SEC Company Response from Advisers Investment Trust (CIK 0001516523) — Mar 5, 2021
Advisers Investment Trust (CIK 0001516523)
Date: March 5, 2021 · CIK: 0001516523 · Accession: 0001193125-21-071214
AI Filing Summary & Sentiment
File numbers found in text: 333-173080, 811-22538
Letter
Division of Investment Management U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549
RE: Advisers Investment Trust: File Nos. 333-173080 and 811-22538
Dear Mr. Be:
On December 15, 2020, Advisers Investment Trust (the “Registrant” or the “Trust”) filed Post-Effective Amendment No. 92 (the “Amendment”) to the Trust’s Registration Statement under the Securities Act of 1933 (the “1933 Act”). The Amendment was filed pursuant to Rule 485(a)(1) under the 1933 Act to register the State Farm Growth Fund, State Farm Balanced Fund, State Farm Interim Fund and State Farm Municipal Bond Fund (each a “Fund” and collectively, the “Funds”), each a new series of the Trust. On February 2, 2021, you provided oral comments. The following is a summary of our understanding of your comments and responses from the Trust.
General
1. Comment: Please file a correspondence via EDGAR responding to these comments at least five business days prior to filing a post-effective amendment under Rule 485(b). Please also provide the staff with a copy of the Rule 485(b) filing redlined to show changes from the 485(a) filing.
Response: The Registrant will file an EDGAR correspondence responding to these comments at least five business days prior to filing a post-effective amendment under Rule 485(b) and will provide the staff with a redlined copy of the Rule 485(b) filing.
2. Comment: Please confirm supplementally that the Registrant will not make sales using any prospectus included in the Amendment until after the closing of the merger transaction with the predecessor funds.
Response: The Registrant confirms that it will not make sales using any prospectus included in the Amendment until after the closing of the merger transaction with the predecessor funds.
Fee Tables
3. Comment: Please provide supplementally a completed fee table.
Response: The complete fee tables for each Fund are included below.
THOMPSON HINE LLP
41 South High Street
www.ThompsonHine.com
ATTORNEYS AT LAW
Suite 1700
O: 614.469.3200
Columbus, Ohio 43215-6101
F: 614.469.3361
March 5, 2021
Page 2
State Farm Growth Fund
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees
(Fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases (as a percentage of offering price)
None
Redemption fee (as a percentage of amount redeemed)
None
Exchange fee
None
Maximum account fee
None
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
Management Fee
0.10 %
Other expenses1
0.06 %
Total annual fund operating expenses
0.16 %
Fee Waivers and Reimbursements 2
(0.04 )%
Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements
0.12 %
Expenses are based on estimated amounts for the current fiscal year.
State Farm Investment Management Corp. (the “Adviser”) has contractually agreed to waive fees and reimburse expenses to the extent that Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) exceed 0.12% until January 28, 2025. If it becomes unnecessary for the Adviser to waive fees or make reimbursements, the Adviser may recapture any of its prior waivers or reimbursements for a period not to exceed three years from the date on which the waiver or reimbursement was made to the extent that such a recapture does not cause the Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) to exceed the current expense limitation or the expense limitation that was in effect at the time of the waiver or reimbursement. The agreement to waive fees and reimburse expenses may be terminated by the Board of Trustees at any time and will terminate automatically upon termination of the Investment Advisory Agreement.
March 5, 2021
Page 3
State Farm Balanced Fund
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees
(Fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases (as a percentage of offering price)
None
Redemption fee (as a percentage of amount redeemed)
None
Exchange fee
None
Maximum account fee
None
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
Management Fee
0.11 %
Other expenses1
0.07 %
Total annual fund operating expenses
0.18 %
Fee Waivers and Reimbursements 2
(0.04 )%
Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements
0.14 %
Expenses are based on estimated amounts for the current fiscal year.
State Farm Investment Management Corp. (the “Adviser”) has contractually agreed to waive fees and reimburse expenses to the extent that Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) exceed 0.14% until January 28, 2025. If it becomes unnecessary for the Adviser to waive fees or make reimbursements, the Adviser may recapture any of its prior waivers or reimbursements for a period not to exceed three years from the date on which the waiver or reimbursement was made to the extent that such a recapture does not cause the Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) to exceed the current expense limitation or the expense limitation that was in effect at the time of the waiver or reimbursement. The agreement to waive fees and reimburse expenses may be terminated by the Board of Trustees at any time and will terminate automatically upon termination of the Investment Advisory Agreement.
