Re: |
Trust
for Professional Managers (the
“Trust”) |
1. |
The
Trust acknowledges that in connection with the comments made by the Staff
of the SEC, the Staff has not passed on the accuracy or adequacy of the
disclosure made herein, and the Funds and their management are solely
responsible for the content of such
disclosure; |
2. |
The
Trust acknowledges that the Staff’s comments and changes in disclosure in
response to the Staff’s comments do not foreclose the SEC or other
regulatory body from the opportunity to seek enforcement or take other
action with respect to the disclosure made herein;
and |
3. |
The
Trust represents that neither the Funds nor their management will assert
the Staff’s comments or changes in disclosure in response to the Staff’s
comments as a defense in any action or proceeding initiated by the SEC or
any person under the federal securities laws of the United
States. |
1. |
In
the fourth paragraph under “Principal Investment Strategies,” what does
the term “primarily” mean with respect to “equity securities”? We would
take this to mean “at least 50%” of the Fund’s assets. Please add
disclosure indicating the Fund’s meaning.
|
2. |
As
appropriate in this section, please indicate the limit on short positions
that may be taken by the Fund (i.e., dollar amount of short sales). We
note that a Fund may have up to 100% of its assets in short positions, so
long as the Fund meets the necessary requirements with respect to
segregation of assets, etc. (See Investment Company Act Release No.
10666). |
3. |
We
note that short sales raise numerous regulatory and other issues. Please
supplementally confirm that the Fund will not have problems meeting the
various regulatory requirements associated with short selling, including
among other things: (a) maintain the Fund’s 15% asset limitation with
respect to illiquid securities; (b) meeting the fund’s continuous
obligations regarding redemptions; (c) Section 18 requirements regarding
the segregation of assets; (d) Regulation T; (e) applicable NASD rules;
and (f) various NYSE rules regarding posting margin.
|
4. |
We
note that under Section 18(f) of the Investment Company Act of 1940, short
sales constitute prohibited “senior securities” unless there is
appropriate asset coverage, which may include the segregation of assets,
coverage through call options or some combination. Please supplementally
inform us of the intended “coverage” of the Fund’s investments.
|
5. |
Please
provide a statement in the prospectus something to the effect that “The
Fund’s Board of Trustees has considered the Fund’s short sales strategy
and its attendant risks and has determined that the strategy does not
impair the Fund’s ability to meet redemptions or meet other regulatory
requirements. Furthermore, the Board of Trustees has adopted guidelines
that ensure that the Fund’s investment advisor continuously monitors the
Fund’s short positions and the Fund’s compliance with the regulatory
requirements in the best interest of shareholders.”
|
6. |
Please
confirm that the Fund will invest in ETFs and/or other investment
companies that may not have an exemptive order from the SEC.
|
7. |
We
note that you indicated “Borrowing Risks” and “Foreign Securities Risk” in
the Fund’s Principal Risks section. Please indicate in this section the
intended limit in such investments.
|
8. |
Please
revise the third sentence under the subheading “Portfolio Turnover Rate”
to read: |
9. |
Please
revise the “Short Sale Risk” to read: “Short
sale strategies are riskier than “long” investment
strategies.
Short selling may result in the Fund’s investment performance suffering if
it is required to close out a short position earlier than it had intended.
This would occur if the lender required the Fund to deliver the securities
it borrowed at the commencement of the short sale and the Fund was unable
to borrow the securities from other securities lenders. Furthermore, until
the Fund replaces a security borrowed, or sold short, it must pay to the
lender amounts equal to any dividends that accrue during the period of the
short sale. In
addition, the Fund will incur certain transaction fees associated with
short selling.
Short sale strategies are often characterized as a form of leveraging or
speculative
investments.
Although the Advisor uses speculative
investment
strategies, there is no assurance that these
strategies will protect against losses or perform better than
non-speculative
strategies. The use of short sales is an effort by the Fund to protect
against losses due to general movements in market prices; however, no
assurance can be given that such strategies
will be successful or that consistent absolute returns will be achieved.”
|
10. |
Please
revise the “High Portfolio Turnover Rate Risk” to read, in
part:
“The
Fund’s investment strategy may result in high turnover
rates. This
could generate capital gains that must be distributed to shareholders as
short-term capital gains taxed at ordinary rates (as high as 35%) and
could increase brokerage commission costs.”
|
11. |
In
footnote 2 to the fee table, please confirm supplementally that the
additional expenses associated with short selling cannot be estimated.
|
12. |
Please
revise the second sentence in footnote 2 to read: “Such additional
expenses (including
dividends on short positions) cannot
be estimated and, therefore, actual Fund expenses may be higher than those
shown.” |
13. |
Please
revise the second sentence of footnote 3 to read: “This waiver can be
terminated only
by the Board of Trustees.” |
14. |
With
respect to Mr. Alpers, please replace the phrase “vast experience” with
“many years” if appropriate. |
15. |
With
respect to Mr. Alpers, please indicate the amount of experience in
managing separate accounts and/or registered investment companies, as the
case may be. |
16. |
With
respect to Mr. Arter, please replace the phrases “extensive” and “now
famous” with “many years” and “well-known,” respectively. In addition,
please delete
the phrase “allowing him to accurately forecast major moves in the global
markets.” Also, please indicate the amount of experience in managing
separate accounts and/or registered investment companies, as the case may
be. |
17. |
Please
add the following statement as appropriate to the section: “The Board of
Trustees will regularly evaluate whether its fair valuation pricing
procedures continue to be appropriate in light of the specific
circumstances of the Fund and the quality of prices obtained through their
application by the Trust’s valuation
committee.” |
18. | Please add disclosure explaining the effects of fair value pricing. |
19. |
Please
update the disclosure regarding approval of the investment advisory
agreement by the Board of Trustees so that it reflects the
factors
considered and conclusions
made regarding the approval. |
20. |
Please
provide a description of any material conflicts of interest that may arise
in connection with the Portfolio Manager’s management of the Fund and the
other accounts managed by the Portfolio Manager, including, for example,
conflicts between the strategy of the other accounts and the Fund or
conflicts in the allocation of investment opportunities between the Fund
and the accounts. Alternatively, supplementally confirm that all such
conflicts are currently disclosed.
|
21. |
With
respect to disclosure to service providers of “non-standard disclosure,”
please indicate the “lag time” of the receipt to such
parties. |