Correspondence 0001592900-24-001986 from EA Series Trust (CIK 0001592900)
EA Series Trust (CIK 0001592900)
Date: Oct. 1, 2024 · CIK: 0001592900 · Accession: 0001592900-24-001986
AI Filing Summary & Sentiment
File numbers found in text: 333-195493, 811-22961
Letter
Division of Investment Management Washington, DC 20549 Post-Effective Amendment No. 356 to the Registration Statement on Form N-1A (the “Amendment”) File Nos.: 333-195493 and 811-22961
RE: EA Series Trust (the “Trust”)
Dear Ms. Hahn:
This correspondence responds to comments received by the undersigned from the staff of the U.S. Securities and Exchange Commission (the “Staff” of the “Commission”), with respect to the Amendment relating to the Cambria Global Shareholder Yield ETF, Cambria Tax Aware ETF and Cambria Endowment Style ETF (each a “Fund” and collectively, the “Funds”), each, a proposed new series of the Trust. For your convenience, your comments have been summarized with responses following each comment. Capitalized terms not otherwise defined have the same meaning as in the Amendment.
Global Comments
1.Comment: Please file your responses as correspondence at least 5 business days prior to filing a 485B and reflect any disclosure changes in correspondence or send a redline showing all changes to the staff. Please apply comments to similar disclosures throughout the document. Unless otherwise noted these comments apply to all three series.
Response: The Registrant acknowledges this comment.
2. Comment: Please provide the completed fee tables and expense examples for each Fund. Please also supplementally confirm that the fees do not include any charges for the purchase and redemption of creation units.
Response: Fee tables and expense examples for each Fund have been provided under separate cover. The Registrant confirms that the fees included in the fee table do not include any charges for the purchase or redemption of creation units.
3. Comment: Please confirm that the expense limitation agreement will remain in place for at least one year from the effective date of the prospectus.
Response: The Funds will not have an expense limitation agreement. Therefore, the fee table, and applicable disclosures have been updated accordingly.
4. Comment: Please confirm if securities lending is a principal investment strategy of any of the Funds. If so, please add disclosure as such.
Response: Securities lending risk has been deleted.
5. Comment: Please supplementally identify the appropriate broad-based securities market index against which each Fund intends to compare its performance.
Response: The Trust has not yet determined the appropriate broad-based securities market index against which each Fund will compare its performance. The Trust will make such determinations closer to the time when such information is required to be disclosed to shareholders.
11300 Tomahawk Creek Pkwy, Suite 310 ● Leawood, KS 66211
Practus, LLP ● Practus.com
Global Shareholder Yield ETF
6. Comment: In principal investment strategy section, please clarify if the Fund will invest in securities regardless of market capitalization.
Response: The Global Shareholder Yield ETF will invest in securities regardless of market capitalization. A new third paragraph under the Principal Investment Strategies section has been added as follows:
The Fund’s investment universe consists of equity securities, including common stock and depositary receipts, issued by publicly listed companies of any market capitalization.
7. Comment: Please supplementally confirm if Cambria will be responsible for the day-to-day management of the Fund and if it is the only sub-adviser.
Response: The Registrant confirms that, while Empowered Funds, LLC dba EA Advisers is responsible for the overall management of the Fund and supervising the sub-adviser, Cambria is responsible for the day-to-day management of the Fund and is the only sub-adviser.
8. Comment: In the Principal Investment Strategies section, with respect to the second paragraph, please explain “shareholder yield” in plain English. With respect to the calculation of shareholder yield, are all of the characteristics equally weighted?
Response: The first sentence of the second paragraph has been revised as follows:
The Fund’s investment sub-adviser, Cambria Investment Management, L.P. (“Cambria” or the “Sub-Adviser”), defines “shareholder yield” as the amount of money shareholders receive from a company in the form of cash dividends, net share repurchases (buybacks), and net debt reduction.
9. Comment: Under the same section, in the first full paragraph on page 2, it states that “Cambria expects geographical weighting across US, foreign developed, and emerging markets to be broadly in line with the global market cap weightings.” Please clarify whether these weightings are calculated by Cambria or measured against an index or third-party source.
Response: These weightings are calculated by Cambria. The sentence has been revised as follows:
Under normal market conditions, Cambria expects geographical weighting across US, foreign developed, and emerging markets (each, a “geographical segment”) to be broadly in line with the global market cap weightings, as determined by Cambria, but Cambria reserves the right to overweight a geographical segment.
