SEC Company Response from TRUST FOR PROFESSIONAL MANAGERS (CIK 0001141819) — Oct 3, 2005
TRUST FOR PROFESSIONAL MANAGERS (CIK 0001141819)
Date: Oct. 3, 2005 · CIK: 0001141819 · Accession: 0000894189-05-002667
AI Filing Summary & Sentiment
File numbers found in text: 333-62298, 811-10401
Letter
VIA EDGAR TRANSMISSION United States Securities and Exchange Commission Division of Investment Management Washington, D.C. 20549-1004 Re: Trust for Professional Managers (the “Trust”) File Nos.: 333-62298, 811-10401
Dear Mr. O’Connor:
This amendment is being filed under Rule 485(b) under the Securities Act of 1933 (the “1933 Act”) in response to your oral comments and suggestions of August 22, 2005, September 23, 2005, and September 29, 2005 regarding the Trust’s Post-Effective Amendment (“PEA”) No. 8 to its registration statement. PEA No. 8 was filed pursuant to Rule 485(a) under the 1933 Act on Form N-1A on July 1, 2005 for the purpose of adding one new series: the Ascentia Long/Short Fund (the “Fund”).
Please note that on September 12, 2005 the Trust filed PEA No. 11 for the purpose of designating September 30, 2005 as the new date upon which PEA No. 8 will go effective. On September 30, 2005 the Trust filed PEA No. 13 for the purpose of designating October 14, 2005 as the new date upon which PEA No. 8 will go effective.
In addition to responses to your comments, this amendment also includes certain non-material changes as appropriate. For your convenience in reviewing the Fund’s responses, your comments and suggestions are included in bold typeface immediately followed by the Funds’ responses.
In addition, in connection with this filing, the Trust hereby states the following:
1.
The Trust acknowledges that in connection with the comments made by the Staff of the SEC, the Staff has not passed on the accuracy or adequacy of the disclosure made herein, and the Funds and their management are solely responsible for the content of such disclosure;
2.
The Trust acknowledges that the Staff’s comments and changes in disclosure in response to the Staff’s comments do not foreclose the SEC or other regulatory body from the opportunity to seek enforcement or take other action with respect to the disclosure made herein; and
3.
The Trust represents that neither the Funds nor their management will assert the Staff’s comments or changes in disclosure in response to the Staff’s comments as a defense in any action or proceeding initiated by the SEC or any person under the federal securities laws of the United States.
The Trust’s responses to your comments are as follows:
Please note that this letter and other documents are in draft form, and in no way reflect the Registrant’s or Fund management’s final intent with respect to the filing discussed herein.
RESPONSES TO ORAL COMMENTS RECEIVED AUGUST 22, 2005
Prospectus - Investments, Risks and Performance/Principal Investment Strategies
1.
In the fourth paragraph under “Principal Investment Strategies,” what does the term “primarily” mean with respect to “equity securities”? We would take this to mean “at least 50%” of the Fund’s assets. Please add disclosure indicating the Fund’s meaning.
The Fund responds by revising the applicable disclosure to read, “The Fund primarily (at least with respect to 50% of its assets) takes long and short positions in equity securities.”
2.
As appropriate in this section, please indicate the limit on short positions that may be taken by the Fund (i.e., dollar amount of short sales). We note that a Fund may have up to 100% of its assets in short positions, so long as the Fund meets the necessary requirements with respect to segregation of assets, etc. (See Investment Company Act Release No. 10-666).
The Fund responds by adding the following language to the second paragraph in this section:
“The Fund may invest up to 100% (but no more than 100%) of its assets in short positions.”
3.
We note that short sales raise numerous regulatory and other issues. Please supplementally confirm that the Fund will not have problems meeting the various regulatory requirements associated with short selling, including among other things: (a) maintain the Fund’s 15% asset limitation with respect to illiquid securities; (b) meeting the fund’s continuous obligations regarding redemptions; (c) Section 18 requirements regarding the segregation of assets; (d) Regulation T; (e) applicable NASD rules; and (f) various NYSE rules regarding posting margin.
