Morgan, Lewis & Bockius LLP MORGAN LEWIS
1701 Market Street
Philadelphia, PA 19103-2921
Tel: 1.215.963.5000
Fax: 1.215.963.5001
www.morganlewis.com
David W. Freese
Associate
215.963.5862
dfreese@morganlewis.com
FILED AS EDGAR CORRESPONDENCE
November 23, 2015
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)
---------------------------------------------------------------------------
Dear Ms. Rossotto:
On behalf of our client, The Advisors' Inner Circle Fund III (the "Trust" or the
"Registrant"), this letter responds to the comments you provided on behalf of
the staff (the "Staff") of the Securities and Exchange Commission (the "SEC")
via telephone regarding the Trust's post-effective amendment no. 55, under the
Securities Act of 1933, as amended (the "1933 Act"), and amendment no. 59, under
the Investment Company Act of 1940, as amended (the "1940 Act"), to its
registration statement on Form N-1A (the "Registration Statement") filed with
the SEC on September 9, 2015 pursuant to Rule 485(a) under the 1933 Act for the
purpose of introducing the Chiron Capital Allocation Fund (the "Fund") as a
series of the Trust (the "Amendment"). Below, we have briefly summarized your
comments and questions, followed by our responses. Capitalized terms not defined
herein should be given the meaning provided in the Amendment.
COMMENTS ON THE PROSPECTUS
1. COMMENT. Please revise the Principal Investment Strategies section to
include the name of the blended index to which the Fund's allocation among
debt and equities is expected to be similar and provide a brief description
of the index. Please also make conforming edits to the disclosure provided
in response to Item 9 of Form N-1A, as necessary.
RESPONSE. The Fund respectfully declines to include in the Fund's summary
section the name of the blended index to which its allocation among debt
and equities is expected to be similar, and has removed the name of such
blended index from the Fund's disclosure in response to Item 9 of Form
N-1A, because it may not have the authority to do so under applicable
licensing agreements. However, a description of such index has been added
in response to the comment.
2. COMMENT. (a) Please define the term "Chiron" at its first mention; and (b)
please define "emerging markets" in the Principal Investment Strategies
section.
RESPONSE. (a) The requested change has been made.
RESPONSE. (b) The requested change has been made.
3. COMMENT. Please remove from the Principal Investment Strategies section
references to the Fund's investment in cash, cash equivalent securities or
short-term debt instruments or supplementally explain how the use of such
instruments is consistent with the Fund's investment objective of total
return.
RESPONSE. The Trust respectfully declines to make the requested change. The
Adviser believes that the ability to invest in cash and cash equivalents,
at times to a significant degree, is important to provide protection during
down markets. The Adviser believes that providing downside protection by
investing in cash and cash equivalents is consistent with seeking to
provide total return and, depending on the market environment, may provide
greater total return than if the Fund was not permitted to invest in cash
and cash equivalents as a principal investment strategy.
4. COMMENT. Please provide a brief explanation of the term "capital recovery
risk" as such term is used in the Principal Investment Strategies section.
RESPONSE. References to "capital recovery risk" have been deleted.
5. COMMENT. Please include the market capitalization range of the Fund's
equity investments in the Principal Investment Strategies section.
RESPONSE. The requested change has been made.
6. COMMENT. Please revise the following sentence in the Principal Investment
Strategies section to more clearly explain the relationship between real
estate- and precious metals-related securities: "The Fund may also invest
in real estate investment trusts ("REITs") and securities related to real
assets (like real estate- or precious metals-related securities) such as
stock, bonds or convertible bonds issued by REITs or companies that mine
precious metals.
RESPONSE. The requested change has been made.
7. COMMENT. If the Fund may invest in contingent convertible bonds, please
specify, and please include disclosure of the risks associated with
investments in contingent convertible bonds.
RESPONSE. The requested changes have been made.
8. COMMENT. Please state in the Principal Investment Strategies section the
percent of the Fund's assets that may be invested in derivatives.
RESPONSE. The Adviser does not limit the Fund's investments in derivatives
as a principal investment strategy. Therefore, the Trust respectfully
declines to revise the Principal Investment Strategies section to include a
percentage limit on the Fund's investment in derivatives.
