July 25, 2006
VIA Edgar
Patricia Williams
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: AssetMark Funds (File Nos. 333-53450 and 811-10267)
Dear Ms. Williams:
On behalf of AssetMark Funds (the "Trust"), I am responding to your
comments, communicated to me via telephone on Friday, July 21, 2006, related to
the preliminary proxy statement filing made by the Trust on Schedule 14A on July
11, 2006. Each comment is summarized below, followed by the Trust's response to
the comment. Please note that the changes to disclosure indicated below will be
made in the definitive proxy statement to be filed by the Trust. Capitalized
terms not otherwise defined in this letter have the meanings assigned to the
terms in the preliminary proxy statement.
1. Comment. In order to comply with Section 15(f) of the Investment Company
Act, a fund must, among other things, meet the condition that at least 75% of
its trustees will not be "interested persons" of the adviser for a period of
three years after the transaction. The section entitled "Section 15(f) of the
Investment Company Act" currently indicates that the parties to the transaction
have agreed that Genworth, as the acquirer, "will use its commercially
reasonable efforts" to assure compliance with the 75% requirement. Please revise
the first paragraph of the section to indicate that satisfaction of the
conditions of Section 15(f) would be mandatory.
Response. We agree that the conditions of Section 15(f) must be satisfied
in order to rely on the "safe harbor" protections of Section 15(f). However, the
composition of the board and the manner of operation of the Funds is determined
in large part by the Fund Board, including the independent trustees, and not
entirely by Genworth. Nonetheless, we have revised the disclosure to address
your comment as follows:
"Section 15(f) of the Investment Company Act. Section 15(f) of the
Investment Company Act provides that an investment advisor (such as
AssetMark) to a registered investment company (such as the Trust), and the
affiliates of such advisor, may receive any amount or benefit in connection
with a sale of any interest in such investment advisor that results in an
assignment of an investment advisory contract if the following two
conditions are satisfied: (1) for a period of three years after such
assignment, at least 75% of the board of directors of the investment
company cannot be "interested persons" (within the meaning of Section
2(a)(19) of the Investment Company Act) of the new investment advisor or
its predecessor; and (2) no "unfair burden" (as defined in the Investment
Company Act) may be imposed on the investment company as a result of the
assignment or any express or implied terms, conditions or understandings
applicable thereto. An "unfair burden" on a fund is defined to include any
arrangement during the two year period after any such transaction occurs
whereby the investment advisor or its predecessor or successor, or any
interested person of such investment advisor, predecessor or successor,
receives or is entitled to receive any compensation, either directly or
indirectly, of two types. The first type is compensation in connection with
the purchase or sale of securities or other property to, from or on behalf
of the fund, other than bona fide ordinary compensation as principal
underwriter for such fund. The second type is compensation from the fund or
its security holders for anything other than bona fide investment advisory
or other services. As purchaser, Genworth has agreed to use its
commercially reasonable efforts to assure compliance with the conditions of
Section 15(f) as it applies to the Funds and the Transaction. The Board of
Trustees of the Trust intends to maintain a board structure that will
satisfy the first condition of Section 15(f) and to operate the Funds in a
manner that will satisfy the no "unfair burden" condition of Section 15(f)
of the Investment Company Act, for the time periods in the rule."
2. Comment. In the section entitled "Shareholder Approval," please consider
adding disclosure addressing the possibility that shareholders of some, but not
all, of the Funds may approve the New Agreement.
Response. The following disclosure will be inserted:
"The New Agreement must be approved by the shareholders of each Fund
for the Transaction to go forward. If there are sufficient votes for some,
but not all, of the Funds to approve the New Agreement, the Meeting may be
adjourned as to those Funds for which there are not sufficient votes to
approve the New Agreement. A shareholder vote may be taken prior to any
adjournment of the Meeting with respect to one or more Funds for which
there are sufficient votes for approval of the New Agreement, even though
the Meeting is adjourned as to one or more other Funds."
3. Comment. In order to increase its prominence, please consider moving the
paragraph entitled "Shareholder Reports" to a location closer to the beginning
of the proxy statement.
Response. This paragraph will be moved to a more prominent location in
accordance with your comment.
4. Comment. Please add disclosure describing how "broker non-votes" will be
treated for purposes of voting on the Proposal.
Response. In the section entitled "Shareholder Approval," disclosure will
be added as indicated below. Please note that the new disclosure is underlined,
while the rest of the paragraph is moved from the section entitled "Quorum" in
order to explain and/or define terms at the point of their first use.
"The shares over which broker-dealers have discretionary voting power, the
shares that represent "broker non-votes" (i.e., shares held by brokers or
nominees as to which (i) instructions have not been received from the
beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter),
and the shares whose proxies reflect an abstention will all be counted as
shares present and entitled to vote for purposes of determining whether the
required quorum of shares exists; however they will have the effect of a
vote against the Proposal."
In connection with the Trust's responses to your comments, the Trust
acknowledges, that: (i) the Trust is responsible for the adequacy and accuracy
of the disclosure in the Trust's filings; (ii) Staff comments or changes to
disclosure in response to Staff comments in the filings reviewed by the Staff do
not foreclose the Commission from taking any action with respect to the filings;
and (iii) the Trust may not assert Staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities laws of
the United States.
* * *
Should you have any questions or concerns regarding any of the above, please
contact me at (215) 564-8077.
Best Regards,
/s/ Fabio Battaglia, III
Fabio Battaglia, III
cc: Carrie E. Hansen
Mark D. Perlow, Esq.
Michael P. O'Hare, Esq.
