0000891804-09-004520.txt : 20130329
0000891804-09-004520.hdr.sgml : 20130329
20091201131849
ACCESSION NUMBER: 0000891804-09-004520
CONFORMED SUBMISSION TYPE: CORRESP
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20091201
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Claymore Exchange-Traded Fund Trust 2
CENTRAL INDEX KEY: 0001365662
IRS NUMBER: 000000000
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: CORRESP
BUSINESS ADDRESS:
STREET 1: C/O CLAYMORE SECURITIES, INC.
STREET 2: 2455 CORPORATE WEST DRIVE
CITY: LISLE
STATE: IL
ZIP: 60532
BUSINESS PHONE: 630-505-3700
MAIL ADDRESS:
STREET 1: C/O CLAYMORE SECURITIES, INC.
STREET 2: 2455 CORPORATE WEST DRIVE
CITY: LISLE
STATE: IL
ZIP: 60532
CORRESP
1
filename1.txt
December 1, 2009
Ms. Kimberly A. Browning
Securities and Exchange Commission
Division of Investment Management
100 F Street, NE
Washington, D.C. 20549
Re: Claymore Exchange-Traded Fund Trust 2 (File Nos. 333-135105 & 811-21910)
Dear Ms. Browning:
Thank you for your telephonic comments concerning Post-Effective Amendment No.
53 to the registration statement for Claymore Exchange-Traded Fund Trust 2 (the
"Trust") filed on Form N-1A on September 23, 2009, concerning the following
three new series of the Trust: Claymore/AlphaShares China Consumer ETF,
Claymore/AlphaShares China Infrastructure ETF and Claymore/AlphaShares China
Technology ETF (each, a "Fund"). Below, we describe the changes made to the
registration statement in response to the staff's comments and provide any
responses to or any supplemental explanations of such comments, as requested.
These changes will be reflected in Post-Effective Amendment No. 58 and
Post-Effective Amendment No. 59 to the Fund's registration statement on Form
N-1A, each of which will be filed via EDGAR on or about the date hereof.(1)
GENERAL:
COMMENT 1. IN YOUR LETTER RESPONDING TO THE FOLLOWING COMMENTS, PLEASE
INCLUDE THE CUSTOMARY "TANDY" REPRESENTATIONS, CONSISTENT WITH SEC RELEASE
2004-89.
Response 1. The "Tandy" representations are set forth at the
end of this letter.
COMMENT 2. PLEASE CONFIRM THAT THE OFFERING OF EACH FUND WILL COMPLY
WITH ALL ASPECTS OF THE TRUST'S CURRENT EXEMPTIVE RELIEF ALLOWING THE TRUST TO
OFFER EXCHANGE-TRADED FUNDS.
Response 2. To the best of our knowledge, the offering of each
Fund will comply with all aspects of the Trust's current exemptive relief.
COMMENT 3. IN THE DISCLOSURE REGARDING CUSTOM ORDERS, PLEASE CLARIFY
WHETHER (A) THE CUT-OFF TIME FOR SUCH ORDERS IS 3:00 P.M. (EASTERN TIME) OR 4:00
P.M. (EASTERN TIME) AND (B) IN EITHER CASE, HOW THE TRUST WILL COMPLY WITH THE
REQUIREMENTS OF RULE 22C-1 TO SELL SHARES AT NET ASSET VALUE ("NAV") NEXT
COMPUTED AFTER THE RECEIPT OF A PURCHASE ORDER.
Response 3. (a) Consistent with prior staff discussions and as
set forth in the statement of additional information (the "SAI") under "Creation
and Redemption of Creation Unit Aggregations - Procedures for Creation of
Creation Unit Aggregations," the 3:00 deadline only applies to custom orders
placed at the request of an AP as a result of the Trust permitting the
substitution of cash for a Deposit Security, but not to custom orders placed as
a result of the Trust requiring such a substitution. Disclosure has been added
to the prospectus under "How to Buy and Sell Shares - How to Buy Shares" to
clarify the distinction.
(b) Regardless of whether the deadline for
submission of a custom order is 3:00 or 4:00, the NAV of the shares issued to
the purchaser as a result of such order purchaser will be
------------------
(1) We also note that in connection with these filings, each Fund's name is
being changed to remove the word "AlphaShares" from the name.
(AlphaShares will remain each Fund's index provider.)
KIMBERLY BROWNING, ESQ.
DECEMBER 1, 2009
PAGE 2
the NAV "next computed" after the order is received - i.e., the NAV computed by
the Fund as of the end of that day, which is typically 4:00 (as set forth in the
Prospectus under "How to Buy and Sell Shares - Pricing Fund Shares").
