SEC Company Response from Columbia Funds Series Trust II (CIK 0001352280) — Sep 7, 2021
Columbia Funds Series Trust II (CIK 0001352280)
Date: Sept. 7, 2021 · CIK: 0001352280 · Accession: 0001193125-21-266415
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File numbers found in text: 333-131683, 811-21852
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CORRESP
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CORRESP
COLUMBIA FUNDS SERIES TRUST II
290 Congress Street
Boston, MA 02210
September 7, 2021
VIA EDGAR
Mr. Mark Cowan
U.S. Securities and Exchange Commission
Division of Investment
Management, Disclosure Review Office
100 F Street, N.E.
Washington, D.C. 20549
RE:
Columbia Funds Series Trust II
Columbia Seligman Technology and Information Fund
Post-Effective Amendment No. 221
File Nos.
333-131683/811-21852
Dear Mr. Cowan:
This
letter responds to comments received from the staff of the Securities and Exchange Commission (the Staff) on August 18, 2021 for the Filing filed by and on behalf of Columbia Funds Series Trust II on behalf of its series, Columbia Seligman
Technology and Information Fund (the Fund). Comments and responses are outlined below.
PROSPECTUS COMMENTS:
Fees and Expenses of the Fund
Comment 1:
The following disclosure is not permitted or required under the Fees and Expenses of the Fund section in the summary prospectus. Please move this disclosure in response to Item 12.
You may be required to pay such brokerage commissions and other fees to financial intermediaries when transacting in any class of Fund shares, including those that do not assess any front-end
sales charge, contingent deferred sales charge, or other asset-based fee for sales or distribution. Such brokerage commissions and other fees are set by the financial intermediary.
Response:
This disclosure will be moved to Item 12.
Comment 2:
At least five business days prior to the effective date, please file on Edgar responses to Staff comments, along with revised disclosure, and the complete Annual Fund Operating Expenses table.
Response:
See Exhibit A to this letter for the completed Annual Fund Operating Expenses table for the Fund.
Principal Investment Strategies
Comment 3:
In the first paragraph under Principal Investment Strategies, please include examples of technology and information companies.
Response:
The Principal Investment Strategies has been revised as follows:
Under normal market conditions, the Fund invests at least 80% of its net assets (including the
amount of any borrowings for investment purposes) in securities of technology and information companies. These companies in which the Fund will concentrate include are companies operating in the information technology
and communications services sectors, applying a global industry classification standard, as may be amended from time to time, to determine industry/sector classifications, as well as other related industries. These technology and
technology-related industry companies may also include companies operating in the consumer discretionary and healthcare sectors, particularly those that are principally engaged in offering, using, or developing
products, processes, or services that will provide or will benefit significantly from technological advances and improvements.
By
way of example, technology and information companies may include semiconductor, semiconductor equipment, technology hardware, storage and peripherals, software, communication equipment and services, electronic equipment and instruments, internet
services and infrastructure, media, health care equipment and supplies, and medical technology companies.
Comment 4:
Please provide better description of how Fund determines a company is a technology or information company. Specify what it is about companies operating in consumer discretionary and healthcare sectors that makes them a technology
and information company.
Response:
Please see our response to Comment 3 above, which includes revisions to the Principal Investment Strategies also designed to address this Comment 4.
Comment 5:
The SAI states that the Fund will, under normal market conditions, invest at least 25% of the value of its total assets at the time of purchase in the securities of issuers conducting their principal business activities in the
technology and related group of industries. Please disclose that the Fund will be concentrated in technology and related group of industries (specify the related group of industries) as part of its principal investment strategy and disclose any
principal risks of concentrating in such industries in the section below. This should also be included in the statutory in response to item 9(b). (D8 of the SAI)
Response:
Please see our response to Comment 3 above, which includes revisions to the Principal Investment Strategies also designed to address this Comment 5.
Comment 6:
In the third paragraph under the Principal Investment Strategies section, state that these are considered growth companies as noted in risk disclosure, or tie the growth strategy to Fund’s investments.
