Correspondence 0001387131-23-009341 from HENNESSY FUNDS TRUST (CIK 0000891944)
HENNESSY FUNDS TRUST (CIK 0000891944)
Date: Aug. 4, 2023 · CIK: 0000891944 · Accession: 0001387131-23-009341
AI Filing Summary & Sentiment
File numbers found in text: 333-272430, 811-07168
Letter
Via EDGAR System Division of Investment Management Washington, D.C. 20549 Re: Hennessy Funds Trust (File Nos. 811-07168 and 033-52154) Registration Statement on Form N-14 (No. 333-272430), Filed June 5, 2023
Dear Ms. Marquigny and Ms. Fettig:
Our client, Hennessy Funds Trust (the “Company”), filed the above referenced Registration Statement on Form N-14 on June 5, 2023 (the “Filing”). The Filing relates to a special meeting of shareholders of the CCM Core Impact Equity Fund and the CCM Small/Mid-Cap Impact Value Fund (each, a “Target Fund” and together, the “Target Funds”), each a series of Quaker Investment Trust, a Delaware statutory trust. At the special meeting, shareholders of each of the Target Funds will be asked to consider and vote on upon the following (the “Proposals”):
1. A proposal to approve an Agreement and Plan of Reorganization (the “Plan”) pursuant to which:
a. all of the assets of each class of the CCM Core Impact Equity Fund will be transferred to the Hennessy Stance ESG ETF (the “Acquiring Fund”), a series of Hennessy Funds Trust, in exchange for shares of the Acquiring Fund (plus cash in lieu of fractional shares of the Acquiring Fund), which will be distributed pro rata by the CCM Core Impact Equity Fund to its shareholders, and the Acquiring Fund will manage the assets of the CCM Core Impact Equity Fund pursuant to the investment strategy the Acquiring Fund was operating under prior to the Reorganization and assume all of the CCM Core Impact Equity Fund’s liabilities; and
AUSTIN
Boston
CHICAGO
dallas
DENVER
DETROIT
houston
JACKSONVILLE
LOS ANGELES
MADISON
MEXICO CITY
MIAMI
MILWAUKEE
NEW YORK
ORLANDO
SACRAMENTO
salt lake city
SAN DIEGO
SAN FRANCISCO
SILICON VALLEY
TALLAHASSEE
TAMPA
WASHINGTON, D.C.
BRUSSELS
TOKYO
Ms. Marquigny
Ms. Fettig
U.S. Securities and Exchange Commission
August 4, 2023
Page 2
b. all of the assets of each class of the CCM Small/Mid-Cap Impact Value Fund will be transferred to the Acquiring Fund in exchange for shares of the Acquiring Fund (plus cash in lieu of fractional shares of the Acquiring Fund), which will be distributed pro rata by the CCM Small/Mid-Cap Impact Value Fund to its shareholders, and the Acquiring Fund will manage the assets of the CCM Small/Mid-Cap Impact Value Fund pursuant to the investment strategy the Acquiring Fund was operating under prior to the Reorganization and assume all of the CCM Small/Mid-Cap Impact Value Fund’s liabilities; and
2. With respect to each Target Fund, if invoked by the chair of the special meeting, to approve adjourning the special meeting to permit further solicitation of proxies in the event a quorum does not exist or a quorum exists but there are not sufficient votes at the time of the special meeting to approve the Plan on behalf of the Target Fund.
On behalf of the Company, set forth below are the Company’s responses to oral comments of the Staff of the Securities and Exchange Commission (the “Staff”) regarding the Filing. The numbered items set forth below briefly express (in bold italics) the significant comments of the Staff, and following such comments are the Company’s responses (in regular type). The Redlined Documents (as defined below) reflect responses to all of the comments of the Staff and additional changes made in connection with said comments and the correction of typos. The Company will file a pre-effective amendment (the “Pre-Effective Amendment No. 1” to revise the Filing in response to the Staff’s comments and to provide any outstanding information. The Company will then file a request for the filing to go effective, followed by a filing of the definitive Proxy Statement and Prospectus, along with the Statement of Additional Information, under Rule 497 of the Securities Act of 1933. The definitive documents will contain the changes made in response to the comments of the Staff, as reflected in the attached redlined Proxy Statement/Prospectus and redlined Statement of Additional Information (the “Redlined Documents”).
Capitalized terms not defined herein have the meanings ascribed to them in the Filing.
