ANALYSTS INVESTMENT TRUST
November 29, 2004
Electronic Transmission Securities and Exchange Commission Public Filing Desk Judiciary Plaza 450 5th Street, N.W. Washington, D.C. 20549 |
Re:
Analysts Investment Trust - File Nos. 33-64370 and 811-77778
Ladies and Gentlemen:
This letter is filed by Analysts Investment Trust (the “Trust”) in response to the comments of the staff of the Securities and Exchange Commission (the “Staff”) with respect to Post-Effective Amendment No. 16 to its Registration Statement (the “Amendment”). The revised portions of the Prospectus and Statement of Additional Information are attached.
PROSPECTUS
Analysts Stock Fund
(1)
The Staff commented that the prospectus was unclear as to the capitalization range of the Stock Fund’s Investments. Disclosure has been added to the section titled “Principal Strategies” to clarify that the Fund may invest in companies of any market capitalization. In addition, the Staff asked for clarification of the term “technical analysis.” This term has been replaced with a description of the analysis used by the adviser to identify short-term trading opportunities.
(2)
The Staff requested that the section titled “Is the Fund Right for You?” be revised to reflect the more aggressive strategies added to the Principal Strategies section. The disclosure has been revised to reflect the more aggressive nature of the Fund.
Analysts Fixed Income Fund
(1)
The Staff requested that the “Principal Strategies” section be revised to clarify that the Fund’s investment in other investment companies is a principal strategy. Therefore, the phrase “to the extent the Fund invests in other investment companies” has been changed to “when the Fund invests in other investment companies.”
(2)
As requested, the “Principal Strategies” section has been revised to describe the dollar weighted average maturity of the Fund’s portfolio.
Share Price Calculation
As requested, the discussion of fair value pricing has been revised to disclose the effect of fair value pricing and to clarify that valuation is performed by the Adviser in accordance with procedures approved by the Board of Trustees.
Other Information About Investments
As requested, disclosure has been added to the “General” section to explain that the Stock Fund’s and the Fixed Income Fund’s 80% investment policy will not be changed without 60 days’ notice to shareholders.
Management of the Funds
(1)
As requested, the disclosure regarding the management agreement has been revised to describe the expenses paid by the Adviser.
(2)
As requested, the disclosure has been revised to clarify that there currently is no sub-adviser to the Funds.
(3)
The Staff requested that we confirm supplementally that the information regarding one of the portfolio managers covers a full five years. Mr. Becker has confirmed that the description of his prior experience does cover the full five years required by Form N-1A.
STATEMENT OF ADDITIONAL INFORMATION
Trustees and Officers
As requested, the chart describing the dollar range of shares of each Fund owned by the Trustees has been revised to include information regarding the aggregate amount of shares owned by each Trustee in all three Funds.
Investment Adviser
The Staff commented that the description of the Board’s deliberations when renewing the management agreements did not comply with Item 12 of Form N-1A. The disclosure has been revised as requested to more fully describe the Board’s deliberations.
Portfolio Transactions and Brokerage
As requested, the disclosure has been revised to clarify the procedures used by the Adviser when multiple clients of the Adviser or purchaser sell the same security on the same day.
OTHER COMMENTS
The Staff requested that the Trust provide a statement in response to the generic “Tandy” letter. The Trust hereby acknowledges that:
1.
The Trust is responsible for the adequacy and accuracy of the disclosure in the filings reviewed by the Staff;
2.
Staff comments or changes to disclosure in response to Staff comments in a filing reviewed by the Staff do not foreclose the Commission from taking any action with respect to the filing; and
3.
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.
If you have any further comments or questions concerning the Amendment, please contact JoAnn M. Strasser at (513) 352-6725.
Very truly yours,
ANALYSTS INVESTMENT TRUST
Jennifer J. Kelhoffer, Chief Compiance Officer
ANALYSTS STOCK FUND
Principal Strategies
The Fund invests primarily in common stock of U.S. companies. The Fund’s adviser applies a combination of technical analysis and traditional fundamental analysis. The Fund’s portfolio will normally consist of long term core positions supplemented by shorter term positions driven by technical opportunities. The Fund may invest in companies of any market capitalization.
•
The Fund’s adviser will supplement the core positions of the Fund with short-term trading opportunities based on analysis of price and volume movements to identify and project trends in a market or security. These opportunities often arise due to temporary imbalances in supply and demand. Taking advantage of these opportunities necessitates rapid trading, and may result in high portfolio turnover.
Is this Fund Right for You?
The Fund may be a suitable investment for:
•
long term investors seeking a Fund with a capital appreciation investment strategy
•
investors willing to accept significant price fluctuations in their investment
•
investors who can tolerate the greater risks associated with an aggressive stock fund.
The Fund is not a complete investment program.
ANALYSTS FIXED INCOME FUND
Principal Strategies
The Fund invests primarily in investment grade fixed income securities, including U.S. government securities, corporate debt securities, preferred stocks, convertible preferred stocks, convertible bonds and debentures. The adviser defines investment grade securities as securities that have a rating from Standard and Poors of BBB (or from Moody’s of Baa) or higher. When the Fund invests in other investment companies, you will indirectly pay some duplicative fees. Under normal circumstances, at least 80% of the Fund’s assets will be invested in fixed income securities. The Fund may invest in securities of all maturities. Bonds are purchased in maturity ranges that the adviser believes will complement the overall portfolio duration of the Fund, based on available yield. The adviser believes that a blended maturity schedule may result in lower volati lity while achieving high income. As of November 1, 2004, the dollar weighted average maturity of the Fund’s portfolio was _____.