Response:
The third paragraph under the Principal Investment Strategies section has been revised as follows:
The Fund may invest in securities of large capitalization companies that are well established and can be expected to grow with the market (i.e., growth stocks). The Fund may also invest in small-to-medium size capitalization companies that the Fund’s portfolio managers believe provide opportunities to benefit from the rapidly changing technologies and the expansion of the sectors and
industries in which the Fund invests. These securities generally include The Fund invests substantially in common stocks
Comment 7:
In the last sentence of the third paragraph under the Principal Investment Strategies section, please delete “generally” and identify all the types of securities the fund principally invests in other than common
stocks.
Response:
Please see our response to Comment 6 that also address this Comment 7.
Principal Risks
Comment 8:
The Fund’s Principal Risks should be presented in order of significance to the Fund rather than in alphabetical order. Please revise. Please see IM Director’s October 2018 speech and IM Guidance 2014-08 (Risk Guidance).
Response:
We have considered this comment and have taken measures across the fund complex to identify, at the very beginning of each Fund’ s Principal Risks discussion, what the Fund views as its main principal risks, which is
meant to guide investors as to the few key risks of investing in the Fund. We believe this approach to be consistent with the intent and sprit of ADI 2019-08. Also, the Funds note that the Commission has
proposed amendments in this regard (https://www.sec.gov/rules/proposed/2020/33-10814.pdf), so the Funds, with all due respect, prefer to await final Commission guidance in this regard before instituting an
approach to disclosure that does not align to any potential Commission guidance in this regard.
Comment 9:
In the first paragraph under Principal Risks, replace “these and other” with “the.”
Response:
Please see response to Comment 8 above.
Comment 10:
In the first paragraph under Principal Risks, please delete “, including Market Risk and Sector Risk, among others”. There is no reason to call these out. All of the risks set forth below are to be
principal risks.
Response:
Please see response to Comment 8 above.
Comment 11:
Under the Principal Risk section, please include any risks applicable to Brexit to Foreign Securities Risk, if applicable.
Response:
The risks associated with Brexit are not applicable to the Fund’s principal investments.
Comment 12:
As noted in Market Risk, if fund will be investing in emerging market countries, this should be disclosed in strategy and add emerging market risk disclosure. If not, revise this disclosure to eliminate the reference
to risks applicable to emerging market countries.
Response:
Market Risk for the Fund has been revised as noted below.
In addition, the impact of infectious illness outbreaks and epidemics in emerging market less developed countries may be greater due to generally less established healthcare systems, governments and financial
markets.
Comment 13:
In Sector Risk in the Summary Prospectus and in Item 9, please include any principal risks affecting technology companies in the information communications services sectors, as well as the consumer discretionary and
healthcare sectors.
Response:
Please see the Information Technology Sector Risk disclosure beneath Sector Risk. Information Technology Sector Risk is particularly focused on from a risk perspective because the Fund generally has at least 80% of its
assets invested in this sector (84.7% at May 31, 2021). To the extent that other sectors become a material component of the Fund’s portfolio, these other sectors (referenced in the Principal Investment Strategies) will receive Principal
Risk disclosure treatment.
Performance Information
Comment 14:
In the second sentence of the second paragraph under the Performance Information section, as class C is shown in the table with CDSC, add “where applicable, . . .”
Response:
We respectfully disagree with the comment, as the sentence is focused on explaining that the returns shown for each such share class include the returns of the Fund’s Class A shares without sales
charge applicable to Class A share.
More Information About the Fund
Principal Investment Strategies
Comment 15:
Include a brief summary of the Fund’s stock-selection approach in the Principal Investment Strategies section in the Summary section of the prospectus.
Response:
The following disclosure will be added to the Principal Investment Strategies section in the Summary section of the prospectus:
The Fund uses a bottom-up stock selection approach. This means that Columbia Management Investment Advisers, LLC (the Investment Manager) uses extensive
in-depth research into specific companies to find those companies that it believes offer significant prospects for future growth.
Comment 16:
In the first bullet point under the fourth paragraph, please define/quantify what is meant by “robust”.
Response:
We have revised the first bullet to read: Growth prospects
Principal Risks
Comment 17:
Please note that, other than Active Management Risks, Foreign Securities Risk and Small and Mid Cap Stock Risk, the risk disclosure in the More Information About the Fund section is identical to the risk disclosure in the Summary of
the Fund section. Please revise.
