rbccorresp121809.htm
Stradley
Ronon Stevens & Young, LLP
2600 One
Commerce Square
Philadelphia,
PA 19103-7098
Telephone: (215)
564-8000
Fax: (215)
564-8120
[SRSY
LOGO]
December
18, 2009
VIA
EDGAR TRANSMISSION
Brion
Thompson, Esquire
Securities
and Exchange Commission
100 F
Street, N.E.
Washington,
DC 20549
Re:
|
RBC
Funds Trust - Post-Effective Amendment No.
29
|
(Registration Nos.
333-111986 / 811-21475)
Dear Mr.
Thompson:
On behalf
of RBC Funds Trust (the “Registrant”), we are submitting the response of the
Registrant to the comments of the staff (the “Staff”) of the U.S. Securities and
Exchange Commission, which you provided to us on December 3, 2009 relating to
Post-Effective Amendment No. 29 under the Securities Act of 1933, as amended
(the “1933 Act”) and Amendment No. 29 under the Investment Company Act of 1940,
as amended (the “1940 Act”) to the Registrant’s Registration Statement filed on
October 16, 2009 to register a new series of the Registrant, the RBC Mid Cap
Value Fund (the “Fund”).
After
discussing these responses with you, the Registrant intends to submit (by EDGAR)
Post-Effective Amendment No. 32 to the Registrant’s Registration Statement on
Form N-1A under the 1933 Act and Amendment No. 32 to such Registration Statement
under the 1940 Act (such amendments, collectively, the “Amendment”), which
incorporate the Registrant’s responses to the Staff’s comments. The
Staff’s comments and our response to each comment are set forth
below.
Comment: The Staff has
requested that the Prospectus include additional clarification as to whether the
Fund’s investment objective may be changed without shareholder approval as
required by Item 4(a) of Form N-1A.
Response: The
“Investment Objective” section of the Fund’s prospectus has been revised to
include the following sentence: “The investment objective is not
fundamental and, therefore, may be changed by the Board of Trustees without
shareholder approval.”
2. Principal Investment
Strategies of the Fund
Comment: The Staff
requested that Registrant provide it with information regarding the
capitalization range of the mid-cap index that will be used by the Fund to
define mid-sized companies for purposes of its 80% names rule policy, and the
Staff indicated that it may have further comment based on that
range.
Response: The
Registrant has determined to define mid-sized companies as those that fall
within a market capitalization range of $1 billion to $12 billion at the time of
purchase by the Fund. The Registrant notes that the market
capitalization of companies in accounts that the Fund’s investment adviser,
Voyageur Asset Management, Inc. (which is being renamed RBC Global Asset
Management (U.S.) Inc. at the end of the calendar year)(“Advisor”), has managed
in the Mid Cap Value Equity strategy generally fall within a narrower range of
approximately $2.5 billion to $4 billion. The Advisor considers
companies with a market capitalization of $1 billion to $2 billion to be within
the low end of its view of the category of mid-sized companies. In
developing the definition of mid-sized companies for the Fund, Registrant and
the Advisor considered all pertinent references, including, for example,
industry indices, classifications used by mutual fund rating organizations,
definitions used in financial publications and mid-sized definitions used by
many other mutual funds. Registrant and the Advisor believe that the
definition used by the Fund and the related disclosure is appropriate in view of
the Fund’s name and anticipated investment operations. Registrant
also acknowledges its obligation under section 35(d) of the 1940 Act to ensure
that the Fund name is not misleading.
3.
|
Risk/Return Summary
and Fund Expenses
|
Comment: The Staff
has requested that footnote four to the “Fees and Expenses” table confirm that
the duration of the expense limitation agreement will be at least one year from
the effective date of the Amendment.
Response: Registrant
confirms that the expense limitation agreement will be in place until January
31, 2011 and has revised the footnote in accordance with the Staff’s
comment.
