordinarily associated with exposure to loans to U.S. entities and individuals.
The foreign lending industry may be subject to less governmental supervision and
regulation than exists in the U.S.; conversely, foreign regulatory regimes
applicable to the lending industry may be more complex and more restrictive than
those in the U.S., resulting in higher costs associated with such investments,
and such regulatory regimes may be subject to interpretation or change without
prior notice to investors, such as a Fund. Foreign lending may not be subject to
accounting, auditing, and financial reporting standards and practices comparable
to those in the U.S. Due to differences in legal systems, there may be
difficulty in obtaining or enforcing a court judgment outside the U.S.
Lender Liability.
A number of judicial decisions have upheld judgments of borrowers
against lending institutions on the basis of various evolving legal theories,
collectively termed “lender liability.” Generally, lender liability is founded
on the premise that a lender has violated a duty (whether implied or
contractual) of good faith, commercial reasonableness and fair dealing, or a
similar duty owed to the borrower or has assumed an excessive degree of control
over the borrower resulting in the creation of a fiduciary duty owed to the
borrower or its other creditors or shareholders. If a loan held by a Fund were
found to have been made or serviced under circumstances that give rise to lender
liability, the borrower’s obligation to repay that loan could be reduced or
eliminated or a Fund’s recovery on that loan could be otherwise impaired, which
would adversely impact the value of that loan. In limited cases, courts have
subordinated the loans of a senior lender to a borrower to claims of other
creditors of the borrower when the senior lender or its agents, such as a loan
servicer, is found to have engaged in unfair, inequitable or fraudulent conduct
with respect to the other creditors. If a loan held by a Fund were subject to
such subordination, it would be junior in right of payment to other indebtedness
of the borrower, which could adversely impact the value of that loan.
A
Fund may invest in loans directly or indirectly by investing in shares of the
DoubleLine Floating Rate Fund and in either case will be subject to the risks
described above.
For
more information on lending risks specific to investments in
infrastructure-related assets, please refer to “ — Infrastructure Sector Risk”
above.
Market
Capitalization Risk
Stocks
fall into three broad market capitalization categories — large, medium and
small. A Fund that invests substantially in one of these categories carries the
risk that due to current market conditions that category may be out of favor
with investors.
If
valuations of large capitalization companies appear to be greatly out of
proportion to the valuations of small or medium capitalization companies,
investors may migrate to the stocks of small and medium‑sized companies. Larger,
more established companies may be unable to respond quickly to new competitive
challenges such as changes in technology and consumer tastes. Larger companies
also may not be able to attain the high growth rates of successful smaller
companies.
Investing
in medium and small capitalization companies may involve special risks because
those companies may have a narrower focus, more limited financial resources,
fewer experienced managers, dependence on a few key employees, a more limited
trading market for their stocks, and less publicly available information, as
compared with larger companies. In addition, securities of these companies are
subject to the risk that, during certain periods, the liquidity of particular
issuers or industries will shrink or disappear with little forewarning as a
result of adverse economic or market conditions, or adverse investor
perceptions, whether or not accurate. Securities of medium and smaller
capitalization issuers may therefore be subject to greater price volatility and
may decline more significantly in market downturns than securities of larger
companies. Smaller and medium capitalization issuers may also require
substantial additional capital to support their operations, to finance expansion
or to maintain their competitive position; and may have substantial borrowings
or may otherwise have a weak financial condition, and may be susceptible to
bankruptcy. Transaction costs for these investments are often higher than those
of larger capitalization companies. There is typically less publicly available
information about medium and small capitalization companies.
Market
Risk
Various
market risks can affect the price or liquidity of an issuer’s securities in
which a Fund may invest. The prices of investments can fall rapidly in response
to developments affecting a specific company, industry, sector or asset class,
or to changing economic, political, demographic, market or other conditions that
can affect markets broadly, including disruptions caused by trade disputes,
natural disasters, epidemics or pandemics, terrorism, or other events.
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Returns
from the securities in which a Fund invests may underperform returns from the
various general securities markets. Different types of securities tend to go
through cycles of outperformance and underperformance in comparison to the
general securities markets. Adverse events occurring with respect to an issuer’s
performance or financial position can depress the value of the issuer’s
securities. The liquidity in a market for a particular security will affect its
value and may be affected by factors relating to the issuer, as well as the
depth of the market for that security. Other market risks that can affect value
include a market’s current attitudes about types of securities, market reactions
to political or economic events, including litigation, and tax and regulatory
effects (including lack of adequate regulations for a market or particular type
of instrument). During periods of severe market stress, it is possible that the
market for some or all of a Fund’s investments may become highly illiquid. In
such an event, a Fund may find it difficult to sell its investments, and, for
investments it is able to sell in such circumstances, the sales price may be
significantly lower, and the trade settlement period may be longer, than
anticipated.
Events
leading to limited liquidity, defaults, non‑performance or other adverse
developments that affect one industry, such as the financial services industry,
or concerns or rumors about any events of these kinds, have in the past and may
in the future lead to market-wide liquidity problems, may spread to other
industries, and could negatively affect the value and liquidity of the Fund’s
investments. For example, in response to the rapidly declining financial
condition of regional banks SVB and Signature, the CDFPI and the NYSDFS closed
SVB and Signature on March 10, 2023 and March 12, 2023, respectively,
and the FDIC was appointed as receiver for SVB and Signature. Although the U.S.
Department of the Treasury, the Federal Reserve and the FDIC have taken measures
to stabilize the financial system, uncertainty and liquidity concerns in the
broader financial services industry remain. Additionally, should there be
additional systemic pressure on the financial system and capital markets, there
can be no assurances of the response of any government or regulator, and any
response may not be as favorable to industry participants as the measures
currently being pursued. In addition, highly publicized issues related to the
U.S. and global capital markets in the past have led to significant and
widespread investor concerns over the integrity of the capital markets. The
situation related to SVB, Signature and other regional banks could in the future
lead to further rules and regulations for public companies, banks, financial
institutions and other participants in the U.S. and global capital markets, and
complying with the requirements of any such rules or regulations may be
burdensome. Even if not adopted, evaluating and responding to any such proposed
rules or regulations could result in increased costs and require significant
attention from the Advisers.
Events
surrounding the COVID‑19 pandemic have contributed to significant market
volatility, reductions in economic activity, market closures, and declines in
global financial markets. These effects and the effects of other infectious
illness outbreaks, epidemics or pandemics may be short term or may last for an
extended period of time, and in either case could result in a substantial
economic downturn or recession. Governmental responses may exacerbate other
pre‑existing political, social, economic, market and financial risks. These
events may have a significant adverse effect on a Fund’s performance and on the
liquidity of a Fund’s investments, impair a Fund’s ability to satisfy redemption
requests, and have the potential to impair the ability of the Advisers or a
Fund’s other service providers to serve a Fund and could lead to operational
disruptions that negatively impact a Fund.
Markets
may, in response to governmental actions or intervention, or general market
conditions, including real or perceived adverse political, economic or market
conditions, tariffs and trade disruptions, inflation, recession, changes in
interest or currency rates, lack of liquidity in the bond markets or adverse
investor sentiment, or other events, including a public health crisis,
experience periods of high volatility and reduced liquidity. During those
periods, the Funds may experience high levels of shareholder redemptions, and
may have to sell securities at times when they would otherwise not do so, and
potentially at unfavorable prices. Securities may be difficult to value during
such periods. Market risk involves the risk that the value of the Fund’s
investment portfolio will change, potentially frequently and in large amounts,
as the prices of its investments go up or down. During periods of severe market
stress, it is possible that the market for some or all of a Fund’s investments
may become highly volatile and/or illiquid. In such an event, the Fund may find
it difficult to sell some or all of its investments and, for certain assets, the
trade settlement period may be longer than anticipated. The fewer the number of
issuers in which a Fund invests and/or the greater the use of leverage, the
greater the potential volatility of the Fund’s portfolio. Recently, there have
been inflationary price movements, which have caused the fixed income securities
markets to experience heightened levels of interest rate volatility and
liquidity risk. Recently, there have been inflationary price movements, which
have caused the fixed income securities markets to experience heightened levels
of interest rate volatility and liquidity risk. The U.S. Federal Reserve has
raised interest rates from historically low levels and may continue to do so.
Please refer to “Debt Securities Risks — Interest Rate Risk” above.
The
United States government and the Federal Reserve and foreign governments and
central banks may take steps to support financial markets. They might, for
example, take steps to support markets and economic activity generally and to
set or maintain low interest rates, such as by purchasing bonds or making
financing broadly available to investors. Such actions may be intended to
support certain asset classes or segments of the markets, but not others, and
can have disproportionate, adverse, and unexpected effects on some asset classes
or sectors, including those in which a Fund invests. For example, efforts by
governments to provide debt relief to certain consumers or market participants
or to support certain aspects of the
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market
could significantly and adversely affect the value of a Fund’s investments, a
Fund’s earnings, or a Fund’s risk profile, and have other unintended or
unexpected effects. Other measures taken by governments and regulators,
including, for example, steps to reverse, withdraw, curtail or taper such
activities, could have a material adverse effect on prices for a Fund’s
portfolio of investments and on the management of the Funds. The withdrawal of
support, failure of efforts in response to a financial or other crisis, or
investor perception that those efforts are not succeeding could negatively
affect financial markets generally as well as the values and liquidity of a
Fund’s investments.
Federal,
state, and other governments, their regulatory agencies, or self regulatory
organizations may take actions that affect the regulation of the securities in
which a Fund invests or the issuers of such securities in ways that are
unforeseeable. Legislation or regulation also may change the way in which the
Funds or the Adviser are regulated. Such legislation, regulation, or other
government action could limit or preclude a Fund’s ability to achieve its
investment objective and affect the Fund’s performance.
Political,
social or financial instability, civil unrest, geopolitical tensions, wars,
natural disasters and acts of terrorism are other potential risks that could
adversely affect a Fund’s investments or markets generally. In addition,
political developments in foreign countries or the United States may at times
subject such countries to sanctions from the U.S. government, foreign
governments and/or international institutions that could negatively affect a
Fund’s investments in issuers located in, doing business in or with assets in
such countries. Any or all of the risks described herein can increase some or
all of the other risks associated with a Fund’s investments, including, among
others, counterparty risk, debt securities risks, liquidity risk, and valuation
risk.
Continuing
uncertainty as to the status of the euro and the EMU and the potential for
certain countries (such as those in the UK) to withdraw from the institution has
created significant volatility in currency and financial markets generally. Any
partial or complete dissolution of the EU could have significant adverse effects
on currency and financial markets, and on the values of a Fund’s portfolio
investments. In January 2020, the United Kingdom withdrew from the EU. During an
11‑month transition period, the UK and the EU agreed to a Trade and Cooperation
Agreement which sets out the agreement for certain parts of the future
relationship between the EU and the UK from January 1, 2021. The Trade and
Cooperation Agreement does not include an agreement on financial services which
is yet to be agreed. From January 1, 2021, EU law ceased to apply in the
UK. However, many EU laws have been transposed into English law and these
transposed laws will continue to apply until such time as they are repealed,
replaced or amended. Depending on the terms of any future agreement between the
EU and the UK on financial services, substantial amendments to English law may
occur. Significant uncertainty remains in the market regarding the ramifications
of these developments, and the range and potential implications of possible
political, regulatory, economic and market outcomes are difficult to predict.
The markets may be further disrupted and adversely affected by the withdrawal at
various times given the uncertainty surrounding the country’s trade, financial,
and other arrangements.
Russia’s
invasion of Ukraine in February 2022, the resulting responses by the United
States and other countries, and the potential for wider conflict could increase
volatility and uncertainty in the financial markets and adversely affect
regional and global economies. The United States and other countries have
imposed broad-ranging economic sanctions on Russia, certain Russian individuals,
banking entities and corporations, and Belarus as a response to Russia’s
invasion of Ukraine, and may impose sanctions on other countries that provide
military or economic support to Russia. The extent and duration of Russia’s
military actions and the repercussions of such actions (including any
retaliatory actions or countermeasures that may be taken by those subject to
sanctions, including cyber attacks) are impossible to predict, but could result
in significant market disruptions, including in certain industries or sectors,
such as the oil and natural gas markets, and may negatively affect global supply
chains, inflation and global growth. These and any related events could
significantly impact a Fund’s performance and the value of an investment in the
Fund, even if the Fund does not have direct exposure to Russian issuers or
issuers in other countries affected by the invasion.
A
Fund may continue to accept new subscriptions and to make additional investments
in instruments in accordance with the Fund’s principal investment strategies to
strive to meet the Fund’s investment objective under all types of market
conditions, including unfavorable market conditions.
Models
and Data Risk
An
Adviser may utilize various proprietary quantitative models or related data in
connection with providing investment management services to a Fund. There is a
possibility that one or all of the quantitative models may fail to identify
profitable opportunities. In addition, failures to properly gather, organize,
and analyze large amounts of data or errors in a model or data, or in the
application of such models, may result in, among other things, execution and
investment allocation failures and investment losses. For example, the models
may incorrectly identify opportunities or data used in the construction and
application of models may prove to be inaccurate or stale, which may result in
misidentified opportunities that may lead to substantial losses for a Fund. A
given model may be more effective with certain instruments or strategies than
others, and
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there
can be no assurance that any model can identify and incorporate all factors that
will affect an investment’s price or performance. Investments selected using the
models may perform differently than expected as a result of, among other things,
the market factors used in creating models, the weight given to each such market
factor, changes from the market factors’ historical trends and technical issues
in the construction and implementation of the models (e.g., data problems, and/or software issues).
An Adviser’s judgments about the weightings among various models and strategies
may be incorrect, adversely affecting performance.
Mortgage-Backed
Securities Risk
Mortgage-backed
securities include, among other things, participation interests in pools of
residential mortgage loans purchased from individual lenders by a federal agency
or originated and issued by private lenders and involve, among others, the
following risks:
Credit and Market
Risks of Mortgage-Backed Securities. Investments by a Fund in
fixed rate and floating rate mortgage-backed securities will entail credit risks
(i.e., the risk of non‑payment of
interest and principal) and market risks (i.e., the risk that interest rates and other
factors could cause the value of the instrument to decline). Many issuers or
servicers of mortgage-backed securities guarantee timely payment of interest and
principal on the securities, whether or not payments are made when due on the
underlying mortgages. This kind of guarantee generally increases the quality of
a security, but does not mean that the security’s market value and yield will
not change. The values of mortgage-backed securities may change because of
changes in the market’s perception of the credit quality of the assets held by
the issuer of the mortgage-backed securities or an entity, if any, providing
credit support in respect of the mortgage-backed securities. In addition, an
unexpectedly high rate of defaults on the mortgages held by a mortgage pool may
limit substantially the pool’s ability to make payments of principal or interest
to a Fund as a holder of such securities, reducing the values of those
securities or in some cases rendering them worthless. The Funds also may
purchase securities that are not guaranteed or subject to any credit support, or
that are subordinate in their right to receive payment of interest and repayment
of principal to other classes of the issuer’s securities. An investment in a
privately issued mortgage-backed security is generally less liquid and subject
to greater credit risks than an investment in a mortgage-backed security that is
issued or otherwise guaranteed by a federal government agency or sponsored
corporation.
Mortgage-backed
securities may be structured similarly to CDOs and may be subject to similar
risks. See “— Collateralized Debt Obligations Risk” in the Prospectus and SAI
for more information. For example, the cash flows from the collateral underlying
the mortgage-backed security may be split into two or more portions, called
tranches, varying in risk and yield. Senior tranches are paid from the cash
flows from the underlying assets before the junior tranches and equity or “first
loss” tranches. Losses are first borne by the equity tranches, next by the
junior tranches, and finally by the senior tranches. Interest holders in senior
tranches are entitled to the lowest interest rates but are generally subject to
less credit risk than more junior tranches because, should there be any default,
senior tranches are typically paid first. The most junior tranches, such as
equity tranches, typically are due to be paid the highest interest rates but
suffer the highest risk of loss should the holder of an underlying mortgage loan
default. If some loans default and the cash collected by the issuer of the
mortgage-backed security is insufficient to pay all of its investors, those in
the lowest, most junior tranches suffer losses first.
Like
bond investments, the value of fixed rate mortgage-backed securities will tend
to rise when interest rates fall, and fall when rates rise. Floating rate
mortgage-backed securities generally tend to have more moderate changes in price
when interest rates rise or fall, but their current yield will generally be
affected. In addition, the mortgage-backed securities market in general may be
adversely affected by changes in governmental legislation or regulation. Factors
that could affect the value of a mortgage-backed security include, among other
things, the types and amounts of insurance, if any, which an individual mortgage
or that specific mortgage-backed security carries, the default and delinquency
rate of the mortgage pool, the amount of time the mortgage loan has been
outstanding, the loan‑to‑value ratio of each mortgage and the amount of
overcollateralization or undercollateralization of a mortgage pool. A Fund may
invest in mortgage-backed securities that are subordinate in their right to
receive payment of interest and repayment of principal to other classes of the
issuer’s securities.
The
residential mortgage market in the United States has experienced difficulties at
times, and the same or similar events may adversely affect the performance and
market value of certain of a Fund’s mortgage-related investments. Delinquencies
and losses on residential mortgage loans (especially subprime and second-lien
mortgage loans) generally increase in a recession and potentially could begin to
increase again. A decline in or flattening of housing values (as has been
experienced and may again be experienced in many housing markets) may exacerbate
such delinquencies and losses. Borrowers with adjustable rate mortgage loans may
be more sensitive to changes in interest rates, which affect their monthly
mortgage payments, and may be unable to secure replacement mortgages at
comparably low interest rates.
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Also,
a number of residential mortgage loan originators have experienced serious
financial difficulties or bankruptcy. Reduced investor demand for
mortgage-related securities has resulted and again may result in limited new
issuances of mortgage-related securities and limited liquidity in the secondary
market for mortgage-related securities, which can adversely affect the market
value of mortgage-related securities and limit the availability of attractive
investment opportunities for a Fund. It is possible that such limited liquidity
in secondary markets could return and worsen.
Ongoing
developments in the residential and commercial mortgage markets may have
additional consequences for the market for mortgage-backed securities. During
periods of deteriorating economic conditions, such as recessions or periods of
rising unemployment, delinquencies and losses generally increase, sometimes
dramatically, with respect to securitizations involving mortgage loans. Many
so‑called sub‑prime mortgage pools have become distressed during periods of
economic distress and may trade at significant discounts to their face value
during such periods.
Additionally,
mortgage lenders may adjust their loan programs and underwriting standards,
which may reduce the availability of mortgage credit to prospective mortgagors.
This may result in reduced availability of financing alternatives for mortgagors
seeking to refinance their mortgage loans. The reduced availability of
refinancing options for mortgagors may result in higher rates of delinquencies,
defaults and losses on mortgage loans, particularly in the case of, but not
limited to, mortgagors with adjustable rate mortgage loans or interest-only
mortgage loans that experience significant increases in their monthly payments
following the adjustment date or the end of the interest-only period (see
“Adjustable Rate Mortgages” below for further discussion of adjustable rate
mortgage risks). These events, alone or in combination with each other and with
deteriorating economic conditions in the general economy, may contribute to
higher delinquency and default rates on mortgage loans. Tighter underwriting
guidelines for residential mortgage loans, together with lower levels of home
sales and reduced refinance activity, also may contribute to a reduction in the
prepayment rate for mortgage loans generally. The values of mortgage-backed
securities may be substantially dependent on the servicing of the underlying
mortgage pools, and therefore are subject to risks associated with the
negligence or malfeasance by their servicers and to the credit risk of their
servicers. In certain circumstances, the mishandling of related documentation
also may affect the rights of security holders in and to the underlying
collateral.
The
U. S. Government conservatorship of Federal Home Loan Mortgage Corporation
(“Freddie Mac”) and the Federal National
Mortgage Corporation (“Fannie Mae”) in
September 2008 and its ultimate resolution may adversely affect the real estate
market, the value of real estate-related assets generally and markets generally.
In addition, there may be proposals from the U.S. Congress or other branches of
the U.S. Government regarding the conservatorship, including regarding reforming
Fannie Mae and Freddie Mac or winding down their operations, which may or may
not come to fruition. There can be no assurance that such proposals, even those
that are not adopted, will not adversely affect the values of the Funds’
assets.
The
Federal Housing Finance Agency (“FHFA”),
as conservator or receiver of Fannie Mae and Freddie Mac, has the power to
repudiate any contract entered into by Fannie Mae or Freddie Mac prior to its
appointment if it determines that performance of the contract is burdensome and
repudiation of the contract promotes the orderly administration of Fannie Mae’s
or Freddie Mac’s affairs. In the event the guaranty obligations of Fannie Mae or
Freddie Mac are repudiated, the payments of interest to holders of Fannie Mae or
Freddie Mac mortgage-backed securities would be reduced if payments on the
mortgage loans represented in the mortgage loan groups related to such
mortgage-backed securities are not made by the borrowers or advanced by the
servicer. Any actual direct compensatory damages for repudiating these guaranty
obligations may not be sufficient to offset any shortfalls experienced by such
mortgage-backed security holders.
Further,
in its capacity as conservator or receiver, FHFA has the right to transfer or
sell any asset or liability of Fannie Mae or Freddie Mac without any approval,
assignment or consent. If FHFA were to transfer any such guaranty obligation to
another party, holders of Fannie Mae or Freddie Mac mortgage-backed securities
would have to rely on that party for satisfaction of the guaranty obligation and
would be exposed to the credit risk of that party.
Liquidity Risk of
Mortgage-Backed Securities. The liquidity of mortgage-backed
securities varies by type of security; at certain times a Fund may encounter
difficulty in disposing of such investments. Investments in privately issued
mortgage-backed securities may have less liquidity than mortgage-backed
securities that are issued by a federal government agency or sponsored
corporation. Because mortgage-backed securities have the potential to be less
liquid than other securities, a Fund may be more susceptible to liquidity risks
than funds that invest in other securities. In the past, in stressed markets,
certain types of mortgage-backed securities suffered periods of illiquidity when
disfavored by the market. It is possible that a Fund may be unable to sell a
mortgage-backed security at a desirable time or at the value the Fund has placed
on the investment.
Commercial
Mortgage-Backed Securities (“CMBS”) Risks. CMBS include securities
that reflect an interest in, or are secured by, mortgage loans on commercial
real property. Many of the risks of investing in commercial
mortgage-backed
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securities
reflect the risks of investing in the real estate securing the underlying
mortgage loans. These risks reflect the effects of local and other economic
conditions on real estate markets, the ability of tenants to make loan payments
and the ability of a property to attract and retain tenants. Commercial
mortgage-backed securities may be less liquid and exhibit greater price
volatility than other types of mortgage- or asset-backed securities.
Prepayment, Extension
and Redemption Risks of Mortgage-Backed Securities.
Mortgage-backed securities may reflect an interest in monthly
payments made by the borrowers who receive the underlying mortgage loans.
Although the underlying mortgage loans are for specified periods of time, such
as 20 or 30 years, the borrowers can, and historically have often paid them off
sooner. When a prepayment happens, a portion of the mortgage-backed security
which represents an interest in the underlying mortgage loan will be prepaid. A
borrower is more likely to prepay a mortgage which bears a relatively high rate
of interest. This means that in times of declining interest rates, a portion of
the Fund’s higher yielding securities are likely to be redeemed and the Fund
will probably be unable to replace them with securities having as great a yield.
Prepayments can result in lower yields to shareholders. The increased likelihood
of prepayment when interest rates decline also limits market price appreciation.
This is known as prepayment risk. Mortgage-backed securities also are subject to
extension risk. Extension risk is the possibility that rising interest rates may
cause prepayments to occur at a slower than expected rate. This particular risk
may effectively change a security which was considered short or intermediate
term into a long-term security. The values of long-term securities generally
fluctuate more widely in response to changes in interest rates than short or
intermediate-term securities. In addition, a mortgage-backed security may be
subject to redemption at the option of the issuer. If a mortgage-backed security
held by a Fund is called for redemption, the Fund will be required to permit the
issuer to redeem or pay‑off the security, which could have an adverse effect on
the Fund’s ability to achieve its investment objective.
Collateralized
Mortgage Obligations. CMOs are debt obligations collateralized by
mortgage loans or mortgage pass-through securities. The expected average life of
CMOs is determined using mathematical models that incorporate prepayment
assumptions and other factors that involve estimates of future economic and
market conditions. These estimates may vary from actual future results,
particularly during periods of extreme market volatility. Further, under certain
market conditions, the average weighted life of certain CMOs may not accurately
reflect the price volatility of such securities. For example, in periods of
supply and demand imbalances in the market for such securities and/or in periods
of sharp interest rate movements, the prices of CMOs may fluctuate to a greater
extent than would be expected from interest rate movements alone. CMOs issued by
private entities are not obligations issued or guaranteed by the U. S.
Government, its agencies or instrumentalities and are not guaranteed by any
government agency, although the securities underlying a CMO may be subject to a
guarantee. Therefore, if the collateral securing the CMO, as well as any third
party credit support or guarantees, is insufficient to make payments when due,
the holder could sustain a loss.
Adjustable Rate
Mortgages. Adjustable Rate Mortgages (“ARMs”) contain maximum and minimum rates beyond
which the mortgage interest rate may not vary over the lifetime of the security.
In addition, many ARMs provide for additional limitations on the maximum amount
by which the mortgage interest rate may adjust for any single adjustment period.
Alternatively, certain ARMs contain limitations on changes in the required
monthly payment. In the event that a monthly payment is not sufficient to pay
the interest accruing on an ARM, any excess interest is added to the principal
balance of the mortgage loan, which is repaid through future monthly payments.
If the monthly payment for such an instrument exceeds the sum of the interest
accrued at the applicable mortgage interest rate and the principal payment
required at such point to amortize the outstanding principal balance over the
remaining term of the loan, the excess is used to reduce the then-outstanding
principal balance of the ARM.
In
addition, certain ARMs may provide for an initial fixed, below-market or teaser
interest rate. During this initial fixed-rate period, the payment due from the
related mortgagor may be less than that of a traditional loan. However, after
the teaser rate expires, the monthly payment required to be made by the
mortgagor may increase significantly when the interest rate on the mortgage loan
adjusts. This increased burden on the mortgagor may increase the risk of
delinquency or default on the mortgage loan and in turn, losses on the
mortgage-backed security into which that loan has been bundled.
Interest and
Principal Only Securities Risk. Stripped mortgage-backed
securities are usually structured with two classes that receive different
portions of the interest and principal distributions on a pool of debt
instruments, such as mortgage loans. In one type of stripped mortgage-backed
security, one class will receive all of the interest from the mortgage assets
(the interest-only, or “IO” class), while
the other class will receive all of the principal from the mortgage assets (the
principal-only, or “PO” class). The yield
to maturity (the expected rate of return on a bond if held until the end of its
lifetime) on an IO class is extremely sensitive to the rate of principal
payments (including prepayments) on the underlying mortgage assets, and a rapid
rate of principal payments may have a material adverse effect on a Fund’s yield
to maturity from these securities. If the assets underlying the IO class
experience greater than anticipated prepayments of principal, a Fund may fail to
recoup fully, or at all, its initial investment in these securities. PO class
securities tend to decline in value
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if
prepayments are slower than anticipated. The values of interest-only and
principal-only securities are especially sensitive to interest rate changes,
which can affect not only their prices but can also change the income flows and
repayment assumptions about those investments.
Inverse Floaters and
Related Securities Risk. Investments in inverse floaters and
similar instruments expose a Fund to the same risks as investments in debt
securities and derivatives, as well as other risks, including those associated
with leverage and increased volatility. An investment in these securities
typically will involve greater risk than an investment in a fixed rate security.
Distributions on inverse floaters and similar instruments will typically bear an
inverse relationship to short-term interest rates and typically will be reduced
or, potentially, eliminated as interest rates rise. The rate at which interest
is paid on an inverse floater may vary by a magnitude that exceeds the magnitude
of the change in a reference rate of interest (typically a short-term interest
rate), and the market prices of inverse floaters may as a result be highly
sensitive to changes in interest rates and in prepayment rates on the underlying
securities, and may decrease in value significantly when interest rates or
prepayment rates change. The effect of the reference rate multiplier in inverse
floaters is associated with greater volatility in their market values.
Investments in inverse floaters and similar instruments that have
mortgage-backed securities underlying them will expose a Fund to the risks
associated with those mortgage-backed securities and the values of those
investments may be especially sensitive to changes in prepayment rates on the
underlying mortgage-backed securities.
Mortgage-backed
securities are a type of asset-backed security and therefore are subject to the
risks described above under “Asset-Backed Security Investment Risk.”
Municipal
Bond Risk
Investing
in the municipal bond market involves the risks of investing in debt securities
generally and certain other risks. The amount of public information available
about the municipal bonds in which a Fund may invest is generally less than that
for corporate equities or bonds, and the investment performance of the Fund’s
investments in municipal bonds may therefore be more dependent on the analytical
abilities of the Adviser than its investments in taxable bonds. The secondary
market for municipal bonds also tends to be less well developed or liquid than
many other securities markets, which may adversely affect the Fund’s ability to
sell municipal bonds at attractive prices.
The
ability of municipal issuers to make timely payments of interest and principal
may be diminished during general economic downturns, by litigation, legislation
or political events, or by the bankruptcy of the issuer. Laws, referenda,
ordinances or regulations enacted in the future by Congress or state
legislatures or the applicable governmental entity could extend the time for
payment of principal and/or interest, or impose other constraints on enforcement
of such obligations, or on the ability of municipal issuers to levy taxes.
Issuers of municipal securities also might seek protection under the bankruptcy
laws. In the event of bankruptcy of such an issuer, a Fund could experience
delays in collecting principal and interest and a Fund may not, in all
circumstances, be able to collect all principal and interest to which it is
entitled. To enforce its rights in the event of a default in the payment of
interest or repayment of principal, or both, a Fund may take possession of and
manage the assets securing the issuer’s obligations on such securities, which
may increase the Fund’s operating expenses. Any income derived from a Fund’s
ownership or operation of such asset may not be tax exempt.
A
Fund may invest in revenue bonds, which are typically issued to fund a wide
variety of capital projects including electric, gas, water and sewer systems;
highways, bridges and tunnels; port and airport facilities; colleges and
universities; and hospitals. Because the principal security for a revenue bond
is generally the net revenues derived from a particular facility or group of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, there is no guarantee that the particular project will
generate enough revenue to pay its obligations, in which case the Fund’s
performance may be adversely affected.
Interest
on municipal obligations, while generally exempt from U.S. federal income tax,
may not be exempt from U.S. federal alternative minimum tax.
Non‑Diversification
Risk
A
non‑diversified Fund may invest its assets in a smaller number of issuers than
may a diversified mutual fund. A non‑diversified Fund may be more susceptible to
any single economic, political, or regulatory occurrence than a diversified fund
investing in a broader range of issuers. A decline in the market value of one of
a non‑diversified Fund’s investments may affect the Fund’s value more than if
the Fund were a diversified fund. Some of the issuers in which a non‑diversified
Fund invests also may present substantial credit or other risks.
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Operational
and Information Security Risks
The
Funds and their service providers depend on complex information technology and
communications systems to conduct business functions, making them susceptible to
operational and information security risks. Any problems relating to the
performance and effectiveness of security procedures used by a Fund or its
service providers to protect a Fund’s assets, such as algorithms, codes,
passwords, multiple signature systems, encryption and telephone call-backs, may
have an adverse impact on an investment in a Fund. For example, design or system
failures or malfunctions, human error, faulty software or data processing
systems, power or communications outages, acts of God, or cyber-attacks may lead
to operational disruptions and potential losses to a Fund. Cyber-attacks
include, among other behaviors, stealing or corrupting data maintained online or
digitally, denial of service attacks on websites, the unauthorized release of
confidential information and causing operational disruption. Successful
cyber-attacks against, or security breakdowns of, a Fund or its Adviser,
custodians, fund accountant, fund administrator, transfer agent, pricing vendors
and/or other third party service providers may adversely impact the Funds and
their shareholders. For instance, cyber-attacks or other operational issues may
interfere with the processing of shareholder transactions, impact a Fund’s
ability to calculate its NAV, cause the release of private shareholder
information or confidential Fund information, impede trading, cause reputational
damage, and subject a Fund to regulatory fines, penalties or financial losses,
reimbursement or other compensation costs, and/or additional compliance costs.
The Funds also may incur substantial costs for cybersecurity risk management in
order to guard against any cyber incidents in the future. Furthermore, as a
Fund’s assets grow, it may become a more appealing target for cybersecurity
threats such as hackers and malware. In general, cyber-attacks result from
deliberate attacks but unintentional events may have effects similar to those
caused by cyber-attacks. Additionally, outside parties may attempt to
fraudulently induce employees of a Fund or an Adviser or the Fund’s service
providers to disclose sensitive information in order to gain access to a Fund’s
infrastructure. Similar types of risks also are present for issuers of
securities in which the Funds invest, which could result in material adverse
consequences for such issuers, and may cause a Fund’s investment in such
securities to lose value. In addition, cyberattacks involving a counterparty to
a Fund could affect such a counterparty’s ability to meets it obligations to the
Fund, which may result in losses to the Fund and its shareholders. In addition,
the adoption of work-from-home arrangements by the Funds, the Advisers or their
service providers could increase all of the above risks, create additional data
and information accessibility concerns, and make the Funds, the Advisers or
their service providers more susceptible to operational disruptions, any of
which could adversely impact their operations. While the Funds or their service
providers may have established business continuity plans and systems designed to
guard against such operational failures and cyber-attacks and the adverse
effects of such events, there are inherent limitations in such plans and systems
including the possibility that certain risks have not been identified, in large
part because different, evolving or unknown threats or risks may emerge in the
future. The Advisers and the Funds do not control the business continuity and
cybersecurity plans and systems put in place by third-party service providers,
and such third-party service providers may have no or limited indemnification
obligations to the Advisers or the Funds.
Portfolio
Turnover Risk
The
length of time a Fund has held a particular security is not generally a
consideration in investment decisions. A change in the securities held by a Fund
is known as portfolio turnover. Portfolio turnover generally involves a number
of direct and indirect costs and expenses to a Fund, including, for example,
brokerage commissions, dealer mark‑ups and bid/ask spreads, and transaction
costs on the sale of securities and reinvestment in other securities, and may
result in the realization of taxable capital gains (including short-term capital
gains, which are generally taxable to shareholders subject to tax at ordinary
income rates). Such costs are not reflected in a Fund’s Total Annual Fund
Operating Expenses set forth under “Fees and Expenses” but do have the effect of
reducing the Fund’s investment return. A Fund and its shareholders will also
share in the costs and tax effects of portfolio turnover in any underlying funds
in which a Fund invests.
Real
Estate Sector Risk
The
value of a Fund’s portfolio could change in light of factors affecting the real
estate sector. Factors affecting real estate values include the supply of real
property in certain markets, changes in zoning laws, delays in completion of
construction, changes in real estate values, changes in property taxes, levels
of occupancy, adequacy of rent to cover operating expenses, and local, regional,
and general market conditions. The value of real estate-related investments also
may be affected by changes in interest rates, macroeconomic developments, and
social and economic trends.
To
the extent that a Fund invests in real estate related investments, including
REITs, real estate-related loans or real-estate linked derivative instruments,
it will be subject to the risks associated with owning real estate and with the
real estate industry generally. These include difficulties in valuing and
disposing of real estate, the possibility of declines in the value of real
estate, risks related to general and local economic conditions, the possibility
of adverse changes in the climate for real estate, environmental liability
risks, the risk of increases in property taxes and operating expenses, possible
adverse changes in zoning laws, the risk of casualty or condemnation losses,
limitations on rents, the possibility of adverse changes in interest
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rates
and in the credit markets and the possibility of borrowers paying off mortgages
sooner than expected, which may lead to reinvestment of assets at lower
prevailing interest rates. To the extent that a Fund invests in REITs, it will
also be subject to the risk that a REIT may default on its obligations or go
bankrupt. By investing in REITs indirectly through a Fund, a shareholder will
indirectly bear his or her proportionate share of the expenses of the REITs. A
Fund’s investments in REITs could cause a Fund to recognize income in excess of
cash received from those securities and, as a result, a Fund may be required to
sell portfolio securities, including when it is not advantageous to do so, in
order to make distributions. An investment in a REIT or a real estate-linked
derivative instrument that is linked to the value of a REIT is subject to
additional risks, such as poor performance by the manager of the REIT, adverse
changes to the tax laws or failure by the REIT to qualify for the favorable tax
treatment applicable to REITs under the Internal Revenue Code of 1986, as
amended (the “Code”). In addition, some
REITs have limited diversification because they invest in a limited number of
properties, a narrow geographic area, or a single type of property. Also, the
organizational documents of a REIT may contain provisions that make changes in
control of the REIT difficult and time-consuming. Finally, private REITs are not
traded on a national securities exchange. As such, these products may be
illiquid. This reduces the ability of a Fund to redeem its investment early.
Private REITs are also generally harder to value and may bear higher fees than
public REITs.
Equity
REITs, which invest primarily in direct fee ownership or leasehold ownership of
real property and derive most of their income from rents, are generally affected
by changes in the values of and incomes from the properties they own. Mortgage
REITs invest mostly in mortgages on real estate, which may secure, for example,
construction, development or long-term loans, and the main source of their
income is mortgage interest payments. Mortgage REITs may be affected by the
credit quality of the mortgage loans they hold. A hybrid REIT combines the
characteristics of equity REITs and mortgage REITs, generally by holding both
ownership interests and mortgage interests in real estate, and thus may be
subject to risks associated with both real estate ownership and mortgage-related
investments. Along with the risks common to different types of real
estate-related investments, REITs, no matter the type, involve additional risk
factors, including poor performance by the REIT’s manager, adverse changes to
the tax laws, and the possible failure by the REIT to qualify for the favorable
tax treatment applicable to REITs under the Code or an exemption under the 1940
Act. REITs are not diversified and are heavily dependent on cash flow earned on
the property interests they hold.
Mortgage
REITs are exposed to the risks specific to the real estate market as well as the
risks that relate specifically to the way in which mortgage REITs are organized
and operated. Mortgage REITs receive principal and interest payments from the
owners of the mortgaged properties. Accordingly, mortgage REITs are subject to
the credit risk of the borrowers to whom they extend credit, and are subject to
the risks described under “Mortgage-Backed Securities Risk” and “Debt Securities
Risks.” Mortgage REITs are also subject to significant interest rate risk.
Mortgage REITs typically use leverage and many are highly leveraged, which
exposes them to the risks of leverage. Leverage risk refers to the risk that
leverage created from borrowing may impair a mortgage REIT’s liquidity, cause it
to liquidate positions at an unfavorable time and increase the volatility of the
values of securities issued by the mortgage REIT. The use of leverage may not be
advantageous to a mortgage REIT. To the extent that a mortgage REIT incurs
significant leverage, it may incur substantial losses if its borrowing costs
increase or if the assets it purchases with leverage decrease in value.
