July 12, 2006
Jeffrey A. Clopeck, Esq.
Day, Berry and Howard LLP
One International Place
Boston, Massachusetts 02110
Re: The Blue Fund Group
File Nos.: 811-21908 and 333-134979
Dear Mr. Clopeck:
We have reviewed the registration statement on Form N-1A for the
Blue
Fund Group, containing one series, the Blue Fund (the "Fund"),
filed
with the Commission on June 13, 2006, and we have the following
comments. The captions we use below correspond to the captions
the
Fund uses in its registration statement. Please note that
comments
we provide in one section may apply to other sections in the
filing
that contain the same or similar disclosure.
Prospectus
Cover Page
The last sentence of the first paragraph uses a number of
ambiguous
terms such as, "progressive values", "environmental
sustainability"
and "responsible corporate governance". Please provide specific
explanations of these terms in the body of the prospectus.
Page 1, Investment Objective
Item 2(a) of Form N-1A requires a description of the Fund`s
investment objectives or goals. The discussion now presented in
this
section is a description of the Fund, not a statement of the
Fund`s
investment objectives or goals, and should be moved to the
Principal
Investment Strategies section.
Please set forth a statement in this section of the investment
objectives or goals which the Fund hopes to achieve, i.e., total
return, capital appreciation, tax exempt income, etc. See Item
2(a)
of Form N-1A.
Pages 1-2, Principal Investment Strategies
The discussion of the Fund`s Principal Investment Strategies is
too
lengthy for the Risk/Return Summary. Please summarize the Fund`s
Principal Investment Strategies in this section and move the
remainder of the information to a place later in the prospectus.
See
Item 2(b) to Form N-1A.
Please disclose the market capitalization range of the Standard &
Poor`s 500 Composite Stock Price Index, (the "S & P 500") as of a
recent date.
Pages 2-3, Principal Investment Risks
Since the S & P 500 is not limited to large capitalization stocks,
the risk disclosure in the section Investing in Common Stocks is
Risky should be expanded to contain small cap and mid cap risk
disclosure to be consistent with the market capitalization of the
common stocks in which the Fund proposes to invest.
Disclosure in the section, The Fund Will Continue to Invest in
Companies in the Blue Index Regardless of Performance, states that
the Fund will not shift its concentration from one industry to
another. This statement is not consistent with investment
restriction 1 in the Statement of Additional Information which
states
that the Fund will not engage in industry concentration. Please
revise the disclosure here to be consistent with the Fund`s
investment restriction not to engage in industry concentration.
Pages 4-5, Investment Objectives, Principal Investment
Strategies,
Related Risks and Disclosure of Portfolio Holdings
If applicable, disclose that the Fund`s investment objective may
be
changed without shareholder approval. See Item 4(a) to Form N-1A.
If the Fund will take any advocacy role regarding social agenda or
corporate change in the companies in which the Fund invests,
please
disclose what such actions will be and how they will be
undertaken.
The final sentence of the first full paragraph on page 5 refers to
a
"recent global survey" but the footnote used to reference this
statement indicates that the date of the survey was 2003. Please
inform us if there is a more recent survey and if so why the
contents
of such survey were not disclosed.
Pages 7-8, The Investment Adviser
The final sentence of the first full paragraph on page 8 should be
revised to indicate that the discussion of the basis for approval
of
the investment advisory contract can be found in the Fund`s annual
or
semi-annual report to shareholders. While this discussion may be
retained in the Statement of Additional Information at the
discretion
of the Fund, it must be present in the Fund`s annual or semi-
annual
report to shareholders. See Item 5(a)(1)(iii) of Form N-1A.
Page 8, The Portfolio Manager
Please disclose the specific position or positions held by Mr.
Adamson at McKinsey & Company. Also, disclose the name of the
boutique New York private equity fund for which he was Senior
Associate. See Item 5(a)(2) of Form N-1A.
Please revise the first sentence of the second paragraph to add
disclosure that the Statement of Additional Information also
contains
information regarding other accounts managed by the portfolio
manager.
Pages 8-9, How Shares are Priced Each Day
Please provide a brief explanation of the circumstances under
which
the Fund will use fair value pricing and the effects of using fair
value pricing. See Instruction to Item 6(a)(1) of Form N-1A.