March 5, 2021
Page 4
State Farm Interim Fund
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees
(Fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases (as a percentage of offering price)
None
Redemption fee (as a percentage of amount redeemed)
None
Exchange fee
None
Maximum account fee
None
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
Management Fee
0.12 %
Other expenses1
0.10 %
Total annual fund operating expenses
0.22 %
Fee Waivers and Reimbursements 2
(0.06 )%
Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements
0.16 %
Expenses are based on estimated amounts for the current fiscal year.
State Farm Investment Management Corp. (the “Adviser”) has contractually agreed to waive fees and reimburse expenses to the extent that Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) exceed 0.16% until January 28, 2025. If it becomes unnecessary for the Adviser to waive fees or make reimbursements, the Adviser may recapture any of its prior waivers or reimbursements for a period not to exceed three years from the date on which the waiver or reimbursement was made to the extent that such a recapture does not cause the Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) to exceed the current expense limitation or the expense limitation that was in effect at the time of the waiver or reimbursement. The agreement to waive fees and reimburse expenses may be terminated by the Board of Trustees at any time and will terminate automatically upon termination of the Investment Advisory Agreement.
March 5, 2021
Page 5
State Farm Municipal Bond Fund
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees
(Fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases (as a percentage of offering price)
None
Redemption fee (as a percentage of amount redeemed)
None
Exchange fee
None
Maximum account fee
None
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
Management Fee
0.11 %
Other expenses1
0.07 %
Total annual fund operating expenses
0.18 %
Fee Waivers and Reimbursements 2
(0.02 )%
Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements
0.16 %
Expenses are based on estimated amounts for the current fiscal year.
State Farm Investment Management Corp. (the “Adviser”) has contractually agreed to waive fees and reimburse expenses to the extent that Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) exceed 0.16% until January 28, 2025. If it becomes unnecessary for the Adviser to waive fees or make reimbursements, the Adviser may recapture any of its prior waivers or reimbursements for a period not to exceed three years from the date on which the waiver or reimbursement was made to the extent that such a recapture does not cause the Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) to exceed the current expense limitation or the expense limitation that was in effect at the time of the waiver or reimbursement. The agreement to waive fees and reimburse expenses may be terminated by the Board of Trustees at any time and will terminate automatically upon termination of the Investment Advisory Agreement.
4. Comment: Please disclose supplementally how Other Expenses were calculated and determined to be a reasonable estimate for the current fiscal year.
Response: Based on the operating model of the Funds, Other Expenses were calculated and determined based on estimated service provider fees, filing fees, legal fees, audit fees, insurance coverage, and Trustee fees.
March 5, 2021
Page 6
Principal Investment Strategy – State Farm Growth Fund
5. Comment: The second to last sentence in the first paragraph states that the Fund’s investments include but are not limited to “large- and mid-capitalization equity securities.” Please define large- and mid-capitalization companies.
Response: The Registrant has revised the Prospectus disclosure referenced in the comment as follows:
Although there is no restriction on the size of the companies in which the Fund invests, ordinarily most of the Fund’s investments include but are not limited to large-capitalization (unadjusted market cap of $9.8 billion or greater) and mid-capitalization (unadjusted market cap of $3.2 billion to $9.8 billion) equity securities, as defined by S&P Dow Jones Indices at the time of investment. Equity securities include common stocks and other income-producing equity securities. The S&P Dow Jones Indices market capitalizations noted above are as of February 26, 2021.
6. Comment: Please consider briefly discussing any parameters or caps (e.g., limitations applicable to sectors, industries, etc.) applied by State Farm Investment Management Corp. (the “Adviser”) when selecting investments for the Fund.
Response: The Registrant has revised the Prospectus disclosure referenced in the comment as follows:
While the Fund seeks to maintain sector weights within 3% to 5% of each sector’s weight in the Fund’s benchmark index, in making investment decisions on specific securities, the Sub-Adviser uses statistical modeling and research to look for companies with one or more of the following characteristics:
•
Strong profitability within their sector (quality).
•
Strong cash flows within their sector (quality).
•
Strong management efficiency (quality), meaning companies that are judicious users of capital and that do not exhibit excessive capital deployment (e.g., as measured by stock issuance, capital expenditures, and leverage ratios) relative to peers.
•
The ability to lower the volatility of the Fund (lower volatility).
7. Comment: Please consider briefly discussing how the Adviser decides to which sectors to allocate assets.
Response: The Registrant believes that the response to comment 6 above addresses this comment.
