William M. Beaudoin
T +1 617 854 2337
william.beaudoin@ropesgray.com
November 29, 2017
VIA EDGAR
Mr. Ken Ellington
Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, D.C. 20549
| Re: | AMG Funds (Registration No. 811-09521), AMG Funds I (Registration No. 811-06520), AMG Funds II |
| (Registration No. 811-06431) and AMG Funds III (Registration No. 811-03752) |
Dear Mr. Ellington:
I am writing on behalf of AMG Funds, AMG Funds I, AMG Funds II and AMG Funds III (each, a “Trust,” and collectively, the “Trusts”) to respond to the comments of the staff (the “Staff”) of the Securities and Exchange Commission (“SEC”) regarding the annual reports to shareholders filed under the Investment Company Act of 1940, as amended (“1940 Act”), on Form N-CSR (each, an “Annual Report”) for the series of each Trust (each, a “Fund” and collectively, the “Funds”) listed inAppendix A hereto. The Trusts appreciate this opportunity to respond to the Staff’s comments. The Staff’s comments and the Trusts’ responses are set forth below.
General
1.Comment: For each of AMG Managers Amundi Short Duration Government Fund and AMG FQ Tax-Managed U.S. Equity Fund, given that a significant portion of realized gain or loss was due to the performance of the Fund’s derivatives positions, please discuss the impact of the performance of the Fund’s derivatives positions in the Management Discussion and Analysis of Fund Performance (“MDFP”), in accordance with the Staff’s letter to the Investment Company Institute dated July 30, 2010 (the “ICI Letter”).
Response: The Funds undertake to consider discussing the impact of the performance of the derivative positions for these Funds in the next annual reports to shareholders, as appropriate.
2.Comment: For all applicable Funds, please disclose in the “Schedule of Portfolio Investments” section of each Fund’s annual report the expiration date of any rights, if applicable.
Response: The Funds undertake to consider disclosing the expiration date of any rights, if applicable, in the next annual reports to shareholders, to the extent such information is available at the time the reports are prepared.
3.Comment: For AMG TimesSquare Emerging Markets Small Cap Fund, given that at the period ended December 31, 2016, as per the “Schedule of Portfolio Investments” section of the Fund’s annual report, 8.8% of the Fund’s net assets were invested in ETFs and 8.1% of the Fund’s net assets were invested in Dreyfus Government Cash Management Fund, please confirm that any acquired fund fees and expenses (“AFFE”) related to these investments were factored into the AFFE calculation for this Fund.
Response: The Fund confirms that the Annual Fund Operating Expenses table in the Fund’s prospectus has been prepared in accordance with the requirements of Form N-1A as to Acquired Fund Fees and Expenses and that such line item was not required to be included in the Fund’s prospectus dated May 1, 2017.
4.Comment: For AMG FQ Global Risk-Balanced Fund, given that at the period ended October 31, 2016, as per the “Schedule of Portfolio Investments” section of the Fund’s annual report, greater than 25% of the Fund’s net assets were invested in iShares iBoxx $ Investment Grade Corporate Bond ETF, please provide disclosure that explains how investors in the Fund may obtain the financial statements for iShares iBoxx $ Investment Grade Corporate Bond ETF.
Response: The Fund undertakes to include the following footnote to the Schedule of Portfolio Investments in future filings on Form N-CSR if approximately 25% or more of the Fund’s net assets are invested in iShares iBoxx $ Investment Grade Corporate Bond ETF:
“A copy of the security’s annual report to shareholders may be obtained without charge on the SEC’s website (http://www.sec.gov).”
5.Comment: For AMG Yacktman Special Opportunities Fund, please explain why there are differences in the Fund’s expense ratio disclosed in the Fund’s annual report for the fiscal year ended December 31, 2016 and in the “Annual Fund Operating Expenses” table in the Fund’s prospectus dated May 1, 2017. With respect Footnote 1 and the restatement of the Fund’s “Management Fee” and “Other Expenses” line items in the “Annual Fund Operating Expenses” table of the Fund’s prospectus, the Staff reminds the Fund that in accordance with Instruction 3(d)(iii) of Item 3 to Form N-1A, “[a] change in ‘Annual Fund Operating Expenses’ does not include a decrease in operating expenses as a percentage of assets due to economies of scale or breakpoints in a fee arrangement resulting from an increase in the Fund’s assets.”