SHARE PRICE CALCULATION
Requests to purchase, exchange and redeem shares are processed at the NAV calculated after the transfer agent receives your order in the form described above in the applicable section. The Funds’ assets are generally valued at their market value. If market prices are not available or do not reflect fair value, or if an event occurs after the close of the trading market that materially affects the values, assets may be valued by the adviser at their fair value according to procedures approved by the Funds' Board of Trustees. For example, arbitrage opportunities may exist when trading in a portfolio security is halted and does not resume before the Fund calculates its NAV. These arbitrage opportunities may enable short-term traders to dilute the NAV of long-term investors. Fair valuation of a Fund's portfolio securities can serve to reduce arbitrage op portunities available to short-term traders, but there is no assurance that fair value pricing policies will prevent dilution of the Fund's NAV by short-term traders.
OTHER INFORMATION ABOUT INVESTMENTS
General
The investment objectives and strategies of any Fund may be changed without shareholder approval. Neither the Stock Fund's nor the Fixed Income Fund's policy to invest, under normal circumstances, at least 80% of the Fund's total assets in common stocks and fixed income securities, respectively, will be changed without 60 days notice to shareholders.
MANAGEMENT OF THE FUNDS
Equity Analysts Inc., 7750 Montgomery Road, Cincinnati, Ohio 45236 (“EAI"), serves as investment adviser to the Funds. Under the terms of the management agreement for each Fund, EAI is responsible for managing the Fund's business affairs and for providing general investment advice to the Fund, and pays all of the Fund's operating expenses except brokerage fees and commissions, taxes, borrowing costs (such as (a) interest, and (b) dividend expense on securities sold short), fees and expenses of non-interested person trustees and extraordinary or non-recurring expenses.
From September 28, 2001 through July 31, 2004, RiverPoint Capital Management, Inc., 312 Walnut Street, 31st Floor, Cincinnati, Ohio 45202 (“RCM”) served as investment sub-adviser to the Funds. [For the fiscal year ended July 31, 2004, EAI paid RCM annual sub-advisory fees, based on average net assets, as follows: Stock Fund, 0.35%; Aggressive Stock Fund, 0.45%; Fixed Income Fund, 0.35%.] There is currently no sub-adviser.
TRUSTEES AND OFFICERS
The following table sets forth information, as of December 31, 2003, with respect to the dollar range of shares of each Fund beneficially owned by the Trustees of the Trust.[update]
Name | Stock Fund | Aggressive | Fixed | Aggregate |
Walter Bowles | $10,001 – $50,000 | [$1 – $10,000] | none | __ |
Robert Buechner | [$10,001 - $50,000] | $1 – $10,000 | none | __ |
Timothy Mackey | $1 - $10,000 | $1 – $10,000 | none | __ |
Investment Adviser
On September 24, 2004, the Board of Trustees considered and renewed the Agreements between the Trust and the Adviser. As to the nature, extent, and quality of the services to be provided by the Adviser, the Board considered the Adviser's written response to an advisory services questionnaire prepared by Fund counsel regarding the nature of the services provided by the Adviser. In its response, the Adviser provided information regarding matters such as any changes in the financial condition or investment personnel of the Adviser. The Trustees also reviewed the balance sheet and profit and loss statement dated August 31, 2004 and discussed the Adviser’s ability to meet its obligations under the Agreements. The Trustees discussed the terms of the Agreements, and concluded that the nature and extent of services required of the Adviser were reasonable and consiste nt with the Board’s expectations. . The Trustees concluded that the Adviser has the resources to provide quality advisory services to the Funds. As to the performance of the Adviser, the Trustees reviewed the performance each Fund compared to its benchmark, and concluded that the Adviser had performed reasonably well. The Board discussed the fact that each Fund had underperformed its benchmark index year-to-date through August 31, 2004, but that the Adviser had not terminated the sub-adviser agreement until August 31, 2004, and would need time to improve the performance of each Fund. The Board acknowledged that the new portfolio managers would be using different strategies than the sub-adviser, which the Adviser expected would enhance returns. The Board indicated to the representatives of the Adviser that they would be monitoring each Fund's future performance. As to the costs of the services to be provided, the Board reviewed the fees under each Agreement compa red to other mutual funds with similar investment objectives and asset levels. The Board considered the fact that each of the Agreements provide for a reduction in management fees as the assets of the Fund increases beyond certain breakpoints, and that the shareholders would benefit from fee reductions as the Funds grow. They concluded that the expense ratios, although not the lowest of their respective peer groups were reasonable. The Trustees also reviewed a profit and loss analysis prepared by the Adviser that detailed the expenses paid by the Adviser on behalf of the Funds, and the total revenue derived by the Adviser from the Funds. The Trustees concluded that the fees in each Agreement were reasonable. The Board reviewed a memorandum regarding their duties when considering the Agreements for renewal, and the independent Trustees met separately with legal counsel. It was the consensus of the Trustees, including the independent Trustees, that renewal of the Agreements would be in the best interests of each Fund and its shareholders.
PORTFOLIO TRANSACTIONS AND BROKERAGE
To the extent that the Trust and another of the Adviser’s clients seek to acquire the same security at about the same time, the Trust may not be able to acquire as large a position in such security as it desires or it may have to pay a higher price for the security. Similarly, the Trust may not be able to obtain as large an execution of an order to sell or as high a price for any particular portfolio security if the other client desires to sell the same portfolio security at the same time. On the other hand, if the same securities are bought or sold at the same time by more than one client, the resulting participation in volume transactions could produce better executions for the Trust. In the event that more than one client wants to purchase or sell the same security on a given date, each client will receive the average price of all trades.
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