COMMENT 4. THE PROSPECTUS CURRENTLY STATES THAT EACH FUND WILL AT ALL
TIMES INVEST AT LEAST 80% OF ITS TOTAL ASSETS IN COMMON STOCK, AMERICAN
DEPOSITARY RECEIPTS ("ADRS"), AMERICAN DEPOSITARY SHARES ("ADSS"), GLOBAL
DEPOSITARY RECEIPTS ("GDRS") AND INTERNATIONAL DEPOSITARY RECEIPTS ("IDRS") THAT
COMPRISE THE RESPECTIVE INDEX AND INVESTMENTS THAT HAVE ECONOMIC CHARACTERISTICS
THAT ARE SUBSTANTIALLY IDENTICAL TO THE ECONOMIC CHARACTERISTICS OF THE
COMPONENT SECURITIES THAT COMPRISE THE RESPECTIVE INDEX. PLEASE CONFIRM THAT THE
TRUST'S EXEMPTIVE RELIEF DOES NOT REQUIRE A HIGHER MINIMUM THAN 80% TO BE
INVESTED IN SUCH INVESTMENTS.
Response 4. Pursuant to an order issued by the Commission
amending the exemptive relief originally granted to the Trust, the Funds may
invest 80% of their total assets in such investments.(2)
COMMENT 5. IN CONNECTION WITH THE 80% MINIMUM SET FORTH IN COMMENT 4
ABOVE, PLEASE CLARIFY THE NATURE OF THE INVESTMENTS WHICH MAY CONSTITUTE THE
REMAINING 20% OF A FUND'S ASSETS.
Response 5. The investments which may constitute the remaining
20% of a Fund's assets are enumerated in the prospectus under "Secondary
Investment Strategies."
COMMENT 6. PLEASE EXPLAIN SUPPLEMENTALLY: (A) WHAT TYPES OF INVESTMENTS
WOULD BE DEEMED TO "HAVE ECONOMIC CHARACTERISTICS THAT ARE SUBSTANTIALLY
IDENTICAL TO THE ECONOMIC CHARACTERISTICS OF THE COMPONENT SECURITIES THAT
COMPRISE THE [RESPECTIVE] INDEX" AND (B) WHO DETERMINES WHETHER AN INSTRUMENT
HAS SUCH SUBSTANTIALLY IDENTICAL ECONOMIC CHARACTERISTICS. FURTHER, PLEASE
EXPLAIN WHETHER DISCLOSURE IS NECESSARY REGARDING THE RISKS INVOLVED WITH THE
FUND'S INVESTMENTS IN SUCH INSTRUMENTS (SUCH AS INCREASED TRACKING ERROR AGAINST
THE APPLICABLE INDEX).
Response 6. (a) Generally, the types of investments
contemplated by the language in the prospectus quoted in Comment 6 includes
instruments whose return is intended to correlate as strongly as possible to
that of the particular Index constituent - for example, an investment in a
depository receipt rather than an underlying stock (or vice versa). The
prospectus language does not encompass, for example, instruments with an inverse
or leveraged relationship to an Index constituent.
(b) The Funds' investment adviser (the "Adviser")
would, as part of its duties and responsibilities in such capacity, determine
whether (i) a particular instrument had such substantially identical
characteristics to an Index constituent and (ii) it might be appropriate for a
Fund to invest in such instrument.(3)
(c) In the prospectus, disclosure has been added
to the last sentence of "Primary Investment Risks - Non-Correlation Risk" for
each Fund to clarify that investments in such instruments may also incur the
risk of non-correlation with the return of the applicable Index, as could be the
case if the Fund utilizes a sampling approach or derivative positions.
------------------
(2) See Investment Company Act Release Nos. 27982 (Sept. 26, 2007) (notice)
and 28019 (Oct. 23, 2007) (order).
(3) These determinations on the Adviser's part are fully consistent with
the scope of the Trust's existing exemptive relief allowing it to offer
index-based ETFs and do not constitute the type of "active management"
which requires separate exemptive relief. See Response 18, infra.
KIMBERLY BROWNING, ESQ.
DECEMBER 1, 2009
PAGE 3
COMMENT 7. FOR SUBSEQUENT FILINGS MADE PURSUANT TO RULE 485(A), PLEASE
NOTE THAT IF SUCH FILINGS CONTAIN BLANK SPACES (SUCH AS IN THE FEE TABLE OR
REGARDING SIMILAR INFORMATION), THE STAFF MAY REQUIRE THE TRUST TO MAKE A
SUBSEQUENT FILING UNDER RULE 485(A) CONTAINING THE MISSING INFORMATION FOR
FURTHER STAFF REVIEW, RATHER THAN A FILING THAT WILL BECOME EFFECTIVE
AUTOMATICALLY UNDER 485(B) WITHOUT FURTHER STAFF REVIEW.