Restricted
Securities Risk
A
Fund may hold securities that the Fund is prevented or limited by law or the
terms of an agreement from selling (a “restricted security”). To the extent that
a Fund is permitted to sell a restricted security, there can be no assurance
that a trading market will exist at any particular time, and the Fund may be
unable to dispose of the security promptly at reasonable prices or at all. A
Fund may have to bear the expense of registering the securities for resale and
the risk of substantial delays in effecting the registration. Also, restricted
securities may be difficult to value because market quotations may not be
readily available, and the values of restricted securities may have significant
volatility.
Securities
or Sector Selection Risk
Securities
or Sector Selection Risk refers to the risk that the securities held by a Fund
will underperform securities held in other funds investing in similar asset
classes or comparable benchmarks because of a portfolio manager’s choice of
securities or sectors for investment. To the extent a Fund allocates a higher
percentage of its investment portfolio to a particular sector or related
sectors, the Fund will be more susceptible to events or factors affecting
companies in that sector or related sectors. For example, the values of
securities of companies in the same or related sectors may be negatively
affected by the common characteristics they share, the common business risks to
which they are subject, common regulatory burdens, or regulatory changes that
affect them similarly. Such characteristics, risks, burdens or changes include,
but are not limited to, changes in governmental regulation, inflation or
deflation, rising or falling interest rates, competition from new entrants, and
other economic, market, political or other developments specific to that sector
or related sectors.
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Short
Position Risk
To
the extent a Fund makes use of short sales or takes short positions for
investment and/or risk management purposes, a Fund may be subject to certain
risks associated with selling short. Short sales are transactions in which a
Fund sells securities or other instruments that a Fund does not own. Short
exposure with respect to securities or market segments may also be achieved
through the use of derivative instruments, such as forwards, futures or swaps on
indices or on individual securities. When a Fund engages in a short sale or
short position on a security or other instrument, it may borrow the security or
other instrument sold short and deliver it to the counterparty. A Fund will
ordinarily have to pay a fee or premium to borrow the security and will be
obligated to repay the lender of the security any dividends or interest that
accrue on the security during the period of the loan. The amount of any gain
from a short position will be decreased, and the amount of any loss increased,
by the amount of the premium, dividends, interest or expenses a Fund pays in
connection with the short position. Short sales and short positions expose a
Fund to the risk that it may be required to cover its short position at a time
when the securities underlying the short position or exposure have appreciated
in value, thus resulting in a loss to a Fund. A Fund may engage in short sales
when it does not own or have the right to acquire the security sold short at no
additional cost. A Fund’s loss on a short sale or position theoretically could
be unlimited in a case in which a Fund is unable, for whatever reason, to close
out its short position. In addition, a Fund’s short selling strategies may limit
its ability to benefit from appreciation in the markets. Short selling involves
a form of financial leverage that may exaggerate any losses realized by a Fund.
Also, there is the risk that the counterparty to a short position may fail to
honor its contractual terms, causing a loss to a Fund.
Sovereign
Debt Obligations Risk
Investments
in countries’ government debt obligations involve special risks. Certain
countries have historically experienced, and may continue to experience, high
rates of inflation, high interest rates, exchange rate fluctuations, large
amounts of external debt, balance of payments and trade difficulties and extreme
poverty and unemployment. The issuer or governmental authority that controls the
repayment of a country’s debt may not be able or willing to repay the principal
and/or interest when due in accordance with the terms of such debt. A debtor’s
willingness or ability to repay principal and interest due in a timely manner
may be affected by, among other factors, its cash flow situation and, in the
case of a government debtor, the extent of its foreign currency reserves or its
inability to sufficiently manage fluctuations in relative currency valuations,
the availability of sufficient foreign exchange on the date a payment is due,
the relative size of the debt service burden to the economy as a whole, the
government debtor’s policy towards principal international lenders such as the
International Monetary Fund and the political and social constraints to which a
government debtor may be subject. Government debtors may default on their debt
and also may be dependent on expected disbursements from foreign governments,
multilateral agencies and others abroad to reduce principal and interest
arrearages on their debt. The commitment on the part of these governments,
agencies and others to make such disbursements may be conditioned on a debtor’s
implementation of economic reforms and/or economic performance and the timely
service of such debtor’s obligations.
Failure
to implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third
parties’ commitments to lend funds to the government debtor, which may further
impair such debtor’s ability or willingness to service its debts on a timely
basis.
As
a result of the foregoing, a government obligor may default on its obligations.
If such an event occurs, a Fund may have limited (or no) legal recourse against
the issuer and/or guarantor. Remedies must, in some cases, be pursued in the
courts of the defaulting party itself, and the ability of the holder of foreign
government debt securities to obtain recourse may be subject to the political
climate in the relevant country. In addition, no assurance can be given that the
holders of more senior fixed income securities, such as commercial bank debt,
will not contest payments to the holders of other foreign government debt
securities in the event of default under their commercial bank loan agreements.
There is no bankruptcy proceeding by which sovereign debt on which governmental
entities have defaulted may be collected in whole or in part. In addition,
foreign governmental entities may enjoy various levels of sovereign immunity,
and it may be difficult or impossible to bring a legal action against a foreign
governmental entity or to enforce a judgment against such an entity.
Government
obligors in emerging market countries are among the world’s largest debtors to
commercial banks, other governments, international financial organizations and
other financial institutions. The issuers of the government debt securities in
which a Fund may invest have in the past experienced substantial difficulties in
servicing their external debt obligations, which led to defaults on certain
obligations and the restructuring of certain indebtedness. Restructuring
arrangements have included, among other things, reducing and rescheduling
interest and principal payments by negotiating new or amended credit agreements,
and obtaining new credit to finance interest payments. Holders of certain
foreign government debt securities may be requested to participate in the
restructuring of such obligations and to extend further loans to their issuers.
There can be no assurance that the foreign government debt securities in which a
Fund may invest will not be subject to similar restructuring arrangements or to
requests for new credit, which may adversely affect a Fund’s holdings.
-253-
Furthermore,
certain participants in the secondary market for such debt may be directly
involved in negotiating the terms of these arrangements and may therefore have
access to information not available to other market participants.
Structured
Products and Structured Notes Risk
Generally,
structured investments are interests in entities organized and operated for the
purpose of restructuring the investment characteristics of underlying investment
interests or securities. These investment entities may be structured as trusts
or other types of pooled investment vehicles. This type of restructuring
generally involves the deposit with or purchase by an entity of the underlying
investments and the issuance by that entity of one or more classes of securities
backed by, or representing interests in, the underlying investments or
referencing an indicator related to such investments. The cash flow or rate of
return on the underlying investments may be apportioned among the newly issued
securities to create different investment characteristics, such as varying
maturities, credit quality, payment priorities and interest rate provisions.
Structured products include, among other things, CDOs, mortgage-backed
securities, other types of asset-backed securities and certain types of
structured notes.
The
cash flow or rate of return on a structured investment may be determined by
applying a multiplier to the rate of total return on the underlying investments
or referenced indicator. Application of a multiplier is comparable to the use of
financial leverage, a speculative technique. Leverage magnifies the potential
for gain and the risk of loss. As a result, a relatively small decline in the
value of the underlying investments or referenced indicator could result in a
relatively large loss in the value of a structured product. Holders of
structured products indirectly bear risks associated with the underlying
investments, index or reference obligation, and are subject to counterparty
risk. A Fund generally has the right to receive payments to which it is entitled
only from the structured product, and generally does not have direct rights
against the issuer. While certain structured investment vehicles enable the
investor to acquire interests in a pool of securities without the brokerage and
other expenses associated with directly holding the same securities, investors
in structured vehicles generally pay their share of the investment vehicle’s
administrative and other expenses.
Structured
products are generally privately offered and sold, and thus, are not registered
under the securities laws. Certain structured products may be thinly traded or
have a limited trading market and may have the effect of increasing a Fund’s
illiquidity to the extent that the Fund, at a particular point in time, may be
unable to find qualified buyers for these securities. In addition to the general
risks associated with fixed income securities discussed herein, structured
products carry additional risks including, but not limited to: (i) the
possibility that distributions from underlying investments will not be adequate
to make interest or other payments; (ii) the quality of the underlying
investments may decline in value or default; (iii) the possibility that the
security may be subordinate to other classes of the issuer’s securities; and
(iv) the complex structure of the security may not be fully understood at
the time of investment and may produce disputes with the issuer or unexpected
investment results.
Structured
notes are derivative securities for which the amount of principal repayment
and/or interest payments is based on the movement of one or more “factors”.
These factors may include, but are not limited to, currency exchange rates,
interest rates (such as the prime lending rate or another industry-standard
floating rate), referenced bonds and stock indices. Some of these factors may or
may not correlate to the total rate of return on one or more underlying
instruments referenced in such notes. In some cases, the impact of the movements
of these factors may increase or decrease through the use of multipliers or
deflators.
Investments
in structured notes involve risks including interest rate risk, credit risk and
market risk. Depending on the factor used and the use of multipliers or
deflators, changes in interest rates and movement of the factor may cause
significant price fluctuations. Additionally, changes in the reference
instrument or security may cause the interest rate on the structured note to be
reduced to zero and any further changes in the reference instrument may then
reduce the principal amount payable on maturity. In the case of structured notes
where the reference instrument is a debt instrument, such as credit-linked
notes, the Fund will be subject to the credit risk of the issuer of the
reference instrument and the issuer of the structured note.
The
Advisers manage a wide variety of accounts and investment strategies.
Investments made on behalf of one client or strategy can raise conflict of
interest issues with other of the Advisers’ clients or strategies. For example,
an Adviser may cause a client to purchase an issuer’s debt security and cause
another client to purchase a different debt security of the same issuer, such as
a different bond of the issuer or different tranche of a mortgage-backed
security that is subordinated to the investment held by other clients. Please
refer to the section of the SAI entitled “Conflicts - Broad and Wide-Ranging
Activities” for more information.
Tax
Risk
In
order to qualify as a regulated investment company under the Code, a Fund must
meet requirements including regarding the source of its income. (See “Taxes”
below for a more detailed discussion.) Income from certain
commodity-linked
-254-
instruments
and from direct investments in commodities does not constitute income that meets
the qualification requirements for a regulated investment company under the Code
(“qualifying income”). The tax treatment
of certain other commodity-linked instruments in which a Fund might invest is
not certain, in particular with respect to whether income or gains from such
instruments constitute qualifying income. Generally, any income a Fund derives
from investments in instruments that do not generate qualifying income,
including commodity-linked swaps and certain other commodity-linked derivatives,
must be limited to a maximum of 10% of the Fund’s annual gross income. Certain
ETFs and other investment pools in which a Fund may invest might not generate
qualifying income, and it may be difficult for the Fund to determine in advance
the amount of non‑qualifying income that would be generated by such investments.
If a Fund were to earn non‑qualifying income in excess of 10% of its annual
gross income, it could fail to qualify as a regulated investment company for
that year, unless it is eligible to and does pay a tax at the Fund level.
The
DoubleLine Multi-Asset Trend Fund and DoubleLine Strategic Commodity Fund
generally intend to gain exposure to commodities through direct investments that
they believe give rise to qualifying income or indirectly through their
investments in subsidiaries in a manner that gives rise to qualifying income.
Each Fund must limit its investment in a subsidiary to no more than 25% of the
value of the Fund’s total assets as of the end of each quarter of the Fund’s
taxable year in order to meet an asset diversification requirement applicable to
regulated investment companies.
If
a Fund were to fail to qualify as a regulated investment company in any taxable
year, the Fund would be subject to tax on its taxable income at corporate rates,
and all distributions from earnings and profits, including any distributions of
net long-term capital gains, would be taxable to shareholders as ordinary
income. In such a case, shareholders of the Fund would be subject to the risk of
diminished returns.
U.S.
Government Securities Risk
Some
U.S. Government securities, such as Treasury bills, notes, and bonds and
mortgage-backed securities guaranteed by the Government National Mortgage
Association (Ginnie Mae), are supported by the full faith and credit of the
United States; others are supported by the right of the issuer to borrow from
the U.S. Treasury; others are supported by the discretionary authority of the
U.S. Government to purchase the agency’s obligations; still others are supported
only by the credit of the issuing agency, instrumentality, or enterprise.
Although U.S. Government-sponsored enterprises may be chartered or sponsored by
Congress, they are not funded by Congressional appropriations, and their
securities are not issued by the U.S. Treasury, their obligations are not
supported by the full faith and credit of the U.S. Government, and so
investments in their securities or obligations issued by them involve greater
risk than investments in other types of U.S. Government securities. No assurance
can be given that the U.S. Government will provide financial support to its
agencies and sponsored entities if it is not obligated by law to do so.
In
addition, certain governmental entities have been subject to regulatory scrutiny
regarding their accounting policies and practices and other concerns that may
result in legislation, changes in regulatory oversight and/or other consequences
that could adversely affect the credit quality, availability or investment
character of securities issued or guaranteed by these entities.
The
events surrounding the U.S. federal government debt ceiling and any resulting
agreement (and similar political, economic and other developments) could
adversely affect a Fund’s ability to achieve its investment objective. For
example, a downgrade of the long-term sovereign credit rating of the U.S. could
increase volatility in both stock and bond markets, result in higher interest
rates and lower Treasury prices and increase the costs of all kinds of debt.
These events and similar events in other areas of the world could have
significant adverse effects on the economy generally and could result in
significant adverse impacts on issuers of securities held by a Fund and the Fund
itself. An Adviser cannot predict the effects of these or similar events in the
future on the U.S. economy and securities markets or on a Fund’s
portfolio.
An
Adviser may not timely anticipate or manage existing, new or additional risks,
contingencies or developments. In recent periods, the values of U.S. Government
securities have been affected substantially by increased demand for them around
the world. Changes in the demand for U.S. Government securities may occur at any
time and may result in increased volatility in the values of those
securities.
Valuation
Risk
Valuation
risk is the risk that a Fund will not value its investments in a manner that
accurately reflects their market values or that a Fund will not be able to sell
any investment at a price equal to the valuation ascribed to that investment for
purposes of calculating the Fund’s NAV. The valuation of each Fund’s investments
involves subjective judgment and some valuations may involve assumptions,
projections, opinions, discount rates, estimated data points and other uncertain
or subjective amounts,
-255-
all
of which may prove inaccurate. In addition, the valuation of certain investments
held by a Fund may involve the significant use of unobservable and non‑market
inputs. Certain securities in which a Fund may invest may be more difficult to
value accurately, especially during periods of market disruptions or extreme
market volatility. As a result, there can be no assurance that fair value
pricing will result in adjustments to the prices of securities or other assets,
or that fair value pricing will reflect actual market value, and it is possible
that the fair value determined for a security or other asset will be materially
different from quoted or published prices, from the prices used by others for
the same security or other asset and/or from the value that actually could be or
is realized upon the sale of that security or other asset. Technological issues
or other service disruption issues involving third party service providers may
also cause a Fund to value its investments incorrectly. Incorrect valuations of
a Fund’s portfolio holdings could result in a Fund’s shareholder transactions
being effected at an NAV that does not accurately reflect the underlying value
of the Fund’s portfolio, resulting in the dilution of shareholder
interests.
Temporary
Defensive Strategies
When
attempting to respond to adverse market, economic, political, or other
conditions, a Fund may take temporary defensive positions that may be
inconsistent (including materially inconsistent) with such Fund’s principal
investment strategies. The Adviser then may, but is not required to, temporarily
use alternative strategies that are mainly designed to limit the Fund’s exposure
to such adverse conditions under the circumstances. In implementing these
strategies, a Fund may invest primarily in, among other things, U.S. Government
and agency obligations, fixed or floating rate investments, derivative
instruments, cash or money market instruments (including, money market funds),
or any other securities or instruments that the portfolio manager(s) considers
consistent with such defensive strategies or deemed consistent with the then
existing market conditions. By way of example, a Fund may hold a higher than
normal proportion of its assets in cash in times of extreme market stress. A
Fund may also use derivatives, such as futures contracts, interest rate swaps,
and credit default swaps, as an efficient means to adjust the Fund’s interest
rate, credit, and other exposures in connection with taking such temporary
defensive positions. During periods when a Fund has taken temporary defensive
positions, the Fund may not achieve its investment objective.
Portfolio
Holdings Information
A
description of each Fund’s policies and procedures with respect to the
disclosure of its portfolio securities is available in the SAI. Currently,
disclosure of each Fund’s portfolio holdings is required by law to be made
within 60 days of the end of each fiscal quarter in either the annual report or
semi-annual report to shareholders or in the holdings reports on Form N‑PORT.
Each Fund’s SAI, annual report, semi-annual report, and filings on Form N‑PORT
are available, free of charge, on the EDGAR database on the SEC’s website at
http://www.sec.gov.
-256-
Management
of the Funds
Investment
Advisers
DoubleLine
Capital LP serves as the investment adviser for each Fund other than DoubleLine
Multi-Asset Trend Fund, DoubleLine Strategic Commodity Fund and DoubleLine
Shiller Enhanced CAPE®.
DoubleLine Alternatives LP serves as the investment adviser for DoubleLine
Multi-Asset Trend Fund, DoubleLine Strategic Commodity Fund and DoubleLine
Shiller Enhanced CAPE®.
Each of DoubleLine Capital and DoubleLine Alternatives operates at 2002 North
Tampa Street, Suite 200, Tampa, Florida 33602 and are registered as investment
advisers under the Investment Advisers Act of 1940, as amended. The Advisers
have been investment advisers to the applicable Funds since the inception of
each Fund (other than DoubleLine Shiller Enhanced CAPE®). Effective as of
July 29, 2022, DoubleLine Alternatives became the investment adviser to
DoubleLine Shiller Enhanced CAPE® and DoubleLine Capital
became the sub‑adviser to the Fund. Prior to July 29, 2022, DoubleLine
Capital was the sole investment adviser to DoubleLine Shiller Enhanced CAPE®. The Advisers manage the
investment portfolios and business affairs of the Funds pursuant to Investment
Management Agreements between each Fund and its Adviser.
Pursuant
to investment sub‑advisory agreements, DoubleLine Alternatives has engaged
DoubleLine Capital to serve as sub‑adviser to DoubleLine Shiller Enhanced
CAPE® and DoubleLine
Multi-Asset Trend Fund to manage each Fund’s investments in debt
instruments.
DoubleLine
Capital was founded in December 2009. Jeffrey E. Gundlach serves as the Chief
Executive Officer and Chief Investment Officer of DoubleLine Capital.
DoubleLine
Alternatives was founded in 2015. Jeffrey Sherman serves as the President of
DoubleLine Alternatives.
As
of May 31, 2024, DoubleLine Capital had approximately $89.9 billion of
assets under management, and DoubleLine Alternatives had approximately
$4.0 billion of assets under management.
Portfolio
Managers
Except
as provided below, the following individuals serve as portfolio managers and are
together jointly and primarily responsible for the day‑to‑day management of the
Funds’ portfolios as indicated below. In the case of DoubleLine Multi-Asset
Trend Fund, Mr. Sherman is primarily responsible for the day‑to‑day
management of the portion of the Fund’s portfolio that provides exposure to the
BNP Paribas Index, and Mr. Gundlach and Mr. Sherman are together
jointly and primarily responsible for the day‑to‑day management of the portion
of the Fund’s portfolio that is invested in debt instruments. Please see the SAI
for additional information about other accounts managed by the portfolio
managers, the portfolio managers’ compensation, and the portfolio managers’
ownership of shares of the Fund(s) they manage. The performance information
shown in the “Performance” section of each Fund Summary reflects the Fund’s
performance of the portfolio management team that was in place during the
periods shown. The composition of the portfolio management team, including
individual portfolio managers, may change over time.
|
|
|
| |
Portfolio Manager |
|
Length of Service
with the Funds |
|
Business Experience During
the Past Five Years |
Jeffrey E.
Gundlach |
|
DoubleLine
Total Return Bond Fund
(since inception in
April 2010)
DoubleLine
Core Fixed Income Fund
(since inception in June 2010)
DoubleLine
Shiller Enhanced CAPE®
(since inception in October 2013)
DoubleLine
Flexible Income Fund
(since inception in
April 2014) |
|
Mr. Gundlach is the founder and Chief
Executive Officer (CEO) of DoubleLine Capital and is Chief Investment
Officer (CIO) of DoubleLine Capital. Mr. Gundlach has been CEO and
CIO of DoubleLine Capital since its inception in December 2009. |
| |
DoubleLine
Long Duration Total Return Bond Fund
(since inception in December 2014)
DoubleLine
Global Bond Fund
(since inception in December
2015) |
|
|
-257-
|
|
|
| |
Portfolio Manager |
|
Length of Service
with the Funds |
|
Business Experience During
the Past Five Years |
| |
DoubleLine
Shiller Enhanced International CAPE®
(since inception in December 2016)
DoubleLine
Low Duration Bond Fund
(since July 2019)
DoubleLine
Multi-Asset Trend Fund
(since inception in February
2021) |
|
|
|
| |
Luz M.
Padilla |
|
DoubleLine
Emerging Markets Fixed Income Fund
(since inception in April 2010)
DoubleLine
Low Duration Bond Fund
(since inception in September 2011)
DoubleLine
Low Duration Emerging Markets Fixed Income Fund
(since inception in April 2014) |
|
Ms. Padilla joined DoubleLine Capital
in 2009 as the Director of the Emerging Markets Group and serves as
Director, International Fixed Income since February 2017. Ms. Padilla
is its lead Portfolio Manager. |
|
| |
Jeffrey J.
Sherman |
|
DoubleLine
Shiller Enhanced CAPE®
(since inception in October 2013)
DoubleLine
Strategic Commodity Fund
(since inception in May 2015)
DoubleLine
Core Fixed Income Fund
(since September 2016)
DoubleLine
Flexible Income Fund
(since September 2016)
DoubleLine
Shiller Enhanced International CAPE®
(since inception in December 2016) |
|
Mr. Sherman was named as DoubleLine
Capital’s Deputy Chief Investment Officer in June 2016. He has been a
Portfolio Manager of DoubleLine Capital since September 2010. He has been
President of DoubleLine Alternatives since April 2015. |
| |
DoubleLine
Low Duration Bond Fund
(since July 2019)
DoubleLine
Multi-Asset Trend Fund
(since inception in February
2021) |
|
|
|
| |
Robert
Cohen |
|
DoubleLine
Floating Rate Fund
(since inception in February 2013)
DoubleLine
Low Duration Bond Fund
(since September 2016) |
|
Mr. Cohen was named as DoubleLine’s
Director of Global Developed Credit in September 2016. He has been a
Portfolio Manager of DoubleLine Capital since July 2012. Prior to
DoubleLine Capital, he was a Senior Credit Analyst at West Gate Horizons
Advisors (and its predecessor entity, ING Capital Advisors) since
2001. |
|
| |
Philip
Kenney |
|
DoubleLine
Floating Rate Fund
(since July 2018) |
|
Mr. Kenney joined DoubleLine’s Global
Developed Credit Group in 2013 and has been Director of Corporate
Research since 2016. Prior to joining the firm, he worked at Crescent
Capital as an investment analyst with a focus on high yield bonds and
leveraged loans. |
|
| |
Mark W.
Christensen |
|
DoubleLine
Low Duration Emerging Markets Fixed Income Fund
(since inception in April 2014)
DoubleLine
Emerging Markets Fixed Income Fund
(since December 2015)
DoubleLine
Emerging Markets Local Currency Bond Fund
(since inception in June 2019) |
|
Mr. Christensen joined DoubleLine in
2009 as a Portfolio Manager and Senior Credit
Analyst. |
-258-
|
|
|
| |
Portfolio Manager |
|
Length of Service
with the Funds |
|
Business Experience During
the Past Five Years |
|
| |
Su Fei
Koo |
|
DoubleLine
Low Duration Emerging Markets Fixed Income Fund
(since inception in April 2014)
DoubleLine
Emerging Markets Fixed Income Fund
(since December 2015)
DoubleLine
Emerging Markets Local Currency Bond Fund
(since inception in June 2019) |
|
Ms. Koo joined DoubleLine in 2009 as
a Portfolio Manager and Senior Credit Analyst. |
|
| |
Vitaliy
Liberman |
|
DoubleLine
Long Duration Total Return Bond Fund
(since inception in December
2014) |
|
Mr. Liberman joined DoubleLine in
2009. He is the lead Portfolio Manager overseeing the Agency mortgage
team. Mr. Liberman is a permanent member of the Fixed Income Asset
Allocation Committee. He is a CFA charterholder. |
|
| |
Damien
Contes |
|
DoubleLine
Infrastructure Income Fund
(since inception in April 2016) |
|
Mr. Contes is a Global Infrastructure
Investments portfolio manager. He joined DoubleLine Capital in 2013 as a
member of the International Fixed Income group focusing on transportation
and energy sectors. Prior to joining DoubleLine Capital, he was a member
of the investment team at ICE Canyon, LLC for six years. |
|
| |
Andrew
Hsu |
|
DoubleLine
Infrastructure Income Fund
(since inception in April 2016)
DoubleLine
Total Return Bond Fund
(since July 2019)
DoubleLine
Income Fund
(since inception in September
2019) |
|
Mr. Hsu joined DoubleLine in 2009. He
is a Portfolio Manager and heads the Global Infrastructure and
Asset-Backed Securities (ABS) group. He is a permanent member of the Fixed
Income Asset Allocation and Structured Products Committees. |
|
| |
William
Campbell |
|
DoubleLine
Global Bond Fund
(since July 2016)
DoubleLine
Emerging Markets Local Currency Bond Fund
(since inception in June 2019) |
|
Mr. Campbell
joined DoubleLine in 2013 as an Emerging Markets sovereign analyst. He
covers Developed Markets, Central & Eastern Europe, Middle East
and Africa (CEEMEA), and China.
Prior
to joining DoubleLine, Mr. Campbell worked for Peridiem Global
Investors as a Global Fixed Income Research Analyst and Portfolio Manager
beginning in March 2011. Mr. Campbell received his BS in Business
Economics and International Business, as well as his BA in English, from
Pennsylvania State University. He received his MA in Mathematics, with a
focus on Mathematical Finance, from Boston University. |
|
| |
Valerie
Ho |
|
DoubleLine
Global Bond Fund
(since July 2016)
DoubleLine
Emerging Markets Local Currency Bond Fund
(since inception in June 2019) |
|
Ms. Ho joined DoubleLine in 2009 as
an Emerging Markets sovereign analyst. She covers Latin America and
Emerging Asia excluding China. She holds a BS in Mathematics/ Economics,
and a Specialization in Computer Programming from University of California
at Los Angeles. She is a CFA charterholder. |
|
| |
Samuel
Lau |
|
DoubleLine
Strategic Commodity Fund
(since July 2018) |
|
Mr. Lau joined DoubleLine in 2009. He
works in portfolio management and trading for derivatives-based and
multi-asset strategies. |
|
| |
Jeffrey
Mayberry |
|
DoubleLine
Strategic Commodity Fund
(since July 2018) |
|
Mr. Mayberry works in portfolio
management and trading for derivatives-based and multi-asset strategies.
He joined DoubleLine in 2009 where he oversaw portfolio analytics, risk
management and the development of portfolio management systems. He moved
to his current role on the Macro-Asset Allocation team in 2014. |
|
| |
Morris
Chen |
|
DoubleLine
Income Fund
(since inception in September
2019) |
|
Mr. Chen joined DoubleLine in 2009.
He is the lead Portfolio Manager overseeing the Commercial Mortgage-Backed
Securities (CMBS) and Commercial Real Estate (CRE) Debt team. He is a
permanent member of the Fixed Income Asset Allocation and Structured
Products Committees. |
|
| |
Ken
Shinoda |
|
DoubleLine
Income Fund
(since inception in September 2019)
DoubleLine
Total Return Bond Fund
(since July 2020) |
|
Mr. Shinoda joined DoubleLine in
2009. He is the Chairman of the Structured Products Committee and the lead
Portfolio Manager overseeing the Non‑Agency Residential Mortgage-Backed
Securities (RMBS) team. He is a permanent member of the Fixed Income Asset
Allocation Committee. He is a CFA charterholder. |
-259-
Advisory
and Sub‑Advisory Agreements
The
Trust and DoubleLine Capital have entered into an Investment Advisory and
Management Agreement in respect of each Fund other than the DoubleLine
Multi-Asset Trend Fund, DoubleLine Strategic Commodity Fund, and DoubleLine
Shiller Enhanced CAPE®,
and the Trust and DoubleLine Alternatives have entered into an Investment
Advisory and Management Agreement in respect of the DoubleLine Multi-Asset Trend
Fund, DoubleLine Strategic Commodity Fund, and DoubleLine Shiller Enhanced
CAPE® (collectively, the
“Advisory Agreements”), under the terms
of which the Funds have employed the Advisers to manage the investment of the
assets of the Funds, to place orders for the purchase and sale of their
portfolio securities, and to be responsible for overall management of the Funds’
business affairs, subject to the oversight of the Board of Trustees.
Under
the Advisory Agreements, the Funds pay to the Advisers as compensation for the
services rendered, facilities furnished, and expenses incurred by them, fees at
the following annual rates:
|
|
|
|
|
|
|
|
|
| |
Fund |
|
Contractual
Annual Management
Fee Rate
(As
a Percentage
of
the Fund’s
Average
Daily
Net
Asset Value) |
|
Actual Management Fee
Paid
for the
Fiscal Year Ended
March 31,
2024
(As
a Percentage
of
the Fund’s
Average
Daily
Net
Asset Value) |
DoubleLine Total
Return Bond Fund |
|
|
|
0.40% |
| |
|
|
0.40% |
|
DoubleLine Core Fixed
Income Fund |
|
|
|
0.40% |
| |
|
|
0.37% |
1 |
DoubleLine Emerging
Markets Fixed Income Fund |
|
|
|
0.75% |
| |
|
|
0.75% |
|
DoubleLine Low
Duration Bond Fund |
|
|
|
0.35% |
| |
|
|
0.35% |
|
DoubleLine Floating
Rate Fund |
|
|
|
0.50% |
| |
|
|
0.50% |
|
DoubleLine Flexible
Income Fund |
|
|
|
0.62% |
| |
|
|
0.62% |
|
DoubleLine Low
Duration Emerging Markets Fixed Income Fund |
|
|
|
0.50% |
| |
|
|
0.35% |
2 |
DoubleLine Long
Duration Total Return Bond Fund |
|
|
|
0.35% |
| |
|
|
0.22% |
2 |
DoubleLine Global
Bond Fund |
|
|
|
0.50% |
| |
|
|
0.50% |
3 |
DoubleLine
Infrastructure Income Fund |
|
|
|
0.50% |
| |
|
|
0.50% |
|
DoubleLine Income
Fund |
|
|
|
0.50% |
| |
|
|
0.27% |
2 |
DoubleLine Emerging
Markets Local Currency Bond Fund |
|
|
|
0.75% |
| |
|
|
0.00% |
2 |
DoubleLine
Multi-Asset Trend Fund |
|
|
|
0.50% |
| |
|
|
0.00% |
1,2 |
DoubleLine Strategic
Commodity Fund |
|
|
|
0.90% |
| |
|
|
0.89% |
|
DoubleLine Shiller
Enhanced CAPE® |
|
|
|
0.45% |
| |
|
|
0.45% |
|
DoubleLine Shiller
Enhanced International CAPE® |
|
|
|
0.50% |
| |
|
|
0.20% |
1,2 |
1 |
Includes
advisory fee waivers made with respect to investments in other investment
vehicles sponsored or advised by an Adviser and not subject to
recoupment. |
2 |
Includes
amounts waived by the Adviser pursuant to the expense limitation
agreement. |
3 |
In
addition, the Adviser recouped 0.01% representing advisory fees waived
during a prior period pursuant to the terms of the expense limitation
agreement between the Adviser and the
Fund. |
-260-
The
Advisers have agreed to waive their investment advisory fees and to reimburse
other ordinary operating expenses of each Fund listed below, as applicable, to
the extent necessary to limit the ordinary operating expenses of each class of
the Fund’s shares to an amount not to exceed the following annual rates (based
on each share class’s average daily net assets):
|
|
|
|
|
| |
Fund |
|
Class I |
|
Class N |
|
Class R6 |
DoubleLine Emerging
Markets Fixed Income Fund |
|
0.95% |
|
1.20% |
|
N/A |
DoubleLine Low
Duration Bond Fund |
|
0.47% |
|
0.72% |
|
0.42% |
DoubleLine Floating
Rate Fund |
|
0.75% |
|
1.00% |
|
N/A |
DoubleLine Flexible
Income Fund |
|
0.82% |
|
1.07% |
|
0.77% |
DoubleLine Low
Duration Emerging Markets Fixed Income Fund |
|
0.59% |
|
0.84% |
|
N/A |
DoubleLine Long
Duration Total Return Bond Fund |
|
0.50% |
|
0.75% |
|
N/A |
DoubleLine Global
Bond Fund |
|
0.70% |
|
0.95% |
|
N/A |
DoubleLine
Infrastructure Income Fund |
|
0.65% |
|
0.90% |
|
N/A |
DoubleLine Income
Fund |
|
0.65% |
|
0.90% |
|
N/A |
DoubleLine Emerging
Markets Local Currency Bond Fund |
|
0.90% |
|
1.15% |
|
N/A |
DoubleLine
Multi-Asset Trend Fund |
|
0.65% |
|
0.90% |
|
N/A |
DoubleLine Strategic
Commodity Fund |
|
1.10% |
|
1.35% |
|
N/A |
DoubleLine Shiller
Enhanced CAPE® |
|
0.65% |
|
0.90% |
|
0.60% |
DoubleLine Shiller
Enhanced International CAPE® |
|
0.65% |
|
0.90% |
|
N/A |
Ordinary
operating expenses exclude taxes, commissions, mark‑ups, litigation expenses,
indemnification expenses, interest expenses, Acquired Fund Fees and Expenses,
and any extraordinary expenses. The expense limitations described in the table
above will apply until at least August 1, 2025 and each may only be
terminated sooner by vote of a Fund’s Board of Trustees at any time.
Fees
waived or expenses reimbursed by an Adviser may be recouped from a Fund in the
three fiscal years following the fiscal year in which the fees were waived or
expenses were reimbursed. Any such recoupment is subject to the review of the
Fund’s Board of Trustees and may not cause a Fund’s ordinary operating expenses
to exceed the Fund’s expense limitation that was in place when the fees were
waived or expenses were reimbursed. Additionally, an Adviser would generally
seek recoupment only in accordance with the terms of any expense limitation of a
Fund that is in place at the time of recoupment. Further information about fees
recouped and fees subject to potential recoupment may be found in the SAI.
When
a Fund invests in other DoubleLine funds, the Adviser will waive its advisory
fees in an amount equal to the advisory fees paid by the other DoubleLine funds
in respect of Fund assets so invested.
The
Advisory Agreements provide that in the absence of willful misfeasance, bad
faith or gross negligence on the part of the Advisers, or reckless disregard of
its obligations and duties under the Advisory Agreements, the Advisers,
including their officers, directors, and partners, shall not be subject to any
liability to the Trust or any Fund, or to any shareholder, officer, director,
partner, or Trustee thereof, for any act or omission in the course of, or
connected with, rendering services under the Advisory Agreements.
DoubleLine
Alternatives has entered into an Investment Management Agreement with DoubleLine
Multi-Asset Trend Ltd., a wholly-owned subsidiary of the DoubleLine Multi-Asset
Trend Fund (the “Commodity Subsidiary Advisory
Agreement”), and the terms of the Commodity Subsidiary Advisory Agreement
are substantially similar to the terms of the DoubleLine Multi-Asset Trend
Fund’s Advisory Agreement.
DoubleLine
Alternatives has entered into an Investment Management Agreement with DoubleLine
Strategic Commodity Ltd., a wholly-owned subsidiary of the DoubleLine Strategic
Commodity Fund (the “Commodity Subsidiary
Advisory Agreement”), and the terms of the Commodity Subsidiary Advisory
Agreement are substantially similar to the terms of the DoubleLine Strategic
Commodity Fund’s Advisory Agreement.
Pursuant
to separate investment sub‑advisory agreements (each, a “Sub‑Advisory Agreement”), DoubleLine Alternatives has
engaged DoubleLine Capital to serve as sub‑adviser to DoubleLine
Shiller Enhanced CAPE®
and to the DoubleLine Multi-Asset Trend Fund to manage each Fund’s investments
in debt instruments. DoubleLine Capital is not compensated directly by a Fund,
but is paid by DoubleLine Alternatives. DoubleLine Alternatives pays a monthly
fee to DoubleLine Capital, calculated at the annual rate (as a percentage of
each Fund’s average daily NAV) of 0.225% for DoubleLine Shiller Enhanced
CAPE® and 0.25% for the DoubleLine
Multi-Asset Trend Fund.
-261-
Each Sub‑Advisory Agreement
provides that in the absence of willful misfeasance, bad faith or gross
negligence on the part of DoubleLine Capital, or reckless disregard of its
obligations and duties under the Sub‑Advisory Agreement, DoubleLine
Capital, including its officers, directors, and partners, shall not be subject
to any liability to DoubleLine Alternatives, the Trust or DoubleLine Shiller
Enhanced CAPE® or
DoubleLine Multi-Asset Trend Fund, as applicable, or to any shareholder,
officer, director, partner, or Trustee of any of the foregoing, for any act or
omission in the course of, or connected with, rendering services under
the Sub‑Advisory Agreement.
A
discussion regarding the basis for the Board of Trustees’ approval of the
Advisory and Sub‑Advisory Agreements with respect to the Funds is
contained in the Funds’ annual report to shareholders for the period ended
March 31, 2024.
DoubleLine
Alternatives has entered into a license agreement with the Morgan Stanley Index
Sponsor that permits, among other things, the Adviser to use the Morgan Stanley
Index in managing the DoubleLine Strategic Commodity Fund’s portfolio and to
enter into derivative transactions tied or related to the Morgan Stanley Index.
Pursuant to the license agreement, the Adviser (and not the Fund) has agreed to
pay the Morgan Stanley Index Sponsor a license fee based on the Fund’s average
daily net assets.
Additional
Information
The
Trustees of the Trust oversee generally the operations of the Funds and the
Trust. The Trust enters into contractual arrangements with various parties,
including among others the Funds’ investment adviser, custodian, transfer agent,
and accountants, who provide services to the Funds.
Shareholders
are not parties to any such contractual arrangements and are not intended third
party (or other form of) beneficiaries of those contractual arrangements. The
Trust’s and the Funds’ contractual arrangements are not intended to create any
shareholder rights to enforce such contracts directly against the service
providers or to seek any remedy under those contracts directly against the
service providers.
