SEC Company Response from Kurv ETF Trust (CIK 0001782952) — Mar 5, 2020
Kurv ETF Trust (CIK 0001782952)
Date: March 5, 2020 · CIK: 0001782952 · Accession: 0001398344-20-005282
AI Filing Summary & Sentiment
File numbers found in text: 333-233633, 811-23473
Letter
Division of Investment Management U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549
Re: Esoterica Thematic Trust; File Nos. 333-233633 and 811-23473
Dear Ms. Larkin:
On February 20, 2020, Esoterica Thematic Trust (the “Fund”) filed Pre-Effective Amendment No. 1 to its registration statement on Form N-1A (the “Registration Statement”). The Fund proposes to revise the disclosure in its Prospectus and Statement of Additional Information (“SAI”) in response to the telephonic comments that we received from you on March 3, 2020, as indicated below. The Fund proposes to make the revisions noted below in the final Prospectus and SAI filed pursuant to Rule 497 of the Securities Act of 1933, as amended. Please find also below a reiteration of your comments and the Fund’s responses, which the Fund has authorized Thompson Hine LLP to make on behalf of the Fund.
Capitalized terms not defined herein have the meaning ascribed to them in the Prospectus and SAI.
Prospectus
Page 1 - Footnote 2 to the Fees and Expenses of the Fund Table
Comment 1. In the first line of footnote 2, please change the term “absorb” to “reimburse.”
Response: The requested revision will be made.
Comment 2. The exclusions listed in footnote 2 do not include “foreign custody transaction costs and foreign account set up fees,” however, “foreign custody transaction costs and foreign account set up fees” are listed as exclusions in the Fund’s Operating Expense Limitation Agreement dated February 14, 2020. Please update footnote 2.
Owen.Pinkerton@thompsonhine.com Phone: 202.263.4144
op 4838-0018-0649.4
Ms. Lisa N. Larkin
March 4, 2020
Page 2
Response: The requested revision will be made. Footnote 2 will be revised to specifically track all exclusions found in the Fund’s Operating Expense Limitation Agreement.
Page 1 - Expense Example
Comment 3. The three-year expense example calculation should be $289 not $298.
Response: The requested revision will be made.
Page 2 - Principal Investment Strategies
Comment 4. Please explain in correspondence what the following sentence means in plain English. Specifically, please explain what benefits might be realized. If additional disclosures are necessary, please update the Registration Statement accordingly:
In selecting companies that the Adviser believes are relevant to the 5G-enabled digital economy, it seeks to identify companies that would benefit from 5G and related technology deployment and development and/or capitalize on the 5G-enabled services and applications in the markets in which they operate.
Response: The primary benefit of 5G and related technology for companies who are currently operating without such technology is the ability of the technology to allow companies to expand the size of their available market and, therefore, result in a greater market share. The italicized disclosure above will be updated as noted below.
In selecting companies that the Adviser believes are relevant to the 5G-enabled digital economy, it seeks to identify companies that would benefit, through an increased available market, from 5G and related technology deployment and development and/or capitalize on the 5G-enabled services and applications in the markets in which they operate.
Comment 5. In the second paragraph, under Principal Investment Strategies, you state:
The Adviser’s internal research and analysis leverages insights from diverse sources, including external research, to develop and refine its investment themes and identify and take advantage of trends that have ramifications for individual companies or entire industries.
Ms. Lisa N. Larkin
March 4, 2020
Page 3
Please confirm whether the Fund will concentrate in a specific industry.
Response: As disclosed under “Concentration Risk” and “Sector Concentration Risk,” the Fund is not prohibited from concentrating in one or more industries or industry sectors at any given time, which may subject the Fund to certain risks, which are discussed in the aforementioned risk factors. In addition, there is no disclosure in the Registration Statement that says that the Fund will not concentrate in one or more industries or industry sectors. As a result, we believe that the language highlighted by the Staff is appropriate and consistent with the Fund’s investment strategy and disclosures.
Comment 6. The staff notes that the Trading Sub-Adviser is not referenced in the Principal Investment Strategies section, but that the Adviser is referenced. Should the Trading Sub-Adviser be referenced in this section?