Response 7. We acknowledge the comment.
PROSPECTUS:
COMMENT 8. TAX-ADVANTAGED PRODUCT STRUCTURE (PAGE 1)
PURSUANT TO GENERAL INSTRUCTION C.3(A) TO FORM N-1A, WE DO NOT BELIEVE
THIS DISCLOSURE SHOULD PRECEDE THAT WHICH IS REQUIRED UNDER ITEMS 2 AND 3 OF
FORM N-1A. MOREOVER, WE BELIEVE THAT IF THIS SECTION IS TO BE INCLUDED IN THE
PROSPECTUS, IT SHOULD REFLECT (A) A COMPARISON TO INDEX-BASED MUTUAL FUNDS
RATHER THAN "CONVENTIONAL MUTUAL FUNDS" GENERALLY, AND (B) THE FACT THAT SUCH
MUTUAL FUNDS MAY NET DAILY PURCHASES AND SALES OF FUND SHARES SO AS TO MINIMIZE
THE NECESSITY TO SELL SHARES TO MEET REDEMPTION REQUESTS.
Response 8. The disclosure has been moved to immediately
precede "Other Information" towards the end of the prospectus. However, we do
not believe that comparing the Funds' structure to that of index-based mutual
funds would alter the substance of the disclosure, for the following reasons:
(a) While index-based mutual funds may have
less portfolio turnover generally than actively-managed mutual funds, the
disclosure in question specifically relates to portfolio turnover driven by
ongoing redemptions of mutual fund shares, and portfolio turnover driven by such
activity should be no different for index-based mutual funds as it would be for
actively-managed mutual funds.
(b) Moreover, the Funds' in-kind redemption
mechanism contrasts equally with redemption-driven portfolio turnover on the
part of both index-based mutual funds and actively-managed mutual funds, so
there should be no reason to distinguish between the two kinds of "conventional"
mutual funds.
(c) Further, even if a mutual fund's ability to
net daily purchases and sales of shares reduces the need for redemption-driven
portfolio turnover, it is nevertheless accurate to say that such portfolio
turnover exceeds what would likely occur with respect to the Funds due to the
Funds' in-kind redemption mechanism.
We have revised the disclosure to state that a
mutual fund "may need to sell portfolio securities..." rather than " the mutual
fund's need to sell..." in order to clarify that a mutual fund may not be
required to sell portfolio securities to meet redemptions in all cases. However,
aside from that change, we respectfully submit that the disclosure is
appropriate.
COMMENT 9. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF - PRIMARY INVESTMENT
STRATEGIES (PAGE 2)
THE SECOND SENTENCE IN THIS SECTION STATES THAT THE INDEX "IS DESIGNED
TO MEASURE AND MONITOR THE PERFORMANCE OF THE INVESTABLE UNIVERSE OF
PUBLICLY-TRADED MAINLAND CHINA-BASED
KIMBERLY BROWNING, ESQ.
DECEMBER 1, 2009
PAGE 4
COMPANIES..." (A) PLEASE CLARIFY THAT "INVESTABLE UNIVERSE" ONLY INCLUDES
SECURITIES AVAILABLE FOR FOREIGN OWNERSHIP. (B) PLEASE CLARIFY THE CRITERIA USED
TO DETERMINE WHETHER A COMPANY IS BASED IN MAINLAND CHINA.
Response 9. (a) The sentence has been revised accordingly.
(b) Disclosure has been inserted clarifying that
(i) the Index consists of companies based in mainland China, Hong Kong or Macau
and (ii) companies are considered to be based in one of those locations if they
derive a majority of revenue from such location.
COMMENT 10. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF - PRIMARY
INVESTMENT STRATEGIES (PAGE 2)
THE FIFTH SENTENCE IN THIS SECTION STATES THAT THE INDEX "WILL INCLUDE
EQUITY SECURITIES OF COMPANIES OF ALL MARKET CAPITALIZATIONS, AS DEFINED BY
ALPHASHARES." PLEASE RECONCILE THIS DISCLOSURE WITH THE MINIMUM CAPITALIZATION
REQUIREMENTS SET FORTH IN ITEM 6 UNDER "INDEX CONSTRUCTION."
Response 10. The sentence, along with item 6 under "Index
Construction" have been revised to clarify that the Index may include securities
of companies of all categories of market capitalizations, subject to the minimum
capitalization requirements set forth in item 6 under "Index Construction."