March 5, 2021
Page 7
8. Comment: Please briefly disclose how the Adviser analyzes “strong management efficiency”.
Response: The Sub-Adviser believes companies possessing strong management efficiency tend to exhibit judicious use of capital, meaning they tend to avoid excessive stock issuance, excessive capital expenditures and excessive use of leverage, relative to their peers. The Sub-Adviser examines certain metrics (e.g., stock issuance, capital expenditures, leverage ratios) commonly available on publicly traded companies and applies statistical modeling and research techniques to identify companies exhibiting “strong management efficiency” relative to their peers.
In assessing strong management efficiency (quality), NTI uses a proprietary quantitative ranking that is designed to provide exposure to quality characteristics. Beginning with a broad universe of liquid securities, NTI applies the proprietary quality score, which focuses on companies that are judicious users of capital and that do not exhibit excessive capital deployment. NTI then optimizes the remaining universe of securities for the appropriate quality and diversification goals. NTI also performs a risk management analysis in which risk exposures are measured and managed at the security, sector and portfolio levels.
The Registrant has revised the Prospectus disclosure referenced in the comment as follows:
While the Fund seeks to maintain sector weights within 3% to 5% of each sector’s weight in the Fund’s benchmark index, in making investment decisions on specific securities, the Sub-Adviser uses statistical modeling and research to look for companies with one or more of the following characteristics:
•
Strong profitability within their sector (quality).
•
Strong cash flows within their sector (quality).
•
Strong management efficiency (quality), meaning companies that are judicious users of capital and that do not exhibit excessive capital deployment (e.g., as measured by stock issuance, capital expenditures, and leverage ratios) relative to peers.
•
The ability to lower the volatility of the Fund (lower volatility).
In assessing strong management efficiency (quality), NTI uses a proprietary quantitative ranking that is designed to provide exposure to quality characteristics. Beginning with a broad universe of liquid securities, NTI applies the proprietary quality score, which focuses on companies that are judicious users of capital and that do not exhibit excessive capital deployment. NTI then optimizes the remaining universe of securities for the appropr
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CORRESP 1 filename1.htm CORRESP March 5, 2021 Raymond Be Disclosure Review Office Division of Investment Management U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 RE: Advisers Investment Trust: File Nos. 333-173080 and 811-22538 Dear Mr. Be: On December 15, 2020, Advisers Investment Trust (the “Registrant” or the “Trust”) filed Post-Effective Amendment No. 92 (the “Amendment”) to the Trust’s Registration Statement under the Securities Act of 1933 (the “1933 Act”). The Amendment was filed pursuant to Rule 485(a)(1) under the 1933 Act to register the State Farm Growth Fund, State Farm Balanced Fund, State Farm Interim Fund and State Farm Municipal Bond Fund (each a “Fund” and collectively, the “Funds”), each a new series of the Trust. On February 2, 2021, you provided oral comments. The following is a summary of our understanding of your comments and responses from the Trust. General 1. Comment: Please file a correspondence via EDGAR responding to these comments at least five business days prior to filing a post-effective amendment under Rule 485(b). Please also provide the staff with a copy of the Rule 485(b) filing redlined to show changes from the 485(a) filing. Response: The Registrant will file an EDGAR correspondence responding to these comments at least five business days prior to filing a post-effective amendment under Rule 485(b) and will provide the staff with a redlined copy of the Rule 485(b) filing. 2. Comment: Please confirm supplementally that the Registrant will not make sales using any prospectus included in the Amendment until after the closing of the merger transaction with the predecessor funds. Response: The Registrant confirms that it will not make sales using any prospectus included in the Amendment until after the closing of the merger transaction with the predecessor funds. Fee Tables 3. Comment: Please provide supplementally a completed fee table. Response: The complete fee tables for each Fund are included below. THOMPSON HINE LLP 41 South High Street www.ThompsonHine.com ATTORNEYS AT LAW Suite 1700 O: 614.469.3200 Columbus, Ohio 43215-6101 F: 614.469.3361 March 5, 2021 Page 2 State Farm Growth Fund Fees and Expenses of the Fund This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Shareholder Fees (Fees paid directly from your investment) Maximum sales charge (load) imposed on purchases (as a percentage of offering price) None Redemption fee (as a percentage of amount redeemed) None Exchange fee None Maximum account fee None Annual Fund Operating Expenses (Expenses that you pay each year as a percentage of the value of your investment) Management Fee 0.10 % Other expenses1 0.06 % Total annual fund operating expenses 0.16 % Fee Waivers and Reimbursements 2 (0.04 )% Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements 0.12 % 1 Expenses are based on estimated amounts for the current fiscal year. 2 State Farm Investment Management Corp. (the “Adviser”) has contractually agreed to waive fees and