1. Please enhance the Filing to more prominently and fully disclose the nature of the Acquiring Fund as a semi-transparent exchange traded fund (“ETF”) that is listed on the NYSE Arca, including, without limitation, a discussion of the material impacts the structure of an ETF will have when converting mutual funds to an ETF, the impact such structure has on mutual fund shareholders, and the related risks.
Response: The requested changes have been made, as reflected in the attached Redlined Documents.
2. Please enhance the disclosure in the Filing on the mechanics of voting, including, without limitation, in the following areas and manner:
● including in the President’s Letter the date by which votes must be received to count if shareholders do not vote in-person, and full description of how proxies may be revoked and the date by which such revocation must be made to be considered “timely”;
Ms. Marquigny
Ms. Fettig
U.S. Securities and Exchange Commission
August 4, 2023
Page 3
● revising the language on taking action on other matters that may come before the special meeting to make it clear this is not a proposal;
● disclosing more prominently how the share classes of the Target Funds are impacted when voting, and how the share classes are impacted in the Reorganizations;
● stating the date by which votes must be received to count if shareholders do not vote in-person; and
● updating and enhancing the disclosure regarding broker non-votes, based on current NYSE Rule 425.
Response: The requested changes have been made, as reflected in the attached Redlined Documents.
3. Please enhance the disclosure in the Filing to prominently state that the Acquiring Fund will manage the assets of the Target Funds under the same strategy the Acquiring Fund was operating under prior to the Reorganizations.
Response: The requested changes have been made, as reflected in the attached Redlined Documents.
4. Please enhance the disclosure in the Filing to clarify what is meant by excluded liabilities, and who will bear the cost of the excluded liabilities.
Response: The Company reviewed the proposed transaction and determined that there are no excluded liabilities. The Acquiring Fund will acquire all of the liabilities of the Target Funds. The Filing has been revised to reflect this determination. See the attached Redlined Documents.
5. Please enhance the disclosure in the Filing to (a) describe the conditions under which adjournment may apply; (b) disclose who will invoke adjournment; (c) clarify whether the special meeting will adjourn with respect to one Target Fund or both Target Funds if shareholders of a Target Fund vote to adjourn the special meeting; and (d) clarify the voting percentage required to approve the proposal to adjourn the special meeting.
Response: The requested changes have been made, as reflected in the attached Redlined Documents.
Ms. Marquigny
Ms. Fettig
U.S. Securities and Exchange Commission
August 4, 2023
Page 4
6. Please enhance the disclosure in the Filing to more fully discuss the reasoning, factors and analysis related to proposing the Reorganizations, including, without limitation, in the following areas and manner:
● disclosing (a) whether the Reorganizations were proposed by the Target Funds or the Acquiring Fund; (b) the reasons the Target Funds are seeking to reorganize; and (c) how the ETF structure of the Acquiring Fund impacted the analysis and determination to propose the Reorganization;
● disclosing how the Acquiring Fund’s ability to utilize a manager of managers structure impacted the analysis and determination to propose the Reorganization;
● disclosing how the Acquiring Fund’s use of third-party ESG data and service providers impacted the analysis and determination to propose the Reorganization;
● disclosing whether the parties considered how the termination of the expense limitation would impact the fees subsequent to the consummation of the Reorganizations, and disclosing if a material increase in the fee is expected;
● disclosing the structural differences between mutual funds and ETFs, including with respect to custody, purchasing and selling shares, and any material risks related to ETFs, disclosing how these differences impacted the analysis and determination to propose the Reorganization, and disclosing in more detail how these differences and differences related to semi-transparent ETFs impact shareholders (and disclose the related risks); and
● disclosing how the principal investment strategies differ in significant ways, and explaining how these differences impacted the analysis and determination to propose the Reorganizations.
Response: The requested changes have been made, as reflected in the attached Redlined Documents.
7. Please enhance the disclosure in the Filing to clarify costs that are involved with the Reorganizations, including, without limitation, in the following areas and manner:
● disclosing whether proxy solicitation costs incurred in connection with the Reorganizations will be paid by Hennessy Advisors and CCM regardless of whether shareholders approve one or more of the Reorganizations;
Ms. Marquigny
Ms. Fettig
U.S. Securities and Exchange Commission
August 4, 2023
Page 5
● disclosing whether Target Fund shareholders who redeem their shares before the Reorganizations will bear any portion of any repositioning costs and, if so, how the Target Funds’ Board of Trustees considered such expense;
● disclosing how sub-advisory fees paid are handled under the Acquiring Fund’s unitary fee arrangement and if sub-advisory expenses are excluded under the unitary fee arrangement (and any related risks), how any expenses excluded under the Acquiring Fund’s unitary fee arrangement and the resulting consequences to shareholders, and ensuring that Vident Advisory, LLC is consistently identified as a sub-advisor;
● discussing the adverse tax treatment related to the redemption of fractional shares of the Target Funds in more balanced terms; and
● discussing in more detail how the costs of trading shares for mutual funds differs from that for ETFs.