This
Prospectus has been designed to meet the regulatory purpose of providing
information concerning the Trust and the Funds that you should consider
carefully in determining whether to purchase shares of a Fund. Neither this
Prospectus, the SAI, nor the Funds’ registration statement, is intended, or
should be read, to be or to give rise to an agreement or contract between the
Trust or the Funds and any shareholder, or to give rise to any rights in any
shareholder or other person other than any rights under federal or state law
that may not be waived.
Certain
Provisions in the Trust’s Declaration of Trust
Derivative Claims of Shareholders. A
shareholder may bring a “derivative” action on behalf of the Trust only if
certain demand requirements set out in Delaware law and the Trust’s declaration
of trust, as amended (the “Declaration”),
are met, including (subject to certain exceptions) that the shareholder first
make a demand on the Trustees to bring the action themselves. The demand
requirements set out in Delaware law and the Declaration do not generally apply
to shareholder actions alleging violations of the Federal securities laws.
Please refer to the section of the SAI entitled “Trustees and Officers —
Additional Information” for more information.
Limited Liability of Trustees. The Declaration
provides that the Trust shall not in any way be bound or limited by any present
or future law or custom in regard to investment by fiduciaries. The Declaration
provides that a Trustee or officer shall be liable for his or her own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee or officer, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or law.
The Trustees, as trustees of a registered investment company, may have a number
of duties ascribed to them under the 1940 Act and the foregoing provisions
are not intended to eliminate or alter those duties.
Share
Class Features
Types
of Shares Available
All
of the Funds offered in this Prospectus currently offer Class I and
Class N shares. DoubleLine Total Return Bond Fund, DoubleLine Core Fixed
Income Fund, DoubleLine Low Duration Bond Fund, DoubleLine Flexible Income Fund,
and DoubleLine Shiller Enhanced CAPE® offer Class R6 shares.
Class R6 Shares are generally only available through authorized dealers,
brokers, or other service providers (“financial
intermediaries”) who have an agreement with the Funds’ distributor to
make Class R6 shares available to their clients who are Class R6
eligible plans (as defined below) and, in certain other limited circumstances
described below, to other eligible investors. In addition, Class R6 shares
may also be purchased directly from a
-262-
Fund’s
transfer agent by a Class R6 eligible plan if such shares are held in an
omnibus account opened in the plan’s name directly with the Fund’s transfer
agent. Class R6 eligible plans include only those plans who hold shares
through a plan level or omnibus account and who do not require (or whose
financial intermediaries do not require) the Funds to provide administrative,
recordkeeping or similar services in respect of plan investors or other
beneficial shareholders (or any compensation in respect of such services
provided by others). Expenses vary among the classes. You should consider
carefully and consult your financial intermediary regarding which of these share
classes you may be eligible to purchase. The Funds do not charge a front‑end or
deferred sales charge commission on any of the classes offered in this
Prospectus.
You
should consider carefully, and ask your financial intermediary about, the amount
of any commission or Rule 12b‑1 fee (as defined herein) that will apply to your
investment in a Fund and whether you would pay a lower commission or Rule 12b‑1
fee if you were to purchase shares of another share class or if you were to
purchase shares of the Fund directly from the Fund or through a different
platform or intermediary.
Expenses
There
are two types of expenses related to mutual funds: expenses you pay directly
(called a sales load) and expenses that are deducted from fund assets.
Expenses You Pay Directly. The Funds do not
charge a front‑end or deferred sales charge commission on any of the classes
offered in this Prospectus. However, your financial intermediary may charge a
commission for effecting a transaction on your behalf or charge you other fees
on investments in the Funds.
Expenses You Pay Through the Fund. The costs
of managing and administering a Fund are spread among shareholders of each class
of shares. These operating costs cover such things as investment management,
distribution (“Rule 12b‑1 fees”) and
shareholder servicing, custody, auditing, administrative and transfer agency
expenses, and fees and expenses of Trustees.
Choosing
a Share Class
The
different share classes have different expense structures and eligibility
requirements. You should choose the cost structure that best meets your needs
and for which you are eligible. You will have higher ongoing operating expenses
if you purchase Class N shares than you would if you purchased Class I
or Class R6 shares. However, Class I shares require a substantially
higher initial investment and only certain investors may purchase Class R6
shares.
You
should consider that all or a portion of the Rule 12b‑1 fees relating to your
investment in Class N shares may serve as compensation to your financial
intermediary for services it provides.
Please
see the eligibility requirements for each share class below.
The
chart below summarizes the features of the different share classes. If you
purchase shares through a financial intermediary, your financial intermediary
may charge a commission for effecting the transaction or charge you other
fees.
This
chart is only a general summary, and you should read the description of the fees
and expenses of each share class below and in the Fund Summaries in this
Prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum
Initial
Investment: |
|
|
Subsequent
Investment: |
|
|
Initial
Sales Charge (Load) |
|
|
Maximum
Contingent
Deferred
Sales Load |
|
|
Annual
12b‑1
Fee |
|
|
|
Regular
Accounts |
|
|
IRAs/
HSAs |
|
|
All Accounts
and Automatic
Investment
Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
|
|
None |
|
|
|
None |
|
|
|
None |
|
Class N Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
|
|
None |
|
|
|
None |
|
|
|
0.25 |
% |
Class R6
Shares |
|
|
None |
|
|
|
None |
|
|
|
None |
|
|
|
None |
|
|
|
None |
|
|
|
None |
|
-263-
The
Trust may suspend the offering of a Fund’s shares for any period of time.
Class I
Shares (All Funds)
If
you meet the initial $100,000 investment minimum for regular accounts or $5,000
for IRA/HSA accounts, you may purchase Class I shares at their current NAV
directly from each Fund by contacting the Funds’ transfer agent, or from
financial intermediaries that make shares of the Funds available to their
customers. Class I shares are not subject to a sales charge or to any Rule
12b‑1 fees.
Class N
Shares (All Funds)
You
may purchase Class N shares of a Fund at their current NAV directly from
each Fund or through certain financial intermediaries that have made special
arrangements with the Funds’ distributor to offer Class N shares to their
clients. Class N shares are not subject to a sales charge. Class N
shares are subject to a Rule 12b‑1 fee of 0.25%. Financial intermediaries that
may make Class N shares available to their clients include banks, trust
companies, broker-dealers, or other financial organizations, many of which may
also charge their clients an advisory fee, management fee, consulting fee, fee
in lieu of brokerage commissions or other similar fees for their services.
Class R6
Shares (DoubleLine Total Return Fund, DoubleLine Core Fixed Income Fund,
DoubleLine Low Duration Bond Fund, DoubleLine Flexible Income Fund and
DoubleLine Shiller Enhanced CAPE® only)
Class R6
Eligible Plans and Other Eligible Investors
Class R6
eligible plans include only those types of plans listed below and who hold
shares through a plan level or omnibus account and who do not require (or whose
financial intermediaries do not require) the Funds to provide administrative,
recordkeeping or similar services in respect of plan investors or other
beneficial shareholders (or any compensation in respect of such services
provided by others):
• |
|
Qualified
401(a) plans (including 401(k) plans, Keogh plans, profit-sharing pension
plans, money purchase pension plans, target benefit plans, defined benefit
pension plans and Taft-Hartley multi-employer pension
plans); |
• |
|
403(b)
plans and tax‑sheltered annuity plans; |
• |
|
457
plans, including 457(a) governmental entity plans and tax‑exempt
plans; |
• |
|
Nonqualified
deferred compensation plans, including rabbi trusts and similar
arrangements; and |
• |
|
Funded
welfare benefit plans (e.g.,
Voluntary Employees’ Beneficiary Association (VEBA) plans, and Other
Post-Employment (OPEB) plans). |
Class R6
shares are not available to Traditional and Roth individual retirement accounts
(IRAs), Coverdell Education Savings Accounts, SEPs, SARSEPs, SIMPLE IRAs, and
529 college savings plans. While Class R6 shares are generally only
available to Class R6 eligible plans, Class R6 shares may be available
to certain non‑retirement accounts through fee‑based platforms that have entered
into an agreement with a Fund’s distributor that makes Class R6 shares
available for investment through those platforms.
In
addition, Fund trustees and other individuals who are affiliated with the Funds
and/or other DoubleLine Funds may purchase Class R6 shares.
How
to Buy Shares
General
Information
Each
Fund offers more than one class of shares. Shares of each class of a Fund
represent an equal pro rata interest in
that share class of the Fund.
Class I
shares are offered at their current NAV. If you meet the initial $100,000
investment minimum for regular accounts or $5,000 for IRA/HSA accounts, you may
purchase Class I shares directly from a Fund by contacting the Fund’s
transfer agent, or from financial intermediaries that make shares of the Fund
available to their customers.
-264-
You
may purchase Class N shares of a Fund at their current NAV directly from
each Fund or through certain financial intermediaries that have made special
arrangements with the Funds’ distributor to offer Class N shares to their
clients. Financial intermediaries that may make Class N shares available to
their clients include banks, trust companies, broker-dealers, or other financial
organizations, many of which may also charge their clients an advisory fee,
management fee, consulting fee, fee in lieu of brokerage commissions or other
similar fees for their services.
Class R6
Shares are offered at their current NAV. Class R6 Shares are generally only
available through financial intermediaries who have an agreement with the Funds’
distributor to make Class R6 shares available to their clients, typically
Class R6 eligible plans. In addition, Class R6 shares may also be
purchased by other eligible investors and directly from a Fund’s transfer agent
by a Class R6 eligible plan if such shares are held in an omnibus account
opened in the plan’s name directly with the Fund’s transfer agent. Certain
financial intermediaries, such as a bank, trust company, broker-dealer, or other
financial organization, that charge an advisory fee, management fee, consulting
fee, a fee in lieu of brokerage commissions or other similar fee for their
services and that have made special arrangements with a Fund’s distributor to
offer Class R6 shares to Class R6 eligible plans or other eligible
investors may be authorized to accept, on behalf of a Fund, purchase order
requests placed by or on behalf of their customers. Your financial intermediary
or plan is responsible for forwarding all of the necessary documentation to the
Fund, and may charge you separately for its services. The purchase, redemption and exchange policies and fees charged by
such financial intermediaries may differ from those that would apply to
transactions effected through the Fund’s transfer agent. For instance,
financial intermediaries or plans may charge transaction fees in addition to any
fees charged by the Fund, and may set different minimums or limitations on
buying, exchanging, or redeeming shares. Please consult a representative of your
financial intermediary for further information.
The
Funds do not apply a sales charge to investments in Class R6, Class I
or Class N shares. The price you pay for a Fund’s shares is the Class’s NAV
per share.
Your
order to purchase shares will be priced based on the next NAV calculated after
your order is received in good order by the Fund or an authorized financial
intermediary. A purchase order is not in good order if the Fund does not, for
example, receive all required documentation and information. In order for you to
receive a Fund’s share price next calculated, the Fund, the Fund’s transfer
agent, or an authorized financial intermediary must receive your order in good
order. In the case of a request furnished to an authorized financial
intermediary, the Fund’s processing of your redemption request may be adversely
affected if the request is not subsequently communicated by your financial
intermediary timely and properly to the Fund; your financial intermediary is
responsible for ensuring that your request is received by the Fund timely and in
good order. Because financial intermediaries’ processing times and arrangements
with the Funds may vary, please ask your financial intermediary or plan
administrator, if any, when your account will be credited. A Fund may at its
discretion reject any purchase order for Fund shares.
Distribution
and Rule 12b‑1 Fees (Class N Shares Only); Other Distribution-Related Payments
to Financial Intermediaries
Each
Fund has adopted a plan pursuant to Rule 12b‑1 under the 1940 Act (the “Plan”) with respect to its Class N shares.
A Fund makes payments under its Plan to the Fund’s distributor to compensate it
for services provided and expenses incurred by it to promote the sale of the
relevant class of shares, reduce redemptions of those shares, and maintain or
improve services provided to shareholders of that class of shares by financial
intermediaries. The Plan is a compensation plan that provides for payments at an
annual rate (based on average daily net assets) of 0.25% for Class N
shares. Because a Fund’s Rule 12b‑1 fees attributable to Class N shares are
paid out of a Fund’s Class N assets on an ongoing basis, they will increase
the cost of your investment and will cost you more than paying for other classes
offered herein. All shareholders of Class N shares share in the expense of
Rule 12b‑1 fees paid from the assets attributable to Class N shares;
however, because these shareholders hold their shares through varying
arrangements (for example, directly or through financial intermediaries), they
may not share equally in the benefits of the Plan applicable to their class of
shares. A Fund may pay distribution fees and other amounts described in this
Prospectus at a time when shares of that Fund are unavailable for
purchase.
An
Adviser, at its own expense and out of its own assets, also may provide other
compensation to financial intermediaries in connection with sales of a Fund’s
shares. Such compensation may include, but is not limited to, financial
assistance to financial intermediaries in connection with conferences, sales, or
training programs for their employees; business building programs and seminars
or informational meetings for the public; advertising or sales campaigns; or
other financial intermediary-sponsored special events, including support in
respect of marketing materials. In some instances, this compensation may be made
available only to certain financial intermediaries whose representatives have
sold or are expected to sell significant amounts of Fund shares. Dealers may not
use sales of a Fund’s shares to qualify for this compensation to the extent
prohibited by the laws or rules of any state or any self-regulatory agency, such
as the Financial Industry Regulatory Authority.
-265-
The
amount of payments made to different financial intermediaries may not be the
same. These payments may provide incentives for such financial intermediaries to
make shares of the Funds available to their customers, and may allow the Funds
greater access to such financial intermediaries, their employees and their
customers than would be the case if no payments were made. Such access
advantages include, but are not limited to, placement of the Funds on a list of
mutual funds offered as investment options to the financial intermediary’s
customers (sometimes referred to as “Shelf
Space”); access to the financial intermediary’s registered
representatives; and/or the ability to assist in training and educating the
financial intermediary’s registered representatives.
Although
the amount of such payments may be more or less, payments made by an Adviser
from its own assets to a financial intermediary for the sale of a Fund’s shares
where the financial intermediary is compensated based on its customers’ assets
are generally made at an annual rate that ranges between 0.05% and 0.15% of the
intermediary’s customers’ assets invested in the Funds. The Advisers may have
arrangements on other bases with certain intermediaries. See the section
entitled “Payments by the Advisers” in the Funds’ SAI.
The
Funds, the distributor, the Adviser and their affiliates do not have contractual
arrangements to compensate financial intermediaries based on the amount of the
intermediaries’ assets invested in Class R6 Shares; however, the Adviser
has entered into arrangements with some financial intermediaries to pay them a
fixed amount per year as part of the Adviser’s participation in the
intermediaries’ select program, which offers, among other things, access to
investor forums, consultation services, new distribution platforms, intermediary
client events and other promotional opportunities. The Adviser has also entered
into arrangements with one or more intermediaries who distribute shares of the
Funds to procure data that the Adviser believes will be helpful in furthering
its marketing and distribution efforts in respect of the Funds and other
products it may manage, including data regarding those at a firm who have
clients invested in the Funds or other products the Adviser may manage. Such
payments are in addition to any service payments or Distribution Plan amounts
paid to FINRA member firms or to other intermediaries.
If
payments to financial intermediaries in respect of a particular mutual fund
complex exceed payments made by other mutual fund complexes, your financial
advisor and the financial intermediary employing him or her may have an
incentive to recommend that fund complex over others. Please speak with your
financial advisor to learn more about the total amounts paid to your financial
advisor and his or her firm in respect of shares of the Funds and by sponsors of
other mutual funds he or she may recommend to you. You should also consult
disclosures made by your financial intermediary at the time of purchase.
Index
Sponsor Arrangements
DoubleLine
Alternatives, the DoubleLine Strategic Commodity Fund and its distributor may
make payments to affiliates of the Morgan Stanley Index Sponsor in connection
with the distribution and sale of the Fund’s shares and/or the provision of
services to certain shareholders of the Fund. The amounts of these payments,
together with the payments by the Adviser to the Morgan Stanley Index Provider,
will provide a financial incentive for the Morgan Stanley Index Sponsor and,
separately, its affiliates to sell or promote the sale of shares of the
Fund.
Payments
to Financial Intermediaries for Shareholder Services
Financial
intermediaries are firms that, for compensation, sell shares of mutual funds,
including shares of a DoubleLine Fund, and/or provide certain administrative,
recordkeeping, and account maintenance services to mutual fund shareholders.
Financial intermediaries may include, among others, brokers, registered
broker-dealers, financial planners or advisors, retirement plan service
providers, banks, and insurance companies. In some cases, a financial
intermediary may hold its clients’ Fund shares in nominee or street name.
Shareholder services provided by a financial intermediary may (though will not
necessarily) include, among other things: processing and mailing trade
confirmations, periodic statements, prospectuses, annual reports, semi-annual
reports, shareholder notices, and other SEC‑required communications; capturing
and processing tax data; issuing and mailing dividend checks to shareholders who
have selected cash distributions; preparing record date shareholder lists for
proxy solicitations; collecting and posting distributions to shareholder
accounts; and establishing and maintaining systematic withdrawals and automated
investment plans and shareholder account registrations. Financial intermediaries
that require compensation for such services from the Fund, the distributor, the
Adviser or their affiliates are not generally permitted to offer Class R6
shares. Moreover, the Funds do not impose shareholder service fees on
Class R6 Shares.
The
compensation paid to a financial intermediary by a Fund’s distributor, Adviser,
or a Fund in respect of these services is typically paid periodically over time,
during the period when the financial intermediary’s clients hold investments in
a Fund. The amount of continuing compensation paid to different financial
intermediaries for distribution and/ or shareholder services varies. In most
cases, the compensation is a percentage of the value of the financial
intermediary’s clients’ investments in the Funds. Variations in compensation
may, but will not necessarily, reflect enhanced or additional services provided
by the
-266-
financial
intermediary. The Funds reimburse the distributor or other related parties for
certain types of payments made to financial intermediaries, and in many cases
make payments directly to financial intermediaries, that provide certain
administrative, recordkeeping, and account maintenance services. The amount of
the payments made by a Fund is reviewed by the Trustees periodically.
Your
financial intermediary or plan may charge you separately for shareholder
services. The fees charged by such financial
intermediaries or plan may differ from those that would apply to transactions
effected through the Fund’s transfer agent. Please consult a
representative of your financial intermediary or plan for further
information.
Calculation
of NAV
The
NAV of each class of a Fund, except as noted below, is typically calculated as
of the close of trading on the NYSE (usually 4:00 p.m. Eastern Time) each day
the NYSE opens for regular trading, and the Funds are not available for purchase
or redemption on holidays when the NYSE is scheduled to be closed. Each Fund’s
assets are normally valued as of this time for the purpose of computing a Fund’s
NAV. The time as of which shares are priced and the time until which purchase
and redemption orders are accepted for processing at the NAV calculated that day
may be changed by a Fund in its discretion as permitted by applicable law or the
SEC. In calculating its NAV, a Fund generally will not consider information that
becomes available after the time as of which the Fund calculates its NAV, such
as securities transactions that occur after that time.
The
Funds value their portfolio securities for purposes of calculating their NAVs
using procedures approved by the Funds’ Board of Trustees. Those procedures
allow for a variety of methodologies to be used to value a Fund’s securities.
The specific methodologies used for a particular security may vary based on the
market data available for a specific security at the time a Fund calculates its
NAV or based on other considerations. The procedures also permit a level of
judgment to be used in the valuation process. Accordingly, the methodologies
summarized below are not an exhaustive list of the methodologies a Fund may use
to value a security and they may not represent the means by which a Fund’s
investments are valued on any particular business day.
A
share class’s NAV is determined by adding the values of a Fund’s securities,
cash and other assets attributable to that class, subtracting all of a Fund’s
expenses and liabilities attributable to that class, and then dividing by the
total number of shares outstanding for that class of the Fund. A Fund’s
investments for which market quotations are readily available are valued based
on market value.
Equity
securities are typically valued at the official close or the last reported sales
price on the principal exchange or market on which they are traded or, if there
were no sales that day at the mean between the closing bid and asked
prices.
Securities
traded on Nasdaq are generally valued at the Nasdaq official closing price,
which may not be the last sales price. If the Nasdaq official closing price is
not available for a security, that security will generally be valued using the
mean between the closing bid and asked prices.
Market
values for domestic and foreign fixed income securities are normally determined
on the basis of valuations provided by independent pricing services. Prices
obtained from independent pricing services use various inputs, including, but
not limited to, information provided by broker-dealers; pricing formulas, such
as dividend discount models; option valuation formulas; estimates of market
values obtained from yield data relating to investments or securities with
similar characteristics; and discounted cash flow models that might be
applicable. A Fund will generally value over‑the‑counter derivatives on the
basis of valuations obtained from counterparties, published index closing levels
or evaluated prices supplied by independent pricing services, some or all of
which may be based on market data from trading on exchanges that closed
significantly before the time as of which a Fund calculates its NAV. Forward
foreign currency contracts are generally valued based on rates provided by
independent data providers. Exchange traded futures and options on futures are
generally valued at the settlement price determined by the relevant exchange on
which they principally trade, and exchange traded options are generally valued
at the last trade price on the exchange on which they principally trade. A Fund
does not normally take into account trading, clearances or settlements that take
place after the close of the principal exchange or market on which such
securities are traded. A Fund will generally value its investments in other
investment companies and private funds, such as hedge funds, at their reported
NAVs, to the extent available.
The
Funds may hold investment positions in sizes smaller than institutionally‑sized
round lot positions (sometimes referred to as ‘odd lots’). Pricing services
generally provide evaluations on the basis of institutionally‑sized round lots.
The Funds do not generally apply (and have not historically applied) discounts
to pricing service evaluations of securities when they hold and value odd lot
positions. If a Fund sells a position in an odd‑lot transaction, the sale price
may be less than the value at which the position has been held by the
Fund.
-267-
Investments
denominated in currencies other than the U.S. dollar are valued in U.S. dollars
using exchange rates obtained from independent data providers, generally as of
the time the Fund calculates its NAV. As a result, the NAV of a Fund’s shares
may be affected by changes in the values of currencies in relation to the U.S.
dollar.
If
market quotations are unavailable or deemed unreliable for a security or if a
security’s value may have been significantly affected by events occurring after
the close of a securities market on which the security principally trades but
before a Fund calculates its NAV, the Fund may, in accordance with procedures
adopted by the Board of Trustees, attempt to assign a value to the security.
This fair value may be higher or lower than any available market price or
quotation for such security and, because this process necessarily depends upon
judgment, this value also may vary from valuations determined by other funds
using their own valuation procedures. While a Fund’s use of fair value pricing
is intended to result in calculation of an NAV that fairly reflects security
values as of the time of pricing, a Fund cannot guarantee that any fair value
price will, in fact, approximate the amount the Fund would actually realize upon
the sale of the securities in question. Fair valuation may require subjective
determinations about the value of a security. While a Fund’s policy is intended
to result in a calculation of a Fund’s NAV that fairly reflects security values
as of the time of pricing, a Fund cannot ensure that fair values used by a Fund
accurately reflect the price that a Fund could obtain for a security if it were
to dispose of that security as of the time of pricing (for instance, in a forced
or distressed sale). The prices used by a Fund may differ from the value that
would be realized if the securities were sold.
The
Board of Trustees has adopted a pricing and valuation policy for use by each
Fund and its Valuation Designee (as defined below) in calculating each Fund’s
NAV. Pursuant to Rule 2a‑5 under the 1940 Act, each Fund has designated its
primary investment adviser, either DoubleLine Capital LP or DoubleLine
Alternatives LP, as applicable, as the “Valuation Designee” to perform all of
the fair value determinations as well as to perform all of the responsibilities
that may be performed by the Valuation Designee in accordance with Rule 2a‑5.
Each Adviser, as Valuation Designee, is authorized to make all necessary
determinations of the fair values of portfolio securities and other assets for
which market quotations are not readily available or if it is deemed that the
prices obtained from brokers and dealers or independent pricing services are
unreliable.
The
valuations of securities that trade principally on a foreign market that closes
before the time as of which a Fund calculates its NAV will generally be based on
quotations or other information as of that earlier closing time. If significant
events occur after that earlier closing time but before the time as of which the
Fund calculates its NAV, the Fund may fair value those securities in accordance
with the Fund’s valuation policies. Foreign markets may be closed on days when a
Fund prices its shares (e.g., on
non‑U.S. holidays), and foreign markets may be open on weekends and other days
when the Fund does not price its shares. The value of such assets or the Fund’s
shares may change significantly on days when the Fund’s shares are not able to
be purchased, redeemed or exchanged.
The
current NAV per share of DoubleLine Strategic Commodity Fund, DoubleLine Shiller
Enhanced CAPE®, and
DoubleLine Multi-Asset Trend Fund are available on the Funds’ website at
www.doubleline.com.
Verification
of Identity
To
help the government fight the funding of terrorism and money laundering
activities, federal law requires that investment companies such as the Trust
obtain, verify, and record information that identifies each person who opens an
account. What this means for you is that you may be asked to provide your name,
address, date of birth, taxpayer identification number and permanent street
address. If your account is in the name of a legal entity (e.g., partnership, limited liability company,
business trust, corporation, etc.), you may also be required to supply the
identity of the beneficial owners. Mailing addresses containing only a P.O. Box
will not be accepted (though an APO or FPO box number can be used by active duty
military personnel). You may be asked to provide your driver’s license or other
identification documents, and a Fund may consult third-party databases to help
verify your identity.
The
Funds will generally reject a new account application if you do not provide the
required identifying information. The relevant Fund will attempt to collect any
missing information required on the application by contacting you, or if
applicable, your financial intermediary. If a Fund is unable to obtain this
information within a timeframe established by the transfer agent in its sole
discretion (for example, 72 hours), which may change from time to time, your
application will be rejected. With respect to opened accounts, the Funds reserve
the right to close your account at the then-current day’s NAV and remit proceeds
to you via check if it is unable to verify your identity. The Funds will attempt
to verify your identity within a timeframe established at its sole discretion
(for example, 96 hours), which may change from time to time. If you are
purchasing shares of the Funds through a financial intermediary, check with the
financial intermediary for details concerning these requirements.
-268-
Minimum
Investments for Shares
The
minimum investment requirements for initial and subsequent investment in shares
of the Funds are as follows:
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Minimum Initial
Investment: |
|
|
Subsequent Investment: |
|
|
|
Regular
Accounts |
|
|
IRAs/
HSAs |
|
|
All Accounts and Automatic
Investment Plans |
|
Class I Shares |
|
$ |
100,000 |
|
|
$ |
5,000 |
|
|
$ |
100 |
|
Class N
Shares |
|
$ |
2,000 |
|
|
$ |
500 |
|
|
$ |
100 |
|
Class R6
shares are not subject to any minimum investment requirements for initial and
subsequent investment in shares of the Funds. See eligibility limitations
described above under “How to Buy Shares.”
The
minimum initial and subsequent investment amounts may be modified for certain
financial intermediaries that submit trades on behalf of underlying investors.
The minimum initial and subsequent purchase amounts may be reduced or waived by
the Funds’ distributor, the Funds’ Adviser, or the Fund for specific investors
or types of investors, including, without limitation, employee benefit plans,
retirement plans, a financial intermediary authorized to sell shares of the
Funds, employees of the Adviser and their family members, the Adviser’s
affiliates or related parties, employees of the Adviser’s affiliates or related
parties and their family members; investment advisory clients of the Adviser;
and current or former Trustees of the Trust and their family members. A person’s
family members include a person’s spouse or life partner and other members of
the person’s immediate family, including step and adoptive relationships.
Certain intermediaries also may have investment minimums, which may differ from
the Funds’ minimums, and may be waived at the intermediaries’ discretion. Each
Fund reserves the right to change the minimum investment amounts without prior
notice.
If
your non‑retirement account in a Fund falls below the minimum investment
necessary to open the particular type of account as a result of redemptions and
or exchanges for six months or more, the Fund may close your account and send
you the proceeds upon 60 days’ written notice.
New
Account Application
If
you are making your initial investment in a Fund and need a New Account
Application or need help completing the New Account Application, please contact
the transfer agent at 877‑DLine11 (877‑354‑6311) or speak with your
representative at your financial intermediary.
Purchase
by Mail
You
may purchase shares by sending a check made payable to “DoubleLine Funds”,
together with a completed New Account Application in the case of an initial
investment, to:
Via Regular
Mail
DoubleLine
Funds
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
WI 53201-0701
Via Express,
Registered or Certified Mail
DoubleLine
Funds
c/o
U.S. Bank Global Fund Services
615
E. Michigan Street, 3rd Floor
Milwaukee,
WI 53202
Generally,
Class R6 shares may be purchased by mail only through an authorized
financial intermediary. Contact your financial intermediary about purchases via
mail.
-269-
Class R6
shares may also be purchased directly from the Fund’s transfer agent by a
Class R6 eligible plan if such shares are held in an omnibus account opened
in the plan’s name directly with the Fund’s transfer agent. Such shares may be
purchased by sending a check made payable to “DoubleLine Funds,” together with a
completed New Account Application in the case of an initial investment, to the
applicable address above.
Subsequent
investments should be accompanied by the Invest by Mail form that is attached to
your account statement (if applicable) or a note specifying the Fund name, your
account number, and the name(s) your account is registered in.
All
investments must be in U.S. dollars drawn on domestic banks. The Funds will not accept cash, money orders, checks
drawn on banks outside the U.S., travelers’ checks, starter checks, or credit
card checks. Third-party checks, except those payable to an existing
shareholder, will not be accepted. In addition, the Funds will not accept
post-dated checks or any conditional order or payment. If your check does not clear, you will be responsible
for any loss a Fund incurs. You also will be charged $25 for every check
returned unpaid.
The
Funds do not consider the U.S. Postal Service or other independent delivery
services to be its agents. Therefore, deposits in the mail or with such
services, or receipt at a U.S. Bank Global Fund Services post office box, of
purchase orders or redemption requests does not constitute receipt by the
transfer agent of a Fund. Receipt of purchase orders or redemption requests is
based on when the order is received at the transfer agent’s offices.
Additionally,
shares of the Funds have not been registered for sale outside of the United
States. The Funds generally do not sell shares to investors residing outside of
the United States even if they are United States citizens or lawful permanent
residents, except to investors with United States military APO or FPO
addresses.
Purchase
by Telephone
If
you have not declined telephone transaction privileges on your account
application, you may purchase additional shares of a Fund by calling 877‑DLine11
(877‑354‑6311). If your account has been open for at least 7 business days,
telephone orders will be accepted via electronic funds transfer from your bank
account through the Automated Clearing House (“ACH”) network. You must have banking
information established on your account prior to making this purchase. If your
purchase order is received in good order before the close of trading on the NYSE
(normally 4:00 p.m. Eastern Time) on a day the NYSE opens for regular trading,
your shares will be purchased at the NAV plus any applicable sales charge
calculated on that day. Please see “How to Buy Shares — General Information” for
information on purchasing shares through a financial intermediary.
Generally,
Class R6 shares may be purchased from the Fund by telephone only through
authorized financial intermediaries. Contact your financial intermediary about
purchases via telephone. Class R6 shares may also be purchased directly
from the Fund’s transfer agent by a Class R6 eligible plan if such shares
are held in an omnibus account opened in the plan’s name directly with the
Fund’s transfer agent.
Purchase
by Internet
If
you have an existing account and are placing a subsequent investment, you may do
so by accessing your account online at DoubleLine.com. An investor must first
establish a direct account by completing the appropriate New Account
Application.
If
a shareholder elects to place purchases for their direct account online, the
shareholder will be required to establish a user ID and password. Shareholders
are responsible for keeping their user IDs and passwords private. The Funds will
not be liable for relying on any instructions submitted online. Submitting
transactions online may be difficult (or impossible) during times when online
communications may be under unusual stress. If a shareholder elects not to view
their account or effect transactions online, the shareholder should not
establish online account access. If online account access has already been
established and you no longer want the account accessible online, you can call
877‑DLine11 (877‑354‑6311) or contact your financial intermediary (if
applicable) and request to suspend online access.
Generally,
Class R6 shares may be purchased from the Fund via the internet only
through an authorized financial intermediary. Contact your financial
intermediary about internet purchases. Class R6 shares may also be
purchased directly from the Fund’s transfer agent by a Class R6 eligible
plan if such shares are held in an omnibus account opened in the plan’s name
directly with the Fund’s transfer agent.
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Purchase
by Wire
If
you are making your first investment in a Fund, before you wire funds, the
transfer agent must have a completed New Account Application. You may mail or
overnight deliver your New Account Application to the transfer agent. Upon
receipt of your completed New Account Application, the transfer agent will
establish an account for you. The shareholder account number assigned will be
required as part of the instruction that should be provided to your bank to send
the wire. Your bank must include both the name of the Fund you are purchasing,
the shareholder account number, and the name on the account per the New Account
Application so that monies can be correctly applied.
U.S.
Bank, N.A.
777
E. Wisconsin Avenue
Milwaukee,
WI 53202
ABA
No. 075000022
Credit:
U.S. Bancorp Fund Services, LLC
Account
No. 112‑952‑137
Further
Credit: DoubleLine Funds [Name of Fund and Share Class]
(Shareholder
Account Number, Shareholder Name)
Generally,
Class R6 shares may be purchased from the Fund by wire only through an
authorized financial intermediary. Contact your financial intermediary about
purchases by wire. Class R6 shares may also be purchased directly from the
Fund’s transfer agent by a Class R6 eligible plan if such shares are held
in an omnibus account opened in the plan’s name directly with the Fund’s
transfer agent.
Before
sending your fed wire, please call the transfer agent at 877‑DLine11
(877‑354‑6311) or contact your financial intermediary (if applicable) to advise
them of the wire. This will ensure prompt and accurate credit to your account
upon receipt of the fed wire.
Wired
funds must be received prior to the close of trading on the NYSE (normally 4:00
p.m. Eastern Time) for the related purchase order to be eligible for same day
pricing, except that orders provided in respect of advisory accounts (including
other DoubleLine funds) managed by DoubleLine Capital or one of its related
parties and orders provided by or through a broker-dealer or financial
intermediary with whom the Funds (or their service providers) have a processing
relationship may receive same day pricing so long as the related trade
instructions are received timely. The Funds and U.S. Bank, N.A. are not
responsible for the consequences of delays resulting from the banking or Federal
Reserve wire system or from incomplete wiring instructions.
Automatic
Investment Plan
Generally,
once your account has been opened with the initial minimum investment you may
make additional purchases at regular intervals through the Automatic Investment
Plan (“AIP”). The AIP provides a
convenient method to have monies deducted from your bank account for investment
into a Fund (if your AIP falls on a weekend or holiday, it will be processed on
the following business day). In order to participate in the AIP each purchase
must be in the amount of $100 or more and your financial institution must be a
member of the ACH network. If your financial institution rejects your payment,
the Fund’s transfer agent will charge a $25 fee to your Fund account. To begin
participating in the AIP, please contact your financial intermediary or, for
direct investors, complete the AIP section on the New Account Application or
call the Funds’ transfer agent at 877‑DLine11 (877‑354‑6311) for instructions.
Your signed New Account Application must be received by the Fund’s transfer
agent, or its agent, as applicable, at least 7 business days prior to the
initial transaction through the AIP. Any request to change or terminate your AIP
should be submitted to the transfer agent, or its agent, as applicable at least
five calendar days prior to the effective date of the next transaction.
Purchases
Through an Authorized Third Party
You
may buy a Fund’s shares through certain broker-dealers and financial
intermediaries. If purchases of a Fund’s shares are arranged and settlement is
made at an investor’s election through a registered broker-dealer, other than
the Fund’s distributor, that broker-dealer may, at its discretion, charge a fee
for that service. From time to time, shares of a Fund may only be available from
a single broker-dealer or a limited number of broker-dealers, which may limit a
Fund’s ability to attract assets.
-271-
How
to Redeem Shares
General
Information
You
may redeem shares on any day when the NYSE opens for regular trading. Your
shares will be redeemed at the next NAV calculated after your order is received
in good order by a Fund or an authorized financial intermediary. A redemption
request in good order must include, among other things, the exact name in which
the shares are registered, the account number, and the number of shares or the
dollar amount of shares to be redeemed, and, for written requests, a signature
matching the account registration, together with any other materials or
information required by the Fund, the transfer agent or any other agents duly
appointed for that purpose. If you invest or hold your shares through a
financial intermediary, see “Redemptions Through Your Financial Intermediary or
Other Authorized Third Party” below.
The
Funds typically seek to send redemption proceeds on the next business day (as
provided above) after the redemption request is received in good order and prior
to market close, regardless of whether the redemption proceeds are sent via
check, wire, or ACH transfer; however, the Funds reserve the right to pay
redemption proceeds as long as seven days after the receipt of a redemption
request. In case of emergencies or when trading on the NYSE is restricted, or as
otherwise permitted by the SEC or applicable law, the Fund may suspend
redemptions or postpone payment for more than seven days. If any portion of the
shares to be redeemed represents an investment made by check or electronic funds
transfer through the ACH network, a Fund may delay the payment of the redemption
proceeds until the transfer agent is reasonably satisfied that the purchase
amount has been collected. This may take up to 15 calendar days from the date of
purchase. This delay is not expected to apply if you purchased your shares via
wire payment.
The
Adviser expects to use a variety of resources to honor requests to redeem shares
of the Funds, including available cash; short-term investments; interest,
dividend income and other monies earned on portfolio investments; the proceeds
from the sale or maturity of portfolio holdings; and various other techniques,
including, without limitation, repurchase agreements. As of the date of this
Prospectus, all of the Funds, other than DoubleLine Emerging Markets Local
Currency Bond Fund, also have available to them an uncommitted line of credit
that they may draw on to manage their liquidity needs, subject to policies and
procedures that govern the allocation of the available credit under the facility
among the Funds. There can be no assurance that the uncommitted line of credit
will remain available to the Funds generally or that any available credit under
the facility will be available to any particular Fund when the Fund seeks to
draw on the facility. Funds that invest in securities with longer settlement
cycles, such as DoubleLine Floating Rate Fund, may use a committed credit
facility, when available, to manage their liquidity needs and honor redemption
requests. There can be no assurance that any credit facility, even a committed
credit facility, will be available to a Fund or available in sufficient amounts
to a Fund under all circumstances. A variety of other measures, such as
redemptions in kind (i.e., payment in
portfolio investments rather than cash), may also be used to honor redemptions.
The Adviser does not expect to honor redemption requests in kind regularly, but
reserves the right to do so. If your shares are redeemed in kind you will incur
transaction costs upon disposition of the assets received in the distribution,
as well as taxes on any capital gains from the sale. In addition, you would
continue to be subject to the risks of any market fluctuation in the value of
the assets you receive in kind until they are sold. The Adviser expects to use
the resources and measures discussed above, among others, to meet redemption
requests in regular and stressed market conditions.
