SEC Company Response from FRANKLIN TEMPLETON TRUST (CIK 0001786958) — Mar 25, 2020
FRANKLIN TEMPLETON TRUST (CIK 0001786958)
Date: March 25, 2020 · CIK: 0001786958 · Accession: 0001786958-20-000004
AI Filing Summary & Sentiment
File numbers found in text: 333-233596, 811-23471
Letter
March 25, 2020 Filed via EDGAR Ms. Karen Rossotto U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Subject: Franklin Templeton Trust (the “Trust”) (File Nos. 811-23471; 333-233596)
Dear Ms. Rossotto:
On behalf of the Trust, submitted herewith via the EDGAR system are the responses to the comments of the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “SEC” or “Commission”) that you provided with regard to the Trust’s initial registration statement on Form N-1A (the “Registration Statement”), relating to the registration of the Franklin Tokenized U.S. Government Money Fund (formerly, Franklin Blockchain Enabled U.S. Government Money Fund) (the “Fund”), a series of the Trust. The Registration Statement was filed with the Commission on September 3, 2019 under the Securities Act of 1933 (the “Securities Act”) and the Investment Company Act of 1940 (the “1940 Act”).
Below we have provided your comments (in bold) and the Trust’s response to each comment. Capitalized terms not otherwise defined in this letter have the meanings assigned to the terms in the Registration Statement.
General
1. Comment: We note that a number of the comments below were provided orally to the Fund previously, consistent with the request for engagement outlined in the January 18, 2018, Letter from Dalia Blass. See Letter from Dalia Blass, Director of the Division of Investment Management of the U.S. Securities and Exchange Commission, to Paul Schott Stevens, President & CEO of the Investment Company Institute, and Timothy W. Cameron, Asset Management Group – Head of the Securities Industry and Financial Markets Association, (Jan. 18, 2018) available at: https://www.sec.gov/divisions/investment/noaction/2018/cryptocurrency-011818.htm.
[Dechert LLP Logo]
Ms. Karen Rossotto
U.S. Securities and Exchange Commission
March 25, 2020
Page 2
Response: The Trust acknowledges your comment.
2. Comment: We note that portions of the registration statement 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 exhibits added in any amendments.
Response: The Trust acknowledges your comment.
3. Comment: Please supplementally explain if the Fund has submitted or intends to submit an exemptive application or no-action request in connection with the registration statement, or if the Fund anticipates requesting such relief in the future.
Response: The Trust does not believe that the Fund, as it is intended to operate at initial launch, will require exemptive or no-action relief. Accordingly, the Trust does not intend to submit an exemptive application or no-action request in connection with the Registration Statement prior to initial launch. However, the Trust undertakes to consult with the Staff prior to introducing any material, novel operational features (such as, for example, secondary market or peer-to-peer trading of Fund shares) and will seek exemptive or no-action relief, as appropriate, if such relief is determined to be required in the future.
4. Comment: The Fund is named the Franklin Blockchain Enabled U.S. Government Money Fund. The name of the Fund, specifically the phrase “Blockchain Enabled,” could suggest that the Fund’s strategy includes investments that use blockchain technology. Under rule 35d-1(a)(2) of the Investment Company Act of 1940 (“the ‘1940 Act”), a fund with a name suggesting that the fund focuses its investments in a particular investment or industry, must have a policy to invest, under normal circumstances, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in that investment or industry. As the Fund must invest at least 99.5 percent of assets in government securities to comply with Rule 2a-7 of the 1940 Act, please explain to us why the name is not misleading within the meaning of rule 35d-1(a)(2) or revise the Fund’s name by removing the term “Blockchain.” Further, given that the Fund’s disclosure describes the Fund’s shares as “blockchain-based,” but the official records for the Fund’s share ownership will be maintained by the Fund’s transfer agent, please explain why the term “Blockchain Enabled” is appropriate and not misleading in the Fund’s name under Section 35(d) of the 1940 Act or revise the Fund’s name by removing “Blockchain Enabled.”
Response: Subsequent to the Trust’s Form N-1A filing on September 3, 2019, the Trust has determined to rename the Fund to the “Franklin Tokenized U.S. Government
Money Fund.” For the reasons discussed more fully below, however, the Trust respectfully asserts that neither the Fund’s former name nor its proposed new name are subject to the provisions of Rule 35d-1, as both the former name and the proposed new name describes an operational feature of the Fund, rather than suggesting a focus in “a particular type of investment or investments.” Moreover, the Trust respectfully asserts that the Fund’s former name and the proposed new name is not otherwise “materially deceptive or misleading.”
[Dechert LLP Logo]
Ms. Karen Rossotto
U.S. Securities and Exchange Commission
March 25, 2020
Page 3
Section 35(d) of the 1940 Act makes it unlawful for “any registered investment company to adopt as a part of the name or title of such company, or of any securities of which it is the issuer, any word or words that the Commission finds are materially deceptive or misleading.” Section 35(d) authorizes the Commission to define any names or titles as being materially deceptive or misleading under that section by rule, regulation, or order. The Commission adopted Rule 35d-1 under the authority of this section. Rule 35d-1(a)(2) makes any name of a fund “materially deceptive and misleading” for purposes of Section 35(d) if the name “suggest[s] that the fund focuses its investments in a particular type of investment or investments,” unless the fund, among other things, adopts a policy to invest, under normal circumstances, at least 80% of the fund’s net assets plus borrowings for investment purposes in the types of investments suggested by the fund’s name.
Historically, the SEC and Staff have distinguished between fund names that have suggested a focus in a particular type of investment or investments and fund names with other meanings, including fund names that connote a particular type of investment strategy (e.g., “income”) or a particular type of use case (e.g., “retirement”). For example, the SEC has stated that Rule 35d-1 “does not apply to fund names that incorporate terms … that connote types of investment strategies as opposed to types of investments.”1 Similarly, the Staff echoed this point by noting that Rule 35d-1 would not apply