0001193125-07-263147.txt : 20120820
0001193125-07-263147.hdr.sgml : 20120818
20071211165554
ACCESSION NUMBER: 0001193125-07-263147
CONFORMED SUBMISSION TYPE: CORRESP
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20071211
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: iSHARES TRUST
CENTRAL INDEX KEY: 0001100663
IRS NUMBER: 943351276
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: CORRESP
BUSINESS ADDRESS:
STREET 1: 400 HOWARD STREET
CITY: SAN FRANCISCO
STATE: CA
ZIP: 94105
BUSINESS PHONE: (415) 670-2000
MAIL ADDRESS:
STREET 1: 400 HOWARD STREET
CITY: SAN FRANCISCO
STATE: CA
ZIP: 94105
FORMER COMPANY:
FORMER CONFORMED NAME: ISHARES TRUST
DATE OF NAME CHANGE: 19991213
CORRESP
1
filename1.txt
[LOGO OF WILLKIE FARR & GALLAGHER LLP] 787 Seventh Avenue
New York, NY 10019-6099
Tel: 212 728 8000
Fax: 212 728 8111
December 11, 2007
VIA EDGAR
James O'Connor, Esq.
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: iShares Trust (the "Registrant")
File Nos. 333-92935, 811-9729
Post-Effective Amendment No. 101, Filed on September 27, 2007
Response to Comments from Commission Staff (the "Staff")
Dear Mr. O'Connor:
This letter responds to comments on the above-referenced Post-Effective
Amendment relating to the iShares JPMorgan USD Emerging Markets Bond Fund (the
"Fund") that you provided in a telephone conversation on November 16, 2007 with
the undersigned and Jane Kim of this firm.
For your convenience, the substance of the comments has been restated below,
and each comment restatement is followed by the Registrant's response. The
Registrant intends to file a post-effective amendment under Rule 485(b)
containing the revised disclosures described below.
Comment No. 1: In your response letter, please identify the exemptive order
upon which the Fund is relying on and represent that it will comply with the
conditions of the order.
Response: The Fund is relying on the Registrant's most recent exemptive order,
Barclays Global Fund Advisors, et al., Investment Company Act Release Nos.
27608 (December 21, 2006) (notice) and 27661 (January 17, 2007) (order), which
relates to exemptive relief for ETFs based on certain fixed income indices. The
Registrant has authorized us to represent that the Fund intends to comply with
all of the terms and conditions of this order.
Comment No. 2: Consider whether the term "quasi-sovereign entities" needs
clarification.
New York Washington, DC Paris London Milan Rome Frankfurt Brussels
James O'Connor, Esq.
December 11, 2007
Page 2
Response: In the "Principal Investment Strategies of the Fund" section of the
Prospectus, reference to "quasi-sovereign entities" will be defined as follows:
"Quasi-sovereign entities are entities whose securities are either 100% owned
by their respective governments or subject to a 100% guarantee that does not
rise to the level of constituting the full faith and credit of such
governments."
The same definition will be provided after reference to "quasi-sovereign
entities" in the "Index Description" section of the SAI.
Comment No. 3: The prospectus should characterize its investments in terms of
bond ratings or bond rating equivalents, e.g., that the Fund's portfolio will
consist primarily (or exclusively, if that is the case) of below investment
grade (junk) bonds. The description of the bonds as being subject to "varying
degrees of credit risk" may suggest a portfolio quality higher than actual and
should be revised or clarified to describe the primarily "junk bond" nature of
the portfolio. This disclosure should be in the summary.
Response:
In the "Principal Investment Strategies of the Fund" section of the Prospectus,
the disclosure has been revised to read as follows:
The JPMorgan EMBI Global Core Index . . . . Only those instruments which:
(i) are denominated in U.S. dollars; (ii) have a current face amount
outstanding of $1 billion or more; (iii) have at least 2 years until
maturity; (iv) are able to settle internationally through Euroclear or
another institution domiciled outside the issuing country; and (v) have bid
and offer prices that are available on a daily and timely basis-either from
an inter-dealer broker or JPMorgan-are considered for inclusion into the
Underlying Index. As of October 31, 2007, the Underlying Index consisted
primarily of below investment grade bonds. Convertible bonds are not
eligible for inclusion into the Underlying Index. The Underlying Index is
market value weighted and is rebalanced monthly on the last business day of
month.