A
signature guarantee may be required of all account holders for any redemption
request in excess of $100,000 where proceeds are requested to be sent by check,
when a redemption request is received by the transfer agent and the account
address has changed within the last 30 calendar days, when redemption proceeds
are to be sent or payable to any person, address or bank account not on a Fund’s
records, or if ownership is being changed on your account. Signature guarantees
will generally be accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New York
Stock Exchange Medallion Signature Program and the Securities Transfer Agents
Medallion Program (“STAMP”). A notary
public is not an acceptable signature guarantor. Investors should check with
their Financial Intermediary to determine if it is subject to these
arrangements.
Shareholders
who have an IRA or other retirement plan must indicate on their written
redemption request whether or not to withhold U.S. federal income tax.
Redemption requests failing to indicate an election not to have tax withheld
will generally be subject to 10% withholding.
Shares
held in IRA or other retirement plan accounts may be redeemed by telephone at
1‑877‑354‑6311. Investors should consider whether or not to withhold taxes from
any such redemption.
The
Funds may establish policies permitting the Funds’ transfer agent to place a
temporary hold for up to 25 business days on the disbursement of redemption
proceeds from an account held directly with the Fund if the transfer agent
reasonably believes that financial exploitation of a Specified Adult (as defined
below) has occurred, is occurring, has been attempted, or will be
-272-
attempted.
“Specified Adult” refers to an individual who is a natural person (i) age
65 and older, or (ii) age 18 and older and whom the Fund’s transfer agent
reasonably believes has a mental or physical impairment that renders the
individual unable to protect his or her own interests. The transfer agent and/or
the Fund may not be aware of factors suggesting financial exploitation of a
Specified Adult and may not be able to identify Specified Adults in all
circumstances. Furthermore, neither the transfer agent nor any Fund is required
to delay the disbursement of redemption proceeds and nor do they assume any
obligation to do so.
Redemptions
by Mail
You
may sell shares by writing a letter that includes:
• |
|
your
name(s) and signature(s) as they appear on the New Account Application
form |
• |
|
the
dollar amount or number of shares you want to
redeem |
• |
|
how
and where to send the proceeds |
For
direct shareholders, mail your letter of instruction to:
Via Regular
Mail
DoubleLine
Funds
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
WI 53201-0701
Via Express,
Registered or Certified Mail
DoubleLine
Funds
c/o
U.S. Bank Global Fund Services
615
E. Michigan Street, 3rd Floor
Milwaukee,
WI 53202
Your
letter of instruction must be accompanied by a signature guarantee or other
documentation, if required (see “Signature Guarantees” below).
Generally,
Class R6 shares may be redeemed from the Fund by mail only through an
authorized financial intermediary. Contact your financial intermediary about
redemptions by mail. Class R6 shares may also be redeemed directly from the
Fund’s transfer agent by a Class R6 eligible plan if such shares are held
in an omnibus account opened in the plan’s name directly with the Fund’s
transfer agent.
The
Funds do not consider the U.S. Postal Service or other independent delivery
services to be its agents. Therefore, deposits in the mail or with such
services, or receipt at a U.S. Bank Global Fund Services post office box, of
purchase orders or redemption requests does not constitute receipt by the
transfer agent of a Fund. Receipt of purchase orders or redemption requests is
based on when the order is received at the transfer agent’s offices.
Signature
Guarantees
Some
circumstances require written orders, along with a signature guarantee from
either a Medallion program member or a non‑Medallion program member. These
include:
• |
|
redemption
requests for amounts in excess of $100,000, where proceeds are requested
to be sent by check; |
• |
|
when
a redemption request is received by the transfer agent and the account
address has changed within the last 30 calendar
days; |
-273-
• |
|
when
redemption proceeds are to be sent or payable to any person, address or
bank account not on the Funds’ record; or |
• |
|
if
ownership is being changed on your account. |
The
Funds and/or the transfer agent may require a signature guarantee or other
acceptable signature authentication in other instances based on the
circumstances relative to the particular situation. The Funds or the transfer
agent reserves the right to waive any signature guarantee requirement at its
discretion. Investors who have purchased shares through a financial intermediary
may be subject to different requirements and should check with their financial
intermediary to determine whether signature guarantee requirements or other
security arrangements apply to their accounts.
A signature guarantee helps protect against
fraud. You can obtain one from most banks, securities dealers, credit unions or
savings associations but not
from a notary public. You may be required to pay a fee for a signature
guarantee. Please call 877‑DLine11 (877‑354‑6311) to ensure that your signature
guarantee will be processed correctly.
Non‑financial
transactions including establishing or modifying certain services on an account
may require a signature guarantee, signature verification from a Signature
Verification Program member, or other acceptable form of authentication from a
financial institution source.
Redemptions
by Telephone
You
may redeem shares by telephone request unless you have declined to have this
option. You may have a check sent to the address of record, proceeds may be
wired to your bank account of record, or funds may be sent via electronic funds
transfer through the ACH network using the bank instructions previously
established on your account. Redemption proceeds will typically be sent on the
business day following your redemption. Wires are subject to a $15 fee. There is
no charge to have proceeds sent via ACH and proceeds are typically credited to
your bank within two to three business days after redemption. Except as noted
above under “— General Information,” proceeds will be processed within seven
calendar days after a Fund receives your redemption request in good order. Call
the transfer agent at 877‑DLine11 (877‑354‑6311) to request a redemption.
Telephone redemption requests must be for a minimum of $100.
Generally,
Class R6 shares may be redeemed from the Fund by telephone only through an
authorized financial intermediary. Contact your financial intermediary about
redemptions via telephone. Class R6 shares may also be redeemed directly
from the Fund’s transfer agent by a Class R6 eligible plan if such shares
are held in an omnibus account opened in the plan’s name directly with the
Fund’s transfer agent.
By
establishing telephone redemptions, you authorize the Funds’ transfer agent to
act upon telephone instructions. Before executing an instruction received by
telephone, the Funds’ transfer agent will use reasonable procedures to seek to
confirm that the telephone instructions are provided by a person authorized to
transact on the account. These procedures will include recording the telephone
call and asking the caller for a form of personal identification. The Fund and
its agents are not liable to shareholders for any loss, expense or cost arising
out of any telephone redemption request that the Fund and its agents reasonably
believed to be genuine pursuant to these procedures, including fraudulent or
unauthorized requests. If an account has more than one owner or authorized
person, a Fund will accept telephone instructions from any one owner or
authorized person. Once a telephone transaction has been placed, it cannot be
canceled or modified after the close of regular trading on the NYSE (generally,
4:00 p.m. Eastern Time).
During
periods of high market activity, shareholders may encounter higher than usual
wait times. Please allow sufficient time to place your telephone
transaction.
Redemptions
by Internet
If
you have an existing account and are placing a redemption request, you may do so
by accessing your account online at DoubleLine.com. Proceeds from online
redemptions may be sent via check, ACH or wire to the bank account of record.
Online redemptions are not available for all direct accounts because in certain
cases, a signature guarantee may be required.
Generally,
Class R6 shares may be redeemed from the Fund via internet only through an
authorized financial intermediary. Contact your financial intermediary about
internet redemptions. Class R6 shares may also be redeemed directly from
the Fund’s transfer agent by a Class R6 eligible plan if such shares are
held in an omnibus account opened in the plan’s name directly with the Fund’s
transfer agent.
-274-
If
a shareholder elects to place redemptions for their direct account online, the
shareholder will be required to establish a user ID and password. Shareholders
are responsible for keeping their user IDs and passwords private. The Funds will
not be liable for relying on any instructions submitted online. Submitting
transactions online may be difficult (or impossible) during times when online
communications may be under unusual stress. If a shareholder elects not to view
their account or effect transactions online, the shareholder should not
establish online account access. If online account access has already been
established and the shareholder no longer wants the account accessible online,
contact your financial intermediary (or, if you are a direct shareholder, you
can call 877‑DLine11 (877‑354‑6311)) and request to suspend online access.
Systematic
Withdrawal Plan
As
another convenience, you may redeem shares through the systematic withdrawal
plan (“SWP”). To begin participating in
the SWP, please contact your financial intermediary or, for direct investors,
complete the SWP section on the New Account Application or call the Funds’
transfer agent at 877‑DLine11 (877‑354‑6311) for instructions. Under the SWP,
you may choose to receive a specified dollar amount generated from the
redemption of shares in your account. In order to participate in the SWP, your
account balance must be at least $10,000 and there must be a minimum withdrawal
of $500. If you elect this redemption method, the Funds will send a check to
your address of record, or will send the payment via electronic funds transfer
through the ACH network, directly to your bank account. For payment through the
ACH network, your bank must be an ACH member and your bank account information
must be on file with a Fund. The plan may be terminated by the Funds at any
time.
You
may elect to terminate your participation in the SWP at any time by contacting
the transfer agent five days prior to the effective date or next scheduled
withdrawal.
To
reach the transfer agent, U.S. Bancorp Fund Services, LLC, call toll free in the
U.S. 877‑DLine11 (877‑354‑6311). Outside the U.S. call 213‑633‑8200
(collect).
Redemptions
Through Your Financial Intermediary or Other Authorized Third Party
You
may redeem shares through certain financial intermediaries. If redemptions of a
Fund’s shares are arranged and settlement is made at an investor’s election
through a financial intermediary, that financial intermediary may, at its
discretion, charge a fee for that service.
You
may sell your shares of a Fund back to the Fund through your financial
intermediary on any day when the NYSE opens for regular trading. The financial
intermediary may charge you a fee for its services. Redemption requests will be
priced at the NAV next determined after they are received in good order by a
Fund or an authorized financial intermediary. In the case of a request furnished
to an authorized financial intermediary, the Fund’s processing of your
redemption request may be adversely affected if the request is not subsequently
communicated by your financial intermediary timely and properly to the Fund;
your financial intermediary is responsible for ensuring that your request is
received by the Fund timely and in good order. Please contact your financial
intermediary for instructions on how to place redemption requests. Because
financial intermediaries’ processing times and arrangements with the Funds may
vary, please ask your financial intermediary when your account will be
debited.
If
you redeem shares through your financial intermediary, your financial
intermediary is responsible for ensuring that the Fund’s transfer agent receives
your redemption request in good order. If your financial intermediary receives
Federal Reserve wires, you may instruct that your redemption proceeds be
forwarded by wire to your account with it; you also may instruct that your
redemption proceeds be forwarded to you by a wire transfer. Please indicate your
financial intermediary’s or your own complete wiring instructions. Your
financial intermediary may charge you separately for this service.
Other
Account Policies
Trading
Limits
Frequent
trading activity by Fund shareholders can reduce a Fund’s long-term performance
in a variety of ways, including as a result of increased trading and transaction
costs, disruption to a Fund’s stated portfolio management strategy, and the need
to maintain an elevated cash position to meet redemptions (and lost opportunity
costs as a result thereof) and forced liquidations. In addition, certain
short-term trading activities that attempt to take advantage of inefficiencies
in the valuation of a Fund’s securities holdings may dilute the interests of the
remaining shareholders and result in unwanted distributions of capital gains to
fund shareholders, including short term capital gains taxable to shareholders
subject to tax at ordinary income tax rates. A
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Fund
with foreign investment exposure may be subject to elevated risks of market
timing activities by investors. For example, a Fund may have exposure to assets
that trade on exchanges that close before the time it calculates its NAV. Some
investors may seek to take advantage of perceived price arbitrage opportunities
that those circumstances may present. Such shareholder activity presents the
potential for existing investors’ interests to be diluted.
Accordingly,
the Board of Trustees has adopted policies and procedures that are designed to
discourage frequent purchases and redemptions of Fund shares by Fund
shareholders. These policies and procedures include:
Trading Limit Policies for All Funds
|
• |
|
Each
Fund may reject any purchase order for any reason and without prior
notice. A Fund or a Fund’s transfer agent may reject a purchase order of
any investor or group of investors or person acting on behalf of any
investor or investors, whose pattern of trading or transaction history
involves, in the opinion of the Adviser or the Fund’s transfer agent,
actual or potential harm to the Fund. |
Additional Trading Limit Policies for All Funds
Except DoubleLine Floating Rate Fund
|
• |
|
The
Trust reserves the right to prohibit any acquisition of a Fund’s shares
(through either a purchase or exchange from another DoubleLine Fund) in
which the acquirer has previously completed multiple round-trip
transactions in the Fund within a 12‑month period in accordance with the
Trust’s policies and procedures. For this purpose, a round trip
transaction consists of the acquisition of shares of a particular
DoubleLine Fund (through either a purchase or exchange from another
DoubleLine Fund) and the subsequent redemption of shares of that Fund
(through either a sale or an exchange into another DoubleLine Fund). These
limits on round trip transactions do not, however, limit a shareholder’s
right to redeem their shares. |
|
• |
|
The
Trust monitors exchanges and redemptions out of a Fund in accordance with
the Trust’s policies and procedures. |
|
• |
|
Exceptions
to these trading limits must be approved by a Fund’s President or designee
and reported to the Board of Trustees on a quarterly
basis. |
These
restrictions do not generally apply to asset allocation programs (including
mutual funds that invest in other mutual funds for asset allocation purposes,
and not for short-term trading) or (except to the extent noted in the next
paragraph) to omnibus accounts, i.e.,
accounts on behalf of multiple, undisclosed investors, maintained by brokers and
other financial intermediaries (including 401(k) or other group retirement
accounts), or to involuntary transactions and automatic investment programs,
such as dividend reinvestment, or transactions pursuant to a Fund’s systematic
investment or withdrawal program, or to certain trading that is not indicative
of abusive short-term trading, such as the application of tax loss selling
programs or similar programs. A Fund also may waive these restrictions on terms
acceptable to the Fund and the Adviser, including in connection with investments
by financial institutions related to obligations the financial institutions may
have to third parties. The limitations and monitoring activities described above
may not be applied to transactions below certain thresholds.
While
financial intermediaries that maintain omnibus accounts may be required to or
may voluntarily impose restrictions on the trading activity of accounts traded
through those financial intermediaries, a Fund’s ability to impose restrictions
with respect to accounts traded through particular intermediaries may vary
depending on the intermediaries’ systems capabilities, applicable contractual
and legal restrictions, and cooperation of those financial intermediaries.
Moreover, the Trust cannot always identify or reasonably detect excessive
trading through omnibus accounts or accounts otherwise facilitated by financial
intermediaries that transmit purchase, exchange and redemption orders to a Fund,
and thus a Fund may have difficulty curtailing such activity. In lieu of
applying round trip transaction or other limits at the omnibus account level,
the Trust or the Adviser may determine to take other action to detect and deter
frequent purchases and redemptions of Fund shares, including, potentially,
requesting and reviewing the underlying trading information for the sub‑accounts
trading through an omnibus account or permitting a financial intermediary to
apply its own policies or procedures designed to detect and prevent excessive or
abusive short-term trading in lieu of applying the Funds’ procedures.
The
Trust and the Adviser may rely on the Funds’ service providers, including the
Funds’ transfer agent and/or administrator, to monitor for abusive short-term
trading activities.
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Redemption
Fees (DoubleLine Floating Rate Fund only)
The
DoubleLine Floating Rate Fund imposes redemption fees. Redemption fees are paid
to and retained by the Fund to help offset, at least in part, portfolio
transaction costs and other related costs directly and indirectly incurred by
the Fund as a result of a redemption or exchange of shares made within 90
calendar days of purchase by allocating some of those costs to the redeeming
shareholder. The Fund will apply a redemption fee equal to 1.00% of the value of
any shares redeemed within 90 calendar days of purchase. To the extent that the
redemption fee applies, the price you will receive when you redeem your shares
of the Fund is the NAV next determined after receipt of your redemption request
in good order, minus the redemption fee. If you purchased shares on different
days, the shares you held longest will be redeemed first (FIFO) for purposes of
determining whether the short-term trading fee applies. The Adviser may impose a
new redemption fee for the Fund or modify the existing fee at any time.
The
DoubleLine Floating Rate Fund permits exceptions to the redemption fee policy
for the following transactions: (i) to the extent the exception is
requested by a financial intermediary and the financial intermediary agrees to
administer the exception uniformly among similarly-affected clients, redemptions
or exchanges by discretionary asset allocation or wrap programs (“wrap programs”) that are initiated by the
sponsor of the program as part of a periodic rebalancing, provided that such
rebalancing occurs no more frequently than quarterly, or, if more frequent, was
the result of an extraordinary change in the management or operation of the wrap
program leading to a revised investment model that is applied across all
applicable accounts in the wrap program; (ii) to the extent the exception
is requested by a financial intermediary and the financial intermediary agrees
to administer the exception uniformly among similarly-affected clients,
redemptions or exchanges by a wrap program that are made as a result of a full
withdrawal from the wrap program or as part of a systematic withdrawal plan;
(iii) to the extent the exception is requested by a financial intermediary
and the intermediary agrees to administer the exception uniformly among
similarly-affected clients, the following transactions in participant-directed
retirement plans: (A) where the shares being redeemed were purchased with
new contributions to the plan (for example, payroll contributions, employer
contributions, and loan repayments); (B) redemptions made in connection with
taking out a loan from the plan; (C) redemptions in connection with death,
disability, hardship withdrawals, or Qualified Domestic Relations Orders;
(iv) redemptions made as part of a systematic withdrawal plan;
(v) redemptions made by a defined contribution plan in connection with a
termination or restructuring of the plan; (vi) redemptions made in
connection with a participant’s termination of employment;
(vii) redemptions made as part of a periodic rebalancing under an asset
allocation model; (viii) involuntary redemptions, such as those resulting
from a shareholder’s failure to maintain a minimum investment in the Fund;
(ix) redemptions of shares acquired through the reinvestment of dividends
or distributions paid by the Fund; (x) redemptions and exchanges effected
by other mutual funds (for example, funds of funds) that are sponsored or
advised by DoubleLine Capital or its related parties; (xi) to the extent
the Fund is used as a qualified default investment alternative under the
Employee Retirement Income Security Act of 1974, as amended, for certain 401(k)
plans; and (xii) otherwise as the officers of DoubleLine Capital or
DoubleLine Funds Trust may determine is appropriate after consideration of the
purpose of the transaction and the potential impact to the Fund.
The
application of the redemption fee and exceptions may vary among financial
intermediaries, and certain financial intermediaries may not apply the
exceptions listed above. If you purchase or sell fund shares through a financial
intermediary, you should contact your intermediary for more information on
whether the redemption fee will be applied to redemptions of your shares.
Please
refer to the “Shareholder Fees” table under the caption “Fees and Expenses for
the Fund” for details regarding the redemption fee charged by the DoubleLine
Floating Rate Fund.
Exchange
Privilege
You
can exchange your Class I shares, Class N shares, or Class R6
shares in a Fund (as applicable) for Class I, Class N, or
Class R6 shares, respectively, in another DoubleLine Fund (if available).
Any exchange is subject to the same minimums as an initial or subsequent
investment, as applicable. You can request your exchange by contacting your
financial intermediary, or (for direct shareholders) in writing, by calling the
transfer agent at 877‑DLine11 (877‑354‑6311), or by accessing your account
online at DoubleLine.com. Be sure to read the current Prospectus for the Fund
into which you are exchanging. Exchanges may only be made on days when both
affected Funds are open for business. Any new account established through an
exchange will have the same registration as the account from which you are
exchanging and will have the same privileges as your original account (as long
as they are available). In addition, the Trust reserves the right to change or
discontinue its exchange privilege, or temporarily suspend this privilege during
unusual market conditions, to the extent permitted under applicable SEC
rules.
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Conversion
of Shares Between Classes
From
time to time, a Fund may authorize the conversion of shares of one class to
another share class Such conversions may be subject to certain conditions,
including that the shares of the other class are eligible for sale in the
owner’s state of residence and all other applicable terms and conditions are
met. Further information about conversion of shares between classes may be found
in the SAI.
Notice
Regarding Delivery of Fund Documents
You
will receive periodic mailings regarding the Funds in which you invest. In order
to reduce the volume of mail you receive, only one copy of each mailing
(including, for example, fund Prospectuses) may be sent to an address shared by
two or more accounts or to shareholders we reasonably believe are from the same
family or household. If you would like to receive one copy of a mailing for each
account, please call 877‑DLine11 (877‑354‑6311) to request individual copies of
these documents. You must submit a written request to receive individual copies
of a Prospectus or shareholder report. It may take up to thirty days to process
your request.
Lost
Shareholders, Inactive Accounts and Unclaimed Property
It
is important that the Funds maintain a correct address for each investor. An
incorrect address may cause an investor’s account statements and other mailings
to be returned to the Funds. In accordance with state statutory requirements for
returned mail, the Funds will attempt to locate the investor or rightful owner
of the account. If the Funds are unable to locate the investor, then they will
determine whether the investor’s account can legally be considered abandoned.
Your mutual fund account may be transferred to the state government of your
state of residence if no activity occurs within your account during the
inactivity period specified in your state’s abandoned property laws, which
varies by state. The Funds are legally obligated to escheat (or transfer)
abandoned property to the appropriate state’s unclaimed property administrator
in accordance with statutory requirements. The investor’s last known address of
record determines which state has jurisdiction. The state may redeem escheated
shares and, if you subsequently seek to reclaim your proceeds of liquidation
from the state, you may only be able to recover the amount received when the
shares were redeemed. To help protect their accounts, shareholders should keep
their accounts up‑to‑date and active, which may include calling the Funds at
877‑DLine11 (877‑354‑6311) to generate shareholder initiated activity such as
completing an account transaction. Investors who are residents of the state of
Texas may designate a representative to receive legislatively required unclaimed
property due diligence notifications. Please contact the Funds to complete a
Texas Designation of Representative form.
Cost
Basis Reporting
When
you redeem or exchange Fund shares, the Fund or, if you purchase your shares
through a financial intermediary, your financial intermediary generally is
required to report to you and the Internal Revenue Service (“IRS”) on an IRS Form 1099‑B or other applicable
form cost-basis information with respect to those shares, as well as information
about whether any gain or loss on your redemption or exchange is short- or
long-term and whether any loss is disallowed under the “wash sale” rules. Such
reporting generally is not required for shares held in a retirement or other
tax‑advantaged account. Cost basis is typically the price you pay for your
shares (including reinvested dividends), with adjustments for certain
commissions, wash-sales, organizational actions, and other items, including any
returns of capital paid to you by a Fund in respect of your shares. Cost basis
is used to determine your net gains and losses on any shares you redeem or
exchange in a taxable account.
A
Fund or your financial intermediary, as applicable, will permit you to select
from a list of alternative cost basis reporting methods to determine your cost
basis in Fund shares. If you do not select a particular cost basis reporting
method, a Fund or financial intermediary will apply its default cost basis
reporting method to your shares. If you hold your shares directly in a Fund
account, the Fund’s default method (or the method you have selected by notifying
the Fund) will apply; if you hold your shares in an account with a financial
intermediary, the intermediary’s default method (or the method you have selected
by notifying the intermediary) will apply. Please contact the Funds at
877‑DLine11 (877‑354‑6311) or consult your financial intermediary, as
appropriate, for more information on the available methods for cost basis
reporting and how to select or change a particular method. You should consult
your tax advisor concerning the application of these rules to your investment in
a Fund, and to determine which available cost basis method is best for
you.
Distributions
The
amount of distributions of net investment income and of net realized long- and
short-term capital gains payable to shareholders will be determined separately
for each Fund class. Dividends of the net investment income of each Fund, if
any,
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will
be declared and paid at least monthly, except for the DoubleLine Emerging
Markets Local Currency Bond Fund and the DoubleLine Global Bond Fund, which will
declare and pay dividends of net investment income, if any, at least quarterly,
and the DoubleLine Strategic Commodity Fund, which will declare and pay
dividends of net investment income, if any, at least annually. Each Fund will
distribute net realized short-term capital gains and net realized long-term
capital gains, if any, at least annually. Your distributions will be reinvested
in the relevant Fund unless you instruct that Fund otherwise. You may change
your distribution election in writing or by telephone. Any change should be
submitted to the transfer agent by phone at 877‑DLine11 (877‑354‑6311) or in
writing to DoubleLine Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701,
Milwaukee, WI 53201-0701 at least five calendar days prior to the record date of
the next distribution. A Fund does not charge any fees or sales loads on shares
purchased through the automatic reinvestment of distributions. You may request
that distributions be paid by check. If you elect to receive distributions of
net investment income and/or capital gains paid in cash and the U.S. Postal
Service cannot deliver the check, or if a check remains outstanding for six
months, the relevant Fund reserves the right to reinvest the distribution check
in your account at that Fund’s then current NAV and will reinvest all subsequent
distributions until instructed otherwise.
Taxes
This
section provides a summary of certain U.S. federal income tax considerations
relevant to an investment in a Fund; it is not intended to be a full discussion
of tax laws and the effects of such laws on you, or to address all aspects of
taxation that may apply to specific types of shareholders, such as foreign
persons. Furthermore, this discussion is based on the Code and U.S. Treasury
regulations issued thereunder that are in effect as of the date of this
Prospectus, which provisions are subject to change, including retroactively.
There may be other U.S. federal, state, or local or non‑U.S. tax considerations
applicable to a particular investor. You are urged to consult your own tax
advisor regarding your investment in a Fund (including the status of your
distributions from the Fund). Additional tax information may be found in the
SAI.
Taxes on Dividends and Distributions. For U.S.
federal income tax purposes, distributions of investment income generally are
taxable to you as ordinary income. Taxes on distributions of capital gains are
determined by how long a Fund owned (or is deemed to have owned) the investments
that generated the gains, rather than how long you have owned your shares of the
Fund. Distributions that a Fund properly reports to you as gains from
investments that a Fund owned (or is deemed to have owned) for more than one
year (“Capital Gain Dividends”) generally
are treated as long-term capital gains includible in your net capital gain and
taxed to individuals at reduced rates. Distributions of gains from investments
that a Fund owned (or is deemed to have owned) for one year or less and gains on
the sale of or payments on bonds characterized as having market discount
generally are taxable to you as ordinary income. Distributions of investment
income that a Fund properly reports to you as derived from qualified dividend
income are taxed in the hands of individuals at the reduced rates applicable to
net capital gains, provided holding period and other requirements are met at
both the shareholder and Fund level. Each Fund does not expect a significant
portion of its distributions to derive from qualified dividend income.
Distributions
by a Fund to its shareholders that the Fund properly reports as
“Section 199A dividends,” as defined and subject to certain conditions
described below, are treated as qualified REIT dividends in the hands of
non‑corporate shareholders. Non‑corporate shareholders are permitted a U.S.
federal income tax deduction equal to 20% of qualified REIT dividends received
by them, subject to certain limitations. Very generally, a “Section 199A
dividend” is any dividend or portion thereof that is attributable to certain
dividends received by a regulated investment company from REITs, to the extent
such dividends are properly reported as such by the regulated investment company
in a written notice to its shareholders. A Section 199A dividend is treated
as a qualified REIT dividend only if the shareholder receiving such dividend
holds the dividend-paying regulated investment company shares for at least 46
days of the 91‑day period beginning 45 days before the shares become
ex‑dividend, and is not under an obligation to make related payments with
respect to a position in substantially similar or related property. A Fund is
permitted to report such part of its dividends as section 199A dividends as are
eligible, but is not required to do so. Distributions of income or gain
attributable to derivatives with respect to REIT securities, including swaps,
will not constitute qualified REIT dividends and will not be eligible for such
deduction.
The
Code generally imposes a 3.8% Medicare contribution tax on the “net investment
income” of certain individuals, estates and trusts to the extent their income
exceeds certain threshold amounts. For these purposes, net investment income
generally includes dividends paid by a Fund, including any capital gain
dividends, and net gains recognized on the sale, redemption, exchange or other
taxable disposition of shares of a Fund. Shareholders are advised to consult
their tax advisors regarding the possible implications of this tax on their
investment in a Fund.
Distributions
are taxable to you even if they are paid from income or gains earned by a Fund
before your investment (and thus were included in the price you paid).
Distributions are taxable in the manner described herein whether you receive
them in cash or reinvest them in additional shares of a Fund.
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Distributions
by a Fund to retirement plans and other tax‑advantaged accounts that qualify for
tax‑advantaged treatment under U.S. federal income tax laws generally will not
be taxable. Special tax rules apply to investments through such plans and/or
accounts. You should consult your tax advisor to determine the suitability of a
Fund as an investment through such a plan and/or account and the tax treatment
of distributions (including distributions of amounts attributable to an
investment in a Fund) from such a plan and/or account.
A
Fund’s investment in certain debt obligations, derivatives and hedging
transactions can cause a Fund to recognize taxable income in excess of the cash
generated by such investments. Thus, a Fund could be required at times to
liquidate investments, including at times when it may not be advantageous to do
so, in order to satisfy its distribution requirements (see “Tax Status of the
Funds” below). Such dispositions could result in realization of capital gains,
including short-term capital gains generally taxable to shareholders at ordinary
income rates when distributed to them.
Distributions
by a Fund to shareholders that are not “United States persons” within the
meaning of the Code (“foreign shareholders”) properly reported by the Fund as
(1) Capital Gain Dividends, (2) short-term capital gain dividends or
(3) interest-related dividends, each as defined and subject to certain
conditions described in the SAI, generally are not subject to withholding of
U.S. federal income tax.
Distributions
by a Fund to foreign shareholders other than Capital Gain Dividends, short-term
capital gain dividends and interest-related dividends (e.g., dividends attributable to dividend and
foreign-source interest income or to short-term capital gains or U.S. source
interest income to which the exception from withholding described above does not
apply) are generally subject to withholding of U.S. federal income tax at a rate
of 30% (or lower applicable treaty rate).
If
you are a non‑U.S. investor, please consult your own tax advisor regarding the
tax consequences of investing in a Fund.
Taxes When You Sell, Redeem or Exchange Your Shares.
Any gain resulting from a sale, redemption, or exchange (including an
exchange for shares of another fund) of your shares in a Fund generally will be
subject to U.S. federal income tax at either short-term or long-term capital
gain rates depending on how long you owned your shares.
Tax Status of the Funds. Each Fund has elected
or intends to elect and intends to qualify and to be eligible to be treated each
year as a regulated investment company under the Code, such that the Fund will
not be subject to U.S. federal income tax on income and gains timely distributed
to shareholders. In order to qualify for the special tax treatment accorded
regulated investment companies and their shareholders, a Fund must meet
requirements with respect to the sources of its income, the diversification of
its assets, and the distribution of its income. A Fund could in some cases cure
a failure to comply with these requirements, including by paying a Fund-level
tax and, in the case of a diversification failure, disposing of certain assets.
If a Fund were ineligible to or otherwise did not cure such a failure, or if a
Fund were otherwise to fail to qualify as a regulated investment company, the
Fund would be subject to U.S. federal income tax on its net income at regular
corporate rates without reduction for distributions to shareholders. When
distributed, that income would also be taxable to shareholders as an ordinary
dividend to the extent attributable to a Fund’s earnings and profits, thereby
potentially diminishing shareholder returns.
Commodity-Related Investments. Income from
certain commodity-linked instruments and from direct investments in commodities
does not constitute qualifying income for purposes of the source of income
requirement noted above. The tax treatment of certain other commodity-linked
instruments in which a Fund might invest is not certain, in particular with
respect to whether income or gains from such instruments constitute qualifying
income. A Fund generally intends to gain exposure to commodities through direct
investments that it believes give rise to qualifying income or indirectly
through its investment in one or more subsidiaries in a manner that gives rise
to qualifying income. A Fund must limit its investment in a subsidiary or group
of subsidiaries to no more than 25% of the value of the Fund’s total assets as
of the end of each quarter of the Fund’s taxable year in order to meet the asset
diversification requirement noted above. It is expected that all of a non‑U.S.
subsidiary’s income will be subpart F income currently included in a Fund’s
income as ordinary income for U.S. federal income tax purposes (such income
inclusions, “subpart F inclusions”).
Under U.S.Treasury regulations, “subpart F income” included in a Fund’s
annual income for U.S. federal income purposes will constitute qualifying income
to the extent it is either (i) timely and currently repatriated or
(ii) derived with respect to the Fund’s business of investing in stock,
securities or currencies. Net losses incurred by a subsidiary during a tax year
do not flow through to a Fund and thus will not be available to offset income or
capital gain generated from a Fund’s other investments. In addition, a
subsidiary is not permitted to carry forward any net ordinary losses it realizes
in a taxable year to offset ordinary income it realizes in subsequent taxable
years. You should consult the SAI for additional information.
Investments in Foreign Securities. A Fund’s
investments in foreign securities may be subject to foreign withholding or other
taxes. In that case, a Fund’s return on those securities may be decreased. If a
Fund meets certain requirements with respect to its asset holdings, it will be
eligible to elect to permit shareholders of the Fund to claim a credit or
deduction with respect to
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foreign
taxes paid by the Fund. In addition, investments in foreign securities or
foreign currencies may increase or accelerate a Fund’s recognition of ordinary
income and may affect the timing or amount of the Fund’s distributions.
Derivatives. A Fund’s use of derivatives may
affect the amount, timing, and character of distributions to shareholders and,
therefore, may increase the amount of taxes payable by shareholders. In
addition, the tax rules applicable to derivatives are in many cases uncertain
under current law. An adverse determination, future guidance by the IRS or U.S.
Treasury regulations, in each case with potentially retroactive effect, might
bear adversely on a Fund’s ability to satisfy the distribution or other
requirements to maintain its qualification as a regulated investment company and
avoid a fund-level tax.
Investments in Other Funds. Special tax
consequences may apply to shareholders of a Fund as a result of its investments
in other funds. Please see the SAI under “Distributions and Taxes” for more
information.
Backup Withholding. A Fund will be required in
certain cases to withhold on distributions paid to a shareholder who
(1) has provided the Fund either an incorrect tax identification number or
no number at all, (2) who is subject to backup withholding by the IRS for
failure to properly report payments of interest or dividends, or (3) who
has failed to certify to the Fund that such shareholder is not subject to backup
withholding.
Reporting. Shareholders will be advised
annually as to the U.S. federal tax status of distributions made by a Fund for
the preceding calendar year.
Consult your tax advisor about other possible tax
consequences. This is a summary of certain U.S. federal income tax
consequences of investing in the Funds. You should consult your tax advisor for
more information on your own tax situation, including possible other U.S.
federal, state, local and non‑U.S. tax consequences of investing in a Fund. For
more information, see “Distributions and Taxes” in the SAI.
Index
Descriptions
The
following index descriptions are based on information provided on the respective
index provider’s website or from other third-party sources. The Funds and
DoubleLine have not verified these descriptions and disclaim responsibility for
their accuracy and completeness.
The
Bloomberg U.S. Aggregate Bond Index represents securities
that are SEC‑registered, taxable, and dollar denominated. The index covers the
U.S. investment grade fixed rate bond market, with index components for
government and corporate securities, mortgage pass-through securities, and
asset-backed securities. These major sectors are subdivided into more specific
indices that are calculated and reported on a regular basis.
The
Bloomberg U.S. Aggregate 1‑3 Years Index
is a subset of the Bloomberg US Aggregate Index, and tracks investment grade,
fixed-rate bonds, including treasuries, government-related, corporate and
securitized issues. It only includes securities with a maturity between one and
up to, but not including three years.
The
Bloomberg U.S. Long Government/Credit Index includes
publicly issued U.S. Treasury debt, U.S. government agency debt, taxable debt
issued by U.S. states and territories and their political subdivisions, debt
issued by U.S. and non‑U.S. corporations, non‑U.S. government debt and
supranational debt.
The
Bloomberg U.S. Mortgage Backed Securities (MBS)
Index tracks fixed-rate agency mortgage backed pass-through securities
guaranteed by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac
(FHLMC).
The
BNP Paribas Multi-Asset Trend Index is
designed to provide exposure to a diverse range of asset classes and geographic
regions. These asset classes include equity, government bond and commodity
futures as well as forex forwards and credit default swap instruments. The
strategy is implemented by synthetically investing in a dynamic basket of
indices. The methodology seeks to identify on a daily basis a hypothetical
portfolio comprised of components based on the “Modern Portfolio Theory”
approach to asset allocation, which is a framework for assembling a portfolio of
certain assets to maximize the expected portfolio return for a given level of
portfolio risk, or alternatively, to minimize portfolio risk for a given level
of expected portfolio return. The portfolio is determined based on historical
trends of the price or level of each component, the short-term and long-term
variance of the components and the covariance between the components, subject to
weighting constraints and a specified level of volatility. For additional
information regarding the Index, see “Description of the BNP Paribas Index
Methodology” in the Prospectus above.
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The
ICE BofA 1‑3 Year Eurodollar Index is a
subset of the ICE BofA Eurodollar Index including all securities with a
remaining term to final maturity less than 3 years. The ICE BofA Eurodollar
Index tracks the performance of U.S. dollar-denominated investment grade
quasigovernment, corporate, securitized and collateralized debt publicly issued
in the eurobond markets. Qualifying securities must have an investment grade
rating (based on an average of Moody’s, S&P and Fitch).
The
ICE BofA 1‑3 Year U.S. Treasury Index is
an unmanaged index that tracks the performance of the direct sovereign debt of
the U.S. Government having a maturity of at least one year and less than three
years.
The
ICE BofA 3‑Month U.S. Treasury Bill Index
is comprised of a single issue purchased at the beginning of the month and held
for a full month. At the end of the month that issue is sold and rolled into a
newly selected issue. The issue selected at each month‑end rebalancing is the
outstanding Treasury Bill that matures closes to, but not beyond, three months
from the rebalancing date. To qualify for selection, an issue must have settled
on or before the month‑end rebalancing date.
The
ICE BofA SOFR Overnight Rate Index tracks
the performance of a synthetic asset paying SOFR to a stated maturity. The index
is based on the assumed purchase at par of a synthetic instrument having exactly
its stated maturity and with a coupon equal to that day’s fixing rate. That
issue is assumed to be sold the following business day (priced at a yield equal
to the current day fixing rate) and rolled into a new instrument.
Beginning
in July 2022, transaction costs were incorporated into the calculation of total
return for ICE fixed income indices.
The
Bloomberg Commodity Index Total Return is
an index calculated on an excess return basis that reflects commodity futures
price movements. The Index rebalances annually weighted 2/3 by trading volume
and 1/3 by world production and weight-caps are applied at the commodity, sector
and group level for diversification. Roll period typically occurs from the 6th-10th business day based on the
roll schedule.
The
FTSE World Government Bond Index (WGBI)
measures the performance of fixed-rate, local currency, investment grade
sovereign bonds. The WGBI is a widely used benchmark that currently includes
sovereign debt from over 20 countries, denominated in a variety of currencies,
and has more than 30 years of history available. The WGBI provides a broad
benchmark for the global sovereign fixed income market. Sub‑indexes are
available in any combination of currency, maturity or rating.
The
J.P. Morgan Corporate Emerging Markets Bond
Index (CEMBI) Broad Diversified 1‑3 Year is a market capitalization
weighted index consisting of US denominated emerging market corporate bonds with
1‑3 year maturity. It is a liquid global corporate benchmark representing Asia,
Latin America, Europe and the Middle East/Africa.
