Morgan, Lewis & Bockius LLP Morgan Lewis
1701 Market Street COUNSELORS AT LAW
Philadelphia, PA 19103-2921
Tel: 215.963.5000
Fax: 215.963.5001
www.morganlewis.com
David W. Freese
215.963.5862
dfreese@morganlewis.com
FILED AS EDGAR CORRESPONDENCE
November 4, 2014
Karen Rossotto, Esq.
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Re: The Advisors' Inner Circle Fund III 485(a) Filing (File Nos.333-192858
and 811-22920)
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Dear Ms. Rossotto:
On behalf of our client, The Advisors' Inner Circle Fund III (the "Trust"), this
letter responds to the comments you provided on behalf of the staff (the
"Staff") of the Securities and Exchange Commission (the "SEC"), regarding the
Trust's Post-Effective Amendment No. 1, under the Securities Act of 1933, as
amended (the "1933 Act"), and Amendment No. 5, under the Investment Company Act
of 1940, as amended (the "1940 Act"), to its registration statement filed with
the SEC on March 31, 2014 pursuant to Rule 485(a) under the 1933 Act, for the
purpose of adding the Nomura High Yield Fund (the "Fund") as an additional
series of the Trust (the "Amendment"). Below, we have briefly summarized your
comments and questions, followed by our responses based on information provided
by the Adviser. Capitalized terms not defined herein should be given the meaning
provided in the Amendment.
COMMENTS ON THE PROSPECTUS
1. COMMENT. Please add a footnote to the "Other Expenses" row of the "Annual
Fund Operating Expenses" table and disclose in the footnote that Other
Expenses are based on estimated amounts for the current fiscal year.
RESPONSE. Footnote 1 has been moved from applying only to the "Total Annual
Operating Expenses" row of the table to applying to the entire table.
Accordingly, the Fund's "Other Expenses" should be read to "have been
restated to reflect contractual expenses expected to be incurred for the
Fund for the current fiscal year, ending September 30, 2014."
2. COMMENT. Please confirm that the fees and expenses incurred indirectly by
the Fund as a result of investment in shares of one or more acquired funds
are not expected to exceed 0.01 percent of the average net assets of the
Fund during the current fiscal year, or alternatively, add an "Acquired
Fund Fees and Expenses" subcaption to the "Annual Fund Operating Expenses"
table and disclose in the subcaption the estimated fees and expenses to be
incurred indirectly by the Fund as a result of investment in shares of one
or more acquired funds during the current fiscal year.
RESPONSE. The fees and expenses incurred indirectly by the Fund as a result
of investment in shares of one or more acquired funds are not expected to
exceed 0.01 percent of the average net assets of the Fund during the
current fiscal year.
3. COMMENT. In the first sentence of the "Principal Investment Strategies"
section, please state that high yield bonds are also known as "junk bonds."
RESPONSE. The requested change has been made.
4. COMMENT. In the first sentence of the fourth paragraph in the "Principal
Investment Strategies" section, please disclose the market capitalization
range of common stock in which the Fund will invest.
RESPONSE. The requested change has been made.
5. COMMENT. If the Fund's investments in loan participations will be a
principal investment strategy of the Fund, please add appropriate
disclosure and describe the risks thereof. Please also disclose whether the
Fund considers loan participations to be "senior loans."
RESPONSE. The requested changes have been made.
6. COMMENT. In the "Principal Risks" section:
(a) Please add risk disclosure regarding payment-in-kind securities,
asset-backed securities, and zero coupon bonds in which the Fund may
principally invest.
RESPONSE. The requested changes have been made.
(b) Please add risk disclosure regarding small and mid-capitalization
securities if investing in such securities is a principal investment
strategy of the Fund.
RESPONSE. The requested changes have been made.
(c) Please add risk disclosure regarding active and frequent trading of
portfolio securities if the Fund may engage in such trading to achieve
its principal investment strategies.
RESPONSE. The Registrant respectfully submits that the "Frequent Trading
Risk" disclosure currently in the Amendment captures the risks associated
with frequent trading, and, therefore, has not made any changes in response
to this comment.
(d) The disclosure in the "Currency Risk" paragraph is repeated in the
"Foreign Currency Risk" paragraph. Please delete one of these
paragraphs.
RESPONSE. The "Currency Risk" paragraph has been deleted.
7. COMMENT. (a) The "Performance Information" section describes the
Reorganization of the Predecessor Fund into the Fund. Please provide the
Staff supplementally with a more detailed explanation of the Predecessor
Fund and the Reorganization, including whether the Predecessor Fund was
registered with the SEC, whether its portfolio managers will also serve as
portfolio managers for the Fund, the reasons for the Reorganization, and
the anticipated timing of the Reorganization.
RESPONSE. (a) For a description of the Reorganization, the Registrant
refers the Staff to the Registrant's Registration Statement on Form N-14
filed with the SEC on October 10, 2014 (SEC Accession No.
0001135428-14-000665).
(b) Please also state your authority for including information regarding
the Predecessor Fund.
