SEC Company Response from METROPOLITAN WEST FUNDS (CIK 0001028621) — Jul 21, 2021
METROPOLITAN WEST FUNDS (CIK 0001028621)
Date: July 21, 2021 · CIK: 0001028621 · Accession: 0001193125-21-220560
AI Filing Summary & Sentiment
File numbers found in text: 333-18737, 811-07989
Letter
Paul Hastings LLP
101 California Street, Forty-Eighth Floor
San Francisco, CA 94111
telephone (415) 856-7000
facsimile (415) 856-7100
www.paulhastings.com
July 21, 2021
VIA EDGAR CORRESPONDENCE
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Metropolitan West Funds - File Nos. 333-18737 and 811-07989
Ladies and Gentlemen:
On behalf of the Metropolitan West Funds (the “Registrant”), we hereby respond to the oral comments provided on June 23, 2021 by Ms. Alison T. White of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) with respect to the Registrant’s Post-Effective Amendment No. 75 to its Registration Statement filed on May 13, 2021 (the “Registration Statement”), which contained disclosure with respect to two new series of the Registrant, the Metropolitan West ESG Securitized Fund (the “ESG Securitized Fund”) and the Metropolitan West Opportunistic High Income Credit Fund (the “Opportunistic High Income Credit Fund”).
The Registrant’s responses to those comments are provided below. We have restated the substance of those comments to the best of our understanding. Capitalized terms have the same respective meanings as in the Registration Statement, unless otherwise indicated. Revised disclosure intended to address these comments will be included in the Registrant’s annual update to its registration statement (the “Annual Update”), which is expected to be filed on or about July 26, 2021. Per the request of Ms. White, the Registrant will provide completed disclosure for review prior to the effective date of the Annual Update.
COVER PAGE
1. Comment: Please update the Funds’ EDGAR series/Class IDs with their ticker symbols.
Response: Comment accepted. The Registrant has included that information in the Annual Update.
TABLE OF CONTENTS
2. Comment: Please include Environmental Social and Governance Investing Risk in the Table of Contents.
Response: Comment accepted. The Registrant has included that risk in the table of contents of the Annual Update.
FEE TABLES
Securities and Exchange Commission
July 21, 2021
Page 2
3. Comment: Please conform the second sentence of each Fund’s fee table preamble to the exact wording of Form N-1A, i.e., “You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the tables and examples below.”
Response: Comment accepted. The Registrant has revised that disclosure accordingly.
4. Comment: In the preamble to each Fund’s fee table, please change “buy and hold” to “buy, hold and sell” as required by Item 3 of Form N-1A.
Response: Comment accepted. The Registrant has revised that disclosure accordingly.
5. Comment: Please advise supplementally how the Registrant estimated each Fund’s Other Expenses and determined such amounts were reasonable.
Response: Other Expenses are estimated based on the experience of the Adviser and the Administrator with other start-up funds, primarily those relatively new funds that are series of the Registrant.
6. Comment: Footnote 3 to each Fund’s fee table that states the Adviser may recoup fees within three years but does not say when that three-year period commences; please clarify.
Response: Comment accepted. The Registrant has supplemented that disclosure to state as follows: “The Adviser may recoup reduced fees and expenses only within three years of the waiver or reimbursement, provided that the recoupment does not cause the Fund’s annual expense ratio to exceed the lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment.
PRINCIPAL INVESTMENT STRATEGIES
7. Comment: Please advise the Staff how the Funds will value derivatives for purposes of their 80% policies.
Response: Derivatives will count toward each Fund’s 80% level, and will be valued for that purpose using their market value rather than their notional value.
8. Comment: Please replace “include, without limitation” with “are” in the statement that “[i]nstruments considered to be economically tied to emerging market countries include, without limitation, those that are principally traded in an emerging market country…” and revise the disclosure as appropriate.
Response: Comment accepted. The Registrant has revised that disclosure as follows:
“Instruments considered to be economically tied to emerging market countries include, without limitation, are (i) those that are principally traded in an emerging
Securities and Exchange Commission
July 21, 2021
Page 3
market country, or (ii) those that are issued by: (ia) an issuer organized under the laws of or maintaining a principal place of business in an emerging market country, (iib) an issuer that derives or is expected to derive 50% or more of its total revenues, earnings or profits from business activity in an emerging market country, or that maintains or is expected to maintain 50% or more of its employees, assets, investments or operations in an emerging market country, or (iiic) a governmental or quasi-governmental entity of an emerging market country.”