The
J.P. Morgan Emerging Markets Bond Index (EMBI)
Global Diversified is a uniquely-weighted version of the EMBI Global. It
limits the weights of those index countries with larger debt stocks by only
including specified portions of these countries’ eligible current face amounts
of debt outstanding. The countries covered in the EMBI Global Diversified are
identical to those covered by the EMBI Global.
The
J.P. Morgan Government Bond Index Emerging
Markets Global Diversified is a custom-weighted index that tracks local
currency bonds issued by emerging market governments, excluding China and India,
and has a broader roster of countries than the base J.P. Morgan Government Bond
Index-Emerging Markets Index, which limits inclusion to countries that are
readily accessible and where no impediments exist for foreign investors.
The
London Interbank Offered Rate (LIBOR) was
an indicative average interest rate at which a selection of banks known as the
panel banks were prepared to lend one another unsecured funds on the London
money market.
The
Morgan Stanley BFMCISM is, as of the date of this Prospectus,
comprised of futures contracts on eleven commodities, which were selected based
on (i) the contracts’ historical backwardation relative to other
commodity-related futures contracts and (ii) the contracts’ historical
liquidity.
The
sectors represented in the Morgan Stanley Index (industrial metals, energy and
agricultural/livestock) have been selected to provide diversified exposure with
22% of the Index in energy, 39% of the Index in industrial metals and the final
39% in agricultural and livestock commodities. The Index’s specific futures
contracts on commodities (crude oil, brent oil, gasoil, reformulated blendstock
for oxygenate blending (RBOB) gasoline, heating oil, copper, nickel, soybeans,
sugar, cotton and live cattle) have been selected by analyzing long term
historical commodity backwardation levels. The eleven (11) commodities the
Index is referencing and the annual rebalancing weights are static in nature.
However, if a significant disruption has occurred (e.g., significant loss of liquidity in a
futures contract, or decommissioning of a futures contract, or change in futures
contract specifications, etc.) as defined in the Index Manual, the Index Sponsor
in its discretion may change the futures contracts and/or the weights with the
aim to maintain an investible, replicable and representative index.
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The
Index is typically re‑balanced annually in January. The Index’s actual exposure
to futures contracts and sectors will change throughout the year based on
changes in the market values of the futures contracts. The Morgan Stanley Index
Sponsor also may alter the commodities that comprise the Index or the parameters
that determine the futures contracts that comprise the Index.
The
futures contract schedule (the roll schedule) for each futures contract within
the Index was designed to seek to minimize the effect of negative roll yield
compared to rolling nearby futures contracts. The roll schedules for each
commodity remains static unless changed by the Morgan Stanley Index Sponsor’s
index committee in an event of unanticipated market disruption.
Backwardation
refers to a potential market structure where longer dated futures contracts are
cheaper than spot prices for the underlying or reference commodity. Longer dated
contracts of a backwardated commodity have the potential to appreciate as
contracts approach expiration. “Roll yield” refers to the return generated by
rolling Futures contracts.
You,
as an investor in the Fund, should conduct your own investigation into the Index
and the Morgan Stanley Index Sponsor.
The
Morgan Stanley Capital International All Country
World Index (MSCI ACWI) is a market-capitalization-weighted index
designed to provide a broad measure of stock performance throughout the world,
including both developed and emerging markets.
The
Morgan Stanley Capital International (MSCI)
Europe Net Return USD Index is a component of the MSCI Europe Index,
which captures large and mid cap representation across 15 Developed Markets (DM)
countries in Europe. With 418 constituents as of June 2024, the index covers
approximately 85% of the free float-adjusted market capitalization across the
European Developed Markets equity universe.
The
Morningstar LSTA US Leveraged Loan TR USD
Index (formerly the S&P/LSTA Leveraged Loan Index) tracks the
market-weighted performance of institutional weighted loans based on market
weightings, spreads and interest payments.
The
S&P 500® Index is an unmanaged capitalization-weighted
index of 500 stocks designed to measure performance of the broad domestic
economy through changes in the aggregate market value of 500 stocks representing
all major industries.
The Secured Overnight Financing Rate (SOFR) is a
broad measure of the cost of borrowing cash overnight collateralized by Treasury
securities. The SOFR includes all trades in the Broad General Collateral Rate
plus bilateral Treasury repurchase agreement (repo) transactions cleared through
the Delivery-versus-Payment (DVP) service offered by the Fixed Income Clearing
Corporation (FICC), which is filtered to remove a portion of transactions
considered “specials.” The New York Federal Reserve reports that SOFR is
calculated as a volume-weighted median of transaction-level tri‑party repo data
collected from The Bank of New York Mellon as well as General Collateral Finance
Repo transaction data and data on bilateral Treasury repo transactions cleared
through the Fixed Income Clearing Corporation DVP service, which are obtained
from the U.S. Department of the Treasury’s Office of Financial
Research.
The
Shiller Barclays CAPE® US Sector TR USD Index (for purposes of this
description, the “Index”) incorporates
the principles of long-term investing distilled by Dr. Robert Shiller and
expressed through the CAPE® (Cyclically Adjusted Price
Earnings) ratio (the “CAPE® Ratio”). The classic CAPE® Ratio assesses equity market
valuations and averages ten years of inflation adjusted earnings to account for
earnings and market cycles. Traditional valuation measures, such as the
price-earnings (PE) ratio, by contrast, typically rely on earnings information
from only the past year. The Index uses a relative version of the classic
CAPE® Ratio to identify undervalued
sectors while also seeking to exclude a sector that may appear undervalued, but
which may have also had recent relative price underperformance due to
fundamental issues with the sector that may negatively affect the sector’s
long-term total return.
The
Index’s composition is determined monthly. Each month, the Index’s methodology
ranks eleven US sectors based on a modified CAPE® Ratio (a “value” factor) and
a twelve-month price momentum factor (a “momentum” factor). Each US sector is
represented by a sector ETF that tracks a sector index, which is an ETF in the
family of Select Sector SPDR Funds or, in the case of the real estate sector,
the iShares Dow Jones U.S. Real Estate Index Fund. The Index methodology selects
the five US sectors with the lowest modified CAPE® Ratio — the sectors that are
the most undervalued according to the CAPE® Ratio. Only four of these
five sectors, however, end up in the Index for a given month, as the sector with
the worst 12‑month price momentum among the five selected sectors is eliminated.
The Index methodology allocates an equally weighted long (i.e., investment) exposure to the four
remaining US sectors.
The Shiller Barclays CAPE® Europe Sector Net TR NoC USD Index (for
purposes of this description, the “Index”) incorporates the principles of
long-term investing distilled by Dr. Robert Shiller and expressed through
the CAPE® Ratio. The
classic CAPE®
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Ratio
assesses equity market valuations and averages ten years of inflation adjusted
earnings to account for earnings and market cycles. Traditional valuation
measures, such as the price-earnings (PE) ratio, by contrast, typically rely on
earnings information from only the past year. The Index uses a relative version
of the classic CAPE®
Ratio to identify undervalued sectors while also seeking to exclude a sector
that may appear undervalued, but which may have also had recent relative price
underperformance due to fundamental issues with the sector that may negatively
affect the sector’s long-term total return.
The
Index’s composition is determined monthly. Each month, the Index’s methodology
ranks ten sectors within the European equity markets based on a modified
CAPE® Ratio (a “value”
factor) and a twelve-month price momentum factor (a “momentum” factor). The
Index methodology selects the five European sectors with the lowest modified
CAPE® Ratio — the sectors
that are the most undervalued according to the CAPE® Ratio. Only four of these
five sectors, however, end up in the Index for a given month, as the sector with
the worst 12‑month price momentum among the five selected sectors is eliminated.
The Index methodology allocates an equally weighted long (i.e., investment) exposure to the four
remaining European sectors.
Direct
investment in an index is not possible.
Disclaimers
The
reference and link to any websites in this Prospectus have been provided as a
convenience, and the information contained on such website is not incorporated
by reference into this Prospectus.
Shiller
Barclays CAPE® Index
Disclaimers
Barclays
Bank PLC and its affiliates (“Barclays”)
is not the issuer, sponsor or promoter of DoubleLine Shiller Enhanced CAPE® or DoubleLine Shiller
Enhanced International CAPE® (in this paragraph, each a
“Fund”) and Barclays has no
responsibilities, obligations or duties to investors in the Funds. The Shiller
Barclays CAPE® US Sector
TR USD Index and Shiller Barclays CAPE® Europe Sector Net TR NoC USD
Index (each an “Index”) consist of the
respective trademarks of Barclays Bank PLC and trademarks owned by or licensed
to RSBB‑I, LLC and Barclays Bank PLC and that are licensed for use by DoubleLine
Funds Trust as the issuer of the Funds (the “Issuer”). Barclays’ only relationship with the
Issuer in respect of the Indices is the licensing of these trademarks and the
Indices which are determined, composed and calculated by Barclays without regard
to the Issuer or the Funds or the owners of the Funds. Additionally, DoubleLine
Capital LP may for any Fund execute transaction(s) with Barclays in or relating
to the respective Fund’s Index and investors neither acquire any interest in
that Fund’s Index nor enter into any relationship of any kind whatsoever with
Barclays upon making an investment in that Fund. The Funds are not sponsored,
endorsed, sold or promoted by Barclays. Barclays does not make any
representation or warranty, express or implied regarding the advisability of
investing in the Funds or the advisability of investing in securities generally
or the ability of any Index to track corresponding or relative market
performance. Barclays has not passed on the legality or suitability of the
Funds’ names or the Indices with respect to any person or entity. Barclays is
not responsible for and has not participated in the determination of the timing
of, prices of, or quantities of the shares of the Funds to be issued. Barclays
has no obligation to take the needs of the Issuer or the owners of the Funds or
any other third party into consideration in determining, composing or
calculating the Indices. Barclays has no obligation or liability in connection
with administration, marketing or trading of the Funds. The licensing agreement
between DoubleLine Funds Trust and Barclays is solely for the benefit of the
Funds and Barclays and not for the benefit of the owners of the Funds, investors
or other third parties.
BARCLAYS
SHALL HAVE NO LIABILITY TO THE ISSUER, INVESTORS OR TO OTHER THIRD PARTIES FOR
THE USE OF DOUBLELINE SHILLER ENHANCED CAPE® AND DOUBLELINE SHILLER
ENHANCED INTERNATIONAL CAPE® NAMES, OR THE QUALITY,
ACCURACY AND/OR COMPLETENESS OF THE SHILLER BARCLAYS CAPE® US SECTOR TR USD INDEX OR
SHILLER BARCLAYS CAPE®
EUROPE SECTOR NET TR NOC USD INDEX OR ANY DATA INCLUDED THEREIN OR FOR
INTERRUPTIONS IN THE DELIVERY OF THE SHILLER BARCLAYS CAPE® US SECTOR TR USD INDEX OR
SHILLER BARCLAYS CAPE®
EUROPE SECTOR NET TR NOC USD INDEX. BARCLAYS MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER, THE INVESTORS OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE SHILLER BARCLAYS CAPE® US SECTOR TR USD INDEX OR
SHILLER BARCLAYS CAPE®
EUROPE SECTOR NET TR NOC USD INDEX OR ANY DATA INCLUDED THEREIN. BARCLAYS MAKES
NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO
DOUBLELINE SHILLER ENHANCED CAPE® AND DOUBLELINE SHILLER
ENHANCED INTERNATIONAL CAPE® NAMES, THE SHILLER BARCLAYS
CAPE® US SECTOR TR USD
INDEX OR SHILLER BARCLAYS CAPE® EUROPE SECTOR NET TR NOC USD
INDEX OR ANY DATA INCLUDED THEREIN. BARCLAYS RESERVES THE RIGHT TO CHANGE THE
METHODS OF CALCULATION OR PUBLICATION, OR TO CEASE THE CALCULATION OR
PUBLICATION OF THE SHILLER BARCLAYS CAPE® US SECTOR TR USD INDEX AND
SHILLER BARCLAYS CAPE®
EUROPE SECTOR NET TR NOC USD INDEX, AND BARCLAYS SHALL NOT BE LIABLE FOR ANY
MISCALCULATION OF OR ANY INCORRECT, DELAYED OR INTERRUPTED
PUBLICATION
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WITH
RESPECT TO ANY OF THE SHILLER BARCLAYS CAPE® US SECTOR TR USD INDEX AND
SHILLER BARCLAYS CAPE®
EUROPE SECTOR NET TR NOC USD INDEX. BARCLAYS SHALL NOT BE LIABLE FOR ANY
DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGES, OR ANY LOST PROFITS AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH,
RESULTING FROM THE USE OF THE SHILLER BARCLAYS CAPE® US SECTOR TR USD INDEX OR
SHILLER BARCLAYS CAPE®
EUROPE SECTOR NET TR NOC USD INDEX OR ANY DATA INCLUDED THEREIN OR WITH RESPECT
TO DOUBLELINE SHILLER ENHANCED CAPE® OR DOUBLELINE SHILLER
ENHANCED INTERNATIONAL CAPE®.
None
of the information supplied by Barclays Bank PLC and used in this publication
may be reproduced in any manner without the prior written permission of Barclays
Capital, the investment banking division of Barclays Bank PLC. Barclays Bank PLC
is registered in England No. 1026167. Registered office 1 Churchill Place
London E14 5HP.
THE
SHILLER BARCLAYS INDICES HAVE BEEN DEVELOPED IN PART BY RSBB‑I, LLC, THE
RESEARCH PRINCIPAL OF WHICH IS ROBERT J. SHILLER. RSBB‑I, LLC IS NOT AN
INVESTMENT ADVISOR, AND DOES NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF THE
SHILLER BARCLAYS INDICES OR ANY DATA OR METHODOLOGY EITHER INCLUDED THEREIN OR
UPON WHICH IT IS BASED. NEITHER RSBB‑I, LLC NOR ROBERT J. SHILLER OR ANY OF
THEIR RESPECTIVE PARTNERS, EMPLOYEES, SUBCONTRACTORS, AGENTS, SUPPLIERS AND
VENDORS (COLLECTIVELY, THE “PROTECTED PARTIES”), SHALL HAVE ANY LIABILITY,
WHETHER CAUSED BY THE NEGLIGENCE OF A PROTECTED PARTY OR OTHERWISE, FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN, AND MAKE NO WARRANTIES, EXPRESS OR
IMPLIED, AS TO PERFORMANCE OR RESULTS EXPERIENCED BY ANY PARTY FROM THE USE OF
ANY INFORMATION INCLUDED THEREIN OR UPON WHICH IT IS BASED, AND EXPRESSLY
DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT THERETO, AND SHALL NOT BE LIABLE FOR ANY CLAIMS OR LOSSES OF ANY
NATURE IN CONNECTION WITH THE USE OF SUCH INFORMATION, INCLUDING BUT NOT LIMITED
TO, LOST PROFITS OR PUNITIVE OR CONSEQUENTIAL DAMAGES, EVEN IF RSBB‑I, LLC,
ROBERT J. SHILLER OR ANY PROTECTED PARTY IS ADVISED OF THE POSSIBILITY OF
SAME.
LSTA
Morningstar Disclaimer
The
DoubleLine Floating Rate Fund is not sponsored, endorsed, sold or promoted by
Morningstar, Inc., or any of its affiliated companies (all such entities,
collectively, “Morningstar Entities”) or
the Loan Syndications and Trading Association (“LSTA”). The Morningstar Entities and LSTA make
no representation or warranty, express or implied, to the owners of the
DoubleLine Floating Rate Fund or any member of the public regarding the
advisability of investing in leveraged loans generally or in the DoubleLine
Floating Rate Fund in particular or the ability of the LSTA/Morningstar
Leveraged Loan Index to track general leveraged loan market performance. The
Morningstar Entities’ only relationship to the DoubleLine Floating Rate Fund is
the licensing of certain service marks and service names of Morningstar and of
the LSTA/Morningstar Leveraged Loan Index which is determined, composed and
calculated by the Morningstar Entities without regard to DoubleLine or the
DoubleLine Floating Rate Fund. The Morningstar Entities have no obligation to
take the needs of DoubleLine or the owners of the DoubleLine Floating Rate Fund
into consideration in determining, composing or calculating the LSTA/Morningstar
Leveraged Loan Index. The Morningstar Entities and LSTA are not responsible for
and have not participated in the determination of the prices and amount of the
DoubleLine Floating Rate Fund or the timing of the issuance or sale of the
DoubleLine Floating Rate Fund or in the determination or calculation of the
equation by which the DoubleLine Floating Rate Fund is converted into cash. The
Morningstar Entities and LSTA have no obligation or liability in connection with
the administration, marketing or trading of the DoubleLine Floating Rate
Fund.
THE
MORNINGSTAR ENTITIES AND LSTA DO NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE LSTA/MORNINGSTAR LEVERAGED LOAN INDEX OR ANY DATA INCLUDED
THEREIN AND HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS
THEREIN. THE MORNINGSTAR ENTITIES AND LSTA MAKE NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY DOUBLELINE, OWNERS OR USERS OF THE DOUBLELINE
FLOATING RATE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE LSTA/
MORNINGSTAR LEVERAGED LOAN INDEX OR ANY DATA INCLUDED THEREIN. THE MORNINGSTAR
ENTITIES AND LSTA MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH RESPECT TO THE LSTA/MORNINGSTAR LEVERAGED LOAN INDEX OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE
MORNINGSTAR ENTITIES OR LSTA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF
THE POSSIBILITY OF SUCH DAMAGES
Morgan
Stanley Index Disclaimers
NOTHING
IN THE FOLLOWING DISCLAIMER IS INTENDED TO MODIFY THE OBLIGATIONS OF ANY MORGAN
STANLEY AFFILIATE, INCLUDING WITHOUT LIMITATION, MORGAN STANLEY SMITH BARNEY LLC
(“MSSB”), UNDER ANY APPLICABLE AGREEMENT BETWEEN ANY SUCH AFFILIATE AND ITS
RESPECTIVE CLIENTS WHO PURCHASE FUND SHARES THROUGH SUCH AFFILIATE.
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THIS
FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MORGAN STANLEY CAPITAL
GROUP INC. (“MORGAN STANLEY”). NEITHER MORGAN STANLEY NOR ANY OF ITS OR ITS
AFFILIATES’ AGENTS (INCLUDING CALCULATION AGENTS), DATA PROVIDERS (WHICH FOR
PURPOSES OF THIS DISCLAIMER INCLUDES WITHOUT LIMITATION ICE DATA, LLP, CHICAGO
MERCANTILE EXCHANGE INC., AND THE LONDON METAL EXCHANGE) OR ANY THIRD PARTY
PROVIDING SERVICES IN CONNECTION WITH THE INDEX MAKES ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, REGARDING THE ADVISABILITY OF INVESTING IN THIS
FUND OR THE ABILITY OF THE MORGAN STANLEY BFMCISM (THE “INDEX”) TO TRACK
MARKET PERFORMANCE. THE INDEX IS THE EXCLUSIVE PROPERTY OF MORGAN STANLEY.
MORGAN STANLEY AND THE INDEX ARE SERVICE MARKS OF MORGAN STANLEY AND/OR A MORGAN
STANLEY AFFILIATE AND HAVE BEEN LICENSED TO DOUBLELINE ALTERNATIVES LP FOR USE
FOR CERTAIN PURPOSES BY DOUBLELINE ALTERNATIVES LP (“LICENSEE”). MORGAN STANLEY
HAS NO OBLIGATION TO TAKE THE NEEDS OF THE LICENSEE, ISSUER OR OWNERS OF THIS
FUND INTO CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE INDEX.
NEITHER MORGAN STANLEY NOR ANY OF ITS OR ITS AFFILIATES’ AGENTS (INCLUDING
CALCULATION AGENTS), DATA PROVIDERS OR ANY THIRD PARTY PROVIDING SERVICES IN
CONNECTION WITH THE INDEX IS RESPONSIBLE FOR AND HAS NOT PARTICIPATED IN THE
DETERMINATION OF THE TIMING OF, PRICES AT, OR QUANTITIES OF THIS FUND OR ITS
ASSETS OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION BY WHICH THIS FUND
IS REDEEMABLE. NEITHER MORGAN STANLEY NOR ANY OF ITS OR ITS AFFILIATES’ AGENTS
(INCLUDING CALCULATION AGENTS), DATA PROVIDERS OR ANY THIRD PARTY PROVIDING
SERVICES IN CONNECTION WITH THE INDEX HAS OR WILL HAVE ANY OBLIGATION OR
LIABILITY TO OWNERS OF THIS FUND IN CONNECTION WITH THE ADMINISTRATION,
MARKETING OR TRADING OF THIS FUND.
ALTHOUGH
MORGAN STANLEY OR ITS AGENTS OR SERVICE PROVIDERS SHALL OBTAIN INFORMATION FOR
INCLUSION IN OR FOR USE IN THE CALCULATION OF THE INDEX FROM SOURCES WHICH
MORGAN STANLEY CONSIDERS RELIABLE, NEITHER MORGAN STANLEY NOR ANY OF ITS OR ITS
AFFILIATES’ AGENTS (INCLUDING CALCULATION AGENTS), DATA PROVIDERS OR ANY THIRD
PARTY PROVIDING SERVICES IN CONNECTION WITH THE INDEX GUARANTEES THE ACCURACY
AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN. NEITHER
MORGAN STANLEY NOR ANY OF ITS OR ITS AFFILIATES’ AGENTS (INCLUDING CALCULATION
AGENTS), DATA PROVIDERS OR ANY THIRD PARTY PROVIDING SERVICES IN CONNECTION WITH
THE INDEX MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED
BY LICENSEE, LICENSEE’S CUSTOMERS AND COUNTERPARTIES, OWNERS OF OR INVESTORS IN
THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR ANY DATA
INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR FOR ANY
OTHER USE. NEITHER MORGAN STANLEY NOR ANY OF ITS OR ITS AFFILIATES’ AGENTS
(INCLUDING CALCULATION AGENTS), DATA PROVIDERS OR ANY THIRD PARTY PROVIDING
SERVICES IN CONNECTION WITH THE INDEX MAKES ANY EXPRESS OR IMPLIED WARRANTIES,
AND DO HEREBY EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL MORGAN STANLEY OR ANY
AGENT OF MORGAN STANLEY OR ANY MORGAN STANLEY AFFILIATE (INCLUDING CALCULATION
AGENTS), DATA PROVIDERS OR ANY THIRD PARTY PROVIDING SERVICES IN CONNECTION WITH
THE INDEX HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE,
CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF
THE POSSIBILITY OF SUCH DAMAGES.
NO
PURCHASER, SELLER OR HOLDER OF THIS SECURITY, OR ANY OTHER PERSON OR ENTITY,
SHOULD USE OR REFER TO ANY MORGAN STANLEY TRADE NAME, TRADEMARK OR SERVICE MARK
TO SPONSOR, ENDORSE, MARKET OR PROMOTE THIS PRODUCT WITHOUT FIRST CONTACTING
MORGAN STANLEY TO DETERMINE WHETHER MORGAN STANLEY’S PERMISSION IS REQUIRED.
UNDER NO CIRCUMSTANCES MAY ANY PERSON OR ENTITY CLAIM ANY AFFILIATION WITH
MORGAN STANLEY WITHOUT THE PRIOR WRITTEN PERMISSION OF MORGAN STANLEY.
BNP
Paribas Multi-Asset Trend Index Disclaimers
The
BNP Paribas Multi-Asset Trend Index (the “Index”) is the exclusive property of BNP
Paribas, the Index sponsor and Index calculation agent (the “Index Sponsor” and the “Index Calculation Agent”). The Index Sponsor
does not guarantee the accuracy and/or completeness of the composition,
calculation, publication and adjustment of the Index, any data included therein,
or any data on which it is based, and the Index Sponsor shall have no liability
for any errors, omissions, or interruptions therein. The Index Sponsor makes no
warranty, express or implied, as to results to be obtained from the use of the
Index. The Index Sponsor makes no express or implied warranties, and expressly
disclaims all warranties of merchantability or fitness for a particular purpose
or use with respect to the Index or any data included therein. Without limiting
any of the foregoing, in no event shall the Index Sponsor have any liability for
any special, punitive, indirect, or consequential damages (including lost
profits), even if notified of the possibility of such damages.
For
the avoidance of doubt the Index and/or any account, transaction or product
using the information relating to the Index, is not sponsored, endorsed, sold,
or promoted by any provider of the underlying data (the “Reference Assets”) comprised in the Index (each
a “Reference Asset Sponsor”) and no
Reference Asset Sponsor makes any representation whatsoever, whether
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express
or implied, either as to the results to be obtained from the use of the relevant
Reference Asset or the index and/or the levels at which the relevant Reference
Asset or the Index stands at any particular time on any particular date or
otherwise. No Reference Asset Sponsor shall be liable (whether in negligence or
otherwise) to any person for any error in a Reference Asset and/or in the Index
and a Reference Asset Sponsor is under no obligation to advise any person of any
error therein. No Reference Asset Sponsor is making any representation
whatsoever, whether express or implied, as to the advisability of purchasing or
assuming any risk in connection with the DoubleLine Multi-Asset Trend Fund
managed by DoubleLine; or any product or investment strategy referencing the
DoubleLine Multi-Asset Trend Fund managed by DoubleLine. No Reference Asset
Sponsor shall have any liability for any act or failure to act by the Index
Sponsor in connection with the calculation, adjustment or maintenance of the
Index. None of the Reference Asset Sponsors or their affiliates have any
affiliation with or control over the Index or the Index Sponsor or any control
over the computation, composition or dissemination of the Index.
The
Index Sponsor and the Index Calculation Agent shall not be held liable for any
modification or change in the methodology used in calculating the index or any
index components thereof (the “BNP Paribas
Indices”). The Index Sponsor and the Index Calculation Agent are under no
obligation to continue the calculation, publication or dissemination of the BNP
Paribas Indices and shall not be held liable for any suspension or interruption
in the calculation of any BNP Paribas Indices. The Index Sponsor and the Index
Calculation Agent decline any liability in connection with the level of any BNP
Paribas Index at any given time. None of BNP Paribas, the Index Sponsor, the
Index Calculation Agent nor any of their affiliates shall be held liable for any
loss whatsoever, directly or indirectly related to any BNP Paribas Index.
BNP
Paribas, the Index Sponsor and the Index Calculation Agent do not guarantee the
accuracy or completeness of the methodology or rules of the BNP Paribas Indices
(the “BNP Paribas Index Rules”) or the
calculation methods, any errors or omissions in computing or disseminating the
BNP Paribas Indices, or for any use thereof, and the Index Sponsor and the Index
Calculation Agent shall have no liability for any errors or omissions
therein.
The
BNP Paribas Index Rules are based on certain assumptions, certain pricing models
and calculation methods adopted by the Index Sponsor and have certain inherent
limitations. Information prepared on the basis of different models, calculation
methods or assumptions may yield different results. Numerous factors may affect
the analysis, which may or may not be taken into account. Therefore, the
analysis of information may vary significantly from analysis obtained from other
sources or market participants.
BNP
Paribas, the Index Sponsor and Index Calculation Agent do not make any
representation whatsoever, either as to the results to be obtained from the use
of the BNP Paribas Indices, the levels of any BNP Paribas Index at any time or
any use of any Index Component or the price, level or rate of any Index
Component at any time.
The
market data used to calculate the level of any BNP Paribas Index may be
furnished by third party sources and is believed to be reliable; however, BNP
Paribas, the Index Sponsor and the Index Calculation Agent make no
representation or guarantee with respect to, and are under no obligation to
verify, the accuracy and completeness thereof.
-287-
Financial
Highlights
The
following tables illustrate the financial performance for each share class of
each Fund for the fiscal periods shown. Certain information reflects financial
results for a single Fund share. Total return illustrates how much your
investment in a Fund would have increased or decreased during each period,
assuming you had reinvested all dividends and distributions. This information
has been audited by PricewaterhouseCoopers LLP, the Funds’ independent
registered public accounting firm. Its report and the Funds’ financial
statements are included in the Funds’ most recent Annual Report to shareholders,
which is available upon request by calling toll-free 877‑DLine11 (877‑354‑6311)
or via www.doubleline.com. You may request additional or more recent
information, when it becomes available, at no charge by calling the phone number
above or via www.doubleline.com.