Response: We have reviewed the disclosure highlighted by the Staff and believe that it accurately represents the roles of the Adviser and the Trading Sub-Adviser in connection with managing the Fund’s investment strategy. Specifically, the Adviser is responsible for making all investment decisions and managing the investment process. The Trading Sub-Adviser, subject to the oversight of the Adviser, will primarily be responsible for executing trading orders, valuing securities and maintaining the Fund’s books and records.
Comment 7. Under the Principal Investment Strategies Section with respect to the definitions of “Group 1,” “Group 2” and “Group 3,” please update the Registration Statement, consistent with our initial comments to explain any technical terms in plain English.
Response: The requested revisions will be made as noted below.
• Group 1: Infrastructure
The company's business activities, products or services are instrumental focused on or benefit from the development of new products or services, technological improvements and advancements in scientific research in the development of 5G communication infrastructure network including core network, transmission, and radio access network, or cloud computing infrastructure.
Ms. Lisa N. Larkin
March 4, 2020
Page 4
• Group 2: Edge Device
The company's business activities, products or services are instrumental focused on or benefit from the development of new products or services, technological improvements and advancements in scientific research in the access of 5G networks by end users, including the edge device itself, such as cellular phone, or the key component within the edge device, such as a baseband processor. The edge device is a type of networking device that connects an internal local area network with an external wide area network or the internet. The edge device provides interconnectivity and traffic translation between different networks on their entering edges or the network boundaries.
• Group 3: Services
The company's business activities, products or services are enabled by the proliferation of 5G infrastructure and edge devices, which can be further categorized into enhanced mobile broadband (eMBB), massive machine type communications (mMTC) and ultra-reliable low latency communications (uRLLC). The possible products and services may include video streaming, cloud gaming, autonomous driving, augmented reality and virtual reality (AR/VR), Internet of Things (“IoT”), and remote surgery. Cloud gaming is a type of online gaming that aims to provide smooth and direct playability to end users of games across various devices. It could include a host gaming server capable of executing a gaming engine and streaming the gaming data to the client device. IoT is a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.
Comment 8. In the first sentence of the final paragraph, under Principal Investment Strategies, you state:
Under normal circumstances, substantially all of the Fund’s assets will be invested in equity securities, including common stocks, partnership interests, business trust shares and other equity investments or ownership interests in business enterprises.
Elsewhere in the Registration Statement you state that: (the Fund)… will invest, under normal circumstances, at least 80% of its total assets in domestic and foreign equity securities of companies, and in your initial correspondence you state that: Outside of the 80% stated policy, the Fund will invest in cash and cash equivalents. Please reconcile the Registration Statement to agree with the Fund’s Principal Investment Strategies.
Ms. Lisa N. Larkin
March 4, 2020
Page 5
Response: The disclosure noted by the staff will be revised to indicate that, under normal circumstances, at least 80% of the Fund’s total assets will be invested in equity securities.
Page 3 – Principal Investment Risks
Comment 9. In the section “5G Companies and Emerging Technologies Investment Risk,” you state that the Fund's holdings may include equity securities of operating companies that focus on or have exposure to a wide variety of industries, and the economic fortunes of certain companies held by the Fund may not be significantly tied to 5G technologies. However, the first sentence of the Principal Investment Strategies you state that: “…at least 80% of its total assets in domestic and foreign equity securities of companies that are relevant to the fifth generation digital cellular network technology ("5G") enabled digital economy.” Please reconcile and revise, as necessary.
Response: The requested revision will be made as indicated below.
Companies across a wide variety of industries, primarily in the technology sector, are exploring the possible applications of 5G technologies. The extent of such technologies' versatility has not yet been fully explored. Consequently, the Fund's holdings may will include equity securities of operating companies that focus on or have exposure to a wide variety of industries, and the economic fortunes of certain companies held by the Fund may not be significantly tied to 5G technologies. Currently, there are few public companies for which 5G technologies represent an attributable and significant revenue or profit stream, and such technologies may not ultimately have a material effect on the economic returns of companies in which the Fund invests.
Comment 10. The section “Concentration Risk” states that the Fund may have the ability to concentrate in a particular industry or group of industries. Please confirm whether this risk is appropriate.