9. Comment: Please revise the derivatives disclosure throughout the filing to discuss only those derivatives that the Funds will actually use as part of their principal investment strategies, the specific purposes for which those derivatives will be used and the risk factors associated with the use of those derivatives. For additional guidance, see the letter from Barry Miller to the ICI dated July 30, 2010 and revise the disclosure as appropriate. See also IM Guidance Update (No. 2013-05).
Response: Comment accepted. The Registrant has revised that disclosure for the ESG Securitized Fund as follows:
“Derivatives, such as options, futures and swaps, are used in an effort to hedge investments, for risk management, or to increase income or gains for the Fund. The types of derivatives in which the Fund may will principally invest may include, but are not limited to are options, futures and swap agreements, as well as: (i) securitization structures securitized instruments that isolate specific cash flows, such as Principal only (PO) bonds or Interest only (IO) bonds; (ii) tiered index bonds that reference a series of cash securitizations (such as CMBX, a non-agency securitized index where the underlying assets are commercial mortgage-backed securities), and (iii) TBAs (to-be-announced securities), which are traded as agency mortgage-backed securities prior to the underlying mortgage loans being allocated to the pool (giving them a derivative nature).”
Please see the response to Comment 11(e) below for revisions that describe the nature of the derivative instruments referenced in (i), (ii) and (iii) above.
The Registrant has revised the related disclosure for the Opportunistic High Income Credit Fund as follows:
“Derivatives are used in an effort to hedge investments, for risk management, or to increase income or gains for the Fund. The Fund may invest in types of derivative instruments in which the Fund will principally invest are, primarily currency and other futures, forward contracts, options, and swap agreements (typically interest rate swaps, index-linked swaps, total return swaps and credit default swaps) and swap agreements.”
Securities and Exchange Commission
July 21, 2021
Page 4
10. Comment: Please replace “may include, but are not limited to” with “are” in the statement that “[t]he derivatives in which the Fund may invest may include, but are not limited to….” Revise the disclosure to list all the derivatives the Fund may use as part of its principal investment strategies, as also noted in Comment 10.
Response: Comment accepted. Please see the Registrant’s response to Comment 10 above.
11. With respect to the ESG Securitized Fund:
a. Comment: Please explain why the Registrant believes that satisfying “one or more” positive-screening criteria to support sustainable initiatives is sufficient to justify characterizing the Fund as an ESG fund.
Response: Comment acknowledged. The Adviser evaluates the Fund’s potential investments based on both fundamental and sustainability factors. The Adviser implements a positive ESG screening approach to securitized investing, which includes using a positive screening matrix to review each purchase by the Fund for social, environmental and/or sustainability factors and ensuring a minimum of 80% of net assets are positively screened and meet positive-screen criteria as defined in the Adviser’s policies and procedures. Therefore, at least 80% of the Fund’s net assets will be invested in issuers meeting the Adviser’s ESG screening process as described in the prospectus.
b. Comment: Please disclose more information about the nature of the securitized vehicles in which the Fund will invest and the degree to which those vehicles will focus on sustainable initiatives, including the types of initiatives. If the deal terms, investment analysis/thesis, or investment liquidity of these vehicles differ materially from other forms of asset backed securities the Adviser would typically consider, that should be addressed in revised disclosure as well.
Response: Comment accepted. The Registrant has supplemented the Fund’s Item 4 disclosure with the following:
“The types of ESG securitized vehicles in which the Fund invests typically include, but are not limited to: (i) agency mortgage-backed securities and private label residential mortgage-backed securities that are collateralized by mortgage loans originated to support energy-efficient home improvements or with a financial inclusion component, focusing on promoting affordability and/or lending to low-to-moderate income individuals and communities; (ii) commercial mortgage-backed securities collateralized by certified energy efficient commercial properties (usually LEED-certified but also including alternative green building certifications such as BREEAM, NABERS, and Energy Star), or by loans focused on promoting affordable rental housing, typically through a landlord commitment and/or requirement to sustain below-market rents in existing or new construction multifamily properties; and (iii) asset-backed securities with an energy efficiency component, such as lower-carbon transportation and green asset transportation. Other securities considered for positive ESG screening include ESG collateralized loan obligations that often also include investment restrictions in certain sectors such as production and/or sale of
Securities and Exchange Commission
July 21, 2021
Page 5
weapons or tobacco-related products. The investment analysis and liquidity of these securitized vehicles do not differ materially from other forms of asset-backed securities the Adviser would typically consider for its other registered funds, except for the addition of the positive ESG screening process.”