reimburse expenses to the extent that Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) exceed 0.12% until January 28, 2025. If it becomes unnecessary for the Adviser to waive fees or make reimbursements, the Adviser may recapture any of its prior waivers or reimbursements for a period not to exceed three years from the date on which the waiver or reimbursement was made to the extent that such a recapture does not cause the Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) to exceed the current expense limitation or the expense limitation that was in effect at the time of the waiver or reimbursement. The agreement to waive fees and reimburse expenses may be terminated by the Board of Trustees at any time and will terminate automatically upon termination of the Investment Advisory Agreement. March 5, 2021 Page 3 State Farm Balanced Fund Fees and Expenses of the Fund This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Shareholder Fees (Fees paid directly from your investment) Maximum sales charge (load) imposed on purchases (as a percentage of offering price) None Redemption fee (as a percentage of amount redeemed) None Exchange fee None Maximum account fee None Annual Fund Operating Expenses (Expenses that you pay each year as a percentage of the value of your investment) Management Fee 0.11 % Other expenses1 0.07 % Total annual fund operating expenses 0.18 % Fee Waivers and Reimbursements 2 (0.04 )% Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements 0.14 % 1 Expenses are based on estimated amounts for the current fiscal year. 2 State Farm Investment Management Corp. (the “Adviser”) has contractually agreed to waive fees and reimburse expenses to the extent that Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) exceed 0.14% until January 28, 2025. If it becomes unnecessary for the Adviser to waive fees or make reimbursements, the Adviser may recapture any of its prior waivers or reimbursements for a period not to exceed three years from the date on which the waiver or reimbursement was made to the extent that such a recapture does not cause the Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) to exceed the current expense limitation or the expense limitation that was in effect at the time of the waiver or reimbursement. The agreement to waive fees and reimburse expenses may be terminated by the Board of Trustees at any time and will terminate automatically upon termination of the Investment Advisory Agreement. March 5, 2021 Page 4 State Farm Interim Fund Fees and Expenses of the Fund This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Shareholder Fees (Fees paid directly from your investment) Maximum sales charge (load) imposed on purchases (as a percentage of offering price) None Redemption fee (as a percentage of amount redeemed) None Exchange fee None Maximum account fee None Annual Fund Operating Expenses (Expenses that you pay each year as a percentage of the value of your investment) Management Fee 0.12 % Other expenses1 0.10 % Total annual fund operating expenses 0.22 % Fee Waivers and Reimbursements 2 (0.06 )% Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements 0.16 % 1 Expenses are based on estimated amounts for the current fiscal year. 2 State Farm Investment Management Corp. (the “Adviser”) has contractually agreed to waive fees and reimburse expenses to the extent that Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) exceed 0.16% until January 28, 2025. If it becomes unnecessary for the Adviser to waive fees or make reimbursements, the Adviser may recapture any of its prior waivers or reimbursements for a period not to exceed three years from the date on which the waiver or reimbursement was made to the extent that such a recapture does not cause the Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) to exceed the current expense limitation or the expense limitation that was in effect at the time of the waiver or reimbursement. The agreement to waive fees and reimburse expenses may be terminated by the Board of Trustees at any time and will terminate automatically upon termination of the Investment Advisory Agreement. March 5, 2021 Page 5 State Farm Municipal Bond Fund Fees and Expenses of the Fund This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Shareholder Fees (Fees paid directly from your investment) Maximum sales charge (load) imposed on purchases (as a percentage of offering price) None Redemption fee (as a percentage of amount redeemed) None Exchange fee None Maximum account fee None Annual Fund Operating Expenses (Expenses that you pay each year as a percentage of the value of your investment) Management Fee 0.11 % Other expenses1 0.07 % Total annual fund operating expenses 0.18 % Fee Waivers and Reimbursements 2 (0.02 )% Total Annual Fund Operating Expenses After Fee Waivers and Reimbursements 0.16 % 1 Expenses are based on estimated amounts for the current fiscal year. 2 State Farm Investment Management Corp. (the “Adviser”) has contractually agreed to waive fees and reimburse expenses to the extent that Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) exceed 0.16% until January 28, 2025. If it becomes unnecessary for the Adviser to waive fees or make reimbursements, the Adviser may recapture any of its prior waivers or reimbursements for a period not to exceed three years from the date on which the waiver or reimbursement was made to the extent that such a recapture does not cause the Total Annual Fund Operating Expenses (excluding brokerage costs, interest, taxes, dividends, litigation and indemnification expenses, expenses associated with investments in underlying investment companies, and extraordinary expenses) to exceed the current expense limitation or the expense limitation that was in effect at the time of the waiver or reimbursement. The agreement to waive fees and reimburse expenses may be terminated by the Board of Trustees at any time and will terminate automatically upon termination of the Investment Advisory Agreement. 