COMMENT 11. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF - PRIMARY
INVESTMENT STRATEGIES (PAGE 2)
THE SIXTH SENTENCE IN THIS SECTION STATES THAT "ALPHASHARES DOES NOT
GUARANTEE THE INCLUSION OF ALL RELEVANT SECURITIES IN THE INDEX." PLEASE DELETE
THIS SENTENCE. IF IT IS APPROPRIATE, PLEASE CONSIDER ADDING RISK DISCLOSURE TO
REFLECT THE POSSIBILITY OF A RELEVANT SECURITY NOT BEING INCLUDED IN THE INDEX.
Response 11. The sentence has been deleted. We do not believe
risk disclosure is appropriate or necessary regarding that possibility.
COMMENT 12. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF -INDEX CONSTRUCTION
(PAGE 2-3)
(a) PLEASE DISCLOSE THE NUMBER OF SECURITIES IN THE INDEX.
(b) PLEASE DISCLOSE WHEN THE INDEX WAS CREATED.
(c) PLEASE EXPLAIN WHETHER THE INDEX WAS CREATED FOR OR ON BEHALF OF
THE ADVISER.
(d) PLEASE EXPLAIN WHETHER THE ADVISER'S LICENSE AGREEMENT WITH THE
INDEX PROVIDER PROVIDES FOR ANY PENALTY IF THE ADVISER TERMINATES THE AGREEMENT,
OR OTHERWISE CREATES ANY DISINCENTIVE FOR THE ADVISER TO RECOMMEND THAT THE FUND
STOP UTILIZING THIS INDEX IF A MORE APPROPRIATE INDEX BECOMES AVAILABLE. IF
THERE ARE ANY SUCH PENALTIES OR DISINCENTIVES, PLEASE CONSIDER WHETHER RISK (OR
OTHER) DISCLOSURE WOULD BE APPROPRIATE.
Response 12. (a) Disclosure has been inserted accordingly.
KIMBERLY BROWNING, ESQ.
DECEMBER 1, 2009
PAGE 5
(b) Disclosure has been inserted accordingly.
(c) The Index was not created by the Index
Provider for or on behalf of the Adviser. The Index's creation complied with the
terms of the Trust's exemptive relief, which provides that no entity that
creates, compiles, sponsors or maintains an underlying index may be an
affiliated person of a Fund or the Adviser.
(d) The Adviser's license agreement with the
Index Provider does not provide for any penalty if the Adviser terminates the
agreement or otherwise create a disincentive for the Adviser to recommend that
the Fund cease utilizing the Index if a more appropriate index becomes
available. Accordingly, no additional disclosure is necessary.
COMMENT 13. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF -INDEX CONSTRUCTION
(PAGE 2-3)
(a) PLEASE CONFIRM THAT THE ADJUSTMENTS MADE BY THE INDEX PROVIDER TO
THE INDEX CONSTITUENTS IN COMPILING THE INDEX (SUCH AS THE MINIMUM
CAPITALIZATION REQUIREMENTS AND TARGET WEIGHTINGS SET FORTH IN ITEMS 6 AND 7,
RESPECTIVELY) ARE CONSISTENT WITH THE SCOPE OF THE TRUST'S EXEMPTIVE RELIEF.
(b) ARE ALL SECURITIES THAT MEET THE CRITERIA SET FORTH IN THIS SECTION
INCLUDED IN THE INDEX, OR MAY THE INDEX PROVIDER EXCLUDE SECURITIES THAT MEET
THE CRITERIA BASED ON ITS DISCRETION OR OTHER FACTORS? IF SO, PLEASE REVISE THE
DISCLOSURE TO CLARIFY WHETHER AND HOW THE INDEX PROVIDER MAY EXCLUDE SECURITIES
THAT OTHERWISE CLARIFY FOR INCLUSION.
Response 13. (a) The adjustments made by the Index Provider to
the Index constituents in compiling the Index are fully consistent with the
scope of the Trust's existing exemptive relief.
(b) The Index Provider does not use discretion to
exclude securities from the Index that otherwise meet the criteria set forth
under "Index Construction." Disclosure has been added immediately preceding item
1 in that section to clarify the foregoing.
COMMENT 14. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF -INDEX CONSTRUCTION
(PAGE 2-3)
PLEASE REVISE ITEM 5 UNDER THIS SECTION TO CLARIFY HOW DEPOSITORY
RECEIPTS MAY BE INCLUDED IN THE INDEX.
Response 14. Disclosure has been inserted to clarify that (a)
ADRs, ADSs, GDRs and IDRs may be included in the Index if the depository receipt
meets the eligibility criteria set forth under "Index Construction" and (b) the
Index will not include different depository receipts (or a depository receipt
and the underlying stock) of the same issuer even if both investments would
independently meet such eligibility criteria.
KIMBERLY BROWNING, ESQ.
