SEC Company Response from OLSTEIN FUNDS (CIK 0000944690) — Oct 28, 2005
OLSTEIN FUNDS (CIK 0000944690)
Date: Oct. 28, 2005 · CIK: 0000944690 · Accession: 0001137439-05-000258
AI Filing Summary & Sentiment
File numbers found in text: 811-09038
Letter
Via EDGAR U.S. Securities and Exchange Commission Division of Investment Management 100 F Street, NE Washington, DC 20549 Attention: Ms. Christina DiAngelo
Re: The Olstein Funds (the "Trust") File No. 811-09038
Dear Ms. DiAngelo:
On behalf of the above-referenced Trust and its series, the Olstein Financial Alert Fund (the "Fund"), following are the responses to the SEC staff's comments conveyed with regard to Post-Effective Amendment Nos. 16/17 to the Trust's Registration Statement on Form N-1A (the "Amendment"). The Amendment was filed with the SEC on August 29, 2005 pursuant to Rule 485(a)(1) under the Securities Act of 1933 ("1933 Act") in order to comply with new disclosure obligations required by the SEC. Each staff comment is summarized below, followed by the Trust's response to the comment. Capitalized terms not otherwise defined in this letter have the meanings assigned to them in the Amendment.
Prospectus
1. Comment. The Fund's primary investment objective is disclosed on the front cover page. Please include the Fund's secondary objective of income on the front cover page as well.
Response. The Fund's secondary objective of income has been added to the disclosure on the front cover page of the Prospectus.
2. Comment. Please clarify that the description of the Fund's investment approach on the front cover page is consistent with the description in the Investment Objectives section.
Response. The Fund believes that the descriptions were consistent and simply used different language to describe the Fund's investment approach. In order to avoid the possibility of confusion, the disclosure on the cover page has been revised so that the descriptions in both places are consistent.
3. Comment. Please clarify that the performance reflected in the bar chart is that of the Class C shares of the Fund.
Response. The introductory paragraph has been revised to clarify that the bar chart only reflects the performance of Class C shares of the Fund.
4. Comment. In the Portfolio Turnover section, the final sentence states that high portfolio turnover might involve "adverse tax effects." Please describe some of the adverse tax effects that could potentially result from high portfolio turnover.
Response. The disclosure has been revised to clarify that adverse tax effects, such as increased capital gains tax rates, may result from high portfolio turnover and that such effects may have a negative impact on an investment in the Fund.
5. Comment. In the introductory paragraph to the Financial Highlights section of the Prospectus, please include a sentence indicating that the total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions).
Response. The requested disclosure has been added.
6. Comment. Please consider expanding the disclosure regarding fair value pricing to include an explanation that the use of fair value pricing could result in the Fund pricing a portfolio security differently than other funds that hold the same security.
Response. The requested disclosure has been added.
7. Comment. Please consider expanding the disclosure with respect to pricing of the Fund's portfolio securities to include a discussion of how each type of security in the portfolio is valued.
Response. Additional disclosure has been added to explain that: (i) short-term investments with maturities of 60 days or less at the time of purchase are valued at amortized cost, which approximates market value, unless the Fund's Board of Trustees determines that this does not represent fair value; and (ii) lacking any sales, over-the-counter securities are valued at the mean between the closing bid and ask price.
8. Comment. In the Frequent Trading of Fund Shares section, please consider the following additions to the disclosure: (i) a statement that the Fund does not accommodate short-term trading; (ii) a description of the limitations on short-term trading, if any; and (iii) a description of the means by which the adviser and/or its agents monitors trades and flows of money into and out of the Fund.
Response. Disclosure addressing each of these points has been added as requested.
9. Comment. In the Dividends, Capital Gains Distributions and Taxes section, please consider including disclosure explaining that the capital gains tax rates will be different based on how long the Fund has held particular investments.
Response. The following sentence has been added:
Capital gains tax rates will vary depending on the length of time the Fund holds its assets.
Statement of Additional Information ("SAI")
10. Comment. In the table describing the Trustees and Officers of the Fund, please include a footnote addressing the terms of office of the Trustees.
Response. The following footnote has been added:
"Each Trustee holds office for an indefinite term."
11. Comment. In the Distribution (12b-1) Plans section, please consider including disclosure that clarifies that the Fund's distributor's compensation under the Fund's 12b-1 Plans is not tied exclusively to distribution or shareholder servicing expenses actually incurred by the distributor or others.