4. Comment: Please disclose supplementally how Other Expenses were calculated and determined to be a reasonable estimate for the current fiscal year. Response: Based on the operating model of the Funds, Other Expenses were calculated and determined based on estimated service provider fees, filing fees, legal fees, audit fees, insurance coverage, and Trustee fees. March 5, 2021 Page 6 Principal Investment Strategy – State Farm Growth Fund 5. Comment: The second to last sentence in the first paragraph states that the Fund’s investments include but are not limited to “large- and mid-capitalization equity securities.” Please define large- and mid-capitalization companies. Response: The Registrant has revised the Prospectus disclosure referenced in the comment as follows: Although there is no restriction on the size of the companies in which the Fund invests, ordinarily most of the Fund’s investments include but are not limited to large-capitalization (unadjusted market cap of $9.8 billion or greater) and mid-capitalization (unadjusted market cap of $3.2 billion to $9.8 billion) equity securities, as defined by S&P Dow Jones Indices at the time of investment. Equity securities include common stocks and other income-producing equity securities. The S&P Dow Jones Indices market capitalizations noted above are as of February 26, 2021. 6. Comment: Please consider briefly discussing any parameters or caps (e.g., limitations applicable to sectors, industries, etc.) applied by State Farm Investment Management Corp. (the “Adviser”) when selecting investments for the Fund. Response: The Registrant has revised the Prospectus disclosure referenced in the comment as follows: While the Fund seeks to maintain sector weights within 3% to 5% of each sector’s weight in the Fund’s benchmark index, in making investment decisions on specific securities, the Sub-Adviser uses statistical modeling and research to look for companies with one or more of the following characteristics: • Strong profitability within their sector (quality). • Strong cash flows within their sector (quality). • Strong management efficiency (quality), meaning companies that are judicious users of capital and that do not exhibit excessive capital deployment (e.g., as measured by stock issuance, capital expenditures, and leverage ratios) relative to peers. • The ability to lower the volatility of the Fund (lower volatility). 7. Comment: Please consider briefly discussing how the Adviser decides to which sectors to allocate assets. Response: The Registrant believes that the response to comment 6 above addresses this comment. March 5, 2021 Page 7 8. Comment: Please briefly disclose how the Adviser analyzes “strong management efficiency”. Response: The Sub-Adviser believes companies possessing strong management efficiency tend to exhibit judicious use of capital, meaning they tend to avoid excessive stock issuance, excessive capital expenditures and excessive use of leverage, relative to their peers. The Sub-Adviser examines certain metrics (e.g., stock issuance, capital expenditures, leverage ratios) commonly available on publicly traded companies and applies statistical modeling and research techniques to identify companies exhibiting “strong management efficiency” relative to their peers. In assessing strong management efficiency (quality), NTI uses a proprietary quantitative ranking that is designed to provide exposure to quality characteristics. Beginning with a broad universe of liquid securities, NTI applies the proprietary quality score, which focuses on companies that are judicious users of capital and that do not exhibit excessive capital deployment. NTI then optimizes the remaining universe of securities for the appropriate quality and diversification goals. NTI also performs a risk management analysis in which risk exposures are measured and managed at the security, sector and portfolio levels. The Registrant has revised the Prospectus disclosure referenced in the comment as follows: While the Fund seeks to maintain sector weights within 3% to 5% of each sector’s weight in the Fund’s benchmark index, in making investment decisions on specific securities, the Sub-Adviser uses statistical modeling and research to look for companies with one or more of the following characteristics: • Strong profitability within their sector (quality). • Strong cash flows within their sector (quality). • Strong management efficiency (quality), meaning companies that are judicious users of capital and that do not exhibit excessive capital deployment (e.g., as measured by stock issuance, capital expenditures, and leverage ratios) relative to peers. • The ability to lower the volatility of the Fund (lower volatility). In assessing strong management efficiency (quality), NTI uses a proprietary quantitative ranking that is designed to provide exposure to quality characteristics. Beginning with a broad universe of liquid securities, NTI applies the proprietary quality score, which focuses on companies that are judicious users of capital and that do not exhibit excessive capital deployment. NTI then optimizes the remaining universe of securities for the appropr