4.
|
Historical Performance
Data of the Advisor
|
Comment: The Staff suggested
that the Registrant’s inclusion of the performance information for the Voyageur
Mid Cap Value Equity Composite (the “Composite”) provided by the Advisor, in the
Fund Management section of the Fund’s prospectus is not consistent with the SEC
staff’s prior interpretive positions in Nicholas-Applegate Mutual
Funds, SEC No-Action Letter (Aug. 6, 1996) and Bramwell Growth Fund, SEC
No-Action Letter (Aug. 7, 1996).1
1
|
In
Nicholas-Applegate, the
SEC staff agreed neither Section 34(b) of the 1940 Act nor Section 206 of
the Advisers Act would prohibit funds from including in their prospectuses
the performance information of the investment adviser’s similarly managed
separately managed accounts provided such information is not presented in
a misleading manner and does not obscure or impede understanding of
information that is required to be in the prospectus. In Bramwell, the SEC staff
permitted a fund to include in its prospectus the performance information
of another registered fund previously managed by the portfolio manager of
fund’s investment adviser provided that the performance is not presented
in a misleading manner and does not obscure or impede understanding of
information that is required to be in the
prospectus.
|
Response: The
Registrant respectfully disagrees with the Staff’s position and submits that the
inclusion of the performance information for the Composite is consistent with
Nicholas-Applegate and
other Staff interpretive positions as described below. Specifically,
the performance information of the Composite reflects the performance of the
Advisor’s advisory client accounts that are managed by the Fund’s portfolio
management team using an investment strategy that is substantially similar to
the Fund’s investment strategy. The Registrant acknowledges that the
performance information for the Composite also includes the performance of
client accounts managed by the portfolio management team while at a prior
advisory firm. However, in a series of no-action interpretive
letters, the Staff has permitted an investment adviser to cite as its
own performance (portability) the performance of a predecessor firm or a
firm at which the investment adviser’s portfolio managers previously managed
accounts.2 In the most recent no-action
letter, Horizon Asset
Management, the SEC staff established the following conditions for the
portability of related performance information:
|
§
|
The
person or persons who manage accounts at the successor adviser were also
primarily responsible for achieving the prior performance
results;
|
|
§
|
The
accounts managed at the predecessor are so similar to the accounts
currently under management that the performance results would provide
relevant information to prospective clients of the successor
adviser;
|
|
§
|
All
accounts that were managed in a substantially similar manner are included
unless the exclusion of any such account would not result in materially
higher performance;
|
|
§
|
The
presentation of performance results is consistent with Staff
interpretations; and
|
|
§
|
The
performance information includes all relevant disclosures, including that
the performance results were from accounts managed at another
entity.
|
The
performance information for the Composite fully satisfies these
conditions. Accordingly, the Registrant respectfully submits that the
presentation of performance information for the Composite is permitted pursuant
to Nicholas-Applegate
and the Staff positions relating to portability. The
Registrant does not believe Bramwell is applicable since
the performance information for the Composite does not reflect the performance
of a fund previously managed by the Advisor.
For your
reference, we have attached hereto as Appendix A the revised disclosure under
“Historical Performance Data of the Advisor,” incorporating changes made in
response to the Staff’s comments. In addition, the disclosure
reflects certain clarifying changes.
2
|
See e.g., Fiduciary Management
Associates, Inc., SEC No-Action Letter (Mar. 5, 1984); Conway Asset Management,
Inc., SEC No-Action Letter (Jan. 27, 1989); and Horizon Asset Management
LLC, SEC No-Action Letter (Sept. 13,
1996).
|
5.
|
Historical Performance
Data of the Advisor: Composite
Table
|
Comment: The Staff
has requested that the “Composite Return Net of Investment Management Fees”
column precede the “Composite Return Gross of Investment Management Fees” column
in the Composite Table.
Response: Disclosure
in the Amendment has been revised to address the Staff’s
comment. Please see Appendix A.
6.
|
Historical Performance
Data of the Advisor: Footnote
One
|
Comment: The Staff has
requested that the Registrant clarify the difference between the inception date
and creation date of the Mid Cap Value Equity Composite in footnote one to the
Composite and the Average Annual Total Returns Tables.