Response: As disclosed under “Concentration Risk” and “Sector Concentration Risk,” the Fund is not prohibited from concentrating in one or more industries or industry sectors at any given time, which may subject the Fund to certain risks, which are discussed in the aforementioned risk factors. In addition, there is no disclosure in the Registration Statement that says that the Fund will not concentrate in one or more industries or industry sectors. With respect to the disclosure cited by the Staff that states that the Fund will invest in companies that “have exposure to a wide variety of industries,” the Fund does not believe that this language is inconsistent with the disclosures regarding concentration risk. In fact, the full sentence states that the Fund may hold securities in companies engaged in a wide variety of industries as a result of the potential impact of 5G technologies on a wide array of industries. As a result, we believe that the existing disclosures are appropriate and consistent with the Fund’s investment strategy and disclosures.
Ms. Lisa N. Larkin
March 4, 2020
Page 6
General Comment – Principal Investment Risks
Comment 11. Please include a risk disclosure for equity securities.
Response: The following risk disclosures will be added to the summary and principal investment risks, respectively.
Equity Risk: The net asset value of the Fund will fluctuate based on changes in the value of the U.S. and/or foreign equity securities held by the Fund. Equity prices can fall rapidly in response to developments affecting a specific company or industry, or to changing economic, political or market conditions.
Equity Risk: Equity securities are susceptible to general stock market fluctuations and to volatile increases and decreases in value. The equity securities held by the Fund may experience sudden, unpredictable drops in value or long periods of decline in value. This may occur because of factors affecting securities markets generally, the equity securities of a particular sector, or a particular company.
Comment 12. Please include a risk disclosure for micro cap companies.
Response: The following risk disclosures will be added to the summary and principal investment risks, respectively.
Micro Cap Company Risk: Micro cap companies may be newly formed or have limited product lines, distribution channels and financial and managerial resources. The risks associated with those investments are generally greater than those associated with investments in the securities of larger, more established companies. Micro cap common stocks may be subject to more abrupt or erratic market movements than those of larger, more established companies or the market averages in general. This may cause the Fund’s net ass
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CORRESP
1
filename1.htm
March 4, 2020
Lisa N. Larkin
Senior Counsel
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re:
Esoterica Thematic Trust; File Nos. 333-233633 and 811-23473
Dear Ms. Larkin:
On
February 20, 2020, Esoterica Thematic Trust (the “Fund”) filed Pre-Effective Amendment No. 1 to its registration statement
on Form N-1A (the “Registration Statement”). The Fund proposes to revise the disclosure in its Prospectus and Statement
of Additional Information (“SAI”) in response to the telephonic comments that we received from you on March 3, 2020,
as indicated below. The Fund proposes to make the revisions noted below in the final Prospectus and SAI filed pursuant to Rule
497 of the Securities Act of 1933, as amended. Please find also below a reiteration of your comments and the Fund’s responses,
which the Fund has authorized Thompson Hine LLP to make on behalf of the Fund.
Capitalized
terms not defined herein have the meaning ascribed to them in the Prospectus and SAI.
Prospectus
Page 1 -
Footnote 2 to the Fees and Expenses of the Fund Table
Comment 1. In
the first line of footnote 2, please change the term “absorb” to “reimburse.”
Response: The
requested revision will be made.
Comment 2. The
exclusions listed in footnote 2 do not include “foreign custody transaction
costs and foreign account set up fees,” however, “foreign custody
transaction costs and foreign account set up fees” are listed as exclusions
in the Fund’s Operating Expense Limitation Agreement dated February 14, 2020. Please
update footnote 2.
Owen.Pinkerton@thompsonhine.com Phone:
202.263.4144
op
4838-0018-0649.4
Ms. Lisa N. Larkin
March 4, 2020
Page 2
Response: The
requested revision will be made. Footnote 2 will be revised to specifically track all
exclusions found in the Fund’s Operating Expense Limitation Agreement.
Page 1 -
Expense Example
Comment 3. The
three-year expense example calculation should be $289 not $298.
Response: The requested revision will
be made.