-288-
|
| |
Financial Highlights (Cont.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
Less Distributions: |
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
For the Year or Period Ended |
|
Net Asset Value, Beginning of Period |
|
Net Investment Income (Loss)(a) |
|
Net Gain (Loss)
on Investments (Realized and Unrealized) |
|
Total from Investment Operations |
|
Distributions from Net Investment Income |
|
Distributions from Net Realized Gain |
|
Total Distributions |
|
Net Asset Value, End of Period |
|
Total Return(c) |
|
Net Assets, End of Period (000’s) |
|
Expenses Before Advisory Fees (Waived) and Other
Fees (Reimbursed)/ Recouped(d) |
|
Expenses After Investment Advisory Fees (Waived)(d) |
|
Expenses After Advisory
Fees (Waived) and Other Fees (Reimbursed)/ Recouped(d) |
|
Net Investment Income (Loss)(d) |
|
|
|
DoubleLine Total Return Bond Fund -
Class I: |
|
|
|
3/31/2024 |
| |
|
$ |
8.97 |
| |
|
|
0.36 |
| |
|
|
(0.21 |
) |
|
|
|
0.15 |
| |
|
|
(0.40 |
) |
|
|
|
— |
| |
|
|
(0.40 |
) |
|
|
$ |
8.72 |
| |
|
|
1.75 |
% |
|
|
$ |
25,498,119 |
| |
|
|
0.50 |
% |
|
|
|
0.50 |
% |
|
|
|
0.50 |
% |
|
|
|
4.19 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.82 |
| |
|
|
0.30 |
| |
|
|
(0.80 |
) |
|
|
|
(0.50 |
) |
|
|
|
(0.35 |
) |
|
|
|
— |
| |
|
|
(0.35 |
) |
|
|
$ |
8.97 |
| |
|
|
(5.08 |
)% |
|
|
$ |
27,489,784 |
| |
|
|
0.49 |
% |
|
|
|
0.49 |
% |
|
|
|
0.49 |
% |
|
|
|
3.28 |
% |
|
|
3/31/2022 |
| |
|
$ |
10.46 |
| |
|
|
0.29 |
| |
|
|
(0.60 |
) |
|
|
|
(0.31 |
) |
|
|
|
(0.33 |
) |
|
|
|
— |
| |
|
|
(0.33 |
) |
|
|
$ |
9.82 |
| |
|
|
(3.14 |
)% |
|
|
$ |
37,399,379 |
| |
|
|
0.48 |
% |
|
|
|
0.48 |
% |
|
|
|
0.48 |
% |
|
|
|
2.75 |
% |
|
|
3/31/2021 |
| |
|
$ |
10.46 |
| |
|
|
0.31 |
| |
|
|
0.04 |
| |
|
|
0.35 |
| |
|
|
(0.35 |
) |
|
|
|
— |
| |
|
|
(0.35 |
) |
|
|
$ |
10.46 |
| |
|
|
3.32 |
% |
|
|
$ |
42,909,929 |
| |
|
|
0.49 |
% |
|
|
|
0.49 |
% |
|
|
|
0.49 |
% |
|
|
|
2.95 |
% |
|
|
3/31/2020 |
| |
|
$ |
10.53 |
| |
|
|
0.34 |
| |
|
|
(0.03 |
) |
|
|
|
0.31 |
| |
|
|
(0.38 |
) |
|
|
|
— |
| |
|
|
(0.38 |
) |
|
|
$ |
10.46 |
| |
|
|
2.97 |
% |
|
|
$ |
44,623,760 |
| |
|
|
0.49 |
% |
|
|
|
0.48 |
% |
|
|
|
0.48 |
% |
|
|
|
3.28 |
% |
|
|
|
DoubleLine Total Return Bond Fund -
Class N: |
|
|
|
3/31/2024 |
| |
|
$ |
8.97 |
| |
|
|
0.34 |
| |
|
|
(0.21 |
) |
|
|
|
0.13 |
| |
|
|
(0.38 |
) |
|
|
|
— |
| |
|
|
(0.38 |
) |
|
|
$ |
8.72 |
| |
|
|
1.50 |
% |
|
|
$ |
4,269,591 |
| |
|
|
0.75 |
% |
|
|
|
0.75 |
% |
|
|
|
0.75 |
% |
|
|
|
3.94 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.82 |
| |
|
|
0.28 |
| |
|
|
(0.80 |
) |
|
|
|
(0.52 |
) |
|
|
|
(0.33 |
) |
|
|
|
— |
| |
|
|
(0.33 |
) |
|
|
$ |
8.97 |
| |
|
|
(5.32 |
)% |
|
|
$ |
5,109,737 |
| |
|
|
0.74 |
% |
|
|
|
0.74 |
% |
|
|
|
0.74 |
% |
|
|
|
3.08 |
% |
|
|
3/31/2022 |
| |
|
$ |
10.46 |
| |
|
|
0.26 |
| |
|
|
(0.60 |
) |
|
|
|
(0.34 |
) |
|
|
|
(0.30 |
) |
|
|
|
— |
| |
|
|
(0.30 |
) |
|
|
$ |
9.82 |
| |
|
|
(3.38 |
)% |
|
|
$ |
4,972,381 |
| |
|
|
0.73 |
% |
|
|
|
0.73 |
% |
|
|
|
0.73 |
% |
|
|
|
2.50 |
% |
|
|
3/31/2021 |
| |
|
$ |
10.46 |
| |
|
|
0.29 |
| |
|
|
0.03 |
| |
|
|
0.32 |
| |
|
|
(0.32 |
) |
|
|
|
— |
| |
|
|
(0.32 |
) |
|
|
$ |
10.46 |
| |
|
|
3.06 |
% |
|
|
$ |
5,239,001 |
| |
|
|
0.74 |
% |
|
|
|
0.74 |
% |
|
|
|
0.74 |
% |
|
|
|
2.70 |
% |
|
|
3/31/2020 |
| |
|
$ |
10.53 |
| |
|
|
0.32 |
| |
|
|
(0.03 |
) |
|
|
|
0.29 |
| |
|
|
(0.36 |
) |
|
|
|
— |
| |
|
|
(0.36 |
) |
|
|
$ |
10.46 |
| |
|
|
2.71 |
% |
|
|
$ |
6,552,760 |
| |
|
|
0.73 |
% |
|
|
|
0.73 |
% |
|
|
|
0.73 |
% |
|
|
|
3.03 |
% |
|
|
|
DoubleLine Total Return Bond Fund -
Class R6: |
|
|
|
3/31/2024 |
| |
|
$ |
8.98 |
| |
|
|
0.37 |
| |
|
|
(0.22 |
) |
|
|
|
0.15 |
| |
|
|
(0.40 |
) |
|
|
|
— |
| |
|
|
(0.40 |
) |
|
|
$ |
8.73 |
| |
|
|
1.81 |
% |
|
|
$ |
1,267,701 |
| |
|
|
0.44 |
% |
|
|
|
0.44 |
% |
|
|
|
0.44 |
% |
|
|
|
4.27 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.83 |
| |
|
|
0.31 |
| |
|
|
(0.81 |
) |
|
|
|
(0.50 |
) |
|
|
|
(0.35 |
) |
|
|
|
— |
| |
|
|
(0.35 |
) |
|
|
$ |
8.98 |
| |
|
|
(5.02 |
)% |
|
|
$ |
1,218,779 |
| |
|
|
0.44 |
% |
|
|
|
0.44 |
% |
|
|
|
0.44 |
% |
|
|
|
3.35 |
% |
|
|
3/31/2022 |
| |
|
$ |
10.46 |
| |
|
|
0.29 |
| |
|
|
(0.59 |
) |
|
|
|
(0.30 |
) |
|
|
|
(0.33 |
) |
|
|
|
— |
| |
|
|
(0.33 |
) |
|
|
$ |
9.83 |
| |
|
|
(2.99 |
)% |
|
|
$ |
1,711,466 |
| |
|
|
0.43 |
% |
|
|
|
0.43 |
% |
|
|
|
0.43 |
% |
|
|
|
2.81 |
% |
|
|
3/31/2021 |
| |
|
$ |
10.46 |
| |
|
|
0.31 |
| |
|
|
0.05 |
| |
|
|
0.36 |
| |
|
|
(0.36 |
) |
|
|
|
— |
| |
|
|
(0.36 |
) |
|
|
$ |
10.46 |
| |
|
|
3.38 |
% |
|
|
$ |
2,071,388 |
| |
|
|
0.44 |
% |
|
|
|
0.44 |
% |
|
|
|
0.44 |
% |
|
|
|
2.89 |
% |
|
|
3/31/2020 |
(b) |
|
|
$ |
10.66 |
| |
|
|
0.24 |
| |
|
|
(0.18 |
) |
|
|
|
0.06 |
| |
|
|
(0.26 |
) |
|
|
|
— |
| |
|
|
(0.26 |
) |
|
|
$ |
10.46 |
| |
|
|
0.52 |
% |
|
|
$ |
65,403 |
| |
|
|
0.45 |
% |
|
|
|
0.45 |
% |
|
|
|
0.45 |
% |
|
|
|
3.33 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| |
|
|
|
For the Year or Period Ended |
|
|
|
|
3/31/2024 |
|
|
3/31/2023 |
|
|
3/31/2022 |
|
|
3/31/2021 |
|
|
3/31/2020 |
|
|
Portfolio
turnover rate for all share classes |
|
|
|
|
| |
|
|
| |
|
|
| |
|
36% |
|
|
|
37% |
|
|
|
89% |
|
|
|
91% |
|
|
|
31% |
|
|
|
(a) Calculated based on
average shares outstanding during the period. |
|
|
(b) Commencement of
operations on July 31, 2019. Total return is based on operations for
a period that is less than a year. |
|
|
(c) Not annualized for
periods less than one year. |
|
|
(d) Annualized for
periods less than one year. |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
|
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
|
For the
Year or
Period
Ended |
|
|
Net Asset
Value,
Beginning
of Period |
|
|
Net
Investment
Income
(Loss)(a) |
|
|
Net Gain
(Loss) on
Investments
(Realized and Unrealized) |
|
|
Total from
Investment
Operations |
|
|
Distributions
from Net Investment Income |
|
|
Distributions from Net Realized Gain |
|
|
Total Distributions |
|
|
Net Asset Value, End of Period |
|
|
Total Return(c) |
|
|
Net Assets, End
of
Period
(000’s) |
|
|
Expenses
Before
Advisory
Fees
(Waived) and
Other Fees
(Reimbursed)/
Recouped(d) |
|
|
Expenses
After
Investment
Advisory
Fees
(Waived)(d) |
|
|
Expenses
After
Advisory Fees
(Waived) and
Other Fees (Reimbursed)/
Recouped(d) |
|
|
Net
Investment
Income
(Loss)(d) |
|
|
|
DoubleLine Core Fixed Income Fund -
Class I: |
|
|
3/31/2024 |
|
|
$ |
9.41 |
|
|
|
0.42 |
|
|
|
(0.19 |
) |
|
|
0.23 |
|
|
|
(0.44 |
) |
|
|
— |
|
|
|
(0.44 |
) |
|
$ |
9.20 |
|
|
|
2.60 |
% |
|
$ |
6,346,593 |
|
|
|
0.47 |
% |
|
|
0.44 |
% |
|
|
0.44 |
% |
|
|
4.59 |
% |
|
3/31/2023 |
|
|
$ |
10.33 |
|
|
|
0.36 |
|
|
|
(0.88 |
) |
|
|
(0.52 |
) |
|
|
(0.40 |
) |
|
|
— |
|
|
|
(0.40 |
) |
|
$ |
9.41 |
|
|
|
(5.03 |
)% |
|
$ |
6,889,213 |
|
|
|
0.47 |
% |
|
|
0.44 |
% |
|
|
0.44 |
% |
|
|
3.75 |
% |
|
3/31/2022 |
|
|
$ |
11.01 |
|
|
|
0.28 |
|
|
|
(0.62 |
) |
|
|
(0.34 |
) |
|
|
(0.31 |
) |
|
|
(0.03 |
) |
|
|
(0.34 |
) |
|
$ |
10.33 |
|
|
|
(3.19 |
)% |
|
$ |
9,843,189 |
|
|
|
0.46 |
% |
|
|
0.42 |
% |
|
|
0.42 |
% |
|
|
2.55 |
% |
|
3/31/2021 |
|
|
$ |
10.62 |
|
|
|
0.32 |
|
|
|
0.42 |
|
|
|
0.74 |
|
|
|
(0.33 |
) |
|
|
(0.02 |
) |
|
|
(0.35 |
) |
|
$ |
11.01 |
|
|
|
6.94 |
% |
|
$ |
10,772,238 |
|
|
|
0.47 |
% |
|
|
0.42 |
% |
|
|
0.42 |
% |
|
|
2.83 |
% |
|
3/31/2020 |
|
|
$ |
10.83 |
|
|
|
0.36 |
|
|
|
(0.20 |
) |
|
|
0.16 |
|
|
|
(0.37 |
) |
|
|
— |
|
|
|
(0.37 |
) |
|
$ |
10.62 |
|
|
|
1.42 |
% |
|
$ |
10,724,409 |
|
|
|
0.47 |
% |
|
|
0.41 |
% |
|
|
0.41 |
% |
|
|
3.30 |
% |
|
|
DoubleLine Core Fixed Income Fund -
Class N: |
|
|
3/31/2024 |
|
|
$ |
9.40 |
|
|
|
0.40 |
|
|
|
(0.18 |
) |
|
|
0.22 |
|
|
|
(0.42 |
) |
|
|
— |
|
|
|
(0.42 |
) |
|
$ |
9.20 |
|
|
|
2.46 |
% |
|
$ |
235,339 |
|
|
|
0.72 |
% |
|
|
0.69 |
% |
|
|
0.69 |
% |
|
|
4.34 |
% |
|
3/31/2023 |
|
|
$ |
10.32 |
|
|
|
0.33 |
|
|
|
(0.88 |
) |
|
|
(0.55 |
) |
|
|
(0.37 |
) |
|
|
— |
|
|
|
(0.37 |
) |
|
$ |
9.40 |
|
|
|
(5.27 |
)% |
|
$ |
274,332 |
|
|
|
0.72 |
% |
|
|
0.69 |
% |
|
|
0.69 |
% |
|
|
3.48 |
% |
|
3/31/2022 |
|
|
$ |
11.00 |
|
|
|
0.25 |
|
|
|
(0.61 |
) |
|
|
(0.36 |
) |
|
|
(0.29 |
) |
|
|
(0.03 |
) |
|
|
(0.32 |
) |
|
$ |
10.32 |
|
|
|
(3.43 |
)% |
|
$ |
443,006 |
|
|
|
0.71 |
% |
|
|
0.67 |
% |
|
|
0.67 |
% |
|
|
2.30 |
% |
|
3/31/2021 |
|
|
$ |
10.61 |
|
|
|
0.29 |
|
|
|
0.42 |
|
|
|
0.71 |
|
|
|
(0.30 |
) |
|
|
(0.02 |
) |
|
|
(0.32 |
) |
|
$ |
11.00 |
|
|
|
6.67 |
% |
|
$ |
544,493 |
|
|
|
0.72 |
% |
|
|
0.66 |
% |
|
|
0.66 |
% |
|
|
2.58 |
% |
|
3/31/2020 |
|
|
$ |
10.82 |
|
|
|
0.34 |
|
|
|
(0.20 |
) |
|
|
0.14 |
|
|
|
(0.35 |
) |
|
|
— |
|
|
|
(0.35 |
) |
|
$ |
10.61 |
|
|
|
1.17 |
% |
|
$ |
706,970 |
|
|
|
0.72 |
% |
|
|
0.66 |
% |
|
|
0.66 |
% |
|
|
3.05 |
% |
|
|
DoubleLine Core Fixed Income Fund -
Class R6: |
|
|
3/31/2024 |
|
|
$ |
9.41 |
|
|
|
0.43 |
|
|
|
(0.19 |
) |
|
|
0.24 |
|
|
|
(0.44 |
) |
|
|
— |
|
|
|
(0.44 |
) |
|
$ |
9.21 |
|
|
|
2.74 |
% |
|
$ |
323,347 |
|
|
|
0.44 |
% |
|
|
0.41 |
% |
|
|
0.41 |
% |
|
|
4.70 |
% |
|
3/31/2023 |
|
|
$ |
10.33 |
|
|
|
0.37 |
|
|
|
(0.89 |
) |
|
|
(0.52 |
) |
|
|
(0.40 |
) |
|
|
— |
|
|
|
(0.40 |
) |
|
$ |
9.41 |
|
|
|
(5.00 |
)% |
|
$ |
118,663 |
|
|
|
0.44 |
% |
|
|
0.41 |
% |
|
|
0.41 |
% |
|
|
3.88 |
% |
|
3/31/2022 |
|
|
$ |
11.01 |
|
|
|
0.28 |
|
|
|
(0.61 |
) |
|
|
(0.33 |
) |
|
|
(0.32 |
) |
|
|
(0.03 |
) |
|
|
(0.35 |
) |
|
$ |
10.33 |
|
|
|
(3.16 |
)% |
|
$ |
93,509 |
|
|
|
0.44 |
% |
|
|
0.39 |
% |
|
|
0.39 |
% |
|
|
2.58 |
% |
|
3/31/2021 |
|
|
$ |
10.62 |
|
|
|
0.32 |
|
|
|
0.42 |
|
|
|
0.74 |
|
|
|
(0.33 |
) |
|
|
(0.02 |
) |
|
|
(0.35 |
) |
|
$ |
11.01 |
|
|
|
6.94 |
% |
|
$ |
104,731 |
|
|
|
0.44 |
% |
|
|
0.38 |
% |
|
|
0.38 |
% |
|
|
2.88 |
% |
|
3/31/2020 |
(b) |
|
$ |
11.05 |
|
|
|
0.24 |
|
|
|
(0.42 |
) |
|
|
(0.18 |
) |
|
|
(0.25 |
) |
|
|
— |
|
|
|
(0.25 |
) |
|
$ |
10.62 |
|
|
|
(1.72 |
)% |
|
$ |
112,911 |
|
|
|
0.45 |
% |
|
|
0.39 |
% |
|
|
0.39 |
% |
|
|
3.26 |
% |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
|
3/31/2023 |
|
|
3/31/2022 |
|
|
3/31/2021 |
|
|
3/31/2020 |
|
|
Portfolio
turnover rate for all share classes |
|
|
|
|
| |
|
|
| |
|
|
| |
|
119% |
|
|
|
119% |
|
|
|
177% |
|
|
|
155% |
|
|
|
43% |
|
|
|
(a) Calculated based on
average shares outstanding during the period. |
|
|
(b) Commencement of
operations on July 31, 2019. Total return is based on operations for
a period that is less than a year. |
|
|
(c) Not annualized for
periods less than one year. |
|
|
(d) Annualized for
periods less than one year. |
|
-289-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
Less Distributions: |
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
For
the
Year
or
Period
Ended |
|
Net
Asset
Value,
Beginning
of
Period |
|
Net
Investment
Income
(Loss)(a) |
|
Net
Gain
(Loss)
on
Investments
(Realized and
Unrealized) |
|
Total
from
Investment
Operations |
|
Distributions
from
Net
Investment
Income |
|
Distributions
from
Net
Realized
Gain |
|
Total
Distributions |
|
Net Asset
Value,
End
of
Period |
|
Total
Return |
|
Net Assets,
End
of
Period
(000’s) |
|
Expenses
Before
Advisory Fees
(Waived)
and
Other
Fees
(Reimbursed)/
Recouped |
|
Expenses
After
Investment
Advisory
Fees
(Waived) |
|
Expenses
After
Advisory Fees
(Waived)
and
Other
Fees
(Reimbursed)/
Recouped |
|
Net
Investment
Income
(Loss) |
|
|
|
DoubleLine Emerging Markets Fixed Income Fund -
Class I: |
|
|
|
3/31/2024 |
| |
|
$ |
8.46 |
| |
|
|
0.48 |
| |
|
|
0.47 |
| |
|
|
0.95 |
| |
|
|
(0.50 |
) |
|
|
|
— |
| |
|
|
(0.50 |
) |
|
|
$ |
8.91 |
| |
|
|
11.65 |
% |
|
|
$ |
461,232 |
| |
|
|
0.92 |
% |
|
|
|
0.92 |
% |
|
|
|
0.92 |
% |
|
|
|
5.62 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.71 |
| |
|
|
0.42 |
| |
|
|
(1.22 |
) |
|
|
|
(0.80 |
) |
|
|
|
(0.45 |
) |
|
|
|
— |
| |
|
|
(0.45 |
) |
|
|
$ |
8.46 |
| |
|
|
(8.22 |
)% |
|
|
$ |
492,903 |
| |
|
|
0.90 |
% |
|
|
|
0.90 |
% |
|
|
|
0.90 |
% |
|
|
|
4.80 |
% |
|
|
3/31/2022 |
| |
|
$ |
10.55 |
| |
|
|
0.39 |
| |
|
|
(0.84 |
) |
|
|
|
(0.45 |
) |
|
|
|
(0.39 |
) |
|
|
|
— |
| |
|
|
(0.39 |
) |
|
|
$ |
9.71 |
| |
|
|
(4.46 |
)% |
|
|
$ |
721,060 |
| |
|
|
0.87 |
% |
|
|
|
0.87 |
% |
|
|
|
0.87 |
% |
|
|
|
3.76 |
% |
|
|
3/31/2021 |
| |
|
$ |
8.83 |
| |
|
|
0.41 |
| |
|
|
1.75 |
| |
|
|
2.16 |
| |
|
|
(0.44 |
) |
|
|
|
— |
| |
|
|
(0.44 |
) |
|
|
$ |
10.55 |
| |
|
|
24.72 |
% |
|
|
$ |
799,879 |
| |
|
|
0.89 |
% |
|
|
|
0.89 |
% |
|
|
|
0.89 |
% |
|
|
|
4.06 |
% |
|
|
3/31/2020 |
| |
|
$ |
10.34 |
| |
|
|
0.49 |
| |
|
|
(1.51 |
) |
|
|
|
(1.02 |
) |
|
|
|
(0.49 |
) |
|
|
|
— |
| |
|
|
(0.49 |
) |
|
|
$ |
8.83 |
| |
|
|
(10.43 |
)% |
|
|
$ |
755,648 |
| |
|
|
0.90 |
% |
|
|
|
0.90 |
% |
|
|
|
0.90 |
% |
|
|
|
4.69 |
% |
|
|
|
DoubleLine Emerging Markets Fixed Income Fund -
Class N: |
|
|
|
3/31/2024 |
| |
|
$ |
8.46 |
| |
|
|
0.46 |
| |
|
|
0.48 |
| |
|
|
0.94 |
| |
|
|
(0.48 |
) |
|
|
|
— |
| |
|
|
(0.48 |
) |
|
|
$ |
8.92 |
| |
|
|
11.49 |
% |
|
|
$ |
22,904 |
| |
|
|
1.17 |
% |
|
|
|
1.17 |
% |
|
|
|
1.17 |
% |
|
|
|
5.37 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.71 |
| |
|
|
0.40 |
| |
|
|
(1.23 |
) |
|
|
|
(0.83 |
) |
|
|
|
(0.42 |
) |
|
|
|
— |
| |
|
|
(0.42 |
) |
|
|
$ |
8.46 |
| |
|
|
(8.45 |
)% |
|
|
$ |
27,671 |
| |
|
|
1.15 |
% |
|
|
|
1.15 |
% |
|
|
|
1.15 |
% |
|
|
|
4.56 |
% |
|
|
3/31/2022 |
| |
|
$ |
10.55 |
| |
|
|
0.37 |
| |
|
|
(0.85 |
) |
|
|
|
(0.48 |
) |
|
|
|
(0.36 |
) |
|
|
|
— |
| |
|
|
(0.36 |
) |
|
|
$ |
9.71 |
| |
|
|
(4.70 |
)% |
|
|
$ |
38,728 |
| |
|
|
1.12 |
% |
|
|
|
1.12 |
% |
|
|
|
1.12 |
% |
|
|
|
3.51 |
% |
|
|
3/31/2021 |
| |
|
$ |
8.83 |
| |
|
|
0.39 |
| |
|
|
1.74 |
| |
|
|
2.13 |
| |
|
|
(0.41 |
) |
|
|
|
— |
| |
|
|
(0.41 |
) |
|
|
$ |
10.55 |
| |
|
|
24.38 |
% |
|
|
$ |
44,972 |
| |
|
|
1.14 |
% |
|
|
|
1.14 |
% |
|
|
|
1.14 |
% |
|
|
|
3.86 |
% |
|
|
3/31/2020 |
| |
|
$ |
10.34 |
| |
|
|
0.47 |
| |
|
|
(1.51 |
) |
|
|
|
(1.04 |
) |
|
|
|
(0.47 |
) |
|
|
|
— |
| |
|
|
(0.47 |
) |
|
|
$ |
8.83 |
| |
|
|
(10.68 |
)% |
|
|
$ |
122,727 |
| |
|
|
1.15 |
% |
|
|
|
1.15 |
% |
|
|
|
1.15 |
% |
|
|
|
4.46 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
3/31/2023 |
|
|
3/31/2022 |
|
|
3/31/2021 |
|
|
3/31/2020 |
|
Portfolio
turnover rate for all share classes |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
49% |
|
|
34% |
|
|
|
51% |
|
|
|
81% |
|
|
|
37% |
|
|
(a) Calculated based on
average shares outstanding during the period. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
|
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
|
For
the
Year
or Period Ended |
|
|
Net Asset Value, Beginning of Period |
|
|
Net Investment Income (Loss)(a) |
|
|
Net Gain (Loss)
on Investments (Realized and Unrealized) |
|
|
Total from Investment Operations |
|
|
Distributions from Net Investment Income |
|
|
Distributions
from
Net
Realized
Gain |
|
|
Total Distributions |
|
|
Net Asset
Value,
End
of
Period |
|
|
Total Return(c) |
|
|
Net
Assets,
End
of
Period
(000’s) |
|
|
Expenses
Before
Advisory Fees
(Waived)
and
Other
Fees
(Reimbursed)/
Recouped(d) |
|
|
Expenses
After
Investment
Advisory
Fees
(Waived)(d) |
|
|
Expenses
After
Advisory Fees
(Waived)
and
Other
Fees
(Reimbursed)/
Recouped(d) |
|
|
Net
Investment
Income
(Loss)(d) |
|
|
|
DoubleLine Low Duration Bond Fund -
Class I: |
|
|
3/31/2024 |
|
|
$ |
9.46 |
|
|
|
0.45 |
|
|
|
0.12 |
|
|
|
0.57 |
|
|
|
(0.45 |
) |
|
|
— |
|
|
|
(0.45 |
) |
|
$ |
9.58 |
|
|
|
6.16 |
% |
|
$ |
4,788,703 |
|
|
|
0.43 |
% |
|
|
0.43 |
% |
|
|
0.43 |
% |
|
|
4.71 |
% |
|
3/31/2023 |
|
|
$ |
9.67 |
|
|
|
0.28 |
|
|
|
(0.19 |
) |
|
|
0.09 |
|
|
|
(0.30 |
) |
|
|
— |
|
|
|
(0.30 |
) |
|
$ |
9.46 |
|
|
|
0.94 |
% |
|
$ |
5,256,310 |
|
|
|
0.43 |
% |
|
|
0.43 |
% |
|
|
0.43 |
% |
|
|
2.98 |
% |
|
3/31/2022 |
|
|
$ |
9.97 |
|
|
|
0.15 |
|
|
|
(0.29 |
) |
|
|
(0.14 |
) |
|
|
(0.16 |
) |
|
|
— |
|
|
|
(0.16 |
) |
|
$ |
9.67 |
|
|
|
(1.42 |
)% |
|
$ |
6,224,937 |
|
|
|
0.41 |
% |
|
|
0.41 |
% |
|
|
0.41 |
% |
|
|
1.55 |
% |
|
3/31/2021 |
|
|
$ |
9.51 |
|
|
|
0.20 |
|
|
|
0.47 |
|
|
|
0.67 |
|
|
|
(0.21 |
) |
|
|
— |
|
|
|
(0.21 |
) |
|
$ |
9.97 |
|
|
|
7.08 |
% |
|
$ |
5,689,932 |
|
|
|
0.42 |
% |
|
|
0.42 |
% |
|
|
0.42 |
% |
|
|
2.05 |
% |
|
3/31/2020 |
|
|
$ |
9.97 |
|
|
|
0.30 |
|
|
|
(0.45 |
) |
|
|
(0.15 |
) |
|
|
(0.31 |
) |
|
|
— |
|
|
|
(0.31 |
) |
|
$ |
9.51 |
|
|
|
(1.59 |
)% |
|
$ |
5,296,795 |
|
|
|
0.42 |
% |
|
|
0.41 |
% |
|
|
0.41 |
% |
|
|
3.05 |
% |
|
|
DoubleLine Low Duration Bond Fund -
Class N: |
|
|
3/31/2024 |
|
|
$ |
9.45 |
|
|
|
0.42 |
|
|
|
0.12 |
|
|
|
0.54 |
|
|
|
(0.42 |
) |
|
|
— |
|
|
|
(0.42 |
) |
|
$ |
9.57 |
|
|
|
5.90 |
% |
|
$ |
739,660 |
|
|
|
0.68 |
% |
|
|
0.68 |
% |
|
|
0.68 |
% |
|
|
4.46 |
% |
|
3/31/2023 |
|
|
$ |
9.67 |
|
|
|
0.26 |
|
|
|
(0.21 |
) |
|
|
0.05 |
|
|
|
(0.27 |
) |
|
|
— |
|
|
|
(0.27 |
) |
|
$ |
9.45 |
|
|
|
0.58 |
% |
|
$ |
846,389 |
|
|
|
0.67 |
% |
|
|
0.67 |
% |
|
|
0.67 |
% |
|
|
2.73 |
% |
|
3/31/2022 |
|
|
$ |
9.96 |
|
|
|
0.13 |
|
|
|
(0.28 |
) |
|
|
(0.15 |
) |
|
|
(0.14 |
) |
|
|
— |
|
|
|
(0.14 |
) |
|
$ |
9.67 |
|
|
|
(1.57 |
)% |
|
$ |
1,043,811 |
|
|
|
0.66 |
% |
|
|
0.66 |
% |
|
|
0.66 |
% |
|
|
1.30 |
% |
|
3/31/2021 |
|
|
$ |
9.50 |
|
|
|
0.18 |
|
|
|
0.46 |
|
|
|
0.64 |
|
|
|
(0.18 |
) |
|
|
— |
|
|
|
(0.18 |
) |
|
$ |
9.96 |
|
|
|
6.82 |
% |
|
$ |
1,194,295 |
|
|
|
0.67 |
% |
|
|
0.67 |
% |
|
|
0.67 |
% |
|
|
1.83 |
% |
|
3/31/2020 |
|
|
$ |
9.96 |
|
|
|
0.28 |
|
|
|
(0.45 |
) |
|
|
(0.17 |
) |
|
|
(0.29 |
) |
|
|
— |
|
|
|
(0.29 |
) |
|
$ |
9.50 |
|
|
|
(1.84 |
)% |
|
$ |
1,483,316 |
|
|
|
0.67 |
% |
|
|
0.66 |
% |
|
|
0.66 |
% |
|
|
2.80 |
% |
|
|
DoubleLine Low Duration Bond Fund -
Class R6: |
|
|
3/31/2024 |
|
|
$ |
9.46 |
|
|
|
0.46 |
|
|
|
0.11 |
|
|
|
0.57 |
|
|
|
(0.45 |
) |
|
|
— |
|
|
|
(0.45 |
) |
|
$ |
9.58 |
|
|
|
6.20 |
% |
|
$ |
127,836 |
|
|
|
0.39 |
% |
|
|
0.39 |
% |
|
|
0.39 |
% |
|
|
4.83 |
% |
|
3/31/2023 |
|
|
$ |
9.67 |
|
|
|
0.30 |
|
|
|
(0.21 |
) |
|
|
0.09 |
|
|
|
(0.30 |
) |
|
|
— |
|
|
|
(0.30 |
) |
|
$ |
9.46 |
|
|
|
0.97 |
% |
|
$ |
54,035 |
|
|
|
0.39 |
% |
|
|
0.39 |
% |
|
|
0.39 |
% |
|
|
3.13 |
% |
|
3/31/2022 |
|
|
$ |
9.97 |
|
|
|
0.15 |
|
|
|
(0.29 |
) |
|
|
(0.14 |
) |
|
|
(0.16 |
) |
|
|
— |
|
|
|
(0.16 |
) |
|
$ |
9.67 |
|
|
|
(1.39 |
)% |
|
$ |
41,366 |
|
|
|
0.39 |
% |
|
|
0.39 |
% |
|
|
0.39 |
% |
|
|
1.53 |
% |
|
3/31/2021 |
|
|
$ |
9.51 |
|
|
|
0.20 |
|
|
|
0.47 |
|
|
|
0.67 |
|
|
|
(0.21 |
) |
|
|
— |
|
|
|
(0.21 |
) |
|
$ |
9.97 |
|
|
|
7.12 |
% |
|
$ |
8,840 |
|
|
|
0.40 |
% |
|
|
0.39 |
% |
|
|
0.39 |
% |
|
|
2.05 |
% |
|
3/31/2020 |
(b) |
|
$ |
10.03 |
|
|
|
0.20 |
|
|
|
(0.52 |
) |
|
|
(0.32 |
) |
|
|
(0.20 |
) |
|
|
— |
|
|
|
(0.20 |
) |
|
$ |
9.51 |
|
|
|
(3.25 |
)% |
|
$ |
369 |
|
|
|
0.39 |
% |
|
|
0.38 |
% |
|
|
0.38 |
% |
|
|
2.98 |
% |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
|
3/31/2023 |
|
|
3/31/2022 |
|
|
3/31/2021 |
|
|
3/31/2020 |
|
|
Portfolio
turnover rate for all share classes |
|
|
|
|
| |
|
|
| |
|
|
| |
|
76% |
|
|
|
72% |
|
|
|
80% |
|
|
|
71% |
|
|
|
60% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(a) Calculated based on
average shares outstanding during the period. |
(b) Commencement of
operations on July 31, 2019. Total return is based on operations for
a period that is less than a year. |
(c) Not annualized for
periods less than one year. |
(d) Annualized for
periods less than one year. |
-290-
|
| |
Financial Highlights (Cont.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
Less Distributions: |
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
For
the
Year
or
Period
Ended |
|
Net
Asset
Value,
Beginning
of
Period |
|
Net
Investment
Income
(Loss)(a) |
|
Net
Gain
(Loss)
on
Investments
(Realized and
Unrealized) |
|
Total
from
Investment
Operations |
|
Distributions
from
Net
Investment
Income |
|
Distributions
from
Net
Realized
Gain |
|
Total
Distributions |
|
Net Asset
Value,
End
of
Period |
|
Total
Return |
|
Net Assets,
End
of
Period
(000’s) |
|
Expenses
Before
Advisory Fees
(Waived)
and
Other
Fees
(Reimbursed)/
Recouped |
|
Expenses After Investment Advisory Fees (Waived) |
|
Expenses
After
Advisory Fees
(Waived)
and
Other
Fees
(Reimbursed)/
Recouped |
|
Net
Investment
Income
(Loss) |
|
|
|
DoubleLine Floating Rate Fund -
Class I: |
|
|
|
3/31/2024 |
| |
|
$ |
8.97 |
| |
|
|
0.75 |
| |
|
|
0.08 |
| |
|
|
0.83 |
| |
|
|
(0.76 |
) |
|
|
|
— |
| |
|
|
(0.76 |
) |
|
|
$ |
9.04 |
| |
|
|
9.61 |
% |
|
|
$ |
162,269 |
| |
|
|
0.74 |
% |
|
|
|
0.74 |
% |
|
|
|
0.74 |
% |
|
|
|
8.34 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.42 |
| |
|
|
0.53 |
| |
|
|
(0.42 |
) |
|
|
|
0.11 |
| |
|
|
(0.56 |
) |
|
|
|
— |
| |
|
|
(0.56 |
) |
|
|
$ |
8.97 |
| |
|
|
1.31 |
% |
|
|
$ |
200,203 |
| |
|
|
0.68 |
% |
|
|
|
0.68 |
% |
|
|
|
0.68 |
% |
|
|
|
5.81 |
% |
|
|
3/31/2022 |
| |
|
$ |
9.51 |
| |
|
|
0.32 |
| |
|
|
(0.09 |
) |
|
|
|
0.23 |
| |
|
|
(0.32 |
) |
|
|
|
— |
| |
|
|
(0.32 |
) |
|
|
$ |
9.42 |
| |
|
|
2.40 |
% |
|
|
$ |
333,518 |
| |
|
|
0.64 |
% |
|
|
|
0.64 |
% |
|
|
|
0.64 |
% |
|
|
|
3.37 |
% |
|
|
3/31/2021 |
| |
|
$ |
8.44 |
| |
|
|
0.34 |
| |
|
|
1.07 |
| |
|
|
1.41 |
| |
|
|
(0.34 |
) |
|
|
|
— |
| |
|
|
(0.34 |
) |
|
|
$ |
9.51 |
| |
|
|
16.95 |
% |
|
|
$ |
240,442 |
| |
|
|
0.72 |
% |
|
|
|
0.72 |
% |
|
|
|
0.72 |
% |
|
|
|
3.69 |
% |
|
|
3/31/2020 |
| |
|
$ |
9.65 |
| |
|
|
0.47 |
| |
|
|
(1.20 |
) |
|
|
|
(0.73 |
) |
|
|
|
(0.48 |
) |
|
|
|
— |
| |
|
|
(0.48 |
) |
|
|
$ |
8.44 |
| |
|
|
(7.99 |
)% |
|
|
$ |
150,892 |
| |
|
|
0.70 |
% |
|
|
|
0.70 |
% |
|
|
|
0.70 |
% |
|
|
|
4.84 |
% |
|
|
|
DoubleLine Floating Rate Fund -
Class N: |
|
|
|
3/31/2024 |
| |
|
$ |
8.99 |
| |
|
|
0.73 |
| |
|
|
0.08 |
| |
|
|
0.81 |
| |
|
|
(0.73 |
) |
|
|
|
— |
| |
|
|
(0.73 |
) |
|
|
$ |
9.07 |
| |
|
|
9.43 |
% |
|
|
$ |
17,070 |
| |
|
|
0.99 |
% |
|
|
|
0.99 |
% |
|
|
|
0.99 |
% |
|
|
|
8.10 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.44 |
| |
|
|
0.48 |
| |
|
|
(0.40 |
) |
|
|
|
0.08 |
| |
|
|
(0.53 |
) |
|
|
|
— |
| |
|
|
(0.53 |
) |
|
|
$ |
8.99 |
| |
|
|
1.04 |
% |
|
|
$ |
20,603 |
| |
|
|
0.92 |
% |
|
|
|
0.92 |
% |
|
|
|
0.92 |
% |
|
|
|
5.32 |
% |
|
|
3/31/2022 |
| |
|
$ |
9.53 |
| |
|
|
0.30 |
| |
|
|
(0.10 |
) |
|
|
|
0.20 |
| |
|
|
(0.29 |
) |
|
|
|
— |
| |
|
|
(0.29 |
) |
|
|
$ |
9.44 |
| |
|
|
2.15 |
% |
|
|
$ |
45,362 |
| |
|
|
0.90 |
% |
|
|
|
0.90 |
% |
|
|
|
0.90 |
% |
|
|
|
3.16 |
% |
|
|
3/31/2021 |
| |
|
$ |
8.45 |
| |
|
|
0.32 |
| |
|
|
1.08 |
| |
|
|
1.40 |
| |
|
|
(0.32 |
) |
|
|
|
— |
| |
|
|
(0.32 |
) |
|
|
$ |
9.53 |
| |
|
|
16.73 |
% |
|
|
$ |
18,339 |
| |
|
|
0.98 |
% |
|
|
|
0.98 |
% |
|
|
|
0.98 |
% |
|
|
|
3.54 |
% |
|
|
3/31/2020 |
| |
|
$ |
9.67 |
| |
|
|
0.44 |
| |
|
|
(1.20 |
) |
|
|
|
(0.76 |
) |
|
|
|
(0.46 |
) |
|
|
|
— |
| |
|
|
(0.46 |
) |
|
|
$ |
8.45 |
| |
|
|
(8.32 |
)% |
|
|
$ |
51,646 |
| |
|
|
0.95 |
% |
|
|
|
0.95 |
% |
|
|
|
0.95 |
% |
|
|
|
4.59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
3/31/2023 |
|
3/31/2022 |
|
3/31/2021 |
|
3/31/2020 |
Portfolio
turnover rate for all share classes |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
50% |
|
|
|
17% |
|
|
|
|
40% |
|
|
|
|
76% |
|
|
|
|
58% |
|
|
(a) Calculated based on
average shares outstanding during the period. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
Less Distributions: |
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
For
the
Year
or
Period Ended |
|
Net
Asset Value,
Beginning of
Period |
|
Net Investment Income (Loss)(a) |
|
Net Gain (Loss)
on Investments (Realized and Unrealized) |
|
Total from Investment Operations |
|
Distributions from Net Investment Income |
|
Distributions from Net Realized Gain |
|
Total Distributions |
|
Net Asset Value, End of Period |
|
Total
Return(c) |
|
Net
Assets,
End
of
Period
(000’s) |
|
Expenses Before
Advisory Fees (Waived)
and Other Fees (Reimbursed)/
Recouped(d) |
|
Expenses
After Investment Advisory
Fees (Waived)(d) |
|
Expenses
After
Advisory
Fees
(Waived)
and Other Fees (Reimbursed)/
Recouped(d) |
|
Net
Investment Income (Loss)(d) |
|
|
|
DoubleLine Shiller Enhanced CAPE® -
Class I: |
|
|
|
3/31/2024 |
| |
|
$ |
12.66 |
| |
|
|
0.64 |
| |
|
|
2.23 |
| |
|
|
2.87 |
| |
|
|
(0.67 |
) |
|
|
|
— |
| |
|
|
(0.67 |
) |
|
|
$ |
14.86 |
| |
|
|
23.36% |
|
|
|
$ |
3,905,582 |
| |
|
|
0.54 |
% |
|
|
|
0.54 |
% |
|
|
|
0.54 |
% |
|
|
|
4.75 |
% |
|
|
3/31/2023 |
| |
|
$ |
16.79 |
| |
|
|
0.49 |
| |
|
|
(2.60 |
) |
|
|
|
(2.11 |
) |
|
|
|
(0.54 |
) |
|
|
|
(1.48 |
) |
|
|
|
(2.02 |
) |
|
|
$ |
12.66 |
| |
|
|
(12.06)% |
|
|
|
$ |
3,988,448 |
| |
|
|
0.55 |
% |
|
|
|
0.55 |
% |
|
|
|
0.55 |
% |
|
|
|
3.48 |
% |
|
|
3/31/2022 |
| |
|
$ |
19.62 |
| |
|
|
0.26 |
| |
|
|
2.00 |
| |
|
|
2.26 |
| |
|
|
(0.30 |
) |
|
|
|
(4.79 |
) |
|
|
|
(5.09 |
) |
|
|
$ |
16.79 |
| |
|
|
10.96% |
|
|
|
$ |
7,828,188 |
| |
|
|
0.54 |
% |
|
|
|
0.53 |
% |
|
|
|
0.53 |
% |
|
|
|
1.29 |
% |
|
|
3/31/2021 |
| |
|
$ |
11.69 |
| |
|
|
0.27 |
| |
|
|
7.95 |
| |
|
|
8.22 |
| |
|
|
(0.29 |
) |
|
|
|
— |
| |
|
|
(0.29 |
) |
|
|
$ |
19.62 |
| |
|
|
70.87% |
|
|
|
$ |
8,169,623 |
| |
|
|
0.55 |
% |
|
|
|
0.54 |
% |
|
|
|
0.54 |
% |
|
|
|
1.64 |
% |
|
|
3/31/2020 |
| |
|
$ |
14.81 |
| |
|
|
0.42 |
| |
|
|
(2.72 |
) |
|
|
|
(2.30 |
) |
|
|
|
(0.43 |
) |
|
|
|
(0.39 |
) |
|
|
|
(0.82 |
) |
|
|
$ |
11.69 |
| |
|
|
(16.78)% |
|
|
|
$ |
4,633,848 |
| |
|
|
0.55 |
% |
|
|
|
0.54 |
% |
|
|
|
0.54 |
% |
|
|
|
2.70 |
% |
|
|
|
DoubleLine Shiller Enhanced CAPE® -
Class N: |
|
|
|
3/31/2024 |
| |
|
$ |
12.65 |
| |
|
|
0.60 |
| |
|
|
2.24 |
| |
|
|
2.84 |
| |
|
|
(0.64 |
) |
|
|
|
— |
| |
|
|
(0.64 |
) |
|
|
$ |
14.85 |
| |
|
|
23.07% |
|
|
|
$ |
281,125 |
| |
|
|
0.79 |
% |
|
|
|
0.79 |
% |
|
|
|
0.79 |
% |
|
|
|
4.50 |
% |
|
|
3/31/2023 |
| |
|
$ |
16.78 |
| |
|
|
0.46 |
| |
|
|
(2.61 |
) |
|
|
|
(2.15 |
) |
|
|
|
(0.50 |
) |
|
|
|
(1.48 |
) |
|
|
|
(1.98 |
) |
|
|
$ |
12.65 |
| |
|
|
(12.29)% |
|
|
|
$ |
312,867 |
| |
|
|
0.80 |
% |
|
|
|
0.80 |
% |
|
|
|
0.80 |
% |
|
|
|
3.26 |
% |
|
|
3/31/2022 |
| |
|
$ |
19.61 |
| |
|
|
0.21 |
| |
|
|
1.99 |
| |
|
|
2.20 |
| |
|
|
(0.24 |
) |
|
|
|
(4.79 |
) |
|
|
|
(5.03 |
) |
|
|
$ |
16.78 |
| |
|
|
10.69% |
|
|
|
$ |
566,561 |
| |
|
|
0.79 |
% |
|
|
|
0.78 |
% |
|
|
|
0.78 |
% |
|
|
|
1.03 |
% |
|
|
3/31/2021 |
| |
|
$ |
11.68 |
| |
|
|
0.24 |
| |
|
|
7.93 |
| |
|
|
8.17 |
| |
|
|
(0.24 |
) |
|
|
|
— |
| |
|
|
(0.24 |
) |
|
|
$ |
19.61 |
| |
|
|
70.45% |
|
|
|
$ |
705,156 |
| |
|
|
0.80 |
% |
|
|
|
0.79 |
% |
|
|
|
0.79 |
% |
|
|
|
1.56 |
% |
|
|
3/31/2020 |
| |
|
$ |
14.80 |
| |
|
|
0.38 |
| |
|
|
(2.72 |
) |
|
|
|
(2.34 |
) |
|
|
|
(0.39 |
) |
|
|
|
(0.39 |
) |
|
|
|
(0.78 |
) |
|
|
$ |
11.68 |
| |
|
|
(17.00)% |
|
|
|
$ |
1,246,723 |
| |
|
|
0.80 |
% |
|
|
|
0.79 |
% |
|
|
|
0.79 |
% |
|
|
|
2.46 |
% |
|
|
|
DoubleLine Shiller Enhanced CAPE® -
Class R6: |
|
|
|
3/31/2024 |
| |
|
$ |
12.67 |
| |
|
|
0.65 |
| |
|
|
2.23 |
| |
|
|
2.88 |
| |
|
|
(0.68 |
) |
|
|
|
— |
| |
|
|
(0.68 |
) |
|
|
$ |
14.87 |
| |
|
|
23.41% |
|
|
|
$ |
18,595 |
| |
|
|
0.48 |
% |
|
|
|
0.48 |
% |
|
|
|
0.48 |
% |
|
|
|
4.82 |
% |
|
|
3/31/2023 |
| |
|
$ |
16.80 |
| |
|
|
0.50 |
| |
|
|
(2.60 |
) |
|
|
|
(2.10 |
) |
|
|
|
(0.55 |
) |
|
|
|
(1.48 |
) |
|
|
|
(2.03 |
) |
|
|
$ |
12.67 |
| |
|
|
(12.00)% |
|
|
|
$ |
8,103 |
| |
|
|
0.50 |
% |
|
|
|
0.50 |
% |
|
|
|
0.50 |
% |
|
|
|
3.58 |
% |
|
|
3/31/2022 |
| |
|
$ |
19.62 |
| |
|
|
0.27 |
| |
|
|
2.01 |
| |
|
|
2.28 |
| |
|
|
(0.31 |
) |
|
|
|
(4.79 |
) |
|
|
|
(5.10 |
) |
|
|
$ |
16.80 |
| |
|
|
11.07% |
|
|
|
$ |
15,398 |
| |
|
|
0.49 |
% |
|
|
|
0.49 |
% |
|
|
|
0.49 |
% |
|
|
|
1.35 |
% |
|
|
3/31/2021 |
| |
|
$ |
11.70 |
| |
|
|
0.27 |
| |
|
|
7.95 |
| |
|
|
8.22 |
| |
|
|
(0.30 |
) |
|
|
|
— |
| |
|
|
(0.30 |
) |
|
|
$ |
19.62 |
| |
|
|
70.82% |
|
|
|
$ |
12,333 |
| |
|
|
0.51 |
% |
|
|
|
0.51 |
% |
|
|
|
0.51 |
% |
|
|
|
1.47 |
% |
|
|
3/31/2020 |
(b) |
|
|
$ |
15.69 |
| |
|
|
0.27 |
| |
|
|
(3.59 |
) |
|
|
|
(3.32 |
) |
|
|
|
(0.28 |
) |
|
|
|
(0.39 |
) |
|
|
|
(0.67 |
) |
|
|
$ |
11.70 |
| |
|
|
(22.15)% |
|
|
|
$ |
124 |
| |
|
|
0.49 |
% |
|
|
|
0.48 |
% |
|
|
|
0.48 |
% |
|
|
|
2.60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
3/31/2023 |
|
|
3/31/2022 |
|
3/31/2021 |
|
3/31/2020 |
|
Portfolio
turnover rate for all share classes |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
75% |
|
|
77% |
|
|
110% |
|
69% |
|
|
62% |
|
|
(a) Calculated based on
average shares outstanding during the period.