The Fund supplementally confirms that it fully intends to comply with applicable regulatory requirements with respect to the Fund’s short sales.
4.
We note that under Section 18(f) of the Investment Company Act of 1940, short sales constitute prohibited “senior securities” unless there is appropriate asset coverage, which may include the segregation of assets, coverage through call options or some combination. Please supplementally inform us of the intended “coverage” of the Fund’s investments.
As disclosed in the subsection “Short Sales” in the “Investment Policies, Strategies and Associated Risks” section of the Fund’s Statement of Additional Information (the “SAI”), the appropriate asset coverage will typically be provided through the Fund’s segregation of liquid assets.
5.
Please provide a statement in the prospectus something to the effect that “The Fund’s Board of Trustees has considered the Fund’s short sales strategy and its attendant risks and has determined that the strategy does not impair the Fund’s ability to meet redemptions or meet other regulatory requirements. Furthermore, the Board of Trustees has adopted guidelines that ensure that the Fund’s investment advisor continuously monitors the Fund’s short positions and the Fund’s compliance with the regulatory requirements in the best interest of shareholders.”
The Fund responds by adding the requested disclosure at the end of the second paragraph in this section.
Please note that this letter and other documents are in draft form, and in no way reflect the Registrant’s or Fund management’s final intent with respect to the filing discussed herein.
6.
Please confirm that the Fund will invest in ETFs and/or other investment companies that may not have an exemptive order from the SEC.
The Fund supplementally confirms that it will make such investments in accordance with applicable disclosure in the SAI, which may include funds and/or ETFs without exemptive orders.
7.
We note that you indicated “Borrowing Risks” and “Foreign Securities Risk” in the Fund’s Principal Risks section. Please indicate in this section the intended limit in such investments.
The Fund responds by adding the following to the end of the fourth paragraph in the section:
“The Fund may have up to 75% of its assets invested directly or indirectly in foreign securities.”
In addition, the following is added as a new fifth paragraph to the section:
“The Fund may also borrow money from banks or other financial institutions to purchase securities, which is commonly known as “leveraging.” Leveraging allows the Fund to generate a return that is larger than what would be generated on the invested capital without leverage, thus changing small market movements into larger changes in the value of the investments of the Fund.”
8.
Please revise the third sentence under the subheading “Portfolio Turnover Rate” to read:
“A high portfolio turnover rate in any year will result in payment by the Fund of above-average transaction costs and could generate capital gains that must be distributed to shareholders as short-term capital gains taxed at ordinary rates. Because of these and other reasons, this Fund may be more appropriate for shareholders holding Fund shares through an IRA or other tax-deferred account.”
The Fund responds by making the requested revision.
Prospectus - Investments, Risks and Performance/Principal Risks
9.
Please revise the “Short Sale Risk” to read: “Short sale strategies are riskier than “long” investment strategies. Short selling may result in the Fund’s investment performance suffering if it is required to close out a short position earlier than it had intended. This would occur if the lender required the Fund to deliver the securities it borrowed at the commencement of the short sale and the Fund was unable to borrow the securities from other securities lenders. Furthermore, until the Fund replaces a security borrowed, or sold short, it must pay to the lender amounts equal to any dividends that accrue during the period of the short sale. In addition, the Fund will incur certain transaction fees associated with short selling. Short sale strategies are often characterized as a form of leveraging or speculative investments. Although the Advisor uses speculative investment strategies, there is no assurance that these strategies will protect against losses or perform better than non-speculative strategies. The use of short sales is an effort by the Fund to protect against losses due to general movements in market prices; however, no assurance can be given that such strategies will be successful or that consistent absolute returns will be achieved.”
The Fund responds by making the requested revisions.
Please note that this letter and other documents are in draft form, and in no way reflect the Registrant’s or Fund management’s final intent with respect to the filing discussed herein.