Response: The requested changes have been made, as reflected in the attached Redlined Documents. Supplementally, we note that there will be no repositioning costs, as the parties will not engage in repositioning the portfolios in connection with the Reorganizations, as discussed in the Redlined Documents.
8. Please supplementally confirm whether the Reorganization of the Target Funds into the Acquiring Fund will cause any valuation differences that would result in an adjustment to the net asset value on the Closing Date.
Response: We supplementally confirm that the reorganization of the Target Funds into the Acquiring Fund will not cause any valuation differences that would result in an adjustment to the net asset value on the Closing Date.
9. Please review the conditions of the exemptive relief related to the Acquiring Fund’s manager of managers order and operation as a semi-transparent ETF and ensure that the disclosure requirements of such exemptive relief are met. Please supplementally represent that the conditions of such exemptive relief have been satisfied.
Response: We supplementally confirm that we have reviewed the conditions of the exemptive relief related to the Acquiring Fund’s manager of mangers order and operation as a semi-transparent ETF and represent that the disclosure conditions of such exemptive relief have been satisfied.
10. Please supplementally represent that the Filing will include all exhibits and documents not previously filed with the Filing, including the consents of the auditors. Please also update the financial information incorporated by reference.
Response: We supplementally represent that the Filing will include all exhibits and documents not previously filed with the Filing, including the consents of the auditors, and that the financial information in the Filing has been updated.
Ms. Marquigny
Ms. Fettig
U.S. Securities and Exchange Commission
August 4, 2023
Page 6
11. Please supplementally represent that any information incorporated by reference will include a functi
Show Raw Text
CORRESP
1
filename1.htm
August
4, 2023
ATTORNEYS
AT LAW
777
East Wisconsin Avenue
Milwaukee,
WI 53202-5306
414.271.2400
TEL
414.297.4900
FAX
www.foley.com
WRITER’S
DIRECT LINE
414.297.5596
pfetzer@foley.com
EMAIL
CLIENT/MATTER
NUMBER
082961-0150
Via
EDGAR System
Ms.
Rebecca Ament Marquigny
Ms.
Christina DiAngelo Fettig
U.S.
Securities and Exchange Commission
Division
of Investment Management
Washington,
D.C. 20549
Re: Hennessy
Funds Trust (File Nos. 811-07168 and 033-52154)
Registration
Statement on Form N-14 (No. 333-272430), Filed June 5, 2023
Dear
Ms. Marquigny and Ms. Fettig:
Our
client, Hennessy Funds Trust (the “Company”), filed the above referenced Registration Statement on Form N-14 on June
5, 2023 (the “Filing”). The Filing relates to a special meeting of shareholders of the CCM
Core Impact Equity Fund and the CCM Small/Mid-Cap Impact Value Fund (each, a “Target Fund” and together, the “Target
Funds”), each a series of Quaker Investment Trust, a Delaware statutory trust. At the special meeting, shareholders
of each of the Target Funds will be asked to consider and vote on upon the following (the “Proposals”):
1. A
proposal to approve an Agreement and Plan of Reorganization (the “Plan”)
pursuant to which:
a. all
of the assets of each class of the CCM Core Impact Equity Fund will be transferred to the
Hennessy Stance ESG ETF (the “Acquiring Fund”), a series of Hennessy Funds
Trust, in exchange for shares of the Acquiring Fund (plus cash in lieu of fractional shares
of the Acquiring Fund), which will be distributed pro rata by the CCM Core Impact Equity
Fund to its shareholders, and the Acquiring Fund will manage the assets of the CCM Core Impact
Equity Fund pursuant to the investment strategy the Acquiring Fund was operating under prior
to the Reorganization and assume all of the CCM Core Impact Equity Fund’s liabilities;
and
AUSTIN
Boston
CHICAGO
dallas
DENVER
DETROIT
houston
JACKSONVILLE
LOS
ANGELES
MADISON
MEXICO
CITY
MIAMI
MILWAUKEE
NEW
YORK
ORLANDO
SACRAMENTO
salt
lake city
SAN
DIEGO
SAN
FRANCISCO
SILICON
VALLEY
TALLAHASSEE
TAMPA
WASHINGTON,
D.C.