Response. The following sentence, which already appears in the Prospectus, has been included in the SAI:
Payments under the 12b-1 Plan are not tied exclusively to distribution or shareholder servicing expenses actually incurred by the distributor or others, and the payments may exceed or be less than the amount expenses actually incurred.
12. Comment. In the Disclosure of Portfolio Holdings section, please consider including the following disclosure: (i) more specific language regarding the persons or entities to which the information will be released; (ii) a description of the Board's procedures for oversight of the disclosure; (iii) a description of what constitutes a "legitimate business purpose" as that term is used in paragraph three; and (iv) a description of ongoing arrangements to release holdings information to service providers.
Response. In response to this comment, we have revised and supplemented the disclosure to address monitoring, reporting and Board oversight, and we clarified the Fund's practice of publicly disclosing holdings information. We did not further define "legitimate business purpose" because that phrase in this context does not lend itself to a limiting definition. Finally, our list of service providers that may receive holdings information is accurate. Other typical recipients, such as ratings agencies, will not receive holdings information until after it is publicly disclosed.
13. Comment. Please include descriptions of the other accounts managed by the portfolio managers, the asset levels in those accounts and whether any of those accounts charge performance fees.
Response. The following disclosure has been added:
In addition to the Fund, Messrs. Olstein and Reidy manage one other registered investment company with total assets of $21,809,853 as of June 30, 2005. The other registered investment company does not charge a performance-based advisory fee.
In connection with the Trust's response to the SEC staff comments on the Amendment, as requested by the staff, the Trust acknowledges that: (i) the Trust is responsible for the adequacy and accuracy of the disclosure in the Trust's filings; (ii) staff comments or changes to disclosure in response to staff comments in the filings reviewed by the staff do not foreclose the SEC from taking any action with respect to the filing; and (iii) the Fund may not assert staff comments as a defense in any proceeding initiated by the SEC or any person under the federal securities laws of the United States.
Please do not hesitate to contact me (215) 564-8198 if you have any questions or wish to discuss any of the responses presented above.
Very truly yours,
/s/ Michael P. O'Hare
Michael P. O'Hare
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SEC Comment Response Letter as filed October 28, 2005
[SRSY LOGO] Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Telephone 215-564-8000
Fax 215-564-8120
www.stradley.com
October 28, 2005
Via EDGAR
U.S. Securities and Exchange Commission
Division of Investment Management
100 F Street, NE
Washington, DC 20549
Attention: Ms. Christina DiAngelo
Re: The Olstein Funds (the "Trust")
File No. 811-09038
Dear Ms. DiAngelo:
On behalf of the above-referenced Trust and its series, the Olstein
Financial Alert Fund (the "Fund"), following are the responses to the SEC
staff's comments conveyed with regard to Post-Effective Amendment Nos. 16/17 to
the Trust's Registration Statement on Form N-1A (the "Amendment"). The Amendment
was filed with the SEC on August 29, 2005 pursuant to Rule 485(a)(1) under the
Securities Act of 1933 ("1933 Act") in order to comply with new disclosure
obligations required by the SEC. Each staff comment is summarized below,
followed by the Trust's response to the comment. Capitalized terms not otherwise
defined in this letter have the meanings assigned to them in the Amendment.
Prospectus
1. Comment. The Fund's primary investment objective is disclosed on the front
cover page. Please include the Fund's secondary objective of income on the
front cover page as well.
Response. The Fund's secondary objective of income has been added to the
disclosure on the front cover page of the Prospectus.
2. Comment. Please clarify that the description of the Fund's investment
approach on the front cover page is consistent with the description in the
Investment Objectives section.
Response. The Fund believes that the descriptions were consistent and
simply used different language to describe the Fund's investment approach.
In order to avoid the possibility of confusion, the disclosure on the cover
page has been revised so that the descriptions in both places are
consistent.
3. Comment. Please clarify that the performance reflected in the bar chart is
that of the Class C shares of the Fund.
Response. The introductory paragraph has been revised to clarify that the
bar chart only reflects the performance of Class C shares of the Fund.
4. Comment. In the Portfolio Turnover section, the final sentence states that
high portfolio turnover might involve "adverse tax effects." Please
describe some of the adverse tax effects that could potentially result from
high portfolio turnover.
Response. The disclosure has been revised to clarify that adverse tax
effects, such as increased capital gains tax rates, may result from high
portfolio turnover and that such effects may have a negative impact on an
investment in the Fund.