RESPONSE. (b) In its Generic Comment Letter dated February 3, 1995, the
Staff stated that it "believes that the survivor of a business combination
for accounting purposes (i.e., the fund whose financial statements are
carried forward), typically will be the fund whose historical performance
may be used by a new or surviving fund." As the Predecessor Fund is the
accounting survivor of the Reorganization, the Fund intends to use the
Predecessor Fund's historical performance in connection with its prospectus
disclosure.
8. COMMENT. In the "More Information about the Fund's Investment Objective
and Investment Strategies" section:
(a) Please state, if applicable, that shareholders will be provided
notice of a change in the Fund's investment objective.
RESPONSE. The Fund does not currently have a policy requiring shareholder
notice of a change in the Fund's investment objective.
(b) If the Fund's investments in unsecured loans will be a principal
investment strategy of the Fund, please describe the risks thereof.
RESPONSE. The requested change has been made.
(c) Please include a "plain english" explanation of "alpha" under the
heading entitled "Principal Investment Strategies."
RESPONSE. The requested change has been made.
(d) Please clarify what "diversified" means in the third sentence of the
third paragraph under the heading entitled "Principal Investment
Strategies."
RESPONSE. The term "diversified" has been removed from the referenced
sentence.
(e) Please (i) disclose that reverse repurchase agreements are considered
"borrowings" by the Fund and (ii) add a corresponding risk disclosure
regarding leverage.
RESPONSE. (i) The requested change has been made. (ii) The Adviser has
confirmed that the Fund does not intend to invest in repurchase agreements
to a degree such that it believes leverage risk will be a principal risk of
the Fund. Accordingly, no disclosure has been added in response to this
comment.
9. COMMENT. If the Fund's policies and procedures with respect to
circumstances under which the Fund discloses its portfolio holdings are
available through a website, please disclose this web address under the
heading "Information about Portfolio Holdings."
RESPONSE. The Fund's policies and procedures with respect to circumstances
under which the Fund discloses its portfolio holdings are summarized in the
SAI but are not made available through a website. Accordingly, no revisions
have been made in response to the comment.
10. COMMENT. In the "Investment Adviser" section, please provide the period
covered by the annual or semi-annual report that will discuss the basis for
the Board's approval of the Fund's investment advisory agreement.
RESPONSE. The requested change will be made in a subsequent post-effective
amendment to the Trust's registration statement, once the information is
available.
11. COMMENT. In the "Related Performance Data of the Sub-Adviser" section:
(a) Please confirm supplementally that the "net returns" performance data
reflects all anticipated operating expenses of Class I shares of the
Fund.
RESPONSE. The "net returns" performance data reflects all anticipated
operating expenses of Class I shares of the Fund.
(b) Please delete "and the maximum sales charge (load) imposed on
purchases" in the last sentence of the fourth paragraph.
RESPONSE. The requested change has been made.
COMMENTS ON THE STATEMENT OF ADDITIONAL INFORMATION
12. COMMENT. In the "Investment Limitations" section, please add "below"
between "rated" and "investment grade" in the seventh non-fundamental
policy.
RESPONSE. The requested change has been made.
13. COMMENT. In the "Investment Limitations" section, please revise the
narrative disclosure with respect to the fundamental investment policy on
concentration to clarify that industrial revenue bonds (i.e., those bonds
that are issued by municipalities to finance non-governmental projects) and
municipal securities with payments of principal or interest backed by the
revenue of a specific project will be counted by the Fund as investments in
the industry to which they are related, and thus subject to the 25%
industry concentration limit.
RESPONSE. The Trust has revised the narrative such that the following
phrase has been deleted: "such as with respect to investments in
obligations issued or guaranteed by the U.S. Government or its agencies and
instrumentalities, or tax-exempt obligations of state or municipal
governments and their political subdivisions".
14. COMMENT. In the "Portfolio Holdings" section, please list other entities
that may receive information regarding the Fund's portfolio holdings, if
any.
RESPONSE. The requested change has been made.
* * * * * * * * * * * *
I hereby acknowledge on behalf of, and with the express authority granted by,
the Registrant that: (i) the Registrant is responsible for the adequacy and
accuracy of the disclosure in its registration statement; (ii) SEC staff
comments or changes to disclosure in response to staff comments in the
registration statement reviewed by the staff do not foreclose the SEC from
taking any action with respect to the registration statement; and (iii) if, to
the Registrant's knowledge, an inquiry or investigation is currently pending or
threatened by the SEC and if the SEC subsequently, in order to protect its
investigative position, so requests, the Registrant will not assert SEC Staff
comments with respect to the inquiry or investigation as a defense in any
proceeding initiated by the SEC under the federal securities laws of the United
States.
As indicated in the SEC's June 24, 2004 release regarding the public release of
comment letters and responses, you are requesting such acknowledgements from all
companies whose filings are being reviewed and that this request and these
acknowledgements should not be construed as suggesting that there is an inquiry
or investigation or other matter involving the Registrant.
If you have any questions, need any additional information or would like any
clarification, please contact me at (215) 963-5862.
Very truly yours,
/s/ David W. Freese
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David W. Freese