Response: Disclosure
in footnote one has been revised to state “Although the Composite was created on
May 8, 2006, performance information for the Composite is shown since its
inception date, January 1, 2001.” The Composite creation date is the
date on which the Advisor first grouped the accounts to create a
composite. The Composite inception date is the earliest date for
which performance is reported for the Composite - the initial date of the
performance record. Please see Appendix A.
7.
|
Historical Performance
Data of the Advisor: Footnote
Six
|
Comment: The Staff
has requested that the Registrant provide updated performance information in the
Mid Cap Value Equity Composite table as of the most recent calendar quarter in
2009.
Response: Disclosure
in the Amendment has been revised to include year-to-date performance through
September 30, 2009. Please see Appendix A.
8. Rule
35d-1 Disclosure
As discussed during our phone
conversation on December 3, 2009, the Staff acknowledged that because the Fund
does not use leverage, Registrant could delete the phrase “plus any borrowings
for investment purposes” in the Prospectus disclosure when defining the concept
of net assets for purposes of Rule 35d-1 of the 1940 Act. Registrant
has included disclosure in the SAI indicating that the term “net assets” used in
the Fund’s 80% names rule policy includes any borrowings for investment
purposes, and has also provided disclosure indicating that the Fund does not
intend to borrow for investment purposes.
Tandy
Representation
The
Registrant acknowledges that: (a) the Registrant is responsible for
the adequacy and accuracy of the disclosure in the filings reviewed by the
Staff; (b) Staff comments or changes to
disclosure
in response to Staff comments do not foreclose the Securities and Exchange
Commission from taking any action with respect to the filing; and (c) the
Registrant may not assert Staff comments as a defense in any proceeding
initiated by the Securities and Exchange Commission or any person under the
federal securities laws of the United States.
Kindly
direct any questions concerning this letter to the undersigned at (215)
564-8198.
Very
truly yours,
/s/Michael
P. O’Hare
Michael
P. O’Hare
cc: Lee
Greenhalgh, Esq., Secretary, RBC Funds Trust
Jodi DeFeyter, Voyageur Asset
Management, Inc.
Appendix
A
Historical
Performance Data
The
following tables show historical performance information for the Voyageur Mid
Cap Value Equity Composite (the “Composite”). The performance information for the
Composite does not represent the performance of the Fund. The performance information for the
Composite should not be considered a substitute for the Fund’s
performance. Performance is historical and does not guarantee or
represent the future performance of the Fund or of the
Advisor. The Composite consists of actual, fee-paying,
discretionary advisory client accounts managed by the Fund’s portfolio
management team according to a Mid Cap Value investment strategy that has the
same investment objective, and uses substantially similar investment policies
and techniques as those of the Fund. For additional information on
the members of Voyageur’s Mid Cap Value portfolio management team, see
“Portfolio Managers” above. The members of the Fund’s portfolio
management team have managed the Composite since 2001. The Composite
is provided solely to illustrate the past performance of the Advisor in managing
substantially similar accounts. The performance presented for the
period January 1, 2001, through May 5, 2006, represents the Mid Cap Value Equity
track record established by the Fund’s portfolio management team while
affiliated with a prior firm. From May 8, 2006, forward, the
Composite information represents accounts managed by the same portfolio
management team since joining the Advisor. A complete list and
description of the Advisor’s composites is available upon request.
The
manner in which the performance was calculated for the Composite differs from
that of registered mutual funds such as the Fund. The Advisor has
prepared and presented the performance information for the Composite in
compliance with the Global Investment Performance Standards (“GIPS®”). All returns presented
were calculated on a total return basis and include all dividends and interest,
accrued income, and realized and unrealized gains and losses. Except
as otherwise noted, all returns reflect the payment of investment management
fees, brokerage commissions and execution costs paid by the accounts included in
the composite, without taking into account federal or state income
taxes. Custodial fees, if any, were not included in the
calculations. Securities are valued as of trade-date. The results are based on
fully discretionary accounts under management, including those accounts no
longer with the firm. There is no minimum asset size below which
portfolios were excluded from the Composite. The currency used to
express performance in the Composite is the U.S. dollar. Performance
results are presented both net of investment management fees and gross of
investment management fees and include the reinvestment of all
income. Because of variation in fee levels, the “net of fees”
Composite returns may not be reflective of performance in any one particular
account. Therefore, the performance information shown below is not
necessarily representative of the performance information that typically would
be shown for a registered mutual fund.
