LETTER
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January 27, 2006
VIA U.S. MAIL AND FACSIMILE
Patrick J. Keniston, Esquire
BISYS Fund Services Limited Partnership
100 Summer Street
Boston, Massachusetts 02110
Re: Giant 5 Funds ("Funds" or "Registrant")
File numbers 333-129930; 811-21836
Dear Mr. Keniston:
This office has received the registration statement on Form
N-
1A, filed on November 23, 2005, for the above referenced Funds.
We
have reviewed the registration statement and have set forth our
comments below. For convenience, we generally organize our
comments
using the headings in the registration statement. All comments,
however, should be considered as being applicable to similar
disclosure found elsewhere in the registration statement.
Prospectus
1. The N-1A requires disclosure of the information required by
Items 2 and 3 in numerical order at the front of the prospectus.
We
note that certain information precedes these Items. Please do not
precede these Items with any other items, except the cover page or
a
table of contents. In this regard, please remove the "Overview"
section or move the information in that section to the discussions
of
each individual Fund. Also, please do not use all caps in the
statements on pages 1 through 3.
2. Please clarify the meaning of the terms "Giant 5 Investment
System" and "Giant 4 Investment System" in the response letter to
the
staff. Explain why the combination of raw materials and energy
themes would be the commodities theme for one Fund. Clarify the
use
of the term "giant themes" as it might be confusing to the reader.
Also, other than expenses, explain the difference between the two
classes.
3. Please explain why there is a statement, on page 1, titled
"INDEPENDENCE SHARES" after the names of the Funds. Are the
"FREEDOM
SHARES" the only other class of shares? Please disclose the
differences in these two classes. Please inform the staff whether
the Registrant has filed a prospectus offering any additional
class
of shares, as indicated in the overview section.
4. Please clarify the references to each Fund - the Registrant`s
name is Giant 5 Funds, which includes both funds. Thus, referring
to
one of the individual Funds as the Giant 5 Fund may be confusing
to
the reader. Also, please consistently refer to the Funds as Funds
or
as Portfolios.
5. State under "Investment Objective" that each Fund may change
its
investment objective without shareholder approval and indicate
whether the Funds will give prior notice of such change. See Item
4(a) of Form N-1A. Also, please disclose that there will be
layering
of duplicative fees from the fund of funds strategy, thus, the
costs
to shareholders will be higher.
6. In the "Principal Investment Strategies" section, please add
that the Funds will also invest in exchange traded funds ("ETFs").
7. In the sections labeled "Real Estate," "Energy," and "Raw
Materials," please clarify the meaning of "or related to" such
industry. Also, in the section labeled "Raw Materials," please
identify the raw materials "industries" versus the Energy
"industry."
8. Please clarify why investing in municipal bonds would meet
the
Funds` investment objectives, given that the yields are generally
lower and they are not a tax exempt investment.
9. Please clarify any distinction between "foreign issuer" bonds
and "international bonds."
10. Please clarify what mutual fund investments, if any, would be
outside the scope of the five themes.
11. Explain why the investment in ETFs and short-term fixed
income
securities does not conflict with the investment strategy of
investing in the five themes. Also, explain how the Funds will
invest
in these 5 themes in "substantially equal portions," given the
Funds
investments in ETFs and short-term fixed income securities.
12. Please clarify what is meant by "international exposure" and
what are the Funds` anticipated percentages of investments in
foreign
investments.
13. Clarify how an investor would choose between the Giant 5
Total
Investment System and the Giant 4 Total Investment System, given
that
the investment strategies appear identical. Please explain the
differences in the strategies in the response letter to the staff.
Also, clarify the discussion as to the types of investors each of
the
Funds targets, given that the Funds` investments appear identical.
14. The bullet list of "Principal Investment Risks" needs to be
expanded to briefly describe each risk. Also, clarify which risks
describe the Funds and/or the underlying funds.
15. Please clarify the risk of non-diversification, given that on
page 3 it states that the Funds are appropriate for an investor
seeking "broad diversification."
16. Please include a discussion of the Funds` compliance with the
liquidity requirements, and, if applicable, include a risk factor
titled illiquid securities risk.
