Correspondence 0000894189-23-000076 from Total Fund Solution (CIK 0001872253)
Total Fund Solution (CIK 0001872253)
Date: Jan. 4, 2023 · CIK: 0001872253 · Accession: 0000894189-23-000076
AI Filing Summary & Sentiment
File numbers found in text: 333-258648, 811-23724
Letter
VIA EDGAR TRANSMISSION United States Securities and Exchange Commission Division of Investment Management Re: Total Fund Solution (the “Trust”) Securities Act Registration No: 333-258648 Investment Company Act Registration No: 811-23724 Cromwell Foresight Global Sustainable Infrastructure Fund (S000079359)
Dear Mr. Williams:
The purpose of this letter is to respond to oral comments the Trust received from the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) on December 9, 2022 regarding the Trust’s Post-Effective Amendment No. 10 (“PEA No. 10”) to its registration statement, filed on behalf of its series, Cromwell Foresight Global Sustainable Infrastructure Fund, (the “Fund”). The Trust’s registration statement was filed pursuant to Rule 485(a) under the Securities Act of 1933, as amended (the “1933 Act”), on Form N‑1A on October 17, 2022 for the purpose of registering the Fund as a new series of the Trust. The Trust will file a post-effective amendment to its registration statement reflecting the revisions discussed herein in response to your comments and also to complete any other outstanding information. The Trust will also file all outstanding exhibits to the registration statement prior to the Fund commencing operations.
The Trust’s responses to your comments are as follows:
PROSPECTUS COMMENTS
Cover Page
1.Staff Comment: On the cover of the prospectus, please update the Fund’s ticker symbols when available.
Response: The Trust confirms that it has now inserted the following ticker symbols on the Fund’s cover page as follows:
Investor Class Shares (CFGVX)
Institutional Class Shares (CFGIX)
Fees and Expenses Table and Expense Example
2.Staff Comment: Regarding the Fees and Expense table on page 1, please remove footnote 1 describing the Fund’s Operating Expenses Limitation Agreement since the Fund anticipates operating under its expense cap, and therefore reflecting no expense reimbursements in the table.
Response: The Trust responds by revising the Fees and Expenses table. After further review and calculation, it was determined that the Fund anticipates the need to waive fees and expenses during its first year of operations. Accordingly, the footnote remains in place. (See Appendix 1.)
3.Staff Comment: On page 1, in the first sentence of the paragraph preceding the Expense Example, please add “or hold” where indicated. Also, please consider removing reference to the Operating Expense Limitation Agreement in the penultimate sentence of the paragraph if it is not applicable.
Response: The Trust responds by revising the referenced paragraph as requested. (See Appendix 1.)
Principal Investment Strategies
4.Staff Comment: On page 2, under “Principal Investment Strategies,” please review the second sentence of the first paragraph and add any missing corresponding risk disclosure to the “Principal Risks” section to address the types of investments listed in the sentence.
Response: The Trust responds by confirming it has reviewed the referenced sentence and notes that of the list of investments — listed investment trusts, REITs, ETFs and other investment company structures (depending on the relevant jurisdictions) or units of master limited partnerships — the Trust had provided corresponding risk disclosure for ETFs and MLPs. The Trust has now added risk disclosure for Listed Investment Trusts, REITs, and other investment companies, to the Principal Risks sections in both Items 4 and 9 as shown below:
Item 4
•Listed Investment Trusts Risk. Listed investment trusts are investment vehicles organized as trusts that issue a fixed number of shares in an initial public offering, after which their shares trade at market value on an exchange. The net asset value of an investment trust fluctuates due to the valuation changes of the investment securities or assets held by the investment trust (assets denominated in foreign currencies are also subject to the exchange rate fluctuations subject to hedging strategy). However, because the shares of a listed investment trust trade at market value on an exchange, such shares can trade below their net asset value (known as a discount) or above net asset value (known as a premium). Current market uncertainty has pushed investment trusts to the widest discounts in years, and there is a risk that such discounts may continue to widen after the Fund has made an investment. Investment trusts that trade at a discount are not typically able to issue new shares to invest in new assets or securities and may not succeed in conducting accretive investment activity for growth.