Response: The expense ratio disclosed in the Fund’s annual report for the fiscal year ended December 31, 2016 differs from the expense ratio disclosed in the “Annual Fund Operating Expenses” table in the Fund’s prospectus dated May 1, 2017 because the “Management Fee” and “Other Expenses” line items in the “Annual Fund Operating Expenses” table were restated to reflect changes to the Fund’s contractual management fee and administrative fee that became effective on October 1, 2016. As disclosed in a supplement dated September 2, 2016 to the Fund’s prospectus and statement of additional information, effective October 1, 2016, the Fund’s base rate of its management fee was reduced from 1.50% to 1.37% of the Fund’s average daily net assets, and the administrative fees paid to AMG Funds LLC was increased to a flat 0.15% from a tiered structure of 0.03% of the average daily net assets of the Fund for the first $300,000,000 of assets under management, 0.025% for the next $200,000,000, and 0.02% on amounts in excess of $500,000,000. The Fund respectfully submits that these changes represent “an increase or a decrease in expenses that occurred during the most recent fiscal year,” as contemplated by Instruction 3(d)(iii) of Item 3 to Form N-1A, and that the Fund’s current prospectus disclosure is therefore appropriate and in compliance with the requirements of Form N-1A.
6.Comment: For AMG Renaissance International Equity Fund and AMG Yacktman Special Opportunities Fund, each of the Funds made significant return of capital distributions during the most recently completed fiscal year; however, under the “Performance” section of each Fund’s website, in the “Returns and Distributions” chart, such distributions appear to be characterized as dividends. Given that the term “dividends” relates to income, please confirm that the distributions in this chart do not include return of capital, or, if they do, please identify the portion that is attributable to return of capital.
Response: At the time of the original distribution and after the re-characterization of the distribution (see Response to Comment 7 for further details), each Fund confirms that its website included information regarding the return of capital. In August 2017, each Fund’s website was updated, and the information regarding the return of capital was inadvertently removed from each Fund’s website. Each Fund undertakes to update its website to identify the portion of the distributions that is attributable to return of capital.
7.Comment: For AMG Renaissance International Equity Fund and AMG Yacktman Special Opportunities Fund, given that each Fund made significant return of capital distributions, please confirm that each Fund has complied with the shareholder notification requirements of Rule 19a-1 of the 1940 Act.
Response: With respect to the returns of capital cited, each Fund complied with the shareholder notification requirements ofRule 19a-1 under the 1940 Act by estimating the sources from which dividends were paid during the year and reporting the correct sources in its first report to shareholders following a determination that the final amounts for the year differed significantly from the initial estimates, pursuant to paragraph (e) of the rule. Each Fund also notified its shareholders of the return of capital distribution via Form 1099 and posted information regarding the return of capital distribution to the Fund’s website.
8.Comment: With respect to the NSAR-B filings made by AMG Funds and AMG Funds III on July 27, 2017, please confirm that each Trust’s copy of the “Report of Independent Registered Public Accounting Firm” in the Trust’s books and records contains the city and state as part of the independent registered public accounting firm’s signature block and ensure that such information appears in future NSAR-B filings.
Response: Each Trust confirms that its copy of the “Report of Independent Registered Public Accounting Firm” in the Trust’s books and records contains the city and state as part of the independent registered public accounting firm’s signature block and undertakes to ensure that such information appears in future NSAR-B filings.
Please direct any questions you may have with respect to this filing to me at (617) 854-2337.
Very truly yours,
/s/ William M. Beaudoin
William M. Beaudoin
| cc: | Mark Duggan, Esq. |
| Maureen A. Meredith, Esq. |
| Gregory C. Davis, Esq. |
| Adam M. Schlichtmann, Esq. |
Appendix A
Series | File Number | Registrant Name | Series Name | FYE | ||||