10. Comment: In the third to last paragraph of the Principal Investment Strategies section, it refers to geographic segments. Please define what is meant by a “geographic segment.” Are any regions excluded? If the Fund’s investments will be focused in any particular regions, please disclose them, including any related risks.
Response: Geographic segment is defined as each of the United States, developed markets, and emerging markets. The first sentence under the fourth paragraph of the Principal Investment Strategies section has been revised as provided in Response 9, above. The Sub-Adviser selects the Fund’s investments principally based on shareholder yield and selects the top 20% of stocks in each geographic segment. Moreover, each of the Fund’s positions are equal weighted. Accordingly, the Registrant has not included any specific regional risk disclosures.
11. Comment: Please confirm the Fund’s starting investment universe. Please also confirm whether the Fund will invest in ETFs. If so, please supplementally confirm how the Fund will comply with Section 12(d) under the Investment Company Act of 1940, as amended (the “1940 Act”).
Response: The Fund is not expected to invest in ETFs and the disclosure has been updated accordingly. Please refer to Response 6, above, with regard to the Fund’s investment universe.
12. Comment: Will the Fund’s emerging markets positions include investments in Russia? Is so, please include additional disclosure.
Response: The Fund’s emerging market positions will not include investments in Russia.
13. Comment: Please include any applicable sector risks if the Fund will invest heavily in any such sectors.
Response: The Fund is expected to invest heavily in the financial and energy sectors. The Fund’s Item 4 and Item 9 disclosures have been updated accordingly.
Tax Aware ETF
14. Comment: Please clarify in the Principal Investment Strategies section that the Fund will hold value stocks with lower dividend distributions because such distributions will be taxed as ordinary income.
Response: The first sentence of the second paragraph of the Principal Investment Strategies section has been amended as follows:
Utilizing its own quantitative model, the Fund’s investment sub-adviser, Cambria Investment Management, L.P. (“Cambria” or the “Sub-Adviser”) selects value stocks with lower dividend distributions, which are generally taxed as ordinary income.
15. Comment: In the same section, in the next to last paragraph, please confirm if the 50-100 stocks will be equal weighted or if another methodology will be used to calculate position weighting.
Response: The Registrant confirms that the stocks will initially be equal-weighted.
16. Comment: In the Principal Risks section, please amend the first sentence of the Tax Aware Investing Risk to reflect the Fund’s intention to invest in lower dividend stocks.
Response: The following has been added as the first sentence of Tax Aware Investing Risk:
The Fund will invest in stocks that have lower dividend distributions, which are generally taxed as ordinary income.
Endowment Style Fund
17. Comment: In the Principal Investment Strategies section, please move the second to last paragraph to the beginning of the section.
Response: The disclosure has been updated accordingly.
18. Comment: In the first sentence of the second paragraph, please clarify what is meant by “regions, countries, and sectors around the globe” and “absolute positive return.”
Response: Regions and countries refer to U.S., foreign developed, and emerging market countries. Sectors refers to equities, fixed income, real assets, and alternative investments. The disclosure has been amended to make this more clear. An explanation of absolute positive return has also been included.
19. Comment: Please clarify if the Fund will invest in developed or emerging markets and if so, please state how the Fund determines what is an emerging market.
Response: The Fund is a fund of funds that will invest in ETFs. It will hold ETFs that invest in U.S., foreign developed, and emerging markets.
20. Comment: Please disclose whether the Fund will concentrate in any sectors.
Response: The Fund is not expected to be concentrated in a particular sector.
21. Comment: Please provide the initial investment universe and how investments are selected for purchase and sale.
Response: The following disclosure has been added with regard to the investment universe:
The Fund’s initial investment universe begins with all U.S. listed ETFs. This list is reviewed and updated at least annually. Underlying ETFs are selected based on several factors, including, but not limited to Cambria’s analysis of an Underlying ETF’s principal investment strategy, risk adjusted return, alpha, tracking error, and cost.
22. Comment: In the second paragraph of the Principal Investment Strategies section, it states that the Fund will invest between 130% – 150% of its total assets in futures contracts. Please also clarify if the Fund intends to limit its investments in futures or other investments that generate non-qualifying income to comply with the Internal Revenue Code of 1986 (the “Code”).
Response: The Trust does not expect to principally invest in futures or other investments that generate non-qualifying income.