Item 9
Listed Investment Trusts Risk. Listed investment trusts are investment vehicles organized as trusts that issue a fixed number of shares in an initial public offering, after which their shares trade at market value on an exchange. The net asset value of an investment trust fluctuates due to the valuation changes of the investment securities or assets held by the investment trust (assets denominated in foreign currencies are also subject to the exchange rate fluctuations subject to hedging strategy). However, because the shares of a listed investment trust trade at market value on an exchange, such
shares can trade below their net asset value (known as a discount) or above net asset value (known as a premium). The more an investment trust falls out of favor and the less demand there is for its shares, the lower the price those selling shares of the trust may have to accept in order to liquidate their position; conversely, purchasers of shares may take advantage of such discount. Current market uncertainty has pushed investment trusts to the widest discounts in years, and there is a risk that such discounts may continue to widen after the Fund has made an investment. Investment trusts that trade at a discount are not typically able to issue new shares to invest in new assets or securities and may not succeed in conducting accretive investment activity for growth. In addition to these risks, when the Fund invests in a listed investment trust it is subject to the risks described herein with respect to investments in other investment companies generally, including that shareholders of the Fund will indirectly bear their proportionate share of fees and expenses of the investment trust, as well as commissions in connection with its purchase and sale of shares.
Item 4
•REIT Investment Risk. The Fund’s investments in REITs will, among other things, be subject to many of the same risks as a direct investment in real estate. The stock prices of companies in the real estate industry, including REITs, are typically sensitive to changes in real estate values, property taxes, interest rates, cash flow of underlying real estate assets, occupancy rates, government regulations affecting zoning, land use, and rents, as well as the management skill and creditworthiness of the issuer.
Item 9
REIT Investment Risk. The Fund’s investments in REITs will, among other things, be subject to many of the same risks as a direct investment in real estate. The stock prices of companies in the real estate industry, including REITs, are typically sensitive to changes in real estate values, property taxes, interest rates, cash flow of underlying real estate assets, occupancy rates, government regulations affecting zoning, land use, and rents, as well as the management skill and creditworthiness of the issuer.
In general, real estate values are affected by a variety of factors, including supply and demand for properties, the economic health of the country or of different regions, and the strength of specific industries that rent properties. REITs also depend generally on their ability to generate cash flow to make distributions to shareholders or unitholders and are subject to the risk of failing to qualify for favorable tax treatment under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). Qualification as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”) in any particular year is a complex analysis that depends on a number of factors. There can be no assurance that an entity in which the Fund invests with the expectation that it will be taxed as a REIT will, in fact, qualify as a REIT. An entity that fails to qualify as a REIT would be taxed as a corporation, and thus, would not be entitled to a deduction for dividends paid to its shareholders and would not pass through to its shareholders the character of income earned by the entity. Dividends paid by REITs may not receive preferential tax treatment afforded other dividends.
Item 4
•Other Investment Companies Risk. Investing in other investment companies subjects the Fund to those risks affecting the investment companies themselves, including the possibility that the value of the underlying securities held by an investment company could decrease or an investment company’s portfolio becomes illiquid. Additionally, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the Fund’s performance. To the extent that the Fund invests in other investment companies, investors
in the Fund will bear both their proportionate share of expenses in the Fund and, indirectly, the expenses of the investment companies in which the Fund invests.
Item 9
Other Investment Companies Risk. The Fund may invest in other investment companies, including open-end funds and ETFs. See “Exchange-Traded Funds Risk” above.
The Fund may purchase the securities of another investment company to temporarily gain exposure to a portion of the market while awaiting purchase of securities or as an efficient means of gaining exposure to a particular asset class. The Fund might also purchase shares of another investment company to gain exposure to the securities in the investment company’s portfolio at times when the Fund may not be able to buy those securities directly. Any investment in another investment company would be consistent with the Fund’s investment objective and investment program.