DECEMBER 1, 2009
PAGE 6
COMMENT 15. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF -INDEX CONSTRUCTION
(PAGE 2-3)
(a) PLEASE REVISE (I) ITEM 3 AND (II) THE "PRINCIPAL INVESTMENT
STRATEGIES" SECTION TO EXPLAIN WHAT CHINA A-SHARES AND CHINA B-SHARES ARE AND
CLARIFY THAT SUCH SHARES ARE NOT ELIGIBLE FOR INCLUSION IN THE INDEX.
(b) PLEASE ADD RISK DISCLOSURE RELATING TO THE EXCLUSION OF CHINA
A-SHARES AND CHINA B-SHARES FROM THE INDEX, INCLUDING THE FACT THAT THE INDEX
MAY THUS NOT PROVIDE FULL EXPOSURE TO THE APPROPRIATE CHINESE SECTOR.
Response 13. (a) The disclosure has been revised accordingly.
(b) Risk disclosure has been added accordingly.
COMMENT 16. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF -PRIMARY INVESTMENT
RISKS (PAGE 4-6)
PLEASE MOVE THE "CHINA INVESTMENT RISK" DISCLOSURE TO PRECEDE THE
"FOREIGN INVESTMENT RISK" DISCLOSURE.
Response 16. The disclosure has been moved.
COMMENT 17. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF -PRIMARY INVESTMENT
RISKS (PAGE 4-6)
ARE EITHER OR BOTH OF THE FOLLOWING RISKS MATERIAL? IF SO, PLEASE ADD
APPLICABLE DISCLOSURE:
(a) RISKS RELATING TO THE FACT THAT THE INDEX IS NEW AND THUS MAY NOT,
OVER TIME, EFFECTIVELY TRACK THE PERFORMANCE OF THE COMPANIES IT IS DESIGNED TO
TRACK.
(b) RISKS RELATING TO THE FACT THAT THE INDEX IS SPECIALIZED AND MAY
NOT REFLECT THE PERFORMANCE OF THE CHINESE MARKET AS A WHOLE.
Response 17. (a) We do not believe this risk is material, as
the criteria for inclusion in the Index are sufficiently objective and based on
sufficiently transparent classifications and measurements, that there is no
reason to assume that the Index will not effectively track the performance of
the companies it is designed to track.
(b) We believe that these risks are sufficiently
covered by (i) the disclosure inserted in response to Comment 15(b) above and
(ii) the existing disclosure regarding the risks of the consumer staples and
consumer discretionary sectors generally.
KIMBERLY BROWNING, ESQ.
DECEMBER 1, 2009
PAGE 7
COMMENT 18. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF -PRIMARY INVESTMENT
RISKS (PAGE 4-6)
PLEASE RECONCILE THE DISCLOSURE IN "REPLICATION MANAGEMENT RISK" WITH
THE FUND'S ABILITY TO UTILIZE FUTURES, OPTIONS AND SIMILAR INSTRUMENTS AS SET
FORTH UNDER "SECONDARY INVESTMENT STRATEGIES." DOES THE FUND'S ABILITY TO USE
SUCH INSTRUMENTS QUALIFY AS "ACTIVE MANAGEMENT" FOR PURPOSES OF THE TRUST'S
EXISTING EXEMPTIVE RELIEF?
Response 18. There is no contradiction between the
disclosures. As is currently disclosed in "Secondary Investment Strategies," a
Fund may invest in futures, options and similar instruments to help it to track
its Index - i.e., to gain economic exposure to the Index constituents(4). The
disclosure in "Replication Management Risk" states that a Fund will not have the
ability to sell a stock in order to avoid exposure to the stock's deteriorating
performance.
In addition, it is clear that the Trust's
existing exemptive relief to offer passively- managed, index-based ETFs does not
forbid the Adviser from exercising all forms of investment discretion with
respect to a Fund. The Trust's exemptive relief explicitly contemplates that the
Fund may invest a certain percentage of its assets in instruments other than an
Index's component securities, including swaps, options and futures - the
selection of which necessarily entails a measure of investment discretion.
Moreover, the Trust's existing exemptive relief allows the Fund to utilize a
sampling strategy (even though the Fund does not currently intend to utilize
such a strategy), pursuant to which the Fund may invest in a representative
sample of the securities in the Index rather than all of the securities in the
Index. A sampling strategy necessarily entails the exercise of investment
discretion on the part of the Adviser to select the representative sample of
Index components. Accordingly, it is clear that the Trust's existing exemptive
relief requires the Adviser to manage the Fund so as to track the performance of
the Index and prescribes certain requirements for doing so (such as the 80%
minimum described in Comment 4 above), but does not forbid the Adviser from
exercising certain amounts of investment discretion in fulfilling this
requirement.