10.
Please revise the “High Portfolio Turnover Rate Risk” to read, in part:“The Fund’s investment strategy may result in high turnover rates. This could generate capital gains that must be distributed to shareholders as short-term capital gains taxed at ordinary rates (as high as 35%) and could increase brokerage commission costs.”
The Fund responds by making the requested revision.
Prospectus - Investments, Risks and Performance/Fees and Expenses
11.
In footnote 2 to the fee table, please confirm supplementally that the additional expenses associated with short selling cannot be estimated.
The Fund supplementally confirms that such expenses cannot be estimated.
12.
Please revise the second sentence in footnote 2 to read: “Such additional expenses (including dividends on short positions) cannot be estimated and, therefore, actual Fund expenses may be higher than those shown.”
The Fund responds by making the requested revision.
13.
Please revise the second sentence of footnote 3 to read: “This waiver can be terminated only by the Board of Trustees.”
The Fund responds by making the requested revision.
Prospectus - Management of the Fund/Portfolio Managers
14.
With respect to Mr. Alpers, please replace the phrase “vast experience” with “many years” if appropriate.
The Fund responds by making the requested change.
15.
With respect to Mr. Alpers, please indicate the amount of experience in managing separate accounts and/or registered investment companies, as the case may be.
The Fund responds by adding the following to the end of the first paragraph:
“Mr. Alpers has managed mutual funds since 1994 and accounts using a long/short investment style since 1995.”
Please note that this letter and other documents are in draft form, and in no way reflect the Registrant’s or Fund management’s final intent with respect to the filing discussed herein.
16.
With respect to Mr. Arter, please replace the phrases “extensive” and “now
Show Raw Text
CORRESP
1
filename1.htm
Correspondence
Please
note that this letter and other documents are in draft form, and in no way
reflect the Registrant’s or Fund management’s final intent with respect to the
filing discussed herein.
September
__, 2005
VIA
EDGAR TRANSMISSION
Mr.
Jim
O’Connor
United
States Securities and Exchange Commission
Division
of Investment Management
450
5th
Street, N.W.
Washington,
D.C. 20549-1004
Re:
Trust
for Professional Managers (the
“Trust”)
File
Nos.: 333-62298, 811-10401
Dear
Mr.
O’Connor:
This
amendment is being filed under Rule 485(b) under the Securities Act of 1933
(the
“1933 Act”) in response to your oral comments and suggestions of August 22,
2005, September 23, 2005, and September 29, 2005 regarding the Trust’s
Post-Effective Amendment (“PEA”) No. 8 to its registration statement. PEA No. 8
was filed pursuant to Rule 485(a) under the 1933 Act on Form N-1A on July
1,
2005 for the purpose of adding one new series: the Ascentia Long/Short Fund
(the
“Fund”).
Please
note that on September 12, 2005 the Trust filed PEA No. 11 for the purpose
of
designating September 30, 2005 as the new date upon which PEA No. 8 will
go
effective. On
September 30, 2005 the Trust filed PEA No. 13 for the purpose of designating
October 14, 2005 as the new date upon which PEA No. 8 will go effective.
In
addition to responses to your comments, this amendment also includes certain
non-material changes as appropriate. For your convenience in reviewing the
Fund’s responses, your comments and suggestions are included in bold typeface
immediately followed by the Funds’ responses.
In
addition, in connection with this filing, the Trust hereby states the
following:
1.
The
Trust acknowledges that in connection with the comments made by
the Staff
of the SEC, the Staff has not passed on the accuracy or adequacy
of the
disclosure made herein, and the Funds and their management are
solely
responsible for the content of such
disclosure;
2.
The
Trust acknowledges that the Staff’s comments and changes in disclosure in
response to the Staff’s comments do not foreclose the SEC or other
regulatory body from the opportunity to seek enforcement or take
other
action with respect to the disclosure made herein;
and
3.