S000009874 | 811-09521 | AMG FUNDS | AMG Systematic Large Cap Value Fund | 2/28/2017 | ||||
S000009875 | 811-09521 | AMG FUNDS | AMG Managers Essex Small/Micro Cap Growth Fund | 5/31/2017 | ||||
S000009876 | 811-09521 | AMG FUNDS | AMG TimesSquare Mid Cap Growth Fund | 12/31/2016 | ||||
S000009877 | 811-09521 | AMG FUNDS | AMG TimesSquare Small Cap Growth Fund | 12/31/2016 | ||||
S000014924 | 811-09521 | AMG FUNDS | AMG Systematic Mid Cap Value Fund | 2/28/2017 | ||||
S000020207 | 811-09521 | AMG FUNDS | AMG Managers Skyline Special Equities Fund | 12/31/2016 | ||||
S000023781 | 811-09521 | AMG FUNDS | AMG GW&K Municipal Enhanced Yield Fund | 12/31/2016 | ||||
S000023782 | 811-09521 | AMG FUNDS | AMG GW&K Small Cap Core Fund | 12/31/2016 | ||||
S000025838 | 811-09521 | AMG FUNDS | AMG GW&K Municipal Bond Fund | 12/31/2016 | ||||
S000025839 | 811-09521 | AMG FUNDS | AMG Renaissance Large Cap Growth Fund | 12/31/2016 | ||||
S000031517 | 811-09521 | AMG FUNDS | AMG Trilogy Global Equity Fund | 10/31/2016 | ||||
S000031518 | 811-09521 | AMG FUNDS | AMG Trilogy Emerging Markets Equity Fund | 10/31/2016 | ||||
S000031519 | 811-09521 | AMG FUNDS | AMG Trilogy International Small Cap Fund | 10/31/2016 | ||||
S000037565 | 811-09521 | AMG FUNDS | AMG Yacktman Focused Fund | 12/31/2016 | ||||
S000037566 | 811-09521 | AMG FUNDS | AMG Yacktman Fund | 12/31/2016 | ||||
S000039569 | 811-09521 | AMG FUNDS | AMG TimesSquare International Small Cap Fund | 12/31/2016 | ||||
S000044448 | 811-09521 | AMG FUNDS | AMG SouthernSun U.S. Equity Fund | 9/30/2016 | ||||
S000044449 | 811-09521 | AMG FUNDS | AMG SouthernSun Small Cap Fund | 9/30/2016 | ||||
S000045695 | 811-09521 | AMG FUNDS | AMG Renaissance International Equity Fund | 12/31/2016 | ||||
S000045879 | 811-09521 | AMG FUNDS | AMG Yacktman Special Opportunities Fund | 12/31/2016 | ||||
S000047833 | 811-09521 | AMG FUNDS | AMG Chicago Equity Partners Small Cap Value Fund | 12/31/2016 | ||||
S000048537 | 811-09521 | AMG FUNDS | AMG Trilogy Emerging Wealth Equity Fund | 10/31/2016 | ||||
S000049941 | 811-09521 | AMG FUNDS | AMG GW&K Small/Mid Cap Fund | 12/31/2016 | ||||
S000054540 | 811-09521 | AMG FUNDS | AMG SouthernSun Global Opportunities Fund | 9/30/2016 | ||||
S000055628 | 811-09521 | AMG FUNDS | AMG TimesSquare Emerging Markets Small Cap Fund | 12/31/2016 | ||||
S000009904 | 811-06520 | AMG Funds I | AMG FQ Tax-Managed U.S. Equity Fund | 10/31/2016 | ||||
S000009907 | 811-06520 | AMG Funds I | AMG FQ Global Risk-Balanced Fund | 10/31/2016 | ||||
S000009909 | 811-06520 | AMG Funds I | AMG FQ Long-Short Equity Fund | 10/31/2016 | ||||
S000009910 | 811-06520 | AMG Funds I | AMG Frontier Small Cap Growth Fund | 10/31/2016 | ||||
S000009911 | 811-06520 | AMG Funds I | AMG Managers Emerging Opportunities Fund | 10/31/2016 | ||||
S000009913 | 811-06520 | AMG Funds I | AMG Managers CenterSquare Real Estate Fund | 10/31/2016 | ||||
S000009914 | 811-06520 | AMG Funds I | AMG GW&K Core Bond Fund | 10/31/2016 | ||||
S000029531 | 811-06520 | AMG Funds I | AMG TimesSquare All Cap Growth Fund | 10/31/2016 | ||||
S000041917 | 811-06520 | AMG Funds I | AMG Managers Brandywine Fund | 9/30/2016 | ||||
S000041918 | 811-06520 | AMG Funds I | AMG Managers Brandywine Blue Fund | 9/30/2016 | ||||
S000041919 | 811-06520 | AMG Funds I | AMG Managers Brandywine Advisors Mid Cap Growth Fund | 9/30/2016 | ||||
S000009897 | 811-06431 | AMG Funds II | AMG Managers Amundi Intermediate Government Fund | 12/31/2016 | ||||
S000009898 | 811-06431 | AMG Funds II | AMG Managers Amundi Short Duration Government Fund | 12/31/2016 | ||||
S000009899 | 811-06431 | AMG Funds II | AMG GW&K Enhanced Core Bond Fund | 12/31/2016 | ||||
S000009900 | 811-06431 | AMG Funds II | AMG Managers High Yield Fund | 12/31/2016 | ||||
S000009901 | 811-06431 | AMG Funds II | AMG Chicago Equity Partners Balanced Fund | 12/31/2016 | ||||
S000009865 | 811-03752 | AMG FUNDS III | AMG Managers Special Equity Fund | 12/31/2016 | ||||
S000009868 | 811-03752 | AMG FUNDS III | AMG Managers Loomis Sayles Bond Fund | 12/31/2016 | ||||
S000009869 | 811-03752 | AMG FUNDS III | AMG Managers Global Income Opportunity Fund | 12/31/2016 | ||||
S000029671 | 811-03752 | AMG FUNDS III | AMG Managers Cadence Capital Appreciation Fund | 5/31/2017 | ||||
S000029672 | 811-03752 | AMG FUNDS III | AMG Managers Cadence Emerging Companies Fund | 5/31/2017 | ||||
S000029674 | 811-03752 | AMG FUNDS III | AMG Managers Cadence Mid Cap Fund | 5/31/2017 |