The risks of owning another investment company are generally similar to the risks of investment directly in the securities in which that investment company invests. However, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the Fund’s performance. In addition, because ETFs trade on a secondary market, their shares may trade at a premium or discount to the actual NAV of their portfolio securities and their shares may have greater volatility because of the potential lack of liquidity.
5.Staff Comment: On page 2, under “Principal Investment Strategies,” the Staff notes that the Fund will invest in ETFs and other investment companies. If the Fund’s investments in such products will result in the Fund experiencing greater than 1 basis point of acquired fund fees and expenses, please add a line item to the Fees and Expenses table. Regarding the Fund’s investments in ETFs and other investment companies, please clarify that such vehicles invest in infrastructure companies as defined.
Response: The Trust responds by confirming that the Fund’s investments in ETFs and other investment companies are currently expected to result in the Fund experiencing greater than 1 basis point of acquired fees and expenses. Accordingly, the Trust has added the applicable line item to the Fees and expenses table. (See Appendix 1.)
Additionally, the Fund has added a phrase clarifying that other investments companies invest in sustainable infrastructure companies as defined.
6.Staff Comment: The Staff notes that the end of the second sentence in the first paragraph states that the Fund will invest in companies “that own or operate real infrastructure or sustainable energy assets anywhere in the world.” Please define “infrastructure” since it is part of the Fund’s name. Additionally, please provide clarification regarding the phrase “anywhere in the world.”
Response: The Trust responds by adding a definition of infrastructure as follows:
The Fund considers a company to be an infrastructure company if it derives at least 50% of its revenue or profits from the ownership or operation of infrastructure assets, such as the physical structures, networks and systems of transportation, energy, water and sewage, medical facilities, government facilities and communication assets.
Regarding the Staff’s request to add clarifying disclosure with respect to the phrase “energy assets anywhere in the world,” the Trust respectfully submits that investors will understand this as a plain English phrase meaning that issuers can be located anywhere in the world.
7.Staff Comment: In reviewing the last sentence of the first paragraph that reads: “Such companies’ revenue streams are typically directly or indirectly supported by long-term government or public sector contracts and government supported initiatives,” the Staff notes references to government and public sector contracts. Please consider adding corresponding principal risk disclosure to the extent appropriate.
Response: The Trust responds by noting after it has reviewed the risk disclosure, it believes that much of the existing disclosure in the “Infrastructure Companies Risk” and the “Foreign Securities Risk” address risks associated with governmental contract risks. The Trust has added the following additional risk to further address the associated risks with the Fund’s investments:
Item 4
•Industrial Sector Risk. The industrial sector can be significantly affected by, among other things, worldwide economic growth, supply and demand for specific products and services, rapid technological developments, international political and economic developments, environmental issues, tariffs and trade barriers, and tax and governmental regulatory policies. As the demand for, or prices of, industrials increase, the value of the Fund’s investments generally would be expected to also increase. Conversely, declines in the demand for, or prices of, industrials generally would be expected to contribute to declines in the value of such securities. Such declines may occur quickly and without warning and may negatively impact the value of the Fund and your investment.
Item 9
Industrial Sector Risk. The value of securities issued by companies in the industrials sector may be adversely affected by supply and demand related to their specific products or services and industrials sector products in general. The products of manufacturing companies may face obsolescence due to rapid technological developments and frequent new product introduction. Government regulations, world events, economic conditions and exchange rates may adversely affect the performance of companies in the industrials sector. Companies in the industrials sector may be adversely affected by liability for environmental damage and product liability claims. The industrials sector may also be adversely affected by changes or trends in commodity prices, which may be influenced by unpredictable factors. Companies in the industrials sector, particularly aerospace and defense companies, may also be adversely affected by government spending policies because companies involved in this sector rely to a significant extent on government demand for their products and services.