Furthermore, the disclosure provided under the "Credit Risk" section of the
Prospectus has been revised to read as follows:
Depending on the composition and weightings of the Underlying Index, the
Fund's portfolio may consist primarily of below investment grade bonds.
There is the chance that any of the Fund's holdings will have their credit
ratings downgraded or will default (fail to make scheduled interest or
principal payments), potentially reducing the Fund's income level and share
price. Debt instruments are subject to varying degrees of credit risk, which
may be reflected in credit ratings.
Comment 4: The disclosure relating to the portfolio managers' backgrounds
should be consistent. Currently, the background of John Sulski is disclosed and
that of Lee Sterne is not.
Response: The background of Lee Sterne has been disclosed.
James O'Connor, Esq.
December 11, 2007
Page 3
Comment 5: Please confirm that the Fund's use of pricing services will be
monitored and evaluated in hindsight by the Board.
Response: The Board of Trustees will monitor and evaluate the performance of
pricing services used by the Fund. For a more detailed description of the
Board's responsibilities and activities in this regard, please refer to our
comment response letter submitted in connection with the Staff's review of the
iShares S&P California Municipal Bond Fund, iShares S&P New York Municipal Bond
Fund and iShares S&P National Municipal Bond Fund (submitted via EDGAR on
September 27, 2007 and August 29, 2007, respectively).
Comment 6: Because of the expectation of high turnover in the portfolio, please
include prospectus disclosure that distributions by the Fund (capital gains as
well as interest income) will likely be taxed to the investor as ordinary
income, with little or no expectation of distributions taxable to the
shareholder as long-term capital gain.
Response: The Registrant respectfully declines to add the requested disclosure
because it does not expect a high portfolio turnover rate for the Fund. The
Fund will be managed similar to other fixed income funds and emerging markets
funds (e.g., iShares MSCI Emerging Markets Index Fund) and its portfolio
turnover rate is not expected to exceed 10% under normal conditions.
Comment 7: Because of the relatively short list of companies in which the Fund
may invest, the number of companies in which the Fund will invest should be
disclosed in the prospectus as well as in the SAI. Also, because it seems
probable that a large portion of the Fund's assets will be invested in a very
few countries, that should also be disclosed in the prospectus, along with
appropriate "concentration risk" disclosure.
Response: Currently, the Fund's underlying index includes twenty-six countries
and 112 companies. After launch, the Fund expects to invest in twenty-two of
such countries and thirty-five of such companies. However, because the
composition of the Fund's underlying index changes, the Fund's portfolio
investments are subject to change. As such, the Registrant does not believe
that disclosure of the specific number of countries and companies in which the
Fund invests is necessary in the prospectus or in the SAI. However, to address
the Staff's concern regarding "concentration risk" disclosure, the
concentration risk disclosure in the prospectus has been expanded and will read
as follows:
The Fund's investments will generally follow the weightings of the
Underlying Index, which may result in concentration of the Fund's
investments in a small group of countries. To the extent that the Fund's
Underlying Index or portfolio is concentrated in the bonds of sovereign and
quasi-sovereign entities in a particular market, country, group of
countries, sector or asset class, the Fund may be adversely affected by the
performance of those bonds, may be subject to increased price volatility and
may be more susceptible to adverse economic, market, political or regulatory
occurrences affecting that market, country, group
James O'Connor, Esq.
December 11, 2007
Page 4
of countries, sector or asset class. An investment in the Fund should not
constitute a complete investment program.
*************
The Registrant has authorized us to represent that, with respect to filings
made by the Registrant with the Securities and Exchange Commission (the
"Commission") and reviewed by the Staff, it acknowledges that:
(a) the Registrant is responsible for the adequacy and accuracy of the
disclosure in the filings;
(b) Staff comments or changes to disclosure in response to Staff comments
in the filings reviewed by the Staff do not foreclose the Commission
from taking any action with respect to the filings; and
(c) the Registrant 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.
Should you have any questions concerning the above, please call me at (202)
303-1203 or Jane Kim of this firm at (202) 303-1242.
Sincerely,
/s/ Anthony A. Vertuno
----------------------------------
Anthony A. Vertuno
cc: Deepa Damre, Esq.
Benjamin J. Haskin, Esq.