The
accounts that are included in the Composite are not subject to the same type of
expenses to which the Fund is subject and are not subject to the diversification
requirements, specific tax restrictions, and investment limitations imposed by
the federal securities and tax laws. Consequently, the performance
results for the Composite could have been adversely affected if
the
accounts in the Composite were subject to the same federal securities and tax
laws as the Fund. In addition, while the
accounts comprising the Composite incur inflows and outflows of cash from
clients, there can be no assurance that the continuous offering of the Fund’s
shares and the Fund’s obligation to redeem its shares will not adversely impact
the Fund’s performance.
The
investment results for the Composite are not intended to predict or suggest the
future returns of the Fund. Total return performance of the Fund is
calculated in accordance with the regulations of the SEC. The SEC
standardized average annual total return is neither time weighted or asset
weighted and is determined for specified periods by computing the annualized
percentage change in the value of an initial amount that is invested in a share
class of the Fund at the maximum public offering price. Investors
should be aware that the use of a methodology different than that used below to
calculate performance could result in different performance data.
Mid
Cap Value Equity Composite(1)
Year
|
|
Composite
Return
Net
of
Investment
Management
Fees(2)
|
|
|
Composite
Return
Gross
of
Investment
Management
Fees
|
|
|
Benchmark
(Russell
Midcap
Value
Index(3))
Return
|
|
|
Composite
Dispersion(4)
|
|
|
Number
of
Accounts
|
|
|
Market
Value
($MM)
|
|
|
Percentage
of
Firm
Assets
|
|
|
Total
Firm
Assets
($MM)(5)
|
|
2009
YTD(6)
|
|
|
24.7 |
% |
|
|
25.2 |
% |
|
|
27.6 |
% |
|
|
N/A |
|
|
|
3 |
|
|
|
18.9 |
|
|
<1%
|
|
|
|
40,258.9 |
|
2008
|
|
|
-31.0 |
% |
|
|
-30.6 |
% |
|
|
-38.4 |
% |
|
|
0.3 |
% |
|
|
2 |
|
|
|
8.6 |
|
|
<1%
|
|
|
|
32,140.1 |
|
2007
|
|
|
5.9 |
% |
|
|
6.4 |
% |
|
|
-1.4 |
% |
|
|
0.2 |
% |
|
|
2 |
|
|
|
12.4 |
|
|
<1%
|
|
|
|
32,045.1 |
|
2006
|
|
|
18.9 |
% |
|
|
19.6 |
% |
|
|
20.2 |
% |
|
|
N/A |
|
|
|
2 |
|
|
|
13.6 |
|
|
<1%
|
|
|
|
28,358.1 |
|
2005
|
|
|
9.7 |
% |
|
|
10.6 |
% |
|
|
12.7 |
% |
|
|
N/A |
|
|
|
1 |
|
|
|
29.5 |
|
|
|
- |
|
|
|
27,018.8 |
|
2004
|
|
|
26.4 |
% |
|
|
27.5 |
% |
|
|
23.7 |
% |
|
|
N/A |
|
|
|
1 |
|
|
|
26.7 |
|
|
|
- |
|
|
|
26,858.3 |
|
2003
|
|
|
39.0 |
% |
|
|
40.2 |
% |
|
|
38.1 |
% |
|
|
N/A |
|
|
|
1 |
|
|
|
8.1 |
|
|
|
- |
|
|
|
22,518.8 |
|
2002
|
|
|
-2.4 |
% |
|
|
-1.6 |
% |
|
|
-9.6 |
% |
|
|
N/A |
|
|
|
1 |
|
|
|
5.8 |
|
|
|
- |
|
|
|
20,245.8 |
|
2001
|
|
|
9.8 |
% |
|
|
10.7 |
% |
|
|
2.3 |
% |
|
|
N/A |
|
|
|
1 |
|
|
|
5.9 |
|
|
|
- |
|
|
|
15,061.3 |
|
Average
Annual Total Returns for the Periods Ended 9/30/2009
|
|
1
Year
|
|
3
Years
|
|
5
Years
|
|
Since
Inception
January 1,
2001
|
|
Composite
gross return
|
|
-0.4%
|
|
-0.4%
|
|
6.9%
|
|
10.4%
|
|
Composite
net return
|
|
-0.9%
|
|
-0.9%
|
|
6.2%
|
|
9.6%
|
|
Russell Midcap Value
Index
(3)
|
|
-7.1%
|
|
-5.7%
|
|
3.5%
|
|
5.9%
|
|
1
|
|
Although
the Composite was created on May 8, 2006, performance information for the
Composite is shown since its inception date, January 1,
2001. The Composite creation date is the date on which
the Advisor first grouped the accounts to create a
composite. The Composite inception date is the earliest date
for which performance is reported for the Composite - the initial date of
the performance record.