COMMENT 19. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF -FEES AND EXPENSES
OF THE FUND (FEE TABLE) (PAGE 7)
(a) PLEASE MOVE THE TEXT IN FOOTNOTE 2 TO THE EXISTING PARENTHETICAL
FOLLOWING THE HEADING "ANNUAL FUND OPERATING EXPENSES."
(b) IN FOOTNOTE 3, PLEASE CLARIFY THAT PURSUANT TO THE TERMS ON WHICH
THE BOARD APPROVED THE 12B-1 PLAN, THE FUND MAY NOT BEGIN PAYING 12B-1 FEES
UNTIL THE BOARD SUBSEQUENTLY APPROVES SUCH PAYMENTS.
(c) IN FOOTNOTE 4, PLEASE CLARIFY THERE (OR ELSEWHERE) THAT THE FUND
PAYS THE FEES OF THE INDEPENDENT BOARD MEMBERS.
(d) IN FOOTNOTE 4, PLEASE CLARIFY WHAT WOULD QUALIFY AS "EXTRAORDINARY
EXPENSES."
Response 19. (a) The disclosure has been moved.
(b) The disclosure has been revised accordingly.
------------------
(4) The Fund may also invest in such instruments to manage cash flows.
KIMBERLY BROWNING, ESQ.
DECEMBER 1, 2009
PAGE 8
(c) The disclosure in that footnote and under
"Investment Advisory Services" has been revised accordingly.
(d) The disclosure in that footnote and under
"Investment Advisory Services" has been revised to clarify that "extraordinary
expenses" include matters such as expenses relating to shareholder meetings.
COMMENT 20. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF -FEES AND EXPENSES
OF THE FUND - CREATION TRANSACTION FEES AND REDEMPTION TRANSACTION FEES (PAGE
7-8)
WITH RESPECT TO APS WHO HOLD CREATION UNITS, PLEASE REPLACE "IN
INVENTORY" WITH "FOR THEIR OWN ACCOUNT."
Response 20. The disclosure has been revised accordingly.
COMMENT 21. CLAYMORE/ALPHASHARES CHINA CONSUMER ETF
WITH RESPECT TO CHANGES MADE IN RESPONSE TO COMMENTS TO THIS FUND'S
DISCLOSURE THAT ARE APPLICABLE TO DISCLOSURE RELATING TO THE OTHER TWO FUNDS,
PLEASE MAKE CONFORMING CHANGES TO THE OTHER FUNDS' DISCLOSURE.
Response 21. Conforming changes have been made.
COMMENT 22. CLAYMORE/ALPHASHARES CHINA INFRASTRUCTURE ETF - PRIMARY
INVESTMENT STRATEGIES (PAGE 9)
THE SECOND SENTENCE IN THIS SECTION REFERS TO THE "SPECIAL
ADMINISTRATIVE REGIONS OF CHINA, SUCH AS HONG KONG AND MACAU." ARE THERE ANY
OTHER SPECIAL ADMINISTRATIVE REGIONS?
Response 22. Currently, Hong Kong and Macau are the only two
such regions. The disclosure has been revised to reflect the foregoing.
COMMENT 23. CLAYMORE/ALPHASHARES CHINA INFRASTRUCTURE ETF - INDEX
CONSTRUCTION (PAGE 10-11)
ITEM 1 SETS FORTH THE VARIOUS GICS CLASSIFICATIONS FROM WHICH COMPANIES
ARE ELIGIBLE FOR THE INDEX. ARE THERE ANY MINIMUM WEIGHTINGS OR REPRESENTATIONS
OF ANY SUCH CLASSIFICATION WITHIN THE INDEX?
Response 23. There is no requirement for any such individual
GICS classification to be represented within the Index.
COMMENT 24. SECONDARY INVESTMENT STRATEGIES (PAGE 23)
PLEASE REFER TO COMMENT 18 ABOVE. ALSO, PLEASE ADD DISCLOSURE
CLARIFYING THAT THE FUND WILL NOT ENTER INTO SUCH DERIVATIVES FOR HEDGING
PURPOSES.
Response 24. Please refer to Response 18 above. The requested
disclosure has been added.
KIMBERLY BROWNING, ESQ.
DECEMBER 1, 2009
PAGE 9
COMMENT 25. SECONDARY INVESTMENT STRATEGIES (PAGE 23)
IN THE DISCLOSURE RELATING TO SECURITIES LENDING, PLEASE ADD A
STATEMENT THAT THE FUNDS DO NOT EXPECT TO ENGAGE IN SECURITIES LENDING TO A
SIGNIFICANT EXTENT.
Response 25. The requested disclosure has been added.