8.Staff Comment: The Staff notes that use of the term “sustainable” in the name of the Fund suggests investment in environmentally friendly companies (e.g., companies that invest in renewable resources or reduce depletion of non-renewable resources or invest in issuers with strong ESG characteristics). Pl
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CORRESP 1 filename1.htm Document U.S. Bank Global Fund Services 615 East Michigan Street Milwaukee, Wisconsin 53202 January 4, 2023 VIA EDGAR TRANSMISSION Matthew Williams United States Securities and Exchange Commission Division of Investment Management 100 F Street, N.E. Washington, D.C. 20549 Re: Total Fund Solution (the “Trust”) Securities Act Registration No: 333-258648 Investment Company Act Registration No: 811-23724 Cromwell Foresight Global Sustainable Infrastructure Fund (S000079359) Dear Mr. Williams: The purpose of this letter is to respond to oral comments the Trust received from the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) on December 9, 2022 regarding the Trust’s Post-Effective Amendment No. 10 (“PEA No. 10”) to its registration statement, filed on behalf of its series, Cromwell Foresight Global Sustainable Infrastructure Fund, (the “Fund”). The Trust’s registration statement was filed pursuant to Rule 485(a) under the Securities Act of 1933, as amended (the “1933 Act”), on Form N‑1A on October 17, 2022 for the purpose of registering the Fund as a new series of the Trust. The Trust will file a post-effective amendment to its registration statement reflecting the revisions discussed herein in response to your comments and also to complete any other outstanding information. The Trust will also file all outstanding exhibits to the registration statement prior to the Fund commencing operations. The Trust’s responses to your comments are as follows: PROSPECTUS COMMENTS Cover Page 1.Staff Comment: On the cover of the prospectus, please update the Fund’s ticker symbols when available. Response: The Trust confirms that it has now inserted the following ticker symbols on the Fund’s cover page as follows: Investor Class Shares (CFGVX) Institutional Class Shares (CFGIX) 1 Fees and Expenses Table and Expense Example 2.Staff Comment: Regarding the Fees and Expense table on page 1, please remove footnote 1 describing the Fund’s Operating Expenses Limitation Agreement since the Fund anticipates operating under its expense cap, and therefore reflecting no expense reimbursements in the table. Response: The Trust responds by revising the Fees and Expenses table. After further review and calculation, it was determined that the Fund anticipates the need to waive fees and expenses during its first year of operations. Accordingly, the footnote remains in place. (See Appendix 1.) 3.Staff Comment: On page 1, in the first sentence of the paragraph preceding the Expense Example, please add “or hold” where indicated. Also, please consider removing reference to the Operating Expense Limitation Agreement in the penultimate sentence of the paragraph if it is not applicable. Response: The Trust responds by revising the referenced paragraph as requested. (See Appendix 1.) Principal Investment Strategies 4.Staff Comment: On page 2, under “Principal Investment Strategies,” please review the second sentence of the first paragraph and add any missing corresponding risk disclosure to the “Principal Risks” section to address the types of investments listed in the sentence. Response: The Trust responds by confirming it has reviewed the referenced sentence and notes that of the list of investments — listed investment trusts, REITs, ETFs and other investment company structures (depending on the relevant jurisdictions) or units of master limited partnerships — the Trust had provided corresponding risk disclosure for ETFs and MLPs. The Trust has now added risk disclosure for Listed Investment Trusts, REITs, and other investment companies, to the Principal Risks sections in both Items 4 and 9 as shown below: Item 4 •Listed Investment Trusts Risk. Listed investment trusts are investment vehicles organized as trusts that issue a fixed number of shares in an initial public offering, after which their shares trade at market value on an exchange. The net asset value of an investment trust fluctuates due to the valuation changes of the investment securities or assets held by the investment trust (assets denominated in foreign currencies are also subject to the exchange rate fluctuations subject to hedging strategy). However, because the shares of a listed investment trust trade at market value on an exchange, such shares can trade below their net asset value (known as a discount) or above net asset value (known as a premium). Current market uncertainty has pushed investment trusts to the widest discounts in years, and there is a risk that such discounts may continue to widen after the Fund has made an investment. Investment trusts that trade at a discount are not typically able to issue new shares to invest in new assets or securities and may not succeed in conducting accretive investment activity for growth. Item 9 Listed Investment Trusts Risk. Listed investment trusts are investment vehicles organized as trusts that issue a fixed number of shares in an initial public offering, after which their shares trade at