9. COMMENT. With regard to Bank Loans Risk please (a) clarify how the Fund
assumes the credit risk of the direct bank lenders; (b) acknowledge that
bank loans may take more than seven (7) days to settle; (c) specify that
the Fund's ability to make timely redemptions of Fund shares may be
impacted by the fact that the purchases and sales of bank loans in the
secondary market are generally subject to contractual restrictions and may
have extended settlement periods; (d) specify that bank loans may not be
considered securities and may not have the protections afforded by the
federal securities laws; and (e) consider including in the bank loans
disclosure in the More Information about Principal Risks section, an
explanation of how the Fund would address short-term liquidity needs that
may arise as a result of extended (longer than seven day) settlement.
RESPONSE. (a) The requested change has been made.
RESPONSE. (b) The requested change has been made.
RESPONSE. (c) The requested change has been made.
RESPONSE. (d) The requested change has been made.
RESPONSE. (e) Based on the Adviser's anticipated level of investment in
bank loans in the near term, the Adviser currently does not anticipate this
being a principal risk of the Fund. Accordingly, the Trust respectfully
declines to make the requested change.
10. COMMENT. Where "below investment grade" securities are mentioned, please
include a parenthetical stating that such securities are commonly known as
"junk bonds."
RESPONSE. The requested change has been made.
11. COMMENT. Since options are disclosed as a principal investment strategy,
please disclose the risk of investing in options.
RESPONSE. The requested change has been made.
12. COMMENT. Please consider replacing the last sentence of the derivatives
risk disclosure in response to Item 4 of Form N-1A with the fourth sentence
in the derivatives risk disclosure provided in response to Item 9 of Form
N-1A.
RESPONSE. The requested change has been made.
13. COMMENT. Please clarify supplementally that the Fund will not create
leverage by direct borrowing as a principal investment strategy. If the
Fund will use direct borrowing to create leverage, please disclose.
RESPONSE. The Adviser confirms that the Fund will not create leverage
through direct borrowing as a principal investment strategy, and that any
leverage used by the Fund as a principal investment strategy will be
economic leverage created by its investments.
14. COMMENT. Please disclose in the Principal Risks section the risks
associated with growth- and value-based investment strategies since each of
these strategies is disclosed in the Principal Investment Strategies
section.
RESPONSE. The requested change has been made.
15. COMMENT. Please disclose in the Principal Risks section the risks
associated with the following types of instruments that are noted in the
Principal Investment Strategies section: (i) ADRs, (ii) asset backed
securities, (iii) credit-linked notes, (iv) leveraged and inverse ETFs, (v)
inflation indexed bonds, (vi) mortgage backed securities and (vii) precious
metals.
RESPONSE. The requested changes have been made.
16. COMMENT. In the More Information about Fund Investments section, 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.
17. COMMENT. Please confirm supplementally that the Fund's performance will be
compared to a broad-based index and the blended benchmark referenced in the
Principal Investment Strategies section will only be used as a secondary
benchmark for performance comparison purposes.
RESPONSE. The Trust confirms that the Fund's performance will be compared
to a broad-based index and the blended benchmark referenced in the
Principal Investment Strategies section will only be used as a secondary
benchmark for performance comparison purposes.
18. COMMENT. Please remove any reference to a sub-adviser unless the Fund's
adviser intends to enter into a sub-advisory agreement.
RESPONSE. The requested change has been made.
19. COMMENT. Please provide a description of the Adviser's experience as an
investment adviser in the Investment Adviser section pursuant to Item
10(a)(1)(i) of Form N-1A.
RESPONSE. The requested change has been made.
20. COMMENT. With regard to the contractual expense limitation agreement
discussed under the Investment Adviser section, please confirm
supplementally that the Adviser may recover waived fees or reimbursed
expenses only if the Fund's Total Annual Operating Expenses (excluding any
interest, taxes, brokerage commissions, Acquired Fund Fees and Expenses,
and non-routine expenses) are lower than the expense limitation in effect
at the time of the waiver or reimbursement.
RESPONSE. The Trust confirms that the Adviser may recover waived fees or
reimbursed expenses only if the Fund's Total Annual Operating Expenses
(excluding any interest, taxes, brokerage commissions, Acquired Fund Fees
and Expenses, and non-routine expenses) are lower than the expense
limitation in effect at the time of the waiver or reimbursement.
21. COMMENT. In accordance with Item 10 of Form N-1A, please disclose, if
accurate, that the portfolio managers will be jointly and primarily
responsible for managing the Fund.
RESPONSE. The requested change has been made.
COMMENT ON THE STATEMENT OF ADDITIONAL INFORMATION
22. COMMENT. Please clarify the disclosure pertaining to "alternative entity
securities" so that it is clear what types of entities issue such
securities.
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
----------------------
David W. Freese