23. Comment: The SEC staff notes that the investment strategy cites various percentages of how the assets will be invested. Please clearly explain how the percentages relate to one another. Please clarify the breakdown of exposures between futures contracts and ETPs.
Response: The Registrant notes that the percentages listed provide different measures of the Fund’s investment allocations. For example, the Fund will obtain aggregate notional exposure of 130-150%. Paragraph four of the Fund’s Principal Investment Strategies section provides general target allocations to the various asset classes to which the Fund will have exposure. Those allocations add up to 130% target notional exposure. In paragraph five, the disclosure discusses how Cambria will allocate the equity portion of the portfolio between U.S. and non-U.S. investments.
24. Comment: Please expand the definition of Underlying Vehicles to include affiliated and unaffiliated ETFs. Please describe the underlying vehicles in more detail, including a range of percentages. Additionally, please supplementally discuss how the fund intends to comply with Section 12 of the 1940 Act.
Response: The Registrant has updated the scope of underlying vehicles as affiliated and unaffiliated ETFs, which are now defined as Underlying ETFs.
The Fund intends to rely on Section 12(d)(1)(F), and when the Fund reaches a scale where the 3% limitation of Section 12(d)(1)(F) becomes relevant, the Fund will rely on Rule 12d1-4.
25. Comment: In the second paragraph of the Principal Investment Strategies section, please clarify if the 130% - 150% relates to the aggregate notional exposure of the derivatives.
Response: The Sub-Adviser confirms that the 130-150% reflects aggregate notional exposure of all holdings in the Fund.
26. Comment: Please clarify how ETPs are selected for the portfolio. Please also confirm whether the Fund intends to invest in inverse and levered ETFs, either directly or indirectly.
Response: Please refer to Response 21, above, with regard to the selection of ETPs. The Fund does not expect to hold levered or inverse levered ETFs or ETPs.
27. Comment: In the second full paragraph of page 10, please update that Cambria is the Fund’s sub-adviser.
Response: The disclosure has been updated accordingly.
28. Comment: In the same paragraph, the disclosure states that “Underlying Vehicles provide targeted notional exposures of approximately 60% of its portfolio to equity securities, 30% to fixed income securities, 20% to real assets, and 20% to various hedge and trend strategies.” Please confirm whether this is referring to futures on ETPs and ETFs. What are the various hedge and trend strategies referring to and how are these strategies defined?
Response: Futures held directly in the Fund will be limited to U.S. Treasury bond futures. The fourth paragraph from the end of the Principal Investment Strategies section has been amended as follows:
Under normal market conditions, the Fund’s investment sub-adviser, Cambria Investment Management, L.P. (“Cambria” or the “Sub-Adviser”), selects Underlying ETFs that provide targeted notional exposures of approximately 60% of its portfolio to equity securities, 30% to fixed income securities, 20% to real assets, and 20% to various hedge and trend strategies. Examples of hedge and trend strategies include, but are not limited to, global macro strategies, long-short strategies, managed futures strategies, and relative strength strategies. Although Cambria seeks to allocate the Fund’s portfolio in accordance with its targeted exposures, targeted allocations may fluctuate in response to market conditions and investment opportunities.
29. Comment: In the Principal Risks section, for Exchange-Traded Funds, Exchange-Traded Products and Investment Companies Risks, please include that ETF Risk applies to the Fund’s operations as a fund of fund and consider using defined terms. Please clarify that expenses may be higher and performance may be lower than funds that invest directly in underlying securities.
Response: The disclosure has been amended as follows:
Risks of Investing in Underlying ETFs. The Fund is a fund-of-funds and invests in Underlying ETFs. Underlying ETFs typically reflect the risks of the types of instruments in which the Underlying ETF invests. In addition, with such investments, the Fund bears its proportionate share of the fees and expenses of the Underlying ETF. As a result, the Fund’s operating expenses may be higher and performance may be lower than funds that invest directly in underlying securities. Through its investments in Underlying ETFs, the Fund may be indirectly exposed to derivatives and leverage; allowing them to obtain the right to a return on stipulated capital that exceeds the amount paid or invested. Use of leverage is speculative and could magnify losses.
30. Comment: With respect to Quantitative Security Selection Risk, please disclosure whether this risk applies to Underlying ETFs as well as stocks. Please make similar adjustments to Currency Risk, Fixed Income Risk, Foreign Investment Risk and Depositary Receipt Risk.