Page
2 - Principal Investment Strategies
Comment 4. Please
explain in correspondence what the following sentence means in plain English. Specifically,
please explain what benefits might be realized. If additional disclosures are necessary,
please update the Registration Statement accordingly:
In selecting
companies that the Adviser believes are relevant to the 5G-enabled digital economy, it seeks to identify companies that would
benefit from 5G and related technology deployment and development and/or capitalize on the 5G-enabled services and applications
in the markets in which they operate.
Response: The
primary benefit of 5G and related technology for companies who are currently operating
without such technology is the ability of the technology to allow companies to expand
the size of their available market and, therefore, result in a greater market share.
The italicized disclosure above will be updated as noted below.
In
selecting companies that the Adviser believes are relevant to the 5G-enabled digital economy, it seeks to identify companies that
would benefit, through an increased available market, from 5G and related technology deployment and development and/or capitalize
on the 5G-enabled services and applications in the markets in which they operate.
Comment 5. In
the second paragraph, under Principal Investment Strategies, you state:
The Adviser’s
internal research and analysis leverages insights from diverse sources, including external research, to develop and refine its
investment themes and identify and take advantage of trends that have ramifications for individual companies or entire
industries.
Ms. Lisa N. Larkin
March 4, 2020
Page 3
Please confirm whether the Fund
will concentrate in a specific industry.
Response: As
disclosed under “Concentration Risk” and “Sector Concentration Risk,”
the Fund is not prohibited from concentrating in one or more industries or industry sectors
at any given time, which may subject the Fund to certain risks, which are discussed in
the aforementioned risk factors. In addition, there is no disclosure in the Registration
Statement that says that the Fund will not concentrate in one or more industries or industry
sectors. As a result, we believe that the language highlighted by the Staff is appropriate
and consistent with the Fund’s investment strategy and disclosures.
Comment 6. The
staff notes that the Trading Sub-Adviser is not referenced in the Principal Investment
Strategies section, but that the Adviser is referenced. Should the Trading Sub-Adviser
be referenced in this section?
Response: We
have reviewed the disclosure highlighted by the Staff and believe that it accurately
represents the roles of the Adviser and the Trading Sub-Adviser in connection with managing
the Fund’s investment strategy. Specifically, the Adviser is responsible for making
all investment decisions and managing the investment process. The Trading Sub-Adviser,
subject to the oversight of the Adviser, will primarily be responsible for executing
trading orders, valuing securities and maintaining the Fund’s books and records.
Comment 7. Under
the Principal Investment Strategies Section with respect to the definitions of “Group
1,” “Group 2” and “Group 3,” please update the Registration
Statement, consistent with our initial comments to explain any technical terms in plain
English.
Response: The requested revisions will
be made as noted below.
• Group
1: Infrastructure
The company's
business activities, products or services are instrumental focused on or benefit from the development of new
products or services, technological improvements and advancements in scientific research in the development of 5G communication
infrastructure network including core network, transmission, and radio access network, or cloud computing infrastructure.
Ms. Lisa N. Larkin
March 4, 2020
Page 4
• Group
2: Edge Device
The company's
business activities, products or services are instrumental focused on or benefit from the development of new
products or services, technological improvements and advancements in scientific research in the access of 5G networks by end users,
including the edge device itself, such as cellular phone, or the key component within the edge device, such as a baseband processor.
The edge device is a type of networking device that connects an internal local area network with an external wide area network
or the internet. The edge device provides interconnectivity and traffic translation between different networks on their entering
edges or the network boundaries.
• Group
3: Services
The company's
business activities, products or services are enabled by the proliferation of 5G infrastructure and edge devices, which can be
further categorized into enhanced mobile broadband (eMBB), massive machine type communications (mMTC) and ultra-reliable low latency
communications (uRLLC). The possible products and services may include video streaming, cloud gaming, autonomous driving, augmented
reality and virtual reality (AR/VR), Internet of Things (“IoT”), and remote surgery. Cloud gaming is a type of online
gaming that aims to provide smooth and direct playability to end users of games across various devices. It could include a host
gaming server capable of executing a gaming engine and streaming the gaming data to the client device. IoT is a system of interrelated
computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers and the
ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.
Comment 8. In the first sentence of the
final paragraph, under Principal Investment Strategies, you state:
Under normal
circumstances, substantially all of the Fund’s assets will be invested in equity securities, including common stocks,
partnership interests, business trust shares and other equity investments or ownership interests in business enterprises.