|
|
|
|
2 |
|
Net
of Investment Management Fees was calculated using actual management
fees. Institutional Fee Schedule: 0.85% on the first $10
million; 0.70% on the next $15 million; 0.60% on the next $25 million;
0.50% on assets over $50 million. |
3
|
|
The
Russell Midcap Value Index, an unmanaged index, is a subset of the Russell
Midcap Index, which measures the performance of the stocks of the 800
smallest companies in the Russell 1000® Index, based on market
capitalization. The Russell Midcap Value Index measures the
performance of those stocks of the Russell Midcap Index with lower
price-to-book ratios and lower relative forecasted growth
rates. Individuals cannot invest directly in an
index.
|
4
|
|
Dispersion
of annual returns is measured by the equal weighted standard deviation of
all accounts in the composite for a full year. Dispersion
marked “N/A” means that the information is not statistically meaningful
due to an insufficient number of portfolios in the Composite for the
entire year.
|
5
|
|
Prior
to January 1, 2006, the Total Firm Assets included all discretionary and
non-discretionary assets managed by the Advisor. Effective
January 1, 2006, Total Firm Assets are represented by assets managed by
Voyageur Institutional Services (“VIS”), a division of the
Advisor.
|
6
|
|
For
the period January 1, 2009 through September 30,
2009.
|
Additional Composite
Disclosures
GIPS® Compliance: The
Composite has been prepared and presented in compliance with GIPS®. Compliance
with GIPS® has
been verified firm-wide by an independent third party from January 1993 through
March 2009. In addition, a performance examination was conducted
beginning on January 1, 2001. Their report is available upon
request.
Composite
Methodology: Returns are time-weighted total rates of return
including cash and cash equivalents, income and realized and unrealized gains
and losses. Returns are shown net of non-recoverable tax, while recoverable tax
is included on a cash basis. Composite results are weighted by
individual portfolio size, using start of period market
values. Portfolios are valued at least monthly or on the date of any
contribution/withdrawal greater than 10% within 1 month. Annual
returns are calculated using geometric linking of monthly returns. An
account becomes eligible for inclusion the first full calendar month after
funding. Inclusion may be deferred in cases where it has not been
possible to implement the investment strategy. Terminated accounts
leave composites at the end of the calendar month before official notification
of termination is received. Beginning May 8, 2006, when the Composite
consists of more than three accounts, Composite policy requires the temporary
removal of any portfolio incurring a client initiated significant cash inflow or
outflow of at least 10% of portfolio assets. The temporary removal of
such an account occurs at the beginning of the month in which the significant
cash flow occurs and the account re-enters the Composite the first full month of
being fully invested. Additional information regarding the treatment
of significant cash flows is available upon request. Except as noted
above, results include all discretionary, fee paying accounts of the
Advisor. Additional information on policies for calculating and
reporting returns is available on request.
Presentation of Results: Gross
returns are presented before management, custodial and other fees but after all
trading expenses. Net returns are calculated after the deduction of
the actual management fees.