COMMENT 26. HOW TO BUY AND SELL SHARES - PRICING FUND SHARES (PAGE
26-27)
PLEASE ADD ADDITIONAL DISCLOSURE FURTHER CLARIFYING THE PROCEDURES FOR
FAIR VALUATION, INCLUDING THAT VALUATIONS MADE PURSUANT TO SUCH PROCEDURES ARE
UNDER THE ULTIMATE SUPERVISION OF THE BOARD.
Response 26. The requested disclosure has been added.
COMMENT 27. HOW TO BUY AND SELL SHARES - HOW TO BUY SHARES (PAGE 27-28)
IN THE FIRST SENTENCE OF THE SECOND PARAGRAPH, PLEASE CLARIFY WHAT
CONSTITUTES AN ORDER "IN GOOD FORM."
Response 27. The requirements for an order to be "in good
form" are set out in the SAI; a cross-reference has been added to the prospectus
disclosure.
COMMENT 28. HOW TO BUY AND SELL SHARES - REDEMPTION OF SHARES (PAGE
28-29)
PLEASE EXPLAIN HOW AN AP WILL BE NOTIFIED THAT CASH REDEMPTIONS ARE
AVAILABLE AT ANY TIME.
Response 28. As set forth in the SAI under "Creation and
Redemption of Creation Unit Aggregations - Redemption of Fund Shares in Creation
Unit Aggregations," the Fund's custodian makes available the list of Fund
Securities that will be available as proceeds for redemption of Creation Units.
If a Fund is accepting redemptions in whole or in part for cash, this will also
be disseminated on a daily basis by the custodian.
COMMENT 29. HOW TO BUY AND SELL SHARES - DISTRIBUTION PLAN AND SERVICE
PLAN (PAGE 30)
PLEASE REVISE THIS SECTION TO CONFORM TO THE CHANGES MADE IN FOOTNOTE 3
TO EACH FUND'S FEE TABLE.
Response 29. The changes have been made.
KIMBERLY BROWNING, ESQ.
DECEMBER 1, 2009
PAGE 10
COMMENT 30. DISCLAIMERS (PAGE 31)
(a) PLEASE CONFIRM THAT THE ADVISER HAS NO AUTHORITY TO DETERMINE AN
INDEX'S CONSTITUENTS.
(b) IN THE THIRD PARAGRAPH, PLEASE DELETE THE STATEMENTS IN THE FIRST
AND LAST SENTENCES THAT THE ADVISER SHALL HAVE NO LIABILITY FOR VARIOUS ITEMS.
(c) IN THE THIRD SENTENCE OF THE THIRD PARAGRAPH, PLEASE EXPLAIN HOW
THE DISCLAIMERS OF WARRANTIES ARE CONSISTENT WITH APPLICABLE STATE LAW.
Response 30. (a) Pursuant to the requirements of the exemptive
relief, the Adviser has no authority to determine an Index's constituents at any
time. See Response 12(c) above.
(b) We believe that those disclaimers of
liability are appropriate, as they only refer to liabilities resulting from the
accuracy, completeness or use of an Index - and, as set forth in (a) above, the
Adviser has no authority over an Index. The disclaimers of liability do not
refer to the Adviser's duties or responsibilities as the Funds' investment
adviser.
(c) Please see Response 30(b) above; for those
reasons, it would thus not be appropriate for the Adviser to make any such
warranties in any event.
STATEMENT OF ADDITIONAL INFORMATION:
COMMENT 31. INVESTMENT RESTRICTIONS AND POLICIES - INVESTMENT
RESTRICTIONS (PAGE 2-3)
IN CONNECTION WITH FUNDAMENTAL RESTRICTION 1, PLEASE ADD A SENTENCE
AFTER THE LIST OF FUNDAMENTAL RESTRICTIONS CLARIFYING THAT IF A FUND'S INDEX
CONCENTRATES IN AN INDUSTRY OR GROUP OF INDUSTRIES, THE FUND WILL ALSO
CONCENTRATE ITS INVESTMENTS ACCORDINGLY.
Response 31. The sentence has been added.
COMMENT 32. INVESTMENT RESTRICTIONS AND POLICIES - INVESTMENT
RESTRICTIONS (PAGE 2-3)
IN CONNECTION WITH FUNDAMENTAL RESTRICTION 4, PLEASE ADD A LIMITATION
ON THE AMOUNT OF A FUND'S ASSETS THAT MAY BE INVESTED IN REPURCHASE AGREEMENTS.
Response 32. We do not believe a limitation on the amount of a
Fund's assets that may be invested in repurchase agreements is
necessary or appropriate. Under the 1940 Act and the rules thereunder,
there is no limitation on the amount of a Fund's assets that may be
invested in money market instruments such as repurchase agreements .