5. Comment. In the introductory paragraph to the Financial Highlights section
of the Prospectus, please include a sentence indicating that the total
returns in the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund (assuming reinvestment of all
dividends and distributions).
Response. The requested disclosure has been added.
6. Comment. Please consider expanding the disclosure regarding fair value
pricing to include an explanation that the use of fair value pricing could
result in the Fund pricing a portfolio security differently than other
funds that hold the same security.
Response. The requested disclosure has been added.
7. Comment. Please consider expanding the disclosure with respect to pricing
of the Fund's portfolio securities to include a discussion of how each type
of security in the portfolio is valued.
Response. Additional disclosure has been added to explain that: (i)
short-term investments with maturities of 60 days or less at the time of
purchase are valued at amortized cost, which approximates market value,
unless the Fund's Board of Trustees determines that this does not represent
fair value; and (ii) lacking any sales, over-the-counter securities are
valued at the mean between the closing bid and ask price.
8. Comment. In the Frequent Trading of Fund Shares section, please consider
the following additions to the disclosure: (i) a statement that the Fund
does not accommodate short-term trading; (ii) a description of the
limitations on short-term trading, if any; and (iii) a description of the
means by which the adviser and/or its agents monitors trades and flows of
money into and out of the Fund.
Response. Disclosure addressing each of these points has been added as
requested.
9. Comment. In the Dividends, Capital Gains Distributions and Taxes section,
please consider including disclosure explaining that the capital gains tax
rates will be different based on how long the Fund has held particular
investments.
Response. The following sentence has been added:
Capital gains tax rates will vary depending on the length of time the
Fund holds its assets.
Statement of Additional Information ("SAI")
10. Comment. In the table describing the Trustees and Officers of the Fund,
please include a footnote addressing the terms of office of the Trustees.
Response. The following footnote has been added:
"Each Trustee holds office for an indefinite term."
11. Comment. In the Distribution (12b-1) Plans section, please consider
including disclosure that clarifies that the Fund's distributor's
compensation under the Fund's 12b-1 Plans is not tied exclusively to
distribution or shareholder servicing expenses actually incurred by the
distributor or others.
Response. The following sentence, which already appears in the Prospectus,
has been included in the SAI:
Payments under the 12b-1 Plan are not tied exclusively to distribution
or shareholder servicing expenses actually incurred by the distributor
or others, and the payments may exceed or be less than the amount
expenses actually incurred.
12. Comment. In the Disclosure of Portfolio Holdings section, please consider
including the following disclosure: (i) more specific language regarding
the persons or entities to which the information will be released; (ii) a
description of the Board's procedures for oversight of the disclosure;
(iii) a description of what constitutes a "legitimate business purpose" as
that term is used in paragraph three; and (iv) a description of ongoing
arrangements to release holdings information to service providers.
Response. In response to this comment, we have revised and supplemented the
disclosure to address monitoring, reporting and Board oversight, and we
clarified the Fund's practice of publicly disclosing holdings information.
We did not further define "legitimate business purpose" because that phrase
in this context does not lend itself to a limiting definition. Finally, our
list of service providers that may receive holdings information is
accurate. Other typical recipients, such as ratings agencies, will not
receive holdings information until after it is publicly disclosed.
13. Comment. Please include descriptions of the other accounts managed by the
portfolio managers, the asset levels in those accounts and whether any of
those accounts charge performance fees.
Response. The following disclosure has been added:
In addition to the Fund, Messrs. Olstein and Reidy manage one other
registered investment company with total assets of $21,809,853 as of
June 30, 2005. The other registered investment company does not charge
a performance-based advisory fee.
In connection with the Trust's response to the SEC staff comments on the
Amendment, as requested by the staff, the Trust acknowledges that: (i) the Trust
is responsible for the adequacy and accuracy of the disclosure in the Trust's
filings; (ii) staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the SEC from
taking any action with respect to the filing; and (iii) the Fund may not assert
staff comments as a defense in any proceeding initiated by the SEC or any person
under the federal securities laws of the United States.
Please do not hesitate to contact me (215) 564-8198 if you have any
questions or wish to discuss any of the responses presented above.
Very truly yours,
/s/ Michael P. O'Hare
Michael P. O'Hare
MPO/tcm
cc: Michael Luper
James B. Kimmel
Philadelphia, PA o Malvern, PA o Harrisburg, PA o Wilmington, DE o Cherry Hill, NJ o Washington, DC
A Pennsylvania Limited Liability Partnership