c. Comment: With respect to the statement that “[i]n implementing its positive-screening ESG strategy, the Adviser evaluates potential investments based on a number of factors”, what information and analysis does the Adviser use to evaluate these factors? Please disclose.
Response: Comment accepted. The Registrant has supplemented that disclosure as follows:
“In conducting its positive ESG screening process, the Adviser reviews for environmental, social and/or sustainable features related to the underlying security collateral and issuer programs, evidenced by marketing materials, borrower underwriting criteria, loan tapes (electronic files that capture lending product data from a financial firm’s internal systems), additional issuer disclosures and clarification from engagement, as well as third-party reports such as rating agency presales and second-party opinions where applicable. Typically, there is significant disclosure around issuer lending programs that offers insight into the environmental, social and/or sustainable nature of a securitization, such as supporting energy-efficient property improvements (environmental positive) and/or supporting affordable rental housing access and availability (social positive). The Adviser will also engage with issuers to obtain additional materials, clarification, and/or data points to support the viability of their lending and securitization programs and/or confirm their compliance with industry standards such as the International Capital Market Association (ICMA) Green, Social and/or Sustainable bond principles. The Adviser will continue to monitor the market for additional information sources as well as issuer best-practices to enhance its diligence and positive screening approach.”
d. Comment: Please describe the Adviser’s due diligence practices in applying its ESG screening criteria to potential investments. This includes what underlying data the Adviser will review to determine whether an investment meets its ESG criteria, and the sources of that data. For example: directly engaging with portfolio companies to better understand their ESG risks and practices; reviewing third-party scoring/data; and/or conducting research using other types of information from either the Fund or an outside source.
Response: Comment accepted. Please see the Registrant’s response to Comment 11(c) above.
e. Comment: Please disclose in the filing in plain English what PO bonds, IO bonds, tiered index bonds and TBAs are. Please also define the acronym TBA. Lastly, it is unclear why you mention these instruments here, but nowhere else in the prospectus or SAI. Please advise or revise.
Securities and Exchange Commission
July 21, 2021
Page 6
Response: Comment accepted. The Registrant has added descriptions of these securities to the Item 9 disclosure under “Additional Fund Information – Principal Investment Strategies – ESG Securitized Fund,” as follows:
“The types of derivatives in which the Fund will principally invest are options, futures and swap agreements, as well as: (i) securitized instruments that isolate specific cash flows, such as Principal only (PO) bonds or Interest only (IO) bonds; (ii) tiered index bonds that reference a series of cash securitizations (such as CMBX, a non-agency securitized index where the underlying assets are commercial mortgage-backed securities), and (iii) TBAs (to-be-announced securities). PO and IO bonds are debt obligations that strip the principal cash flows from the interest cash flows of mortgage collateral, such that the principal cash flows form one bond, the PO, and the interest cash flows form a separate bond, the IO. Tiered index bonds are derivative instruments for which the interest rate is tied to a specified index or market rate. So long as this index or market rate is below a predetermined “strike” rate, the interest rate on the tiered index bond remains fixed; if, however, the specified index or market rate rises above the “strike” rate, the interest rate on the tiered index bond will decrease. TBAs are to-be-announced mortgage pass-through securities, which settle on a delayed delivery basis, thus giving them a derivative nature. Please see “Securities and Techniques Used by the Funds” in the Statement of Additional Information for additional information regarding those investment types.”