The
Trust represents that neither the Funds nor their management will
assert
the Staff’s comments or changes in disclosure in response to the Staff’s
comments as a defense in any action or proceeding initiated by
the SEC or
any person under the federal securities laws of the United
States.
The
Trust’s responses to your comments are as follows:
Please
note that this letter and other documents are in draft form, and in no
way
reflect the Registrant’s or Fund management’s final intent with respect to the
filing discussed herein.
RESPONSES
TO ORAL COMMENTS RECEIVED AUGUST 22, 2005
Prospectus
- Investments, Risks and Performance/Principal Investment
Strategies
1.
In
the fourth paragraph under “Principal Investment Strategies,” what does
the term “primarily” mean with respect to “equity securities”? We would
take this to mean “at least 50%” of the Fund’s assets. Please add
disclosure indicating the Fund’s meaning.
The
Fund
responds by revising the applicable disclosure to read, “The Fund primarily
(at
least with respect to 50%
of
its assets)
takes
long and short positions in equity securities.”
2.
As
appropriate in this section, please indicate the limit on short
positions
that may be taken by the Fund (i.e., dollar amount of short sales).
We
note that a Fund may have up to 100% of its assets in short positions,
so
long as the Fund meets the necessary requirements with respect
to
segregation of assets, etc. (See Investment Company Act Release
No.
10-666).
The
Fund
responds by adding the following language to the second paragraph in this
section:
“The
Fund
may invest up to 100% (but no more than 100%) of its assets in short
positions.”
3.
We
note that short sales raise numerous regulatory and other issues.
Please
supplementally confirm that the Fund will not have problems meeting
the
various regulatory requirements associated with short selling,
including
among other things: (a) maintain the Fund’s 15% asset limitation with
respect to illiquid securities; (b) meeting the fund’s continuous
obligations regarding redemptions; (c) Section 18 requirements
regarding
the segregation of assets; (d) Regulation T; (e) applicable NASD
rules;
and (f) various NYSE rules regarding posting margin.
The
Fund
supplementally confirms that it fully intends to comply with applicable
regulatory requirements with respect to the Fund’s short sales.
4.
We
note that under Section 18(f) of the Investment Company Act of
1940, short
sales constitute prohibited “senior securities” unless there is
appropriate asset coverage, which may include the segregation of
assets,
coverage through call options or some combination. Please supplementally
inform us of the intended “coverage” of the Fund’s investments.
As
disclosed in the subsection “Short Sales” in the “Investment Policies,
Strategies and Associated Risks” section of the Fund’s Statement of Additional
Information (the “SAI”), the appropriate asset coverage will typically be
provided through the Fund’s segregation of liquid assets.
5.
Please
provide a statement in the prospectus something to the effect that
“The
Fund’s Board of Trustees has considered the Fund’s short sales strategy
and its attendant risks and has determined that the strategy does
not
impair the Fund’s ability to meet redemptions or meet other regulatory
requirements. Furthermore, the Board of Trustees has adopted guidelines
that ensure that the Fund’s investment advisor continuously monitors the
Fund’s short positions and the Fund’s compliance with the regulatory
requirements in the best interest of shareholders.”
The
Fund
responds by adding the requested disclosure at the end of the second paragraph
in this section.
2
Please
note that this letter and other documents are in draft form, and in no
way
reflect the Registrant’s or Fund management’s final intent with respect to the
filing discussed herein.
6.
Please
confirm that the Fund will invest in ETFs and/or other investment
companies that may not have an exemptive order from the SEC.
The
Fund
supplementally confirms that it will make such investments in accordance
with
applicable disclosure in the SAI, which may include funds and/or ETFs without
exemptive orders.
7.
We
note that you indicated “Borrowing Risks” and “Foreign Securities Risk” in
the Fund’s Principal Risks section. Please indicate in this section the
intended limit in such investments.
The
Fund
responds by adding the following to the end of the fourth paragraph in the
section:
“The
Fund
may have up to 75% of its assets invested directly or indirectly in foreign
securities.”