BRUSSELS
TOKYO
Ms. Marquigny
Ms. Fettig
U.S. Securities and Exchange Commission
August 4, 2023
Page 2
b. all
of the assets of each class of the CCM Small/Mid-Cap Impact Value Fund will be transferred
to the Acquiring Fund in exchange for shares of the Acquiring Fund (plus cash in lieu of
fractional shares of the Acquiring Fund), which will be distributed pro rata by the CCM Small/Mid-Cap
Impact Value Fund to its shareholders, and the Acquiring Fund will manage the assets of the
CCM Small/Mid-Cap Impact Value Fund pursuant to the investment strategy the Acquiring Fund
was operating under prior to the Reorganization and assume all of the CCM Small/Mid-Cap Impact
Value Fund’s liabilities; and
2. With
respect to each Target Fund, if invoked by the chair of the special meeting, to approve adjourning
the special meeting to permit further solicitation of proxies in the event a quorum does
not exist or a quorum exists but there are not sufficient votes at the time of the special
meeting to approve the Plan on behalf of the Target Fund.
On
behalf of the Company, set forth below are the Company’s responses to oral comments of the Staff of the Securities and Exchange
Commission (the “Staff”) regarding the Filing. The numbered items set forth below briefly express (in bold italics)
the significant comments of the Staff, and following such comments are the Company’s responses (in regular type). The Redlined
Documents (as defined below) reflect responses to all of the comments of the Staff and additional changes made in connection with said
comments and the correction of typos. The Company will file a pre-effective amendment (the “Pre-Effective Amendment No. 1”
to revise the Filing in response to the Staff’s comments and to provide any outstanding information. The Company will then file
a request for the filing to go effective, followed by a filing of the definitive Proxy Statement and Prospectus, along with the Statement
of Additional Information, under Rule 497 of the Securities Act of 1933. The definitive documents will contain the changes made in response
to the comments of the Staff, as reflected in the attached redlined Proxy Statement/Prospectus and redlined Statement of Additional Information
(the “Redlined Documents”).
Capitalized
terms not defined herein have the meanings ascribed to them in the Filing.
1. Please enhance the Filing to more prominently and fully disclose the nature of the Acquiring Fund as a semi-transparent exchange traded
fund (“ETF”) that is listed on the NYSE Arca, including, without limitation, a discussion of the material impacts
the structure of an ETF will have when converting mutual funds to an ETF, the impact such structure has on mutual fund shareholders,
and the related risks.
Response:
The requested changes have been made, as reflected in the attached Redlined Documents.
2. Please enhance the disclosure in the Filing on the mechanics of voting, including, without limitation, in the following areas and manner:
● including
in the President’s Letter the date by which votes must be received to count if shareholders
do not vote in-person, and full description of how proxies may be revoked and the date by
which such revocation must be made to be considered “timely”;
Ms. Marquigny
Ms. Fettig
U.S. Securities and Exchange Commission
August 4, 2023
Page 3
● revising
the language on taking action on other matters that may come before the special meeting to
make it clear this is not a proposal;
● disclosing
more prominently how the share classes of the Target Funds are impacted when voting, and
how the share classes are impacted in the Reorganizations;
● stating
the date by which votes must be received to count if shareholders do not vote in-person;
and
● updating
and enhancing the disclosure regarding broker non-votes, based on current NYSE Rule 425.
Response:
The requested changes have been made, as reflected in the attached Redlined Documents.
3. Please enhance the disclosure in the Filing to prominently state that the Acquiring Fund will manage the assets of the Target Funds under
the same strategy the Acquiring Fund was operating under prior to the Reorganizations.
Response:
The requested changes have been made, as reflected in the attached Redlined Documents.
4. Please enhance the disclosure in the Filing to clarify what is meant by excluded liabilities, and who will bear the cost of the excluded
liabilities.
Response:
The Company reviewed the proposed transaction and determined that there are no excluded liabilities. The Acquiring Fund will acquire
all of the liabilities of the Target Funds. The Filing has been revised to reflect this determination. See the attached Redlined Documents.
5. Please enhance the disclosure in the Filing to (a) describe the conditions under which adjournment may apply; (b) disclose who will invoke
adjournment; (c) clarify whether the special meeting will adjourn with respect to one Target Fund or both Target Funds if shareholders
of a Target Fund vote to adjourn the special meeting; and (d) clarify the voting percentage required to approve the proposal to adjourn
the special meeting.