Statement of Additional Information
Page 1, The Fund, Its Investments and Risks
Please move the statement, "The Fund normally invests at least 95%
of
its total asset in common stocks of blue companies included in the
S&P 500" to the Principal Investment Strategies section of the
Risk/Return Summary in the prospectus. See Item 2(b) of Form N-
1A.
Pages 7-8, Investment Restrictions
Disclosure in restriction 1 states, "In addition, this limitation
does not apply to investments in domestic banks, including U.S.
branches of foreign banks and foreign branches of U.S. banks."
This
language should be deleted. The exception to which this statement
refers is only applicable to money market funds. See Investment
Company Act of 1940 Release No. 9011 (October 30, 1975). Also
delete
similar language regarding bank concentration in the first
paragraph
following nonfundamental restriction 10 on page 8.
Page 9, Disclosure of Portfolio Holdings
Please revise the second and third bullet points to clarify the
frequency and lag time, if any, on the possible release of
portfolio
information to such persons. Disclose further any conditions or
restrictions placed on the use of portfolio information that is
disclosed, including any requirement that the information be kept
confidential or prohibitions on trading based on the information,
and
any procedures to monitor the use of this information. See Items
11(f)(1)(ii) and (iii) to Form N-1A.
Please describe any ongoing arrangements to make available
information regarding the Fund`s portfolio securities to any
person,
including the identity of the persons who receive information
pursuant to such arrangements. See Item 11(f)(2) of Form N-1A.
Page 14, Portfolio Manager
Please provide disclosure for the portfolio manager concerning
other
accounts managed and any material conflicts of interest. See Item
15(a)(2), (3) and (4) of Form N-1A.
Please revise the Compensation section to describe the structure
of
and method used to determine the Portfolio Manager`s compensation.
See Item 15(b) of Form N-1A and Instructions 2 and 3 thereto.
Please disclose the dollar range of equity securities in the Fund
beneficially owned by the Portfolio Manager using the ranges set
forth in Item 15(c) of Form N-1A.
Page 21, Information About Portfolio Transactions
The discussion of selecting brokers in the first paragraph
mentions
that the investment adviser will consider "other services provided
by
the broker-dealer". Please confirm to us that the Fund has
adopted
procedures to prevent the sale of fund shares from being a factor
in
the Fund`s brokerage allocation decisions. See Rule 12b-1(h)
under
the Investment Company Act of 1940.
General Comments
Please include a transmittal letter with all future filings.
Where a comment is made in one location, it is applicable to all
similar disclosure appearing elsewhere in the registration
statement.
We note that portions of the filing are incomplete. We may have
additional comments on such portions when you complete them in a
pre-
effective amendment, on disclosures made in response to this
letter,
on information supplied supplementally, or on exhibits added in
any
pre-effective amendments.
Please advise us if you have submitted or expect to submit an
exemptive application or no-action request in connection with your
registration statement.
Please respond to this letter in the form of a pre-effective
amendment filed pursuant to Rule 472 under the Securities Act of
1933. You should provide a response to all comments. Where no
change is made in the filing in response to a comment, please so
indicate in a supplemental letter for the information of the staff
and briefly state the basis for such position. Please note the
Rule
472 requirement for copies marked to show changes from the
previous
filing.
We urge all persons who are responsible for the accuracy and
adequacy
of the disclosure in the filings reviewed by the staff to be
certain
that they have provided all information investors require. Since
the
Fund and its management are in possession of all facts relating to
a
fund`s disclosure, they are responsible for the accuracy and
adequacy
of the disclosures they have made.
Notwithstanding our comments, in the event the Fund requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the Fund from its full responsibility for the adequacy and
accuracy for the disclosure in the filing; and
* the Fund may not assert this action as a defense in any
proceeding
initiated by the Commission or any person under the federal
securities laws of the United States.
In addition, please be advised that the Division of Enforcement
has
access to all information you provide to the staff of the Division
of
Investment Management in our review of your filing or in response
to
our comments on your filing.
We will consider a written request for acceleration of the
effective
date of the registration statement as confirmation of the fact
that
those requesting acceleration are aware of their respective
responsibilities. We will act on the request and, pursuant to
delegated authority, grant acceleration of the effective date.
Please direct any questions you may have regarding the filing or
this
letter of comment to me at (202) 551-6986.
Sincerely,
Patricia P. Williams
Accountant/Analyst
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