Response: The disclosure has been amended to reflect that the quantitative techniques are used to generate the Fund’s investment allocations, including to the Underlying ETFs.
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CORRESP 1 filename1.htm Document October 1, 2024 Jaea F. Hahn Division of Investment Management U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 RE: EA Series Trust (the “Trust”) Post-Effective Amendment No. 356 to the Registration Statement on Form N-1A (the “Amendment”) File Nos.: 333-195493 and 811-22961 Dear Ms. Hahn: This correspondence responds to comments received by the undersigned from the staff of the U.S. Securities and Exchange Commission (the “Staff” of the “Commission”), with respect to the Amendment relating to the Cambria Global Shareholder Yield ETF, Cambria Tax Aware ETF and Cambria Endowment Style ETF (each a “Fund” and collectively, the “Funds”), each, a proposed new series of the Trust. For your convenience, your comments have been summarized with responses following each comment. Capitalized terms not otherwise defined have the same meaning as in the Amendment. Global Comments 1.Comment: Please file your responses as correspondence at least 5 business days prior to filing a 485B and reflect any disclosure changes in correspondence or send a redline showing all changes to the staff. Please apply comments to similar disclosures throughout the document. Unless otherwise noted these comments apply to all three series. Response: The Registrant acknowledges this comment. 2. Comment: Please provide the completed fee tables and expense examples for each Fund. Please also supplementally confirm that the fees do not include any charges for the purchase and redemption of creation units. Response: Fee tables and expense examples for each Fund have been provided under separate cover. The Registrant confirms that the fees included in the fee table do not include any charges for the purchase or redemption of creation units. 3. Comment: Please confirm that the expense limitation agreement will remain in place for at least one year from the effective date of the prospectus. Response: The Funds will not have an expense limitation agreement. Therefore, the fee table, and applicable disclosures have been updated accordingly. 4. Comment: Please confirm if securities lending is a principal investment strategy of any of the Funds. If so, please add disclosure as such. Response: Securities lending risk has been deleted. 5. Comment: Please supplementally identify the appropriate broad-based securities market index against which each Fund intends to compare its performance. Response: The Trust has not yet determined the appropriate broad-based securities market index against which each Fund will compare its performance. The Trust will make such determinations closer to the time when such information is required to be disclosed to shareholders. 11300 Tomahawk Creek Pkwy, Suite 310 ● Leawood, KS 66211 Practus, LLP ● Practus.com Global Shareholder Yield ETF 6. Comment: In principal investment strategy section, please clarify if the Fund will invest in securities regardless of market capitalization. Response: The Global Shareholder Yield ETF will invest in securities regardless of market capitalization. A new third paragraph under the Principal Investment Strategies section has been added as follows: The Fund’s investment universe consists of equity securities, including common stock and depositary receipts, issued by publicly listed companies of any market capitalization. 7. Comment: Please supplementally confirm if Cambria will be responsible for the day-to-day management of the Fund and if it is the only sub-adviser. Response: The Registrant confirms that, while Empowered Funds, LLC dba EA Advisers is responsible for the overall management of the Fund and supervising the sub-adviser, Cambria is responsible for the day-to-day management of the Fund and is the only sub-adviser. 8. Comment: In the Principal Investment Strategies section, with respect to the second paragraph, please explain “shareholder yield” in plain English. With respect to the calculation of shareholder yield, are all of the characteristics equally weighted? Response: The first sentence of the second paragraph has been revised as follows: The Fund’s investment sub-adviser, Cambria Investment Management, L.P. (“Cambria” or the “Sub-Adviser”), defines “shareholder yield” as the amount of money shareholders receive from a company in the form of cash dividends, net share repurchases (buybacks), and net debt reduction. 9. Comment: Under the same section, in the first full paragraph on page 2, it states that “Cambria expects geographical weighting across US, foreign developed, and emerging markets to be broadly in line with the global market cap weightings.” Please clarify whether these weightings are calculated by Cambria or measured against an index or third-party source. Response: These weightings are calculated by Cambria. The sentence has been revised as follows: Under normal market conditions, Cambria expects geographical weighting across US, foreign developed, and emerging markets (each, a “geographical segment”) to be broadly in line with the global market cap weightings, as determined by Cambria, but Cambria reserves the right to overweight a geographical segment. 