Response:
The requested changes have been made, as reflected in the attached Redlined Documents.
Ms. Marquigny
Ms. Fettig
U.S. Securities and Exchange Commission
August 4, 2023
Page 4
6. Please enhance the disclosure in the Filing to more fully discuss the reasoning, factors and analysis related to proposing the Reorganizations,
including, without limitation, in the following areas and manner:
● disclosing
(a) whether the Reorganizations were proposed by the Target Funds or the Acquiring Fund;
(b) the reasons the Target Funds are seeking to reorganize; and (c) how the ETF structure
of the Acquiring Fund impacted the analysis and determination to propose the Reorganization;
● disclosing
how the Acquiring Fund’s ability to utilize a manager of managers structure impacted
the analysis and determination to propose the Reorganization;
● disclosing
how the Acquiring Fund’s use of third-party ESG data and service providers impacted
the analysis and determination to propose the Reorganization;
● disclosing
whether the parties considered how the termination of the expense limitation would impact
the fees subsequent to the consummation of the Reorganizations, and disclosing if a material
increase in the fee is expected;
● disclosing
the structural differences between mutual funds and ETFs, including with respect to custody,
purchasing and selling shares, and any material risks related to ETFs, disclosing how these
differences impacted the analysis and determination to propose the Reorganization, and disclosing
in more detail how these differences and differences related to semi-transparent ETFs impact
shareholders (and disclose the related risks); and
● disclosing
how the principal investment strategies differ in significant ways, and explaining how these
differences impacted the analysis and determination to propose the Reorganizations.
Response:
The requested changes have been made, as reflected in the attached Redlined Documents.
7. Please enhance the disclosure in the Filing to clarify costs that are involved with the Reorganizations, including, without limitation,
in the following areas and manner:
● disclosing
whether proxy solicitation costs incurred in connection with the Reorganizations will be
paid by Hennessy Advisors and CCM regardless of whether shareholders approve one or more
of the Reorganizations;
Ms. Marquigny
Ms. Fettig
U.S. Securities and Exchange Commission
August 4, 2023
Page 5
● disclosing
whether Target Fund shareholders who redeem their shares before the Reorganizations will
bear any portion of any repositioning costs and, if so, how the Target Funds’ Board
of Trustees considered such expense;
● disclosing
how sub-advisory fees paid are handled under the Acquiring Fund’s unitary fee arrangement
and if sub-advisory expenses are excluded under the unitary fee arrangement (and any related
risks), how any expenses excluded under the Acquiring Fund’s unitary fee arrangement
and the resulting consequences to shareholders, and ensuring that Vident Advisory, LLC is
consistently identified as a sub-advisor;
● discussing
the adverse tax treatment related to the redemption of fractional shares of the Target Funds
in more balanced terms; and
● discussing
in more detail how the costs of trading shares for mutual funds differs from that for ETFs.
Response:
The requested changes have been made, as reflected in the attached Redlined Documents. Supplementally, we note that there will be no
repositioning costs, as the parties will not engage in repositioning the portfolios in connection with the Reorganizations, as discussed
in the Redlined Documents.
8. Please supplementally confirm whether the Reorganization of the Target Funds into the Acquiring Fund will cause any valuation differences
that would result in an adjustment to the net asset value on the Closing Date.
Response:
We supplementally confirm that the reorganization of the Target Funds into the Acquiring Fund will not cause any valuation differences
that would result in an adjustment to the net asset value on the Closing Date.
9. Please review the conditions of the exemptive relief related to the Acquiring Fund’s manager of managers order and operation as
a semi-transparent ETF and ensure that the disclosure requirements of such exemptive relief are met. Please supplementally represent
that the conditions of such exemptive relief have been satisfied.
Response:
We supplementally confirm that we have reviewed the conditions of the exemptive relief related to the Acquiring Fund’s manager
of mangers order and operation as a semi-transparent ETF and represent that the disclosure conditions of such exemptive relief have been
satisfied.
10. Please supplementally represent that the Filing will include all exhibits and documents not previously filed with the Filing, including
the consents of the auditors. Please also update the financial information incorporated by reference.
Response:
We supplementally represent that the Filing will include all exhibits and documents not previously filed with the Filing, including the
consents of the auditors, and that the financial information in the Filing has been updated.
Ms. Marquigny
Ms. Fettig
U.S. Securities and Exchange Commission
August 4, 2023
Page 6
11. Please supplementally represent that any information incorporated by reference will include a functi