17. Given that the Funds may invest in underlying funds whose
investment objectives may not be identical to the Funds` discuss
how
the Funds anticipate accomplishing their investment objectives.
Also, please discuss why those underlying funds would not be an
incompatible investment for an investor who invests in the Funds.
Fees and Expenses/ Investment Objectives, Strategies and Risks
18. Are there any wire transaction fees? If so, please disclose
in
a footnote to the fee tables.
19. Please disclose any waiver of fees (and any reimbursement
rights
to waivers of fees) in footnotes to the fee tables.
20. Clarify whether the underlying funds have 12b-1 plans, and if
so, who receives the fee on the sale of shares to the top-tier
fund.
21. Please clarify how commodity-linked derivative instruments
would
achieve long-term growth.
22. Please briefly describe in a synopsis how the adviser
determines
the buying and selling of investments.
23. Describe, including the risks for, commodity-linked
derivative
instruments. Disclose any percentage limitations on their use and
disclose how they are consistent with the energy and raw materials
themes.
24. If any of the underlying funds are multi-classed, disclose
which
class(es) the Funds will buy. Disclose whether the underlying
funds
will be open end-funds and who receives any applicable sales
charges.
25. Please confirm whether the distribution fees for the
Independence Shares are 0.18% for the Giant 5 Total Investment
System
and 0.14% for the Giant 4 Total Investment System, and if so, what
accounts for the difference in the fees. Similarly, please
confirm
and explain any fee differences for the Freedom Shares.
26. If illiquid securities are a principal investment, please
state
the Funds` policy regarding investments in illiquid securities.
27. Supplementally inform the staff why an investor may receive
more
taxable capital gains distribution than if investing directly in
the
underlying funds. Disclose whether the underlying funds will be
closed-end.
28. Please reconcile the non-diversification risk with the Funds
being diversified. Clarify whether the underlying funds will be
diversified or non-diversified.
29. Clarify why there would be industry concentration risk for
certain underlying funds, given that the Funds primarily invest in
the energy and raw materials industries.
30. Please indicate for the underlying funds, how their NAV is
calculated.
Fund Management
31. Please reference earlier in the prospectus that the adviser
is
newly created and has no prior experience as an investment
adviser.
32. Please disclose who the nonprofit entities are that will
receive
the donations of 25% of the adviser`s profits. Please disclose
whether the Funds` Board of Trustees considered these donations of
the adviser`s profits.
33. Are any portfolio managers, in addition to Michael Willis,
responsible for the day-to-day management of the Funds? If yes,
please add the appropriate disclosure.
34. Please explain to the staff in the response letter why use of
terms such as "holy grail of Wall Street" and unlocking "the
secrets
of Wall Street" are not misleading to the investor.
35. Please include the investment advisory contract as an exhibit
(in addition to the other exhibits to be filed by amendment) in
the
next amendment to the registration statement.
36. Conform and clarify when the New York Stock Exchange is open.
Add appropriate disclosure about when national versus business
holidays are observed. We note that the SAI states that NYSE is
closed on business holidays, which includes Good Friday.
37. Clarify that, for redemptions, the NAV is calculated after
the
order is received versus after the order is accepted.
38. Clarify whether the underlying funds will be publicly-traded
and/or registered investment companies.
39. Disclose the basis for charging investors who are not
shareholders a $10 fee for each shareholder report.
40. Please add footnotes to the fee table disclosing the $20
annual
fee for maintaining lower balances and the $15 annual maintenance
fee
for certain retirement accounts
41. Please explain the conflicting statements that a new account
can
be opened with identifying information but additional purchases
cannot be made until an identity is "verified."
42. Please explain the basis for calculating the NAV after an
account is closed versus when an account is closed.
43. In the "Market Timing" section, please define the term
"excessive trading practices." Also, supplementally inform the
staff
why the Funds cannot guarantee assessing the redemption fee on all
applicable redemptions.
44. Please explain why a request for redemption should indicate
the
shareholder`s address where the check should be sent, given that
the
Funds should already have an address of record.
45. In the "Wire Transfer" section, explain why the Funds may
charge
a wire transfer fee, and whether the Funds currently charge one.