(b) Commenced
operations on July 31, 2019. Total return is based on operations for
a period that is less than one year.
(c) Not annualized for
periods less than one year.
(d) Annualized for
periods less than one year. |
|
-291-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
Less Distributions: |
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
For
the
Year
or
Period Ended |
|
Net
Asset Value,
Beginning of
Period |
|
Net Investment Income (Loss)(a) |
|
Net Gain (Loss)
on Investments (Realized and Unrealized) |
|
Total from Investment Operations |
|
Distributions from Net Investment Income |
|
Distributions from Net Realized Gain |
|
Total Distributions |
|
Net Asset Value,
End
of
Period |
|
Total
Return(c) |
|
Net Assets,
End
of
Period
(000’s) |
|
Expenses Before
Advisory
Fees (Waived) and Other
Fees (Reimbursed)/
Recouped(d) |
|
Expenses
After Investment Advisory
Fees (Waived)(d) |
|
Expenses
After
Advisory
Fees (Waived) and Other Fees (Reimbursed)/
Recouped(d) |
|
Net
Investment Income (Loss)(d) |
|
|
|
DoubleLine Flexible Income Fund -
Class I: |
|
|
|
3/31/2024 |
| |
|
$ |
8.42 |
| |
|
|
0.50 |
| |
|
|
0.21 |
| |
|
|
0.71 |
| |
|
|
(0.53 |
) |
|
|
|
— |
| |
|
|
(0.53 |
) |
|
|
$ |
8.60 |
| |
|
|
8.69% |
|
|
|
$ |
802,933 |
| |
|
|
0.74 |
% |
|
|
|
0.74 |
% |
|
|
|
0.74 |
% |
|
|
|
5.97 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.21 |
| |
|
|
0.41 |
| |
|
|
(0.78 |
) |
|
|
|
(0.37 |
) |
|
|
|
(0.42 |
) |
|
|
|
— |
| |
|
|
(0.42 |
) |
|
|
$ |
8.42 |
| |
|
|
(3.99)% |
|
|
|
$ |
726,230 |
| |
|
|
0.74 |
% |
|
|
|
0.74 |
% |
|
|
|
0.74 |
% |
|
|
|
4.74 |
% |
|
|
3/31/2022 |
| |
|
$ |
9.65 |
| |
|
|
0.35 |
| |
|
|
(0.43 |
) |
|
|
|
(0.08 |
) |
|
|
|
(0.36 |
) |
|
|
|
— |
| |
|
|
(0.36 |
) |
|
|
$ |
9.21 |
| |
|
|
(0.91)% |
|
|
|
$ |
971,543 |
| |
|
|
0.73 |
% |
|
|
|
0.71 |
% |
|
|
|
0.71 |
% |
|
|
|
3.65 |
% |
|
|
3/31/2021 |
| |
|
$ |
8.40 |
| |
|
|
0.35 |
| |
|
|
1.28 |
| |
|
|
1.63 |
| |
|
|
(0.38 |
) |
|
|
|
— |
| |
|
|
(0.38 |
) |
|
|
$ |
9.65 |
| |
|
|
19.59% |
|
|
|
$ |
1,086,763 |
| |
|
|
0.76 |
% |
|
|
|
0.73 |
% |
|
|
|
0.73 |
% |
|
|
|
3.71 |
% |
|
|
3/31/2020 |
| |
|
$ |
9.65 |
| |
|
|
0.39 |
| |
|
|
(1.22 |
) |
|
|
|
(0.83 |
) |
|
|
|
(0.42 |
) |
|
|
|
— |
| |
|
|
(0.42 |
) |
|
|
$ |
8.40 |
| |
|
|
(9.06)% |
|
|
|
$ |
874,594 |
| |
|
|
0.73 |
% |
|
|
|
0.69 |
% |
|
|
|
0.69 |
% |
|
|
|
4.12 |
% |
|
|
|
DoubleLine Flexible Income Fund -
Class N: |
|
|
|
3/31/2024 |
| |
|
$ |
8.42 |
| |
|
|
0.48 |
| |
|
|
0.20 |
| |
|
|
0.68 |
| |
|
|
(0.50 |
) |
|
|
|
— |
| |
|
|
(0.50 |
) |
|
|
$ |
8.60 |
| |
|
|
8.42% |
|
|
|
$ |
69,796 |
| |
|
|
0.99 |
% |
|
|
|
0.99 |
% |
|
|
|
0.99 |
% |
|
|
|
5.70 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.20 |
| |
|
|
0.39 |
| |
|
|
(0.77 |
) |
|
|
|
(0.38 |
) |
|
|
|
(0.40 |
) |
|
|
|
— |
| |
|
|
(0.40 |
) |
|
|
$ |
8.42 |
| |
|
|
(4.13)% |
|
|
|
$ |
95,069 |
| |
|
|
0.99 |
% |
|
|
|
0.99 |
% |
|
|
|
0.99 |
% |
|
|
|
4.47 |
% |
|
|
3/31/2022 |
| |
|
$ |
9.65 |
| |
|
|
0.33 |
| |
|
|
(0.44 |
) |
|
|
|
(0.11 |
) |
|
|
|
(0.34 |
) |
|
|
|
— |
| |
|
|
(0.34 |
) |
|
|
$ |
9.20 |
| |
|
|
(1.26)% |
|
|
|
$ |
142,205 |
| |
|
|
0.98 |
% |
|
|
|
0.96 |
% |
|
|
|
0.96 |
% |
|
|
|
3.39 |
% |
|
|
3/31/2021 |
| |
|
$ |
8.39 |
| |
|
|
0.32 |
| |
|
|
1.29 |
| |
|
|
1.61 |
| |
|
|
(0.35 |
) |
|
|
|
— |
| |
|
|
(0.35 |
) |
|
|
$ |
9.65 |
| |
|
|
19.43% |
|
|
|
$ |
155,408 |
| |
|
|
1.01 |
% |
|
|
|
0.97 |
% |
|
|
|
0.97 |
% |
|
|
|
3.49 |
% |
|
|
3/31/2020 |
| |
|
$ |
9.64 |
| |
|
|
0.37 |
| |
|
|
(1.22 |
) |
|
|
|
(0.85 |
) |
|
|
|
(0.40 |
) |
|
|
|
— |
| |
|
|
(0.40 |
) |
|
|
$ |
8.39 |
| |
|
|
(9.30)% |
|
|
|
$ |
230,033 |
| |
|
|
0.98 |
% |
|
|
|
0.94 |
% |
|
|
|
0.94 |
% |
|
|
|
3.83 |
% |
|
|
|
DoubleLine Flexible Income Fund -
Class R6: |
|
|
|
3/31/2024 |
| |
|
$ |
8.43 |
| |
|
|
0.51 |
| |
|
|
0.20 |
| |
|
|
0.71 |
| |
|
|
(0.53 |
) |
|
|
|
— |
| |
|
|
(0.53 |
) |
|
|
$ |
8.61 |
| |
|
|
8.73% |
|
|
|
$ |
79,635 |
| |
|
|
0.70 |
% |
|
|
|
0.70 |
% |
|
|
|
0.70 |
% |
|
|
|
5.98 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.21 |
| |
|
|
0.42 |
| |
|
|
(0.78 |
) |
|
|
|
(0.36 |
) |
|
|
|
(0.42 |
) |
|
|
|
— |
| |
|
|
(0.42 |
) |
|
|
$ |
8.43 |
| |
|
|
(3.84)% |
|
|
|
$ |
125,350 |
| |
|
|
0.70 |
% |
|
|
|
0.70 |
% |
|
|
|
0.70 |
% |
|
|
|
4.86 |
% |
|
|
3/31/2022 |
| |
|
$ |
9.66 |
| |
|
|
0.34 |
| |
|
|
(0.43 |
) |
|
|
|
(0.09 |
) |
|
|
|
(0.36 |
) |
|
|
|
— |
| |
|
|
(0.36 |
) |
|
|
$ |
9.21 |
| |
|
|
(0.98)% |
|
|
|
$ |
112,378 |
| |
|
|
0.70 |
% |
|
|
|
0.68 |
% |
|
|
|
0.68 |
% |
|
|
|
3.55 |
% |
|
|
3/31/2021 |
| |
|
$ |
8.40 |
| |
|
|
0.32 |
| |
|
|
1.32 |
| |
|
|
1.64 |
| |
|
|
(0.38 |
) |
|
|
|
— |
| |
|
|
(0.38 |
) |
|
|
$ |
9.66 |
| |
|
|
19.78% |
|
|
|
$ |
758 |
| |
|
|
0.72 |
% |
|
|
|
0.70 |
% |
|
|
|
0.70 |
% |
|
|
|
3.42 |
% |
|
|
3/31/2020 |
(b) |
|
|
$ |
9.74 |
| |
|
|
0.25 |
| |
|
|
(1.32 |
) |
|
|
|
(1.07 |
) |
|
|
|
(0.27 |
) |
|
|
|
— |
| |
|
|
(0.27 |
) |
|
|
$ |
8.40 |
| |
|
|
(11.26)% |
|
|
|
$ |
89 |
| |
|
|
0.68 |
% |
|
|
|
0.65 |
% |
|
|
|
0.65 |
% |
|
|
|
3.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
3/31/2023 |
|
|
3/31/2022 |
|
3/31/2021 |
|
3/31/2020 |
|
Portfolio
turnover rate for all share classes |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
32% |
|
|
13% |
|
|
41% |
|
46% |
|
|
41% |
|
|
(a) Calculated based on
average shares outstanding during the period.
(b) Commenced
operations on July 31, 2019. Total return is based on operations for
a period that is less than one year.
(c) Not annualized for
periods less than one year.
(d) Annualized for
periods less than one year. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
Less Distributions: |
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
For
the
Year
or Period Ended |
|
Net Asset Value, Beginning of Period |
|
Net Investment Income (Loss)(a) |
|
Net Gain (Loss)
on Investments (Realized and Unrealized) |
|
Total from Investment Operations |
|
Distributions from Net Investment Income |
|
Distributions from Net Realized Gain |
|
Total Distributions |
|
Net Asset Value, End of Period |
|
Total Return |
|
Net Assets, End of Period (000’s) |
|
Expenses Before Advisory Fees (Waived)
and Other Fees (Reimbursed)/
Recouped |
|
Expenses After Investment Advisory Fees (Waived) |
|
Expenses After Advisory Fees (Waived)
and Other Fees (Reimbursed)/
Recouped |
|
Net Investment Income (Loss) |
|
|
|
DoubleLine Low Duration Emerging Markets Fixed
Income Fund - Class I: |
|
|
|
3/31/2024 |
| |
|
$ |
9.05 |
| |
|
|
0.37 |
| |
|
|
0.36 |
| |
|
|
0.73 |
| |
|
|
(0.37 |
) |
|
|
|
— |
| |
|
|
(0.37 |
) |
|
|
$ |
9.41 |
| |
|
|
8.23 |
% |
|
|
$ |
153,250 |
| |
|
|
0.74 |
% |
|
|
|
0.74 |
% |
|
|
|
0.59 |
% |
|
|
|
4.04 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.40 |
| |
|
|
0.26 |
| |
|
|
(0.35 |
) |
|
|
|
(0.09 |
) |
|
|
|
(0.26 |
) |
|
|
|
— |
| |
|
|
(0.26 |
) |
|
|
$ |
9.05 |
| |
|
|
(0.90 |
)% |
|
|
$ |
182,023 |
| |
|
|
0.69 |
% |
|
|
|
0.69 |
% |
|
|
|
0.59 |
% |
|
|
|
2.81 |
% |
|
|
3/31/2022 |
| |
|
$ |
9.90 |
| |
|
|
0.16 |
| |
|
|
(0.45 |
) |
|
|
|
(0.29 |
) |
|
|
|
(0.17 |
) |
|
|
|
(0.04 |
) |
|
|
|
(0.21 |
) |
|
|
$ |
9.40 |
| |
|
|
(3.00 |
)% |
|
|
$ |
238,613 |
| |
|
|
0.68 |
% |
|
|
|
0.68 |
% |
|
|
|
0.59 |
% |
|
|
|
1.67 |
% |
|
|
3/31/2021 |
| |
|
$ |
9.36 |
| |
|
|
0.22 |
| |
|
|
0.56 |
| |
|
|
0.78 |
| |
|
|
(0.24 |
) |
|
|
|
— |
| |
|
|
(0.24 |
) |
|
|
$ |
9.90 |
| |
|
|
8.33 |
% |
|
|
$ |
215,744 |
| |
|
|
0.66 |
% |
|
|
|
0.66 |
% |
|
|
|
0.59 |
% |
|
|
|
2.21 |
% |
|
|
3/31/2020 |
| |
|
$ |
9.80 |
| |
|
|
0.32 |
| |
|
|
(0.36 |
) |
|
|
|
(0.04 |
) |
|
|
|
(0.32 |
) |
|
|
|
(0.08 |
) |
|
|
|
(0.40 |
) |
|
|
$ |
9.36 |
| |
|
|
(0.62 |
)% |
|
|
$ |
180,730 |
| |
|
|
0.63 |
% |
|
|
|
0.63 |
% |
|
|
|
0.59 |
% |
|
|
|
3.24 |
% |
|
|
|
DoubleLine Low Duration Emerging Markets Fixed
Income Fund - Class N: |
|
|
|
3/31/2024 |
| |
|
$ |
9.06 |
| |
|
|
0.35 |
| |
|
|
0.37 |
| |
|
|
0.72 |
| |
|
|
(0.35 |
) |
|
|
|
— |
| |
|
|
(0.35 |
) |
|
|
$ |
9.43 |
| |
|
|
8.07 |
% |
|
|
$ |
4,658 |
| |
|
|
0.99 |
% |
|
|
|
0.99 |
% |
|
|
|
0.84 |
% |
|
|
|
3.82 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.41 |
| |
|
|
0.23 |
| |
|
|
(0.34 |
) |
|
|
|
(0.11 |
) |
|
|
|
(0.24 |
) |
|
|
|
— |
| |
|
|
(0.24 |
) |
|
|
$ |
9.06 |
| |
|
|
(1.18 |
)% |
|
|
$ |
5,337 |
| |
|
|
0.93 |
% |
|
|
|
0.93 |
% |
|
|
|
0.84 |
% |
|
|
|
2.51 |
% |
|
|
3/31/2022 |
| |
|
$ |
9.91 |
| |
|
|
0.14 |
| |
|
|
(0.46 |
) |
|
|
|
(0.32 |
) |
|
|
|
(0.14 |
) |
|
|
|
(0.04 |
) |
|
|
|
(0.18 |
) |
|
|
$ |
9.41 |
| |
|
|
(3.24 |
)% |
|
|
$ |
22,501 |
| |
|
|
0.93 |
% |
|
|
|
0.93 |
% |
|
|
|
0.84 |
% |
|
|
|
1.42 |
% |
|
|
3/31/2021 |
| |
|
$ |
9.38 |
| |
|
|
0.19 |
| |
|
|
0.55 |
| |
|
|
0.74 |
| |
|
|
(0.21 |
) |
|
|
|
— |
| |
|
|
(0.21 |
) |
|
|
$ |
9.91 |
| |
|
|
7.94 |
% |
|
|
$ |
25,849 |
| |
|
|
0.91 |
% |
|
|
|
0.91 |
% |
|
|
|
0.84 |
% |
|
|
|
1.95 |
% |
|
|
3/31/2020 |
| |
|
$ |
9.81 |
| |
|
|
0.30 |
| |
|
|
(0.36 |
) |
|
|
|
(0.06 |
) |
|
|
|
(0.29 |
) |
|
|
|
(0.08 |
) |
|
|
|
(0.37 |
) |
|
|
$ |
9.38 |
| |
|
|
(0.77 |
)% |
|
|
$ |
16,922 |
| |
|
|
0.88 |
% |
|
|
|
0.88 |
% |
|
|
|
0.84 |
% |
|
|
|
3.03 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
3/31/2023 |
|
|
3/31/2022 |
|
3/31/2021 |
|
3/31/2020 |
|
Portfolio
turnover rate for all share classes |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
29% |
|
|
37% |
|
|
39% |
|
72% |
|
|
65% |
|
|
(a) Calculated based on
average shares outstanding during the period. |
|
-292-
|
| |
Financial Highlights (Cont.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
|
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
|
For
the
Year
or Period Ended |
|
|
Net Asset Value, Beginning of Period |
|
|
Net Investment Income (Loss)(a) |
|
|
Net Gain (Loss)
on Investments (Realized and Unrealized) |
|
|
Total from Investment Operations |
|
|
Distributions from Net Investment Income |
|
|
Distributions from Net Realized Gain |
|
|
Total Distributions |
|
|
Net Asset Value, End of Period |
|
|
Total Return |
|
|
Net Assets, End of Period (000’s) |
|
|
Expenses Before Advisory Fees (Waived)
and Other Fees (Reimbursed)/
Recouped |
|
|
Expenses After Investment Advisory Fees (Waived) |
|
|
Expenses After Advisory Fees (Waived)
and Other Fees (Reimbursed)/
Recouped |
|
|
Net Investment Income (Loss) |
|
|
|
DoubleLine Long Duration Total
Return Bond Fund - Class I: |
|
|
3/31/2024 |
|
|
$ |
7.15 |
|
|
|
0.26 |
|
|
|
(0.58 |
) |
|
|
(0.32 |
) |
|
|
(0.25 |
) |
|
|
— |
|
|
|
(0.25 |
) |
|
$ |
6.58 |
|
|
|
(4.39 |
)% |
|
$ |
47,884 |
|
|
|
0.62 |
% |
|
|
0.62 |
% |
|
|
0.50 |
% |
|
|
3.88 |
% |
|
3/31/2023 |
|
|
$ |
8.84 |
|
|
|
0.22 |
|
|
|
(1.69 |
) |
|
|
(1.47 |
) |
|
|
(0.22 |
) |
|
|
— |
|
|
|
(0.22 |
) |
|
$ |
7.15 |
|
|
|
(16.66 |
)% |
|
$ |
48,859 |
|
|
|
0.59 |
% |
|
|
0.59 |
% |
|
|
0.50 |
% |
|
|
2.97 |
% |
|
3/31/2022 |
|
|
$ |
9.37 |
|
|
|
0.28 |
|
|
|
(0.53 |
) |
|
|
(0.25 |
) |
|
|
(0.28 |
) |
|
|
— |
|
|
|
(0.28 |
) |
|
$ |
8.84 |
|
|
|
(2.89 |
)% |
|
$ |
54,898 |
|
|
|
0.54 |
% |
|
|
0.54 |
% |
|
|
0.50 |
% |
|
|
2.87 |
% |
|
3/31/2021 |
|
|
$ |
11.75 |
|
|
|
0.29 |
|
|
|
(1.62 |
) |
|
|
(1.33 |
) |
|
|
(0.29 |
) |
|
|
(0.76 |
) |
|
|
(1.05 |
) |
|
$ |
9.37 |
|
|
|
(12.24 |
)% |
|
$ |
71,267 |
|
|
|
0.55 |
% |
|
|
0.55 |
% |
|
|
0.51 |
% |
|
|
2.56 |
% |
|
3/31/2020 |
|
|
$ |
9.88 |
|
|
|
0.28 |
|
|
|
2.11 |
|
|
|
2.39 |
|
|
|
(0.27 |
) |
|
|
(0.25 |
) |
|
|
(0.52 |
) |
|
$ |
11.75 |
|
|
|
24.85 |
% |
|
$ |
87,469 |
|
|
|
0.68 |
% |
|
|
0.68 |
% |
|
|
0.65 |
% |
|
|
2.55 |
% |
|
|
DoubleLine Long Duration Total
Return Bond Fund - Class N: |
|
|
3/31/2024 |
|
|
$ |
7.13 |
|
|
|
0.26 |
|
|
|
(0.59 |
) |
|
|
(0.33 |
) |
|
|
(0.24 |
) |
|
|
— |
|
|
|
(0.24 |
) |
|
$ |
6.56 |
|
|
|
(4.63 |
)% |
|
$ |
12,036 |
|
|
|
0.92 |
% |
|
|
0.92 |
% |
|
|
0.75 |
% |
|
|
4.07 |
% |
|
3/31/2023 |
|
|
$ |
8.81 |
|
|
|
0.21 |
|
|
|
(1.69 |
) |
|
|
(1.48 |
) |
|
|
(0.20 |
) |
|
|
— |
|
|
|
(0.20 |
) |
|
$ |
7.13 |
|
|
|
(16.83 |
)% |
|
$ |
1,693 |
|
|
|
0.83 |
% |
|
|
0.83 |
% |
|
|
0.75 |
% |
|
|
2.73 |
% |
|
3/31/2022 |
|
|
$ |
9.37 |
|
|
|
0.25 |
|
|
|
(0.56 |
) |
|
|
(0.31 |
) |
|
|
(0.25 |
) |
|
|
— |
|
|
|
(0.25 |
) |
|
$ |
8.81 |
|
|
|
(3.48 |
)% |
|
$ |
5,364 |
|
|
|
0.77 |
% |
|
|
0.77 |
% |
|
|
0.75 |
% |
|
|
2.59 |
% |
|
3/31/2021 |
|
|
$ |
11.74 |
|
|
|
0.26 |
|
|
|
(1.61 |
) |
|
|
(1.35 |
) |
|
|
(0.26 |
) |
|
|
(0.76 |
) |
|
|
(1.02 |
) |
|
$ |
9.37 |
|
|
|
(12.38 |
)% |
|
$ |
11,234 |
|
|
|
0.80 |
% |
|
|
0.80 |
% |
|
|
0.76 |
% |
|
|
2.29 |
% |
|
3/31/2020 |
|
|
$ |
9.88 |
|
|
|
0.24 |
|
|
|
2.11 |
|
|
|
2.35 |
|
|
|
(0.24 |
) |
|
|
(0.25 |
) |
|
|
(0.49 |
) |
|
$ |
11.74 |
|
|
|
24.44 |
% |
|
$ |
20,225 |
|
|
|
0.93 |
% |
|
|
0.93 |
% |
|
|
0.90 |
% |
|
|
2.31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
3/31/2023 |
|
|
3/31/2022 |
|
3/31/2021 |
|
3/31/2020 |
|
Portfolio
turnover rate for all share classes |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
146% |
|
|
227% |
|
|
95% |
|
89% |
|
|
40% |
|
|
(a) Calculated based on
average shares outstanding during the period. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
|
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
|
For
the
Year
or Period Ended |
|
|
Net Asset Value, Beginning of Period |
|
|
Net Investment Income (Loss)(a) |
|
|
Net Gain (Loss)
on Investments (Realized and Unrealized) |
|
|
Total from Investment Operations |
|
|
Distributions from Net Investment Income |
|
|
Distributions from Net Realized Gain |
|
|
Total Distributions |
|
|
Net Asset Value, End of Period |
|
|
Total Return |
|
|
Net Assets, End of Period (000’s) |
|
|
Expenses Before Advisory Fees (Waived)
and Other Fees (Reimbursed)/
Recouped |
|
|
Expenses After Investment Advisory Fees (Waived) |
|
|
Expenses After Advisory Fees (Waived)
and Other Fees (Reimbursed)/
Recouped |
|
|
Net Investment Income (Loss) |
|
|
|
DoubleLine Strategic Commodity Fund
(Consolidated) - Class I: |
|
|
3/31/2024 |
|
|
$ |
7.54 |
|
|
|
0.31 |
|
|
|
0.18 |
|
|
|
0.49 |
|
|
|
(0.24 |
) |
|
|
— |
|
|
|
(0.24 |
) |
|
$ |
7.79 |
|
|
|
6.72 |
% |
|
$ |
136,093 |
|
|
|
1.08 |
% |
|
|
1.08 |
% |
|
|
1.07 |
% |
|
|
4.05 |
% |
|
3/31/2023 |
|
|
$ |
12.56 |
|
|
|
0.07 |
|
|
|
(1.47 |
) |
|
|
(1.40 |
) |
|
|
(3.62 |
) |
|
|
— |
|
|
|
(3.62 |
) |
|
$ |
7.54 |
|
|
|
(11.83 |
)% |
|
$ |
158,615 |
|
|
|
1.02 |
% |
|
|
1.02 |
% |
|
|
1.02 |
% |
|
|
0.64 |
% |
|
3/31/2022 |
|
|
$ |
9.61 |
|
|
|
(0.11 |
) |
|
|
4.41 |
|
|
|
4.30 |
|
|
|
(1.35 |
) |
|
|
— |
|
|
|
(1.35 |
) |
|
$ |
12.56 |
|
|
|
48.24 |
% |
|
$ |
223,799 |
|
|
|
1.04 |
% |
|
|
1.04 |
% |
|
|
1.10 |
% |
|
|
(0.97 |
)% |
|
3/31/2021 |
|
|
$ |
6.91 |
|
|
|
(0.05 |
) |
|
|
2.75 |
|
|
|
2.70 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
9.61 |
|
|
|
39.07 |
% |
|
$ |
151,565 |
|
|
|
1.14 |
% |
|
|
1.14 |
% |
|
|
1.10 |
% |
|
|
(0.66 |
)% |
|
3/31/2020 |
|
|
$ |
9.72 |
|
|
|
0.07 |
|
|
|
(2.78 |
) |
|
|
(2.71 |
) |
|
|
(0.10 |
) |
|
|
— |
|
|
|
(0.10 |
) |
|
$ |
6.91 |
|
|
|
(28.25 |
)% |
|
$ |
116,739 |
|
|
|
1.09 |
% |
|
|
1.09 |
% |
|
|
1.10 |
% |
|
|
1.00 |
% |
|
|
DoubleLine Strategic Commodity Fund
(Consolidated) - Class N: |
|
|
3/31/2024 |
|
|
$ |
7.43 |
|
|
|
0.28 |
|
|
|
0.19 |
|
|
|
0.47 |
|
|
|
(0.22 |
) |
|
|
— |
|
|
|
(0.22 |
) |
|
$ |
7.68 |
|
|
|
6.50 |
% |
|
$ |
13,055 |
|
|
|
1.33 |
% |
|
|
1.33 |
% |
|
|
1.32 |
% |
|
|
3.81 |
% |
|
3/31/2023 |
|
|
$ |
12.42 |
|
|
|
0.04 |
|
|
|
(1.44 |
) |
|
|
(1.40 |
) |
|
|
(3.59 |
) |
|
|
— |
|
|
|
(3.59 |
) |
|
$ |
7.43 |
|
|
|
(12.02 |
)% |
|
$ |
16,743 |
|
|
|
1.27 |
% |
|
|
1.27 |
% |
|
|
1.27 |
% |
|
|
0.40 |
% |
|
3/31/2022 |
|
|
$ |
9.52 |
|
|
|
(0.13 |
) |
|
|
4.35 |
|
|
|
4.22 |
|
|
|
(1.32 |
) |
|
|
— |
|
|
|
(1.32 |
) |
|
$ |
12.42 |
|
|
|
47.78 |
% |
|
$ |
23,906 |
|
|
|
1.29 |
% |
|
|
1.29 |
% |
|
|
1.35 |
% |
|
|
(1.22 |
)% |
|
3/31/2021 |
|
|
$ |
6.87 |
|
|
|
(0.07 |
) |
|
|
2.72 |
|
|
|
2.65 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
9.52 |
|
|
|
38.57 |
% |
|
$ |
20,205 |
|
|
|
1.39 |
% |
|
|
1.39 |
% |
|
|
1.34 |
% |
|
|
(0.88 |
)% |
|
3/31/2020 |
|
|
$ |
9.65 |
|
|
|
0.07 |
|
|
|
(2.78 |
) |
|
|
(2.71 |
) |
|
|
(0.07 |
) |
|
|
— |
|
|
|
(0.07 |
) |
|
$ |
6.87 |
|
|
|
(28.28 |
)% |
|
$ |
25,421 |
|
|
|
1.34 |
% |
|
|
1.34 |
% |
|
|
1.35 |
% |
|
|
0.75 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
3/31/2023 |
|
|
3/31/2022 |
|
3/31/2021 |
|
3/31/2020 |
|
Portfolio
turnover rate for all share classes |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
0% |
|
|
0% |
|
|
0% |
|
0% |
|
|
0% |
|
|
(a) Calculated based on
average shares outstanding during the period. |
|
-293-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
Less Distributions: |
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
For
the
Year
or Period Ended |
|
Net Asset Value, Beginning of Period |
|
Net Investment Income (Loss)(a) |
|
Net
Gain (Loss) on Investments (Realized
and Unrealized) |
|
Total from Investment Operations |
|
Distributions from Net Investment Income |
|
Distributions from Net Realized Gain |
|
Distribution in Excess |
|
Total Distributions |
|
Net Asset Value, End of Period |
|
Total Return |
|
Net
Assets,
End
of Period (000’s) |
|
Expenses Before Advisory Fees (Waived)
and
Other Fees (Reimbursed)/ Recouped |
|
Expenses After Investment Advisory Fees (Waived) |
|
Expenses After Advisory Fees (Waived)
and
Other Fees (Reimbursed)/
Recouped |
|
Net Investment Income (Loss) |
|
|
|
DoubleLine Global Bond Fund -
Class I: |
|
|
|
3/31/2024 |
| |
|
$ |
8.46 |
| |
|
|
0.22 |
| |
|
|
(0.29 |
) |
|
|
|
(0.07 |
) |
|
|
|
— |
| |
|
|
— |
| |
|
|
— |
| |
|
|
— |
| |
|
$ |
8.39 |
| |
|
|
(0.83 |
)% |
|
|
$ |
144,005 |
| |
|
|
0.59 |
% |
|
|
|
0.59 |
% |
|
|
|
0.60 |
% |
|
|
|
2.61 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.26 |
| |
|
|
0.11 |
| |
|
|
(0.91 |
) |
|
|
|
(0.80 |
) |
|
|
|
— |
| |
|
|
— |
| |
|
|
— |
| |
|
|
— |
| |
|
$ |
8.46 |
| |
|
|
(8.64 |
)% |
|
|
$ |
144,457 |
| |
|
|
0.66 |
% |
|
|
|
0.66 |
% |
|
|
|
0.65 |
% |
|
|
|
1.26 |
% |
|
|
3/31/2022 |
| |
|
$ |
10.21 |
| |
|
|
0.04 |
| |
|
|
(0.88 |
) |
|
|
|
(0.84 |
) |
|
|
|
(0.03 |
) |
|
|
|
(0.08 |
) |
|
|
|
— |
(b) |
|
|
|
(0.11 |
) |
|
|
$ |
9.26 |
| |
|
|
(8.29 |
)% |
|
|
$ |
276,559 |
| |
|
|
0.56 |
% |
|
|
|
0.56 |
% |
|
|
|
0.56 |
% |
|
|
|
0.37 |
% |
|
|
3/31/2021 |
| |
|
$ |
10.21 |
| |
|
|
0.05 |
| |
|
|
0.12 |
| |
|
|
0.17 |
| |
|
|
— |
| |
|
|
(0.17 |
) |
|
|
|
— |
| |
|
|
(0.17 |
) |
|
|
$ |
10.21 |
| |
|
|
1.59 |
% |
|
|
$ |
787,064 |
| |
|
|
0.55 |
% |
|
|
|
0.55 |
% |
|
|
|
0.55 |
% |
|
|
|
0.50 |
% |
|
|
3/31/2020 |
| |
|
$ |
10.28 |
| |
|
|
0.15 |
| |
|
|
(0.10 |
) |
|
|
|
0.05 |
| |
|
|
(0.12 |
) |
|
|
|
— |
(b) |
|
|
|
— |
| |
|
|
(0.12 |
) |
|
|
$ |
10.21 |
| |
|
|
0.43 |
% |
|
|
$ |
1,217,100 |
| |
|
|
0.55 |
% |
|
|
|
0.55 |
% |
|
|
|
0.55 |
% |
|
|
|
1.34 |
% |
|
|
|
DoubleLine Global Bond Fund -
Class N: |
|
|
|
3/31/2024 |
| |
|
$ |
8.41 |
| |
|
|
0.19 |
| |
|
|
(0.29 |
) |
|
|
|
(0.10 |
) |
|
|
|
— |
| |
|
|
— |
| |
|
|
— |
| |
|
|
— |
| |
|
$ |
8.31 |
| |
|
|
(1.19 |
)% |
|
|
$ |
156 |
| |
|
|
0.84 |
% |
|
|
|
0.84 |
% |
|
|
|
0.85 |
% |
|
|
|
2.34 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.23 |
| |
|
|
0.08 |
| |
|
|
(0.90 |
) |
|
|
|
(0.82 |
) |
|
|
|
— |
| |
|
|
— |
| |
|
|
— |
| |
|
|
— |
| |
|
$ |
8.41 |
| |
|
|
(8.88 |
)% |
|
|
$ |
240 |
| |
|
|
0.92 |
% |
|
|
|
0.92 |
% |
|
|
|
0.91 |
% |
|
|
|
0.95 |
% |
|
|
3/31/2022 |
| |
|
$ |
10.18 |
| |
|
|
0.01 |
| |
|
|
(0.87 |
) |
|
|
|
(0.86 |
) |
|
|
|
(0.01 |
) |
|
|
|
(0.08 |
) |
|
|
|
— |
(b) |
|
|
|
(0.09 |
) |
|
|
$ |
9.23 |
| |
|
|
(8.45 |
)% |
|
|
$ |
416 |
| |
|
|
0.81 |
% |
|
|
|
0.81 |
% |
|
|
|
0.81 |
% |
|
|
|
0.12 |
% |
|
|
3/31/2021 |
| |
|
$ |
10.21 |
| |
|
|
0.03 |
| |
|
|
0.11 |
| |
|
|
0.14 |
| |
|
|
— |
| |
|
|
(0.17 |
) |
|
|
|
— |
| |
|
|
(0.17 |
) |
|
|
$ |
10.18 |
| |
|
|
1.30 |
% |
|
|
$ |
815 |
| |
|
|
0.80 |
% |
|
|
|
0.80 |
% |
|
|
|
0.80 |
% |
|
|
|
0.29 |
% |
|
|
3/31/2020 |
| |
|
$ |
10.26 |
| |
|
|
0.12 |
| |
|
|
(0.10 |
) |
|
|
|
0.02 |
| |
|
|
(0.07 |
) |
|
|
|
— |
(b) |
|
|
|
— |
| |
|
|
(0.07 |
) |
|
|
$ |
10.21 |
| |
|
|
0.23 |
% |
|
|
$ |
2,407 |
| |
|
|
0.80 |
% |
|
|
|
0.80 |
% |
|
|
|
0.80 |
% |
|
|
|
1.13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
3/31/2023 |
|
3/31/2022 |
|
3/31/2021 |
|
3/31/2020 |
Portfolio
turnover rate for all share classes |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
| |
49% |
|
112% |
|
83% |
|
63% |
|
21% |
|
(a) Calculated based on
average shares outstanding during the period.