market value on an exchange. The net asset value of an investment trust fluctuates due to the valuation changes of the investment securities or assets held by the investment trust (assets denominated in foreign currencies are also subject to the exchange rate fluctuations subject to hedging strategy). However, because the shares of a listed investment trust trade at market value on an exchange, such 2 shares can trade below their net asset value (known as a discount) or above net asset value (known as a premium). The more an investment trust falls out of favor and the less demand there is for its shares, the lower the price those selling shares of the trust may have to accept in order to liquidate their position; conversely, purchasers of shares may take advantage of such discount. Current market uncertainty has pushed investment trusts to the widest discounts in years, and there is a risk that such discounts may continue to widen after the Fund has made an investment. Investment trusts that trade at a discount are not typically able to issue new shares to invest in new assets or securities and may not succeed in conducting accretive investment activity for growth. In addition to these risks, when the Fund invests in a listed investment trust it is subject to the risks described herein with respect to investments in other investment companies generally, including that shareholders of the Fund will indirectly bear their proportionate share of fees and expenses of the investment trust, as well as commissions in connection with its purchase and sale of shares. Item 4 •REIT Investment Risk. The Fund’s investments in REITs will, among other things, be subject to many of the same risks as a direct investment in real estate. The stock prices of companies in the real estate industry, including REITs, are typically sensitive to changes in real estate values, property taxes, interest rates, cash flow of underlying real estate assets, occupancy rates, government regulations affecting zoning, land use, and rents, as well as the management skill and creditworthiness of the issuer. Item 9 REIT Investment Risk. The Fund’s investments in REITs will, among other things, be subject to many of the same risks as a direct investment in real estate. The stock prices of companies in the real estate industry, including REITs, are typically sensitive to changes in real estate values, property taxes, interest rates, cash flow of underlying real estate assets, occupancy rates, government regulations affecting zoning, land use, and rents, as well as the management skill and creditworthiness of the issuer. In general, real estate values are affected by a variety of factors, including supply and demand for properties, the economic health of the country or of different regions, and the strength of specific industries that rent properties. REITs also depend generally on their ability to generate cash flow to make distributions to shareholders or unitholders and are subject to the risk of failing to qualify for favorable tax treatment under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). Qualification as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”) in any particular year is a complex analysis that depends on a number of factors. There can be no assurance that an entity in which the Fund invests with the expectation that it will be taxed as a REIT will, in fact, qualify as a REIT. An entity that fails to qualify as a REIT would be taxed as a corporation, and thus, would not be entitled to a deduction for dividends paid to its shareholders and would not pass through to its shareholders the character of income earned by the entity. Dividends paid by REITs may not receive preferential tax treatment afforded other dividends. Item 4 •Other Investment Companies Risk. Investing in other investment companies subjects the Fund to those risks affecting the investment companies themselves, including the possibility that the value of the underlying securities held by an investment company could decrease or an investment company’s portfolio becomes illiquid. Additionally, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the Fund’s performance. To the extent that the Fund invests in other investment companies, investors 3 in the Fund will bear both their proportionate share of expenses in the Fund and, indirectly, the expenses of the investment companies in which the Fund invests. Item 9 Other Investment Companies Risk. The Fund may invest in other investment companies, including open-end funds and ETFs. See “Exchange-Traded Funds Risk” above. The Fund may purchase the securities of another investment company to temporarily gain exposure to a portion of the market while awaiting purchase of securities or as an efficient means of gaining exposure to a particular asset class. The Fund might also purchase shares of another investment company to gain exposure to the securities in the investment company’s portfolio at times when the Fund may not be able to buy those securities directly. Any investment in another investment company would be consistent with the Fund’s investment objective and investment program. The risks of owning another investment company are generally similar to the risks of investment directly in the securities in which that investment company invests. However, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the Fund’s performance. In addition, because ETFs trade on a secondary market, their shares may trade at a premium or discount to the actual NAV of their portfolio securities and their shares may have greater volatility because of the potential lack of liquidity. 