10. Comment: In the third to last paragraph of the Principal Investment Strategies section, it refers to geographic segments. Please define what is meant by a “geographic segment.” Are any regions excluded? If the Fund’s investments will be focused in any particular regions, please disclose them, including any related risks. Response: Geographic segment is defined as each of the United States, developed markets, and emerging markets. The first sentence under the fourth paragraph of the Principal Investment Strategies section has been revised as provided in Response 9, above. The Sub-Adviser selects the Fund’s investments principally based on shareholder yield and selects the top 20% of stocks in each geographic segment. Moreover, each of the Fund’s positions are equal weighted. Accordingly, the Registrant has not included any specific regional risk disclosures. 11. Comment: Please confirm the Fund’s starting investment universe. Please also confirm whether the Fund will invest in ETFs. If so, please supplementally confirm how the Fund will comply with Section 12(d) under the Investment Company Act of 1940, as amended (the “1940 Act”). Response: The Fund is not expected to invest in ETFs and the disclosure has been updated accordingly. Please refer to Response 6, above, with regard to the Fund’s investment universe. 2 12. Comment: Will the Fund’s emerging markets positions include investments in Russia? Is so, please include additional disclosure. Response: The Fund’s emerging market positions will not include investments in Russia. 13. Comment: Please include any applicable sector risks if the Fund will invest heavily in any such sectors. Response: The Fund is expected to invest heavily in the financial and energy sectors. The Fund’s Item 4 and Item 9 disclosures have been updated accordingly. Tax Aware ETF 14. Comment: Please clarify in the Principal Investment Strategies section that the Fund will hold value stocks with lower dividend distributions because such distributions will be taxed as ordinary income. Response: The first sentence of the second paragraph of the Principal Investment Strategies section has been amended as follows: Utilizing its own quantitative model, the Fund’s investment sub-adviser, Cambria Investment Management, L.P. (“Cambria” or the “Sub-Adviser”) selects value stocks with lower dividend distributions, which are generally taxed as ordinary income. 15. Comment: In the same section, in the next to last paragraph, please confirm if the 50-100 stocks will be equal weighted or if another methodology will be used to calculate position weighting. Response: The Registrant confirms that the stocks will initially be equal-weighted. 16. Comment: In the Principal Risks section, please amend the first sentence of the Tax Aware Investing Risk to reflect the Fund’s intention to invest in lower dividend stocks. Response: The following has been added as the first sentence of Tax Aware Investing Risk: The Fund will invest in stocks that have lower dividend distributions, which are generally taxed as ordinary income. Endowment Style Fund 17. Comment: In the Principal Investment Strategies section, please move the second to last paragraph to the beginning of the section. Response: The disclosure has been updated accordingly. 18. Comment: In the first sentence of the second paragraph, please clarify what is meant by “regions, countries, and sectors around the globe” and “absolute positive return.” Response: Regions and countries refer to U.S., foreign developed, and emerging market countries. Sectors refers to equities, fixed income, real assets, and alternative investments. The disclosure has been amended to make this more clear. An explanation of absolute positive return has also been included. 19. Comment: Please clarify if the Fund will invest in developed or emerging markets and if so, please state how the Fund determines what is an emerging market. Response: The Fund is a fund of funds that will invest in ETFs. It will hold ETFs that invest in U.S., foreign developed, and emerging markets. 20. Comment: Please disclose whether the Fund will concentrate in any sectors. Response: The Fund is not expected to be concentrated in a particular sector. 3 21. Comment: Please provide the initial investment universe and how investments are selected for purchase and sale. Response: The following disclosure has been added with regard to the investment universe: The Fund’s initial investment universe begins with all U.S. listed ETFs. This list is reviewed and updated at least annually. Underlying ETFs are selected based on several factors, including, but not limited to Cambria’s analysis of an Underlying ETF’s principal investment strategy, risk adjusted return, alpha, tracking error, and cost. 22. Comment: In the second paragraph of the Principal Investment Strategies section, it states that the Fund will invest between 130% – 150% of its total assets in futures contracts. Please also clarify if the Fund intends to limit its investments in futures or other investments that generate non-qualifying income to comply with the Internal Revenue Code of 1986 (the “Code”). Response: The Trust does not expect to principally invest in futures or other investments that generate non-qualifying income. 