In
addition, the following is added as a new fifth paragraph to the
section:
“The
Fund
may also borrow money from banks or other financial institutions to purchase
securities, which is commonly known as “leveraging.” Leveraging allows the Fund
to generate a return that is larger than what would be generated on the invested
capital without leverage, thus changing small market movements into larger
changes in the value of the investments of the Fund.”
8.
Please
revise the third sentence under the subheading “Portfolio Turnover Rate”
to read:
“A
high portfolio turnover rate in any year will result in payment by the Fund
of
above-average transaction costs and could generate
capital gains that must be distributed to shareholders as short-term capital
gains taxed at ordinary rates. Because of these and other reasons, this Fund
may
be more appropriate for shareholders holding Fund shares through an IRA or
other
tax-deferred account.”
The
Fund
responds by making the requested revision.
Prospectus
- Investments, Risks and Performance/Principal Risks
9.
Please
revise the “Short Sale Risk” to read: “Short
sale strategies are riskier than “long” investment
strategies.
Short selling may result in the Fund’s investment performance suffering if
it is required to close out a short position earlier than it had
intended.
This would occur if the lender required the Fund to deliver the
securities
it borrowed at the commencement of the short sale and the Fund
was unable
to borrow the securities from other securities lenders. Furthermore,
until
the Fund replaces a security borrowed, or sold short, it must pay
to the
lender amounts equal to any dividends that accrue during the period
of the
short sale. In
addition, the Fund will incur certain transaction fees associated
with
short selling.
Short sale strategies are often characterized as a form of leveraging
or
speculative
investments.
Although the Advisor uses speculative
investment
strategies, there is no assurance that these
strategies will protect against losses or perform better than
non-speculative
strategies. The use of short sales is an effort by the Fund to
protect
against losses due to general movements in market prices; however,
no
assurance can be given that such strategies
will be successful or that consistent absolute returns will be
achieved.”
The
Fund
responds by making the requested revisions.
3
Please
note that this letter and other documents are in draft form, and in no
way
reflect the Registrant’s or Fund management’s final intent with respect to the
filing discussed herein.
10.
Please
revise the “High Portfolio Turnover Rate Risk” to read, in
part:“The
Fund’s investment strategy may result in high turnover
rates. This
could generate capital gains that must be distributed to shareholders
as
short-term capital gains taxed at ordinary rates (as high as
35%) and
could increase brokerage commission costs.”
The
Fund
responds by making the requested revision.
Prospectus
- Investments, Risks and Performance/Fees and Expenses
11.
In
footnote 2 to the fee table, please confirm supplementally that
the
additional expenses associated with short selling cannot be estimated.
The
Fund
supplementally confirms that such expenses cannot be estimated.
12.
Please
revise the second sentence in footnote 2 to read: “Such additional
expenses (including
dividends on short positions) cannot
be estimated and, therefore, actual Fund expenses may be higher
than those
shown.”
The
Fund
responds by making the requested revision.
13.
Please
revise the second sentence of footnote 3 to read: “This waiver can be
terminated only
by the Board of
Trustees.”
The
Fund
responds by making the requested revision.
Prospectus
- Management of the Fund/Portfolio Managers
14.
With
respect to Mr. Alpers, please replace the phrase “vast experience” with
“many years” if appropriate.
The
Fund
responds by making the requested change.
15.
With
respect to Mr. Alpers, please indicate the amount of experience
in
managing separate accounts and/or registered investment companies,
as the
case may be.
The
Fund
responds by adding the following to the end of the first paragraph:
“Mr.
Alpers has managed
mutual funds since 1994 and accounts using a long/short investment style
since
1995.”
4
Please
note that this letter and other documents are in draft form, and in no
way
reflect the Registrant’s or Fund management’s final intent with respect to the
filing discussed herein.
16.
With
respect to Mr. Arter, please replace the phrases “extensive” and “now