In addition, the Registrant has revised the disclosure in the SAI under the section called “Securities and Techniques Used by the Funds,” which describes the various investment types and related risks, as follows:
Under “Asset-Backed Securities” on page 10 of the Registration Statement’s SAI:
“The Funds may invest in securities issued by trusts and special purpose corporations with principal and interest payouts backed by, or supported by, any of various types of assets. These assets typically include receivables related to the purchase of automobiles, credit card loans, and hom
Show Raw Text
CORRESP 1 filename1.htm CORRESP Paul Hastings LLP 101 California Street, Forty-Eighth Floor San Francisco, CA 94111 telephone (415) 856-7000 facsimile (415) 856-7100 www.paulhastings.com July 21, 2021 VIA EDGAR CORRESPONDENCE Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Re: Metropolitan West Funds - File Nos. 333-18737 and 811-07989 Ladies and Gentlemen: On behalf of the Metropolitan West Funds (the “Registrant”), we hereby respond to the oral comments provided on June 23, 2021 by Ms. Alison T. White of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) with respect to the Registrant’s Post-Effective Amendment No. 75 to its Registration Statement filed on May 13, 2021 (the “Registration Statement”), which contained disclosure with respect to two new series of the Registrant, the Metropolitan West ESG Securitized Fund (the “ESG Securitized Fund”) and the Metropolitan West Opportunistic High Income Credit Fund (the “Opportunistic High Income Credit Fund”). The Registrant’s responses to those comments are provided below. We have restated the substance of those comments to the best of our understanding. Capitalized terms have the same respective meanings as in the Registration Statement, unless otherwise indicated. Revised disclosure intended to address these comments will be included in the Registrant’s annual update to its registration statement (the “Annual Update”), which is expected to be filed on or about July 26, 2021. Per the request of Ms. White, the Registrant will provide completed disclosure for review prior to the effective date of the Annual Update. COVER PAGE 1. Comment: Please update the Funds’ EDGAR series/Class IDs with their ticker symbols. Response: Comment accepted. The Registrant has included that information in the Annual Update. TABLE OF CONTENTS 2. Comment: Please include Environmental Social and Governance Investing Risk in the Table of Contents. Response: Comment accepted. The Registrant has included that risk in the table of contents of the Annual Update. FEE TABLES Securities and Exchange Commission July 21, 2021 Page 2 3. Comment: Please conform the second sentence of each Fund’s fee table preamble to the exact wording of Form N-1A, i.e., “You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the tables and examples below.” Response: Comment accepted. The Registrant has revised that disclosure accordingly. 4. Comment: In the preamble to each Fund’s fee table, please change “buy and hold” to “buy, hold and sell” as required by Item 3 of Form N-1A. Response: Comment accepted. The Registrant has revised that disclosure accordingly. 5. Comment: Please advise supplementally how the Registrant estimated each Fund’s Other Expenses and determined such amounts were reasonable. Response: Other Expenses are estimated based on the experience of the Adviser and the Administrator with other start-up funds, primarily those relatively new funds that are series of the Registrant. 6. Comment: Footnote 3 to each Fund’s fee table that states the Adviser may recoup fees within three years but does not say when that three-year period commences; please clarify. Response: Comment accepted. The Registrant has supplemented that disclosure to state as follows: “The Adviser may recoup reduced fees and expenses only within three years of the waiver or reimbursement, provided that the recoupment does not cause the Fund’s annual expense ratio to exceed the lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. PRINCIPAL INVESTMENT STRATEGIES 7. Comment: Please advise the Staff how the Funds will value derivatives for purposes of their 80% policies. Response: Derivatives will count toward each Fund’s 80% level, and will be valued for that purpose using their market value rather than their notional value. 8. Comment: Please replace “include, without limitation” with “are” in the statement that “[i]nstruments considered to be economically tied to emerging market countries include, without limitation, those that are principally traded in an emerging market country…” and revise the disclosure as appropriate. Response: Comment accepted. The Registrant has revised that disclosure as follows: “Instruments considered to be economically tied to emerging market countries include, without limitation, are (i) those that are principally traded in an emerging Securities and Exchange Commission July 21, 2021 Page 3 market country, or (ii) those that are issued by: (ia) an issuer organized under the laws of or maintaining a principal place of business in an emerging market country, (iib) an issuer that derives or is expected to derive 50% or more of its total revenues, earnings or profits from business activity in an emerging market country, or that maintains or is expected to maintain 50% or more of its employees, assets, investments or operations in an emerging market country, or (iiic) a governmental or quasi-governmental entity of an emerging market country.” 