(b) Less than $0.005 per
share. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
Less Distributions: |
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
For
the
Year
or Period Ended |
|
Net Asset Value, Beginning of Period |
|
Net Investment Income (Loss)(a) |
|
Net Gain (Loss)
on Investments (Realized and Unrealized) |
|
Total from Investment Operations |
|
Distributions from Net Investment Income |
|
Distributions from Net Realized Gain |
|
Total Distributions |
|
Net Asset Value, End of Period |
|
Total Return |
|
Net Assets, End of Period (000’s) |
|
Expenses Before Advisory Fees (Waived)
and Other Fees (Reimbursed)/
Recouped |
|
Expenses After Investment Advisory Fees (Waived) |
|
Expenses After Advisory Fees (Waived)
and Other Fees (Reimbursed)/
Recouped |
|
Net Investment Income (Loss) |
|
|
|
DoubleLine Infrastructure Income Fund -
Class I: |
|
|
|
3/31/2024 |
| |
|
$ |
9.05 |
| |
|
|
0.34 |
| |
|
|
0.16 |
| |
|
|
0.50 |
| |
|
|
(0.33 |
) |
|
|
|
— |
| |
|
|
(0.33 |
) |
|
|
$ |
9.22 |
| |
|
|
5.68 |
% |
|
|
$ |
358,912 |
| |
|
|
0.57 |
% |
|
|
|
0.57 |
% |
|
|
|
0.57 |
% |
|
|
|
3.72 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.67 |
| |
|
|
0.28 |
| |
|
|
(0.60 |
) |
|
|
|
(0.32 |
) |
|
|
|
(0.27 |
) |
|
|
|
(0.03 |
) |
|
|
|
(0.30 |
) |
|
|
$ |
9.05 |
| |
|
|
(3.24 |
)% |
|
|
$ |
346,227 |
| |
|
|
0.57 |
% |
|
|
|
0.57 |
% |
|
|
|
0.57 |
% |
|
|
|
3.02 |
% |
|
|
3/31/2022 |
| |
|
$ |
10.46 |
| |
|
|
0.27 |
| |
|
|
(0.71 |
) |
|
|
|
(0.44 |
) |
|
|
|
(0.28 |
) |
|
|
|
(0.07 |
) |
|
|
|
(0.35 |
) |
|
|
$ |
9.67 |
| |
|
|
(4.39 |
)% |
|
|
$ |
521,889 |
| |
|
|
0.57 |
% |
|
|
|
0.57 |
% |
|
|
|
0.57 |
% |
|
|
|
2.63 |
% |
|
|
3/31/2021 |
| |
|
$ |
9.56 |
| |
|
|
0.29 |
| |
|
|
0.92 |
| |
|
|
1.21 |
| |
|
|
(0.31 |
) |
|
|
|
— |
| |
|
|
(0.31 |
) |
|
|
$ |
10.46 |
| |
|
|
12.73 |
% |
|
|
$ |
566,994 |
| |
|
|
0.56 |
% |
|
|
|
0.56 |
% |
|
|
|
0.56 |
% |
|
|
|
2.82 |
% |
|
|
3/31/2020 |
| |
|
$ |
10.11 |
| |
|
|
0.33 |
| |
|
|
(0.54 |
) |
|
|
|
(0.21 |
) |
|
|
|
(0.34 |
) |
|
|
|
— |
| |
|
|
(0.34 |
) |
|
|
$ |
9.56 |
| |
|
|
(2.32 |
)% |
|
|
$ |
503,146 |
| |
|
|
0.56 |
% |
|
|
|
0.56 |
% |
|
|
|
0.56 |
% |
|
|
|
3.19 |
% |
|
|
|
DoubleLine Infrastructure Income Fund -
Class N: |
|
|
|
3/31/2024 |
| |
|
$ |
9.06 |
| |
|
|
0.33 |
| |
|
|
0.15 |
| |
|
|
0.48 |
| |
|
|
(0.31 |
) |
|
|
|
— |
| |
|
|
(0.31 |
) |
|
|
$ |
9.23 |
| |
|
|
5.42 |
% |
|
|
$ |
6,971 |
| |
|
|
0.83 |
% |
|
|
|
0.83 |
% |
|
|
|
0.83 |
% |
|
|
|
3.60 |
% |
|
|
3/31/2023 |
| |
|
$ |
9.68 |
| |
|
|
0.25 |
| |
|
|
(0.59 |
) |
|
|
|
(0.34 |
) |
|
|
|
(0.25 |
) |
|
|
|
(0.03 |
) |
|
|
|
(0.28 |
) |
|
|
$ |
9.06 |
| |
|
|
(3.49 |
)% |
|
|
$ |
601 |
| |
|
|
0.82 |
% |
|
|
|
0.82 |
% |
|
|
|
0.82 |
% |
|
|
|
2.74 |
% |
|
|
3/31/2022 |
| |
|
$ |
10.46 |
| |
|
|
0.25 |
| |
|
|
(0.71 |
) |
|
|
|
(0.46 |
) |
|
|
|
(0.25 |
) |
|
|
|
(0.07 |
) |
|
|
|
(0.32 |
) |
|
|
$ |
9.68 |
| |
|
|
(4.60 |
)% |
|
|
$ |
1,794 |
| |
|
|
0.82 |
% |
|
|
|
0.82 |
% |
|
|
|
0.82 |
% |
|
|
|
2.38 |
% |
|
|
3/31/2021 |
| |
|
$ |
9.56 |
| |
|
|
0.27 |
| |
|
|
0.92 |
| |
|
|
1.19 |
| |
|
|
(0.29 |
) |
|
|
|
— |
| |
|
|
(0.29 |
) |
|
|
$ |
10.46 |
| |
|
|
12.45 |
% |
|
|
$ |
9,700 |
| |
|
|
0.81 |
% |
|
|
|
0.81 |
% |
|
|
|
0.81 |
% |
|
|
|
2.58 |
% |
|
|
3/31/2020 |
| |
|
$ |
10.11 |
| |
|
|
0.30 |
| |
|
|
(0.54 |
) |
|
|
|
(0.24 |
) |
|
|
|
(0.31 |
) |
|
|
|
— |
| |
|
|
(0.31 |
) |
|
|
$ |
9.56 |
| |
|
|
(2.55 |
)% |
|
|
$ |
9,784 |
| |
|
|
0.81 |
% |
|
|
|
0.81 |
% |
|
|
|
0.81 |
% |
|
|
|
2.93 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
3/31/2023 |
|
3/31/2022 |
|
3/31/2021 |
|
3/31/2020 |
Portfolio
turnover rate for all share classes |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
| |
49% |
|
8% |
|
23% |
|
39% |
|
10% |
|
(a) Calculated based on
average shares outstanding during the
period. |
-294-
|
| |
Financial Highlights (Cont.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Income (Loss) from Investment Operations: |
|
|
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets: |
|
For the
Year or
Period
Ended |
|
|
Net Asset
Value,
Beginning
of
Period |
|
|
Net
Investment
Income
(Loss)(a) |
|
|
Net Gain
(Loss) on
Investments
(Realized and
Unrealized) |
|
|
Total from
Investment
Operations |
|
|
Distributions
from Net
Investment
Income |
|
|
Distributions
from Net
Realized
Gain |
|
Total
Distributions |
|
|
Net Asset
Value,
End of
Period |
|
|
Total
Return |
|
|
Net Assets,
End of
Period
(000’s) |
|
|
Expenses
Before
Advisory
Fees
(Waived) and
Other Fees
(Reimbursed)/ Recouped |
|
|
Expenses
After
Investment
Advisory
Fees
(Waived) |
|
|
Expenses
After
Advisory
Fees
(Waived) and
Other Fees (Reimbursed)/ Recouped |
|
|
Net
Investment
Income
(Loss) |
|
|
|
DoubleLine Shiller Enhanced International
CAPE® -
Class I: |
|
|
3/31/2024 |
|
|
$ |
12.01 |
|
|
|
0.62 |
|
|
|
0.39 |
|
|
|
1.01 |
|
|
|
(0.67 |
) |
|
— |
|
|
(0.67 |
) |
|
$ |
12.35 |
|
|
|
8.88 |
% |
|
$ |
36,996 |
|
|
|
0.92 |
% |
|
|
0.89 |
% |
|
|
0.62 |
% |
|
|
5.23 |
% |
|
3/31/2023 |
|
|
$ |
13.07 |
|
|
|
0.48 |
|
|
|
(0.99 |
) |
|
|
(0.51 |
) |
|
|
(0.55 |
) |
|
— |
|
|
(0.55 |
) |
|
$ |
12.01 |
|
|
|
(3.48 |
)% |
|
$ |
45,489 |
|
|
|
0.93 |
% |
|
|
0.89 |
% |
|
|
0.61 |
% |
|
|
4.17 |
% |
|
3/31/2022 |
|
|
$ |
12.75 |
|
|
|
0.26 |
|
|
|
0.39 |
|
|
|
0.65 |
|
|
|
(0.33 |
) |
|
— |
|
|
(0.33 |
) |
|
$ |
13.07 |
|
|
|
5.05 |
% |
|
$ |
94,443 |
|
|
|
0.79 |
% |
|
|
0.75 |
% |
|
|
0.61 |
% |
|
|
1.91 |
% |
|
3/31/2021 |
|
|
$ |
7.88 |
|
|
|
0.21 |
|
|
|
4.88 |
|
|
|
5.09 |
|
|
|
(0.22 |
) |
|
— |
|
|
(0.22 |
) |
|
$ |
12.75 |
|
|
|
65.24 |
% |
|
$ |
40,292 |
|
|
|
0.93 |
% |
|
|
0.91 |
% |
|
|
0.62 |
% |
|
|
1.96 |
% |
|
3/31/2020 |
|
|
$ |
10.17 |
|
|
|
0.29 |
|
|
|
(2.29 |
) |
|
|
(2.00 |
) |
|
|
(0.29 |
) |
|
— |
|
|
(0.29 |
) |
|
$ |
7.88 |
|
|
|
(20.29 |
)% |
|
$ |
27,523 |
|
|
|
0.80 |
% |
|
|
0.77 |
% |
|
|
0.62 |
% |
|
|
2.84 |
% |
|
|
DoubleLine Shiller Enhanced International
CAPE® -
Class N: |
|
|
3/31/2024 |
|
|
$ |
12.01 |
|
|
|
0.58 |
|
|
|
0.40 |
|
|
|
0.98 |
|
|
|
(0.64 |
) |
|
— |
|
|
(0.64 |
) |
|
$ |
12.35 |
|
|
|
8.59 |
% |
|
$ |
9,116 |
|
|
|
1.17 |
% |
|
|
1.14 |
% |
|
|
0.87 |
% |
|
|
4.88 |
% |
|
3/31/2023 |
|
|
$ |
13.07 |
|
|
|
0.47 |
|
|
|
(1.01 |
) |
|
|
(0.54 |
) |
|
|
(0.52 |
) |
|
— |
|
|
(0.52 |
) |
|
$ |
12.01 |
|
|
|
(3.73 |
)% |
|
$ |
9,111 |
|
|
|
1.20 |
% |
|
|
1.16 |
% |
|
|
0.86 |
% |
|
|
4.13 |
% |
|
3/31/2022 |
|
|
$ |
12.76 |
|
|
|
0.22 |
|
|
|
0.39 |
|
|
|
0.61 |
|
|
|
(0.30 |
) |
|
— |
|
|
(0.30 |
) |
|
$ |
13.07 |
|
|
|
4.70 |
% |
|
$ |
6,011 |
|
|
|
1.03 |
% |
|
|
0.99 |
% |
|
|
0.86 |
% |
|
|
1.59 |
% |
|
3/31/2021 |
|
|
$ |
7.88 |
|
|
|
0.19 |
|
|
|
4.88 |
|
|
|
5.07 |
|
|
|
(0.19 |
) |
|
— |
|
|
(0.19 |
) |
|
$ |
12.76 |
|
|
|
64.90 |
% |
|
$ |
6,002 |
|
|
|
1.18 |
% |
|
|
1.16 |
% |
|
|
0.87 |
% |
|
|
1.85 |
% |
|
3/31/2020 |
|
|
$ |
10.17 |
|
|
|
0.27 |
|
|
|
(2.29 |
) |
|
|
(2.02 |
) |
|
|
(0.27 |
) |
|
— |
|
|
(0.27 |
) |
|
$ |
7.88 |
|
|
|
(20.50 |
)% |
|
$ |
13,044 |
|
|
|
1.05 |
% |
|
|
1.02 |
% |
|
|
0.87 |
% |
|
|
2.61 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
3/31/2023 |
|
3/31/2022 |
|
3/31/2021 |
|
3/31/2020 |
Portfolio
turnover rate for all share classes |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
| |
85% |
|
91% |
|
125% |
|
97% |
|
48% |
|
(a) Calculated based on
average shares outstanding during the
period. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Income (Loss) from Investment Operations: |
|
|
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets: |
|
For the
Year or
Period
Ended |
|
|
Net Asset
Value,
Beginning
of
Period |
|
|
Net
Investment
Income
(Loss)(a) |
|
|
Net Gain
(Loss) on
Investments
(Realized and Unrealized) |
|
|
Total from
Investment
Operations |
|
|
Distributions
from Net
Investment
Income |
|
|
Distributions
from Net
Realized
Gain |
|
Total
Distributions |
|
|
Net Asset
Value,
End of Period |
|
|
Total
Return(c) |
|
|
Net Assets,
End of
Period
(000’s) |
|
|
Expenses
Before
Advisory
Fees
(Waived) and
Other Fees
(Reimbursed)/ Recouped(d) |
|
|
Expenses
After
Investment
Advisory
Fees
(Waived)(d) |
|
|
Expenses
After
Advisory
Fees
(Waived) and
Other Fees
(Reimbursed)/ Recouped(d) |
|
|
Net
Investment
Income
(Loss)(d) |
|
|
|
DoubleLine Emerging Markets Local Currency Bond
Fund - Class I: |
|
|
3/31/2024 |
|
|
$ |
8.55 |
|
|
|
0.46 |
|
|
|
(0.02 |
) |
|
|
0.44 |
|
|
|
(0.30 |
) |
|
— |
|
|
(0.30 |
) |
|
$ |
8.69 |
|
|
|
5.21 |
% |
|
$ |
11,675 |
|
|
|
2.34 |
% |
|
|
2.34 |
% |
|
|
0.90 |
% |
|
|
5.32 |
% |
|
3/31/2023 |
|
|
$ |
8.91 |
|
|
|
0.35 |
|
|
|
(0.54 |
) |
|
|
(0.19 |
) |
|
|
(0.17 |
) |
|
— |
|
|
(0.17 |
) |
|
$ |
8.55 |
|
|
|
(1.92 |
)% |
|
$ |
9,423 |
|
|
|
2.45 |
% |
|
|
2.45 |
% |
|
|
0.90 |
% |
|
|
4.21 |
% |
|
3/31/2022 |
|
|
$ |
9.38 |
|
|
|
0.32 |
|
|
|
(0.68 |
) |
|
|
(0.36 |
) |
|
|
(0.11 |
) |
|
— |
|
|
(0.11 |
) |
|
$ |
8.91 |
|
|
|
(3.90 |
)% |
|
$ |
9,238 |
|
|
|
2.75 |
% |
|
|
2.75 |
% |
|
|
0.90 |
% |
|
|
3.51 |
% |
|
3/31/2021 |
|
|
$ |
8.64 |
|
|
|
0.30 |
|
|
|
0.61 |
|
|
|
0.91 |
|
|
|
(0.17 |
) |
|
— |
|
|
(0.17 |
) |
|
$ |
9.38 |
|
|
|
10.60 |
% |
|
$ |
9,604 |
|
|
|
2.57 |
% |
|
|
2.57 |
% |
|
|
0.90 |
% |
|
|
3.11 |
% |
|
3/31/2020 |
(b) |
|
$ |
10.00 |
|
|
|
0.25 |
|
|
|
(1.49 |
) |
|
|
(1.24 |
) |
|
|
(0.12 |
) |
|
— |
|
|
(0.12 |
) |
|
$ |
8.64 |
|
|
|
(12.52 |
)% |
|
$ |
8,664 |
|
|
|
6.23 |
% |
|
|
6.23 |
% |
|
|
0.90 |
% |
|
|
3.45 |
% |
|
|
DoubleLine Emerging Markets Local Currency Bond
Fund - Class N: |
|
|
3/31/2024 |
|
|
$ |
8.53 |
|
|
|
0.45 |
|
|
|
(0.02 |
) |
|
|
0.43 |
|
|
|
(0.28 |
) |
|
— |
|
|
(0.28 |
) |
|
$ |
8.68 |
|
|
|
5.10 |
% |
|
$ |
960 |
|
|
|
2.70 |
% |
|
|
2.70 |
% |
|
|
1.15 |
% |
|
|
5.16 |
% |
|
3/31/2023 |
|
|
$ |
8.90 |
|
|
|
0.33 |
|
|
|
(0.54 |
) |
|
|
(0.21 |
) |
|
|
(0.16 |
) |
|
— |
|
|
(0.16 |
) |
|
$ |
8.53 |
|
|
|
(2.21 |
)% |
|
$ |
209 |
|
|
|
2.66 |
% |
|
|
2.66 |
% |
|
|
1.15 |
% |
|
|
3.99 |
% |
|
3/31/2022 |
|
|
$ |
9.37 |
|
|
|
0.30 |
|
|
|
(0.68 |
) |
|
|
(0.38 |
) |
|
|
(0.09 |
) |
|
— |
|
|
(0.09 |
) |
|
$ |
8.90 |
|
|
|
(4.08 |
)% |
|
$ |
127 |
|
|
|
2.90 |
% |
|
|
2.90 |
% |
|
|
1.15 |
% |
|
|
3.27 |
% |
|
3/31/2021 |
|
|
$ |
8.64 |
|
|
|
0.27 |
|
|
|
0.61 |
|
|
|
0.88 |
|
|
|
(0.15 |
) |
|
— |
|
|
(0.15 |
) |
|
$ |
9.37 |
|
|
|
10.24 |
% |
|
$ |
96 |
|
|
|
2.82 |
% |
|
|
2.82 |
% |
|
|
1.15 |
% |
|
|
2.86 |
% |
|
3/31/2020 |
(b) |
|
$ |
10.00 |
|
|
|
0.23 |
|
|
|
(1.49 |
) |
|
|
(1.26 |
) |
|
|
(0.10 |
) |
|
— |
|
|
(0.10 |
) |
|
$ |
8.64 |
|
|
|
(12.69 |
)% |
|
$ |
87 |
|
|
|
6.48 |
% |
|
|
6.48 |
% |
|
|
1.15 |
% |
|
|
3.19 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
3/31/2023 |
|
3/31/2022 |
|
3/31/2021 |
|
3/31/2020 |
Portfolio
turnover rate for all share classes(c) |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
| |
31% |
|
20% |
|
36% |
|
20% |
|
13% |
|
(a) Calculated based on
average shares outstanding during the period.
(b) Commenced operations
on June 28, 2019. Total return is based on operations for a period
that is less than a year.
(c) Not annualized for
periods less than one year.
(d) Annualized for
periods less than one year. |
-295-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Income (Loss) from Investment Operations: |
|
|
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
|
For the
Year or
Period
Ended |
|
Net Asset
Value,
Beginning
of
Period |
|
|
Net
Investment
Income
(Loss)(a) |
|
|
Net Gain
(Loss) on
Investments
(Realized and
Unrealized) |
|
|
Total from
Investment
Operations |
|
|
Distributions
from Net
Investment
Income |
|
|
Distributions
from Net
Realized
Gain |
|
|
Distribution
in Excess |
|
|
Total
Distributions |
|
|
Net Asset
Value,
End of
Period |
|
|
Total
Return(c) |
|
|
Net Assets,
End of
Period (000’s) |
|
|
Expenses
Before
Advisory
Fees
(Waived) and
Other Fees
(Reimbursed)/ Recouped(d) |
|
|
Expenses
After
Investment
Advisory
Fees
(Waived)(d) |
|
|
Expenses
After
Advisory
Fees
(Waived) and
Other Fees
(Reimbursed)/ Recouped(d) |
|
|
Net
Investment
Income
(Loss)(d) |
|
|
DoubleLine Income Fund - Class I: |
|
3/31/2024 |
|
$ |
7.53 |
|
|
|
0.46 |
|
|
|
0.38 |
|
|
|
0.84 |
|
|
|
(0.57 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.57 |
) |
|
$ |
7.80 |
|
|
|
11.67 |
% |
|
$ |
79,772 |
|
|
|
0.88 |
% |
|
|
0.88 |
% |
|
|
0.65 |
% |
|
|
6.13 |
% |
3/31/2023 |
|
$ |
8.62 |
|
|
|
0.40 |
|
|
|
(1.09 |
) |
|
|
(0.69 |
) |
|
|
(0.40 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.40 |
) |
|
$ |
7.53 |
|
|
|
(8.10 |
)% |
|
$ |
50,732 |
|
|
|
0.83 |
% |
|
|
0.83 |
% |
|
|
0.65 |
% |
|
|
5.01 |
% |
3/31/2022 |
|
$ |
9.28 |
|
|
|
0.42 |
|
|
|
(0.63 |
) |
|
|
(0.21 |
) |
|
|
(0.44 |
) |
|
|
— |
|
|
|
(0.01 |
) |
|
|
(0.45 |
) |
|
$ |
8.62 |
|
|
|
(2.42 |
)% |
|
$ |
89,732 |
|
|
|
0.72 |
% |
|
|
0.72 |
% |
|
|
0.65 |
% |
|
|
4.55 |
% |
3/31/2021 |
|
$ |
8.05 |
|
|
|
0.36 |
|
|
|
1.20 |
|
|
|
1.56 |
|
|
|
(0.33 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.33 |
) |
|
$ |
9.28 |
|
|
|
19.70 |
% |
|
$ |
136,369 |
|
|
|
0.74 |
% |
|
|
0.74 |
% |
|
|
0.65 |
% |
|
|
4.07 |
% |
3/31/2020(b) |
|
$ |
10.00 |
|
|
|
0.24 |
|
|
|
(1.94 |
) |
|
|
(1.70 |
) |
|
|
(0.25 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.25 |
) |
|
$ |
8.05 |
|
|
|
(17.35 |
)% |
|
$ |
69,580 |
|
|
|
1.13 |
% |
|
|
1.13 |
% |
|
|
0.65 |
% |
|
|
4.07 |
% |
|
DoubleLine Income Fund - Class N: |
|
3/31/2024 |
|
$ |
7.54 |
|
|
|
0.45 |
|
|
|
0.37 |
|
|
|
0.82 |
|
|
|
(0.55 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.55 |
) |
|
$ |
7.81 |
|
|
|
11.38 |
% |
|
$ |
3,984 |
|
|
|
1.13 |
% |
|
|
1.13 |
% |
|
|
0.90 |
% |
|
|
5.92 |
% |
3/31/2023 |
|
$ |
8.63 |
|
|
|
0.38 |
|
|
|
(1.09 |
) |
|
|
(0.71 |
) |
|
|
(0.38 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.38 |
) |
|
$ |
7.54 |
|
|
|
(8.35 |
)% |
|
$ |
3,194 |
|
|
|
1.08 |
% |
|
|
1.08 |
% |
|
|
0.90 |
% |
|
|
4.73 |
% |
3/31/2022 |
|
$ |
9.30 |
|
|
|
0.39 |
|
|
|
(0.63 |
) |
|
|
(0.24 |
) |
|
|
(0.42 |
) |
|
|
— |
|
|
|
(0.01 |
) |
|
|
(0.43 |
) |
|
$ |
8.63 |
|
|
|
(2.75 |
)% |
|
$ |
12,838 |
|
|
|
1.03 |
% |
|
|
1.03 |
% |
|
|
0.90 |
% |
|
|
4.30 |
% |
3/31/2021 |
|
$ |
8.05 |
|
|
|
0.34 |
|
|
|
1.22 |
|
|
|
1.56 |
|
|
|
(0.31 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.31 |
) |
|
$ |
9.30 |
|
|
|
19.67 |
% |
|
$ |
2,676 |
|
|
|
0.99 |
% |
|
|
0.99 |
% |
|
|
0.90 |
% |
|
|
3.84 |
% |
3/31/2020(b) |
|
$ |
10.00 |
|
|
|
0.23 |
|
|
|
(1.94 |
) |
|
|
(1.71 |
) |
|
|
(0.24 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.24 |
) |
|
$ |
8.05 |
|
|
|
(17.46 |
)% |
|
$ |
592 |
|
|
|
1.26 |
% |
|
|
1.26 |
% |
|
|
0.90 |
% |
|
|
4.13 |
% |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
|
3/31/2023 |
|
|
3/31/2022 |
|
|
3/31/2021 |
|
|
3/31/2020 |
|
Portfolio
turnover rate for all share classes(c) |
|
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
66% |
|
|
|
23% |
|
|
|
14% |
|
|
|
30% |
|
|
|
33% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(a) Calculated based on
average shares outstanding during the period.
(b) Commenced operations
on September 3, 2019. Total return is based on operations for a
period that is less than a year.
(c) Not annualized for
periods less than one year.
(d) Annualized for
periods less than one year. |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Income (Loss)
from Investment
Operations: |
|
|
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net
Assets: |
|
For the
Year or
Period
Ended |
|
Net
Asset
Value,
Beginning
of
Period |
|
|
Net
Investment
Income
(Loss)(a) |
|
|
Net Gain
(Loss) on
Investments
(Realized and
Unrealized) |
|
|
Total
from
Investment
Operations |
|
|
Distributions
from Net
Investment
Income |
|
|
Distributions
from Net
Realized
Gain |
|
|
|
|
|
Total Distributions |
|
|
Net Asset
Value,
End of
Period |
|
|
Total
Return(c) |
|
|
Net Assets,
End of
Period
(000’s) |
|
|
Expenses
Before
Advisory Fees
(Waived) and
Other Fees
(Reimbursed)/ Recouped(d) |
|
|
Expenses
After
Investment
Advisory
Fees
(Waived)(d) |
|
|
Expenses
After
Advisory Fees
(Waived) and
Other Fees
(Reimbursed)/ Recouped(d) |
|
|
Net
Investment
Income
(Loss)(d) |
|
|
DoubleLine Multi-Asset Trend Fund (Consolidated)
- Class I: |
|
3/31/2024 |
|
$ |
7.98 |
|
|
|
0.41 |
|
|
|
0.08 |
|
|
|
0.49 |
|
|
|
(0.38 |
) |
|
|
— |
|
|
|
|
| |
|
(0.38 |
) |
|
$ |
8.09 |
|
|
|
6.37 |
% |
|
$ |
12,996 |
|
|
|
1.41 |
% |
|
|
1.11 |
% |
|
|
0.34 |
% |
|
|
5.23 |
% |
3/31/2023 |
|
$ |
10.56 |
|
|
|
0.29 |
|
|
|
(1.25 |
) |
|
|
(0.96 |
) |
|
|
(1.62 |
) |
|
|
— |
|
|
|
|
| |
|
(1.62 |
) |
|
$ |
7.98 |
|
|
|
(10.67 |
)% |
|
$ |
12,849 |
|
|
|
2.14 |
% |
|
|
1.87 |
% |
|
|
0.38 |
% |
|
|
3.21 |
% |
3/31/2022 |
|
$ |
9.87 |
|
|
|
0.17 |
|
|
|
0.73 |
|
|
|
0.90 |
|
|
|
(0.20 |
) |
|
|
(0.01 |
) |
|
|
|
| |
|
(0.21 |
) |
|
$ |
10.56 |
|
|
|
9.12 |
% |
|
$ |
13,761 |
|
|
|
5.51 |
% |
|
|
5.21 |
% |
|
|
0.35 |
% |
|
|
1.68 |
% |
3/31/2021(b) |
|
$ |
10.00 |
|
|
|
0.01 |
|
|
|
(0.13 |
) |
|
|
(0.12 |
) |
|
|
(0.01 |
) |
|
|
— |
|
|
|
|
| |
|
(0.01 |
) |
|
$ |
9.87 |
|
|
|
(1.15 |
)% |
|
$ |
10,547 |
|
|
|
11.70 |
% |
|
|
11.39 |
% |
|
|
0.34 |
% |
|
|
1.61 |
% |
|
DoubleLine Multi-Asset Trend Fund (Consolidated)
- Class N: |
|
3/31/2024 |
|
$ |
7.99 |
|
|
|
0.38 |
|
|
|
0.08 |
|
|
|
0.46 |
|
|
|
(0.36 |
) |
|
|
— |
|
|
|
|
| |
|
(0.36 |
) |
|
$ |
8.09 |
|
|
|
5.97 |
% |
|
$ |
226 |
|
|
|
1.64 |
% |
|
|
1.34 |
% |
|
|
0.57 |
% |
|
|
4.84 |
% |
3/31/2023 |
|
$ |
10.56 |
|
|
|
0.27 |
|
|
|
(1.24 |
) |
|
|
(0.97 |
) |
|
|
(1.60 |
) |
|
|
— |
|
|
|
|
| |
|
(1.60 |
) |
|
$ |
7.99 |
|
|
|
(10.78 |
)% |
|
$ |
365 |
|
|
|
2.43 |
% |
|
|
2.17 |
% |
|
|
0.64 |
% |
|
|
2.98 |
% |
3/31/2022 |
|
$ |
9.87 |
|
|
|
0.14 |
|
|
|
0.73 |
|
|
|
0.87 |
|
|
|
(0.17 |
) |
|
|
(0.01 |
) |
|
|
|
| |
|
(0.18 |
) |
|
$ |
10.56 |
|
|
|
8.85 |
% |
|
$ |
205 |
|
|
|
6.04 |
% |
|
|
5.74 |
% |
|
|
0.60 |
% |
|
|
1.33 |
% |
3/31/2021(b) |
|
$ |
10.00 |
|
|
|
0.01 |
|
|
|
(0.13 |
) |
|
|
(0.12 |
) |
|
|
(0.01 |
) |
|
|
— |
|
|
|
|
| |
|
(0.01 |
) |
|
$ |
9.87 |
|
|
|
(1.17 |
)% |
|
$ |
130 |
|
|
|
12.06 |
% |
|
|
11.75 |
% |
|
|
0.58 |
% |
|
|
1.52 |
% |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year or Period Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2024 |
|
|
3/31/2023 |
|
|
3/31/2022 |
|
|
3/31/2021 |
|
Portfolio
turnover rate for all share classes(c) |
|
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
17% |
|
|
|
119% |
|
|
|
183% |
|
|
|
0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(a) Calculated based on
average shares outstanding during the period.
(b) Commencement of
operations on February 26, 2021. Total return is based on operations
for a period that is less than one year.
(c) Not annualized for
periods less than one year.
(d) Annualized for
periods less than one year. |
-296-
PRIVACY
POLICY
What
Does DoubleLine Do With Your Personal Information?
This
notice provides information about how DoubleLine (“we,” “our” and “us”)
collects, discloses, and protects your personal information, and how you might
choose to limit our ability to disclose certain information about you. Please
read this notice carefully.
Why
We Need Your Personal Information
All
financial companies need to disclose customers’ personal information to run
their everyday businesses, to appropriately tailor the services offered (where
applicable), and to comply with our regulatory obligations. Accordingly,
information, confidential and proprietary, plays an important role in the
success of our business. However, we recognize that you have entrusted us with
your personal and financial data, and we recognize our obligation to keep this
information secure. Maintaining your privacy is important to us, and we hold
ourselves to a high standard in its safekeeping and use. Most importantly,
DoubleLine does not sell its customers’ non‑public personal information to any
third parties. DoubleLine uses its customers’ non‑public personal information
primarily to complete financial transactions that its customers request (where
applicable), to make its customers aware of other financial products and
services offered by a DoubleLine affiliated company, and to satisfy obligations
we owe to regulatory bodies.
Information
We May Collect
We
may collect various types of personal data about you, including:
• |
|
Your
personal identification information, which may include your name and
passport information, your IP address, politically exposed person (“PEP”)
status, and such other information as may be necessary for us to provide
our services to you and to complete our customer due diligence process and
discharge anti-money laundering obligations; |
• |
|
Your
contact information, which may include postal address and e‑mail address
and your home and mobile telephone numbers; |
• |
|
Your
family relationships, which may include your marital status, the identity
of your spouse and the number of children that you
have; |
• |
|
Your
professional and employment information, which may include your level of
education and professional qualifications, your employment, employer’s
name and details of directorships and other offices which you may hold;
and |
• |
|
Financial
information, risk tolerance, sources of wealth and your assets, which may
include details of shareholdings and beneficial interests in financial
instruments, your bank details and your credit
history. |
Where
We Obtain Your Personal Information
• |
|
Information
we receive about you on applications or other
forms; |
• |
|
Information
you may give us orally; |
• |
|
Information
about your transactions with us or others; |
• |
|
Information
you submit to us in correspondence, including emails or other electronic
communications; and |
• |
|
Information
about any bank account you use for transfers between your bank account and
any DoubleLine investment account, including information provided when
effecting wire transfers. |
Information
Collected From Websites
Websites
maintained by DoubleLine or its service providers may use a variety of
technologies to collect information that help DoubleLine and its service
providers understand how the website is used. Information collected from your
web browser
-297-
(including
small files stored on your device that are commonly referred to as “cookies”)
allow the websites to recognize your web browser and help to personalize and
improve your user experience and enhance navigation of the website. You can
change your cookie preferences by changing the setting on your web browser to
delete or reject cookies. If you delete or reject cookies, some website pages
may not function properly. Our websites may contain links that are maintained or
controlled by third parties with privacy policies that may differ, in some cases
significantly, from the privacy policies described in this notice. Please read
the privacy policies of such third parties and understand that accessing their
websites is at your own risk. Please contact your DoubleLine representative if
you would like to receive more information about the privacy policies of third
parties.
We
also use web analytics services, which currently include but are not limited to
Google Analytics and Adobe Analytics. Such web analytics services use cookies
and similar technologies to evaluate visitor’s use of the domain, compile
statistical reports on domain activity, and provide other services related to
our websites. For more information about Google Analytics, or to opt out of
Google Analytics, please go to https://tools.google.com/dlpage/gaoptout. For
more information about Adobe Analytics, or to opt out of Adobe Analytics, please
go to: http://www.adobe.com/privacy/opt‑out.html.
How
and Why We May Disclose Your Information
DoubleLine
does not disclose any non‑public personal information about our customers or
former customers without the customer’s authorization, except that we may
disclose the information listed above, as follows:
• |
|
It
may be necessary for DoubleLine to provide information to nonaffiliated
third parties in connection with our performance of the services we have
agreed to provide to you. For example, it might be necessary to do so in
order to process transactions and maintain
accounts. |
• |
|
DoubleLine
will release any of the non‑public information listed above about a
customer if directed to do so by that customer or if DoubleLine is
required or authorized by law to do so, such as for the purpose of
compliance with regulatory requirements or in the case of a court order,
legal investigation, or other properly executed governmental
request. |
• |
|
In
order to alert a customer to other financial products and services offered
by an affiliate, DoubleLine may disclose information to an affiliate,
including companies using the DoubleLine name. Such products and services
may include, for example, other investment products offered by a
DoubleLine company. If you prefer that we not disclose non‑public personal
information about you to our affiliates for this purpose, you may direct
us not to make such disclosures (other than disclosures permitted by law)
by contacting us at [email protected] or at 1 (800) 285‑1545. If you
limit this sharing and you have a joint account, your decision will be
applied to all owners of the account. |
We
will limit access to your personal account information to those agents and
vendors who need to know that information to provide products and services to
you. We do not share your information to nonaffiliated third parties for
marketing purposes. We maintain physical, electronic, and procedural safeguards
to guard your non‑public personal information.
Notice
Related To The California Consumer Privacy Act (CCPA) And To “Natural Persons”
Residing In The State Of California
DoubleLine
collects and uses information that identifies, describes, references, links or
relates to, or is associated with, a particular consumer or device (“Personal
Information”). Personal Information we collect from our customers and consumers
is covered under the Gramm-Leach-Bliley Act (“GLBA”) and is therefore excluded
from the scope of the California Consumer Privacy Act, as amended by the
California Privacy Rights Act (together, “CCPA”).
However,
for California residents who are not DoubleLine customers or consumers, as those
terms are defined by GLBA, the personal information we collect about you is
subject to the CCPA. As such, you have privacy rights with respect to your
personal information. Please review the following applicable California privacy
notice that is available at https://www.doubleline.com, or by contacting us at
[email protected] or at 1 (800) 285‑1545.
CA
Privacy Notice for Website Visitors, Media Subscribers and Business
Representatives
CA
Privacy Notice for Employees
Notice
to “Natural Persons” Residing In The European Economic Area (The “EEA”)
If
you reside in the EEA, we may transfer your personal information outside the
EEA, and will ensure that it is protected and transferred in a manner consistent
with legal requirements applicable to the information. This can be done in a
number of different ways, for instance:
• |
|
the
country to which we send the personal information may have been assessed
by the European Commission as providing an “adequate” level of protection
for personal data; or |
-298-
• |
|
the
recipient may have signed a contract based on standard contractual clauses
approved by the European Commission. |
In
other circumstances, the law may permit us to otherwise transfer your personal
information outside the EEA. In all cases, however, any transfer of your
personal information will be compliant with applicable data protection
law.
Notice
To Investors In Cayman Islands Investment Funds
If
you are a natural person, please review this notice as it applies to you
directly. If you are a legal representative of a corporate or entity investor
that provides us with any personal information about individuals (i.e., natural
persons), you agree to furnish a copy of this notice to each such individual or
otherwise advise them of its content.
Any
international transfer of personal information will be compliant with the
requirements of the Data Protection Act, 2017 of the Cayman Islands.
Privacy
For Children
DoubleLine
is concerned about the privacy of children. Our website and our services are not
targeted at individuals under 18 years of age, and we do not knowingly
collect any personal information from an individual under 18. If we learn that a
child under the age of 13 (or such higher age as required by applicable law) has
submitted personally identifiable information online without parental consent,
we will take all reasonable measures to delete such information from its
databases and to not use such information for any purpose (except where
necessary to protect the safety of the child or others as required or allowed by
law). If you become aware of any personally identifiable information, we have
collected from children under 13 (or such higher age as required by applicable
law), please contact us at
[email protected] or at 1 (800) 285‑1545. We do
not sell or share any personal information and have no actual knowledge about
selling or sharing personal information of individuals under the age of
16.
Retention
Of Personal Information And Security
Your
personal information will be retained for as long as required:
• |
|
for
the purposes for which the personal information was
collected; |
• |
|
in
order to establish or defend legal rights or obligations or to satisfy any
reporting or accounting obligations; and/or |
• |
|
as
required by data protection laws and any other applicable laws or
regulatory requirements, including, but not limited to, U.S. laws and
regulations applicable to our business. |
We
will undertake commercially reasonable efforts to protect the personal
information that we hold with appropriate security measures.
Access
To And Control Of Your Personal Information
Depending
on your country of domicile or applicable law, you may have the following rights
in respect of the personal information about you that we process:
• |
|
the
right to access and port personal information; |
• |
|
the
right to rectify personal information; |
• |
|
the
right to restrict the use of personal
information; |
• |
|
the
right to request that personal information is erased;
and |
• |
|
the
right to object to processing of personal
information. |
Although
you have the right to request that your personal information be deleted at any
time, applicable laws or regulatory requirements may prohibit us from doing so.
In addition, if you invest in a DoubleLine fund through a financial
intermediary, DoubleLine may not have access to personal information about
you.
-299-
If
you wish to exercise any of the rights set out above, please contact us at
[email protected] or at 1 (800) 285‑1545.
Changes
To DoubleLine’s Privacy Policy
DoubleLine
reserves the right to modify its privacy policy at any time, but in the event
that there is a change that affects the content of this notice materially,
DoubleLine will promptly inform its customers of such changes in accordance with
applicable law.
-300-
|
| |
| |
|
|
DoubleLine
Funds |
You can
find more information about the Funds in the following documents:
Statement
of Additional Information (SAI)
The Funds’ SAI
provides more details about each Fund’s investments and its policies. A current
SAI is on file with the Securities and Exchange Commission (SEC) and is
incorporated by reference into this document and is legally considered part of
this Prospectus. The SAI is available on the EDGAR Database on the SEC’s
Internet site at http://www.sec.gov, and may be obtained, after paying a
duplicating fee, by electronic request at
[email protected].
Annual
and Semi-Annual Reports
Additional
information about each Fund’s investments is or will be available in the Funds’
annual and semi-annual reports to shareholders and in Form N-CSR. The Funds’
annual report contains a discussion of the market conditions and investment
strategies that affected the Funds’ performance during the Funds’ most recent
fiscal year. In Form N-CSR, you will find the Funds’ annual and semi-annual
financial statements.
To
Obtain Information
You can obtain
a free copy of these documents, request other information, or make general
inquiries about the Funds by contacting the Funds:
By Email:
By Internet:
doubleline.com/fund-documents/
By Telephone:
Call
877-DLine11 (877-354-6311) or your financial intermediary.
By Mail:
Write to:
DoubleLine
Funds
c/o U.S. Bank
Global Fund Services
P.O. Box
701
Milwaukee, WI
53201-0701
Reports
and other information about the Funds (including the SAI) are available on the
EDGAR Database on the SEC’s Internet site at http://www.sec.gov, and copies of
this information may be obtained, after paying a duplicating fee, by electronic
request at
[email protected].
If someone
makes a statement about a Fund that is not in this Prospectus, you should not
rely upon that information. Neither the Funds nor the distributor is offering to
sell shares of a Fund to any person to whom a Fund may not lawfully sell its
shares.
DoubleLine || 2002 N. Tampa Street, Suite 200 || Tampa, FL 33602 || (877) DLINE11 or (877) 354-6311
|
|
|
| |
DL‑PRO |
|
| |
Investment Company Act File Number 811-22378 |