Elsewhere
in the Registration Statement you state that: (the Fund)… will invest, under normal circumstances, at least 80% of its
total assets in domestic and foreign equity securities of companies, and in your initial correspondence you state that: Outside
of the 80% stated policy, the Fund will invest in cash and cash equivalents. Please reconcile the Registration Statement to
agree with the Fund’s Principal Investment Strategies.
Ms. Lisa N. Larkin
March 4, 2020
Page 5
Response: The
disclosure noted by the staff will be revised to indicate that, under normal circumstances,
at least 80% of the Fund’s total assets will be invested in equity securities.
Page
3 – Principal Investment Risks
Comment 9. In the section “5G Companies
and Emerging Technologies Investment Risk,” you state that the Fund's holdings may include equity securities of operating
companies that focus on or have exposure to a wide variety of industries, and the economic fortunes of certain companies held
by the Fund may not be significantly tied to 5G technologies. However, the first sentence of the Principal Investment Strategies
you state that: “…at least 80% of its total assets in domestic and foreign equity securities of companies that
are relevant to the fifth generation digital cellular network technology ("5G") enabled digital economy.”
Please reconcile and revise, as necessary.
Response: The requested revision will
be made as indicated below.
Companies
across a wide variety of industries, primarily in the technology sector, are exploring the possible applications of 5G technologies.
The extent of such technologies' versatility has not yet been fully explored. Consequently, the Fund's holdings may
will include equity securities of operating companies that focus on or have exposure to a wide variety of industries, and the
economic fortunes of certain companies held by the Fund may not be significantly tied to 5G technologies. Currently, there are
few public companies for which 5G technologies represent an attributable and significant revenue or profit stream, and such technologies
may not ultimately have a material effect on the economic returns of companies in which the Fund invests.
Comment 10. The section “Concentration
Risk” states that the Fund may have the ability to concentrate in a particular industry or group of industries. Please confirm
whether this risk is appropriate.
Response: As
disclosed under “Concentration Risk” and “Sector Concentration Risk,”
the Fund is not prohibited from concentrating in one or more industries or industry sectors
at any given time, which may subject the Fund to certain risks, which are discussed in
the aforementioned risk factors. In addition, there is no disclosure in the Registration
Statement that says that the Fund will not concentrate in one or more industries or industry
sectors. With respect to the disclosure cited by the Staff that states that the Fund
will invest in companies that “have exposure to a wide variety of industries,”
the Fund does not believe that this language is inconsistent with the disclosures regarding
concentration risk. In fact, the full sentence states that the Fund may hold securities
in companies engaged in a wide variety of industries as a result of the potential impact
of 5G technologies on a wide array of industries. As a result, we believe that the existing
disclosures are appropriate and consistent with the Fund’s investment strategy
and disclosures.
Ms. Lisa N. Larkin
March 4, 2020
Page 6
General
Comment – Principal Investment Risks
Comment 11. Please include a risk disclosure
for equity securities.
Response: The
following risk disclosures will be added to the summary and principal investment risks,
respectively.
Equity
Risk: The net asset value of the Fund will fluctuate based on changes in the value of the U.S. and/or foreign equity securities
held by the Fund. Equity prices can fall rapidly in response to developments affecting a specific company or industry, or to changing
economic, political or market conditions.
Equity
Risk: Equity securities are susceptible to general stock market fluctuations and to volatile increases and decreases in value.
The equity securities held by the Fund may experience sudden, unpredictable drops in value or long periods of decline in value.
This may occur because of factors affecting securities markets generally, the equity securities of a particular sector, or a particular
company.
Comment 12. Please include a risk disclosure
for micro cap companies.
Response: The
following risk disclosures will be added to the summary and principal investment risks,
respectively.
Micro
Cap Company Risk: Micro cap companies may be newly formed or have limited product lines, distribution channels and financial
and managerial resources. The risks associated with those investments are generally greater than those associated with investments
in the securities of larger, more established companies. Micro cap common stocks may be subject to more abrupt or erratic market
movements than those of larger, more established companies or the market averages in general. This may cause the Fund’s
net ass