9. Comment: Please revise the derivatives disclosure throughout the filing to discuss only those derivatives that the Funds will actually use as part of their principal investment strategies, the specific purposes for which those derivatives will be used and the risk factors associated with the use of those derivatives. For additional guidance, see the letter from Barry Miller to the ICI dated July 30, 2010 and revise the disclosure as appropriate. See also IM Guidance Update (No. 2013-05). Response: Comment accepted. The Registrant has revised that disclosure for the ESG Securitized Fund as follows: “Derivatives, such as options, futures and swaps, are used in an effort to hedge investments, for risk management, or to increase income or gains for the Fund. The types of derivatives in which the Fund may will principally invest may include, but are not limited to are options, futures and swap agreements, as well as: (i) securitization structures securitized instruments that isolate specific cash flows, such as Principal only (PO) bonds or Interest only (IO) bonds; (ii) tiered index bonds that reference a series of cash securitizations (such as CMBX, a non-agency securitized index where the underlying assets are commercial mortgage-backed securities), and (iii) TBAs (to-be-announced securities), which are traded as agency mortgage-backed securities prior to the underlying mortgage loans being allocated to the pool (giving them a derivative nature).” Please see the response to Comment 11(e) below for revisions that describe the nature of the derivative instruments referenced in (i), (ii) and (iii) above. The Registrant has revised the related disclosure for the Opportunistic High Income Credit Fund as follows: “Derivatives are used in an effort to hedge investments, for risk management, or to increase income or gains for the Fund. The Fund may invest in types of derivative instruments in which the Fund will principally invest are, primarily currency and other futures, forward contracts, options, and swap agreements (typically interest rate swaps, index-linked swaps, total return swaps and credit default swaps) and swap agreements.” Securities and Exchange Commission July 21, 2021 Page 4 10. Comment: Please replace “may include, but are not limited to” with “are” in the statement that “[t]he derivatives in which the Fund may invest may include, but are not limited to….” Revise the disclosure to list all the derivatives the Fund may use as part of its principal investment strategies, as also noted in Comment 10. Response: Comment accepted. Please see the Registrant’s response to Comment 10 above. 11. With respect to the ESG Securitized Fund: a. Comment: Please explain why the Registrant believes that satisfying “one or more” positive-screening criteria to support sustainable initiatives is sufficient to justify characterizing the Fund as an ESG fund. Response: Comment acknowledged. The Adviser evaluates the Fund’s potential investments based on both fundamental and sustainability factors. The Adviser implements a positive ESG screening approach to securitized investing, which includes using a positive screening matrix to review each purchase by the Fund for social, environmental and/or sustainability factors and ensuring a minimum of 80% of net assets are positively screened and meet positive-screen criteria as defined in the Adviser’s policies and procedures. Therefore, at least 80% of the Fund’s net assets will be invested in issuers meeting the Adviser’s ESG screening process as described in the prospectus. b. Comment: Please disclose more information about the nature of the securitized vehicles in which the Fund will invest and the degree to which those vehicles will focus on sustainable initiatives, including the types of initiatives. If the deal terms, investment analysis/thesis, or investment liquidity of these vehicles differ materially from other forms of asset backed securities the Adviser would typically consider, that should be addressed in revised disclosure as well. Response: Comment accepted. The Registrant has supplemented the Fund’s Item 4 disclosure with the following: “The types of ESG securitized vehicles in which the Fund invests typically include, but are not limited to: (i) agency mortgage-backed securities and private label residential mortgage-backed securities that are collateralized by mortgage loans originated to support energy-efficient home improvements or with a financial inclusion component, focusing on promoting affordability and/or lending to low-to-moderate income individuals and communities; (ii) commercial mortgage-backed securities collateralized by certified energy efficient commercial properties (usually LEED-certified but also including alternative green building certifications such as BREEAM, NABERS, and Energy Star), or by loans focused on promoting affordable rental housing, typically through a landlord commitment and/or requirement to sustain below-market rents in existing or new construction multifamily properties; and (iii) asset-backed securities with an energy efficiency component, such as lower-carbon transportation and green asset transportation. Other securities considered for positive ESG screening include ESG collateralized