Response:
We appreciate the Staff’s comment and have reviewed IM Guidance 2014-08. In our view, the disclosure of principal risks and principal investment strategies of investing in the Fund in
response to Item 4 accurately summarizes the key information that is important to an investor decision and we do not believe the Item 4 disclosure reflects long, complex and detailed descriptions of principal risks and principal investment
strategies that are dense and not user-friendly, as discussed in IM Guidance 2014-08. Certain principal risk and principal investment strategy disclosures provided in response to Item 9 are identical to those
provided in response to Item 4 which reflects our view that, in such instances, expanding on the key information provided in response to Item 4 would not add significant incremental benefit to making an investment decision. While we understand that
information disclosed in response to Item 4 need not be repeated in response to Item 9, we believe omitting such information in response to Item 9 could result in investor confusion and misunderstanding of the principal risks and principal
investment strategies of investing in the Fund.
Comment 17:
In the More Information About the Fund – Additional Investment Strategies and Policies section, the Staff encourages funds to disclose non-principal risks (and non-principal investment strategies) in the fund’s statement of additional information rather than in the fund’s prospectus. The Staff believes that including this disclosure in the prospectus may
overwhelm other important information. See ADI 2019-08 - Improving Principal Risks Disclosure.
Response:
After giving consideration to the comment, the Registrant elects to include certain information, including certain investment strategies and the risks thereof that are not principal investment strategies of the Fund, in the
prospectus in accordance with General Instruction C.3(b) of Form N-1A.
STATEMENT OF ADDITIONAL INFORMATION COMMENTS
Comment 18:
An auditor’s consent is needed for each fund whose financials are incorporated by reference. Otherwise, delete the statement as to other funds not amended by this registration statement.
Response:
Section 7(a) of the Securities Act provides that “[i]f any accountant . . . is named as having prepared or certified any part of the registration statement, or is named as having prepared or certified a report . . . for
use in connection with the registration statement, the written consent of such person shall be filed with the registration statement.” Rule 439(a) under the Securities Act provides that “[i]f the Act or the rules and regulations of the
Commission require the filing of a written consent to the use of any material in connection with the registration
statement, such consent shall be filed as an exhibit to the registration statement even though the material is incorporated therein by reference.” The Columbia Funds’ practice with respect to auditor consents is consistent
with these requirements. The Statement of Additional Information includes the Funds, which intends to file a post-effective amendment to its registration statement pursuant to Rule 485 under the Securities Act as well as other series of the
Registrant that are not amending their registration statement (Other Funds). An auditor’s consent will be filed as an exhibit in the 485(b) submission of the registration statement for the Fund. Likewise, when the Other Funds previously filed a
post-effective amendment to the registration statement pursuant to Rule 485, an auditor’s consent was filed as an exhibit. With respect to the Other Funds, the reference in the Statement of Additional Information to the auditor is not being
made in connection with the registration statement because they are not filing an amendment to the registration statement – the Other Funds and other classes of the Funds will be filing the Statement of Additional Information pursuant to Rule
497 under the Securities Act. Therefore, an additional filing of the auditor consent is not required and does not warrant any additional cost or burden to the Other Funds of securing and filing such consent in addition to the consent filed when they
filed their most recent post-effective amendment to the registration statement.
Comment 19:
In the Fundamental and Non-fundamental Policies – Fundamental Policies – D. – Concentration – D8 section, please add an explanatory note identifying the related
group of industries.
Response:
The following footnote will be added to the Fund’s concentration policy, which is noted in the SAI as D9:
For purposes of applying the limitation set forth in its concentration policy above, applying the Global Industry Classification Standard (GICS) sector classifications, as may be amended from time to time, the Fund invests in
companies operating in the information technology and communications services sectors, which sectors may be changed without Fund shareholder approval.
Comment 20:
Also in the Fundamental and Non-fundamental Policies – Fundamental Policies – D. – Concentration – D8 section, please clarify how the Fund will implement its
concentration policy with respect to investments in any private activity municipal debt securities issued by non-governmental entities.
Please note a fund should look through a private activity municipal debt security whose principal and interest payments are derived principally from the assets and revenues of a nongovernmental entity in order to determine the
industry to which the investments should be allocated when determining the Fund’s compliance with its concentration policies.
Alternatively, a Fund can provide an exception for these privative activity municipal se