46. Please explain why a voided personal check is necessary for
redemption. Also, clarify why the discussion regarding the value
of
an account falling below $500 is appropriate in the "Systematic
Withdrawal Plan" section, and whether it should state that the
Funds
"will" instead of "may" charge a $20 annual fee.
47. Please remove from the redemption section the prohibition of
redemption. Also, revise the delay from 15 business days to 15
days
from purchase date. Also, describe any "extraordinary
circumstances"
under which payment for shares may be delayed.
48. Please revise the statement that there is "no sales charge"
to
reflect that there is no initial sales charge, given that there
are
12b-1 fees.
49. Please verify that the SEC telephone number and website
information is correct.
Taxes
50. What are the percentages that the Funds expect to invest in
commodity-linked derivative instruments?
51. The Internal Revenue Service recently issued guidance
(Revenue
Ruling 2006-1) to clarify that income from commodity-linked
derivative contracts is not qualifying income for purposes of
851(b)(2) of the Internal Revenue Code. The current tax language
states that "The status of swap contracts and other commodities-
linked derivative instruments under tests to qualify as a
regulated
investment company under Subchapter M of the Internal Revenue Code
of
1986 is not certain." Please amend this language to accurately
reflect the guidance issued by the Internal Revenue Service in
Revenue Ruling 2006-1.
52. Please clarify who will be responsible for any fees
associated
with distribution.
Statement of Additional Information
53. Please indicate whether there is a discussion of reverse
repurchase agreements, "IPOs", hybrid instruments, commodity
futures
contracts, "Brady" bonds, short sales, and other investments
(discussed in the Statement of Additional Information) in the
prospectus, and, if not, why not. Generally, we note a number of
types of investments in the SAI that are not discussed in the
prospectus. Please inform the staff in your response letter why
these investments do not appear in the prospectus, and please add
them to the prospectus, if appropriate.
54. In your response letter, please explain to the staff the
legal
basis and ramifications for the Funds participating on creditors
committees formed by creditors to negotiate with the management of
financially troubled issuers of securities held by the Funds.
Please
estimate the potential cost of legal fees that the Funds may
incur.
55. Please add a statement that the reports of the underlying
funds
are also available upon request and from whom the reports are
available.
56. Please indicate the extent to which each Funds will engage in
purchasing or selling commodities. Please supplementally inform
the
staff the meaning of "other instruments" in the purchase or sale
of
real estate.
57. Please revise the phrase on page 4 of the SAI the statement
from
"more than 25% of the Fund`s total assets would be invested in the
security of companies whose principal business activities are in
the
same industry" to "25% or more... industry or group of
industries."
58. Please supplementally inform the staff the basis for valuing
the
amount borrowed at the lesser of cost or market.
59. Please revise the statement that "certain" investment
companies
in which the Funds invest can be expected to charge fees... to
"the"
investment companies in which the Funds invest "charge fees...".
60. Please explain why the investment performance of an index is
a
hypothetical number.
61. Please disclose the Funds` expected portfolio turnover rate
in
the section titled "Portfolio Turnover."
General Comments
62. 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 financial statements
and exhibits added in any pre-effective amendments.
63. Please advise us if you have submitted or expect to submit an
exemptive application or no-action request in connection with the
registration statement.
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
for
an informed decision. Since the Registrant and its management are
in
possession of all facts relating to the Registrant`s disclosure,
they
are responsible for the accuracy and adequacy of the disclosures
they
have made.
Notwithstanding our comments, in the event the Registrant
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 Registrant from its full responsibility for the
adequacy
and accuracy of the disclosure in the filing; and
* the Registrant may not assert this action as 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 connection with 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 a 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 respond to this letter by filing a pre-effective
amendment pursuant to Rule 472 under the Securities Act of 1933.
Please respond to all comments. Where no changes will be made in
the
filing in response to a comment, please inform us in a
supplemental
letter and state the basis for your position.
If you have any questions prior to filing a pre-effective
amendment, please call me at (202) 551-6985.
Sincerely,
Valerie J. Lithotomos
Senior Counsel
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