loan obligations that often also include investment restrictions in certain sectors such as production and/or sale of Securities and Exchange Commission July 21, 2021 Page 5 weapons or tobacco-related products. The investment analysis and liquidity of these securitized vehicles do not differ materially from other forms of asset-backed securities the Adviser would typically consider for its other registered funds, except for the addition of the positive ESG screening process.” c. Comment: With respect to the statement that “[i]n implementing its positive-screening ESG strategy, the Adviser evaluates potential investments based on a number of factors”, what information and analysis does the Adviser use to evaluate these factors? Please disclose. Response: Comment accepted. The Registrant has supplemented that disclosure as follows: “In conducting its positive ESG screening process, the Adviser reviews for environmental, social and/or sustainable features related to the underlying security collateral and issuer programs, evidenced by marketing materials, borrower underwriting criteria, loan tapes (electronic files that capture lending product data from a financial firm’s internal systems), additional issuer disclosures and clarification from engagement, as well as third-party reports such as rating agency presales and second-party opinions where applicable. Typically, there is significant disclosure around issuer lending programs that offers insight into the environmental, social and/or sustainable nature of a securitization, such as supporting energy-efficient property improvements (environmental positive) and/or supporting affordable rental housing access and availability (social positive). The Adviser will also engage with issuers to obtain additional materials, clarification, and/or data points to support the viability of their lending and securitization programs and/or confirm their compliance with industry standards such as the International Capital Market Association (ICMA) Green, Social and/or Sustainable bond principles. The Adviser will continue to monitor the market for additional information sources as well as issuer best-practices to enhance its diligence and positive screening approach.” d. Comment: Please describe the Adviser’s due diligence practices in applying its ESG screening criteria to potential investments. This includes what underlying data the Adviser will review to determine whether an investment meets its ESG criteria, and the sources of that data. For example: directly engaging with portfolio companies to better understand their ESG risks and practices; reviewing third-party scoring/data; and/or conducting research using other types of information from either the Fund or an outside source. Response: Comment accepted. Please see the Registrant’s response to Comment 11(c) above. e. Comment: Please disclose in the filing in plain English what PO bonds, IO bonds, tiered index bonds and TBAs are. Please also define the acronym TBA. Lastly, it is unclear why you mention these instruments here, but nowhere else in the prospectus or SAI. Please advise or revise. Securities and Exchange Commission July 21, 2021 Page 6 Response: Comment accepted. The Registrant has added descriptions of these securities to the Item 9 disclosure under “Additional Fund Information – Principal Investment Strategies – ESG Securitized Fund,” as follows: “The types of derivatives in which the Fund will principally invest are options, futures and swap agreements, as well as: (i) securitized instruments that isolate specific cash flows, such as Principal only (PO) bonds or Interest only (IO) bonds; (ii) tiered index bonds that reference a series of cash securitizations (such as CMBX, a non-agency securitized index where the underlying assets are commercial mortgage-backed securities), and (iii) TBAs (to-be-announced securities). PO and IO bonds are debt obligations that strip the principal cash flows from the interest cash flows of mortgage collateral, such that the principal cash flows form one bond, the PO, and the interest cash flows form a separate bond, the IO. Tiered index bonds are derivative instruments for which the interest rate is tied to a specified index or market rate. So long as this index or market rate is below a predetermined “strike” rate, the interest rate on the tiered index bond remains fixed; if, however, the specified index or market rate rises above the “strike” rate, the interest rate on the tiered index bond will decrease. TBAs are to-be-announced mortgage pass-through securities, which settle on a delayed delivery basis, thus giving them a derivative nature. Please see “Securities and Techniques Used by the Funds” in the Statement of Additional Information for additional information regarding those investment types.” In addition, the Registrant has revised the disclosure in the SAI under the section called “Securities and Techniques Used by the Funds,” which describes the various investment types and related risks, as follows: Under “Asset-Backed Securities” on page 10 of the Registration Statement’s SAI: “The Funds may invest in securities issued by trusts and special purpose corporations with principal and interest payouts backed by, or supported by, any of various types of assets. These assets typically include receivables related to the purchase of automobiles, credit card loans, and hom