COMMENT 33. INVESTMENT RESTRICTIONS AND POLICIES - INVESTMENT
RESTRICTIONS (PAGE 2-3)
IN CONNECTION WITH FUTURE FILINGS, PLEASE CONSIDER ADDING A NARRATIVE
DESCRIPTION OF THE TYPE OF SENIOR SECURITIES THAT A FUND MAY ISSUE PURSUANT TO
FUNDAMENTAL RESTRICTION 7.
Response 33. We acknowledge the comment.
KIMBERLY BROWNING, ESQ.
DECEMBER 1, 2009
PAGE 11
COMMENT 34. INVESTMENT RESTRICTIONS AND POLICIES - INVESTMENT
RESTRICTIONS (PAGE 2-3)
IN CONNECTION WITH NON-FUNDAMENTAL RESTRICTION 5, PLEASE ADD DISCLOSURE
EXPLAINING THAT A FUND WILL TAKE CORRECTIVE ACTION IF A FUND'S INVESTMENTS IN
ILLIQUID SECURITIES SURPASS 15%. ALSO, PLEASE SEE COMMENT 36 BELOW.
Response 34. Disclosure has been added accordingly. Please see
Response 36 below.
COMMENT 35. INVESTMENT POLICIES AND RISKS - LOANS OF PORTFOLIO
SECURITIES (PAGE 3-4)
(a) PLEASE CONFIRM THAT EACH FUND WILL IN FACT REQUIRE APPROVED
BORROWERS TO POST THE FORMS OF COLLATERAL SET OUT IN PROVISO (A) IN THE SECOND
PARAGRAPH.
(b) THE LAST SENTENCE STATES THAT THE FUND "MAY RETURN A PART OF THE
INTEREST" TO A THIRD-PARTY FINDER. PLEASE CLARIFY WHEN THE FUND WOULD NOT RETURN
PART OF THE INTEREST PURSUANT TO SUCH ARRANGEMENTS.
Response 35. (a) We hereby confirm that each Fund will in fact
require approved borrowers to post the forms of collateral set out in
proviso (a) in the second paragraph.
(b) The disclosure has been revised to clarify
that the Fund will return part of the interest whenever it enters into
securities lending transactions that involve a third party that is
acting as a finder.
COMMENT 36. INVESTMENT POLICIES AND RISKS - ILLIQUID SECURITIES
(PAGE 5)
PLEASE CONSIDER WHETHER THERE IS A MATERIAL LIKELIHOOD THAT THE CHINESE
SECURITIES IN WHICH THE FUND INVESTS MAY BECOME ILLIQUID AT ANY TIME, AND IF SO,
ADD APPROPRIATE DISCLOSURE.
Response 36. Based on the criteria set forth for inclusion in
each Index (including the exclusion of the less liquid China A-shares
and China B-shares) as set forth in the prospectus under "Index
Construction" for each Fund, we do not believe there is a material risk
that the Chinese securities in which each Fund will invest will become
illiquid.
COMMENT 37. INVESTMENT POLICIES AND RISKS - FUTURES AND OPTIONS
(PAGE 5-7)
PLEASE ADD DISCLOSURE STATING THAT A FUND MAY INVEST IN SUCH
INSTRUMENTS FOR PURPOSES OF TRACKING ITS INDEX, BUT NOT FOR HEDGING PURPOSES.
Response 37. Disclosure has been added accordingly.
COMMENT 38. INVESTMENT POLICIES AND RISKS; GENERAL CONSIDERATIONS AND
RISKS
GENERALLY, PLEASE CLARIFY WHETHER ANY OF THE POLICIES AND RISKS SET
FORTH IN THIS SECTION ARE PRINCIPAL OR SECONDARY, AND SPECIFY WHICH FALL INTO
EACH CATEGORY. IF NONE OF THE POLICIES OR RISKS ARE PRINCIPAL ONES, PLEASE
SPECIFY ACCORDINGLY.
Response 38. Disclosure has been added to (a) specify that all
of the investment policies set forth in the "Investment Policies and
Risks" section are secondary ones and (b) distinguish between the
primary and secondary risks set forth in "General Considerations and
Risks."
KIMBERLY BROWNING, ESQ.
DECEMBER 1, 2009
PAGE 12
As you have requested and consistent with SEC Release 2004-89, the
Trust hereby acknowledges that:
the Trust is responsible for the adequacy and accuracy of the
disclosure in the filings;
the Staff's 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
the Trust 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.
If you would like to discuss any of these responses in further detail
or if you have any questions, please feel free to contact me at (212) 641-5669,
or Stuart Strauss at (212) 698-3529. Thank you.
Sincerely,
/s/ Jeremy Senderowicz