23. Comment: The SEC staff notes that the investment strategy cites various percentages of how the assets will be invested. Please clearly explain how the percentages relate to one another. Please clarify the breakdown of exposures between futures contracts and ETPs. Response: The Registrant notes that the percentages listed provide different measures of the Fund’s investment allocations. For example, the Fund will obtain aggregate notional exposure of 130-150%. Paragraph four of the Fund’s Principal Investment Strategies section provides general target allocations to the various asset classes to which the Fund will have exposure. Those allocations add up to 130% target notional exposure. In paragraph five, the disclosure discusses how Cambria will allocate the equity portion of the portfolio between U.S. and non-U.S. investments. 24. Comment: Please expand the definition of Underlying Vehicles to include affiliated and unaffiliated ETFs. Please describe the underlying vehicles in more detail, including a range of percentages. Additionally, please supplementally discuss how the fund intends to comply with Section 12 of the 1940 Act. Response: The Registrant has updated the scope of underlying vehicles as affiliated and unaffiliated ETFs, which are now defined as Underlying ETFs. The Fund intends to rely on Section 12(d)(1)(F), and when the Fund reaches a scale where the 3% limitation of Section 12(d)(1)(F) becomes relevant, the Fund will rely on Rule 12d1-4. 25. Comment: In the second paragraph of the Principal Investment Strategies section, please clarify if the 130% - 150% relates to the aggregate notional exposure of the derivatives. Response: The Sub-Adviser confirms that the 130-150% reflects aggregate notional exposure of all holdings in the Fund. 26. Comment: Please clarify how ETPs are selected for the portfolio. Please also confirm whether the Fund intends to invest in inverse and levered ETFs, either directly or indirectly. Response: Please refer to Response 21, above, with regard to the selection of ETPs. The Fund does not expect to hold levered or inverse levered ETFs or ETPs. 27. Comment: In the second full paragraph of page 10, please update that Cambria is the Fund’s sub-adviser. Response: The disclosure has been updated accordingly. 4 28. Comment: In the same paragraph, the disclosure states that “Underlying Vehicles provide targeted notional exposures of approximately 60% of its portfolio to equity securities, 30% to fixed income securities, 20% to real assets, and 20% to various hedge and trend strategies.” Please confirm whether this is referring to futures on ETPs and ETFs. What are the various hedge and trend strategies referring to and how are these strategies defined? Response: Futures held directly in the Fund will be limited to U.S. Treasury bond futures. The fourth paragraph from the end of the Principal Investment Strategies section has been amended as follows: Under normal market conditions, the Fund’s investment sub-adviser, Cambria Investment Management, L.P. (“Cambria” or the “Sub-Adviser”), selects Underlying ETFs that provide targeted notional exposures of approximately 60% of its portfolio to equity securities, 30% to fixed income securities, 20% to real assets, and 20% to various hedge and trend strategies. Examples of hedge and trend strategies include, but are not limited to, global macro strategies, long-short strategies, managed futures strategies, and relative strength strategies. Although Cambria seeks to allocate the Fund’s portfolio in accordance with its targeted exposures, targeted allocations may fluctuate in response to market conditions and investment opportunities. 29. Comment: In the Principal Risks section, for Exchange-Traded Funds, Exchange-Traded Products and Investment Companies Risks, please include that ETF Risk applies to the Fund’s operations as a fund of fund and consider using defined terms. Please clarify that expenses may be higher and performance may be lower than funds that invest directly in underlying securities. Response: The disclosure has been amended as follows: Risks of Investing in Underlying ETFs. The Fund is a fund-of-funds and invests in Underlying ETFs. Underlying ETFs typically reflect the risks of the types of instruments in which the Underlying ETF invests. In addition, with such investments, the Fund bears its proportionate share of the fees and expenses of the Underlying ETF. As a result, the Fund’s operating expenses may be higher and performance may be lower than funds that invest directly in underlying securities. Through its investments in Underlying ETFs, the Fund may be indirectly exposed to derivatives and leverage; allowing them to obtain the right to a return on stipulated capital that exceeds the amount paid or invested. Use of leverage is speculative and could magnify losses. 30. Comment: With respect to Quantitative Security Selection Risk, please disclosure whether this risk applies to Underlying ETFs as well as stocks. Please make similar adjustments to Currency Risk, Fixed Income Risk, Foreign Investment Risk and Depositary Receipt Risk. Response: The disclosure has been amended to reflect that the quantitative techniques are used to generate the Fund’s investment allocations, including to the Underlying ETFs. 31. Com