5.Staff Comment: On page 2, under “Principal Investment Strategies,” the Staff notes that the Fund will invest in ETFs and other investment companies. If the Fund’s investments in such products will result in the Fund experiencing greater than 1 basis point of acquired fund fees and expenses, please add a line item to the Fees and Expenses table. Regarding the Fund’s investments in ETFs and other investment companies, please clarify that such vehicles invest in infrastructure companies as defined. Response: The Trust responds by confirming that the Fund’s investments in ETFs and other investment companies are currently expected to result in the Fund experiencing greater than 1 basis point of acquired fees and expenses. Accordingly, the Trust has added the applicable line item to the Fees and expenses table. (See Appendix 1.) Additionally, the Fund has added a phrase clarifying that other investments companies invest in sustainable infrastructure companies as defined. 6.Staff Comment: The Staff notes that the end of the second sentence in the first paragraph states that the Fund will invest in companies “that own or operate real infrastructure or sustainable energy assets anywhere in the world.” Please define “infrastructure” since it is part of the Fund’s name. Additionally, please provide clarification regarding the phrase “anywhere in the world.” Response: The Trust responds by adding a definition of infrastructure as follows: The Fund considers a company to be an infrastructure company if it derives at least 50% of its revenue or profits from the ownership or operation of infrastructure assets, such as the physical structures, networks and systems of transportation, energy, water and sewage, medical facilities, government facilities and communication assets. 4 Regarding the Staff’s request to add clarifying disclosure with respect to the phrase “energy assets anywhere in the world,” the Trust respectfully submits that investors will understand this as a plain English phrase meaning that issuers can be located anywhere in the world. 7.Staff Comment: In reviewing the last sentence of the first paragraph that reads: “Such companies’ revenue streams are typically directly or indirectly supported by long-term government or public sector contracts and government supported initiatives,” the Staff notes references to government and public sector contracts. Please consider adding corresponding principal risk disclosure to the extent appropriate. Response: The Trust responds by noting after it has reviewed the risk disclosure, it believes that much of the existing disclosure in the “Infrastructure Companies Risk” and the “Foreign Securities Risk” address risks associated with governmental contract risks. The Trust has added the following additional risk to further address the associated risks with the Fund’s investments: Item 4 •Industrial Sector Risk. The industrial sector can be significantly affected by, among other things, worldwide economic growth, supply and demand for specific products and services, rapid technological developments, international political and economic developments, environmental issues, tariffs and trade barriers, and tax and governmental regulatory policies. As the demand for, or prices of, industrials increase, the value of the Fund’s investments generally would be expected to also increase. Conversely, declines in the demand for, or prices of, industrials generally would be expected to contribute to declines in the value of such securities. Such declines may occur quickly and without warning and may negatively impact the value of the Fund and your investment. Item 9 Industrial Sector Risk. The value of securities issued by companies in the industrials sector may be adversely affected by supply and demand related to their specific products or services and industrials sector products in general. The products of manufacturing companies may face obsolescence due to rapid technological developments and frequent new product introduction. Government regulations, world events, economic conditions and exchange rates may adversely affect the performance of companies in the industrials sector. Companies in the industrials sector may be adversely affected by liability for environmental damage and product liability claims. The industrials sector may also be adversely affected by changes or trends in commodity prices, which may be influenced by unpredictable factors. Companies in the industrials sector, particularly aerospace and defense companies, may also be adversely affected by government spending policies because companies involved in this sector rely to a significant extent on government demand for their products and services. 8.Staff Comment: The Staff notes that use of the term “sustainable” in the name of the Fund suggests investment in environmentally friendly companies (e.g., companies that invest in renewable resources or reduce depletion of non-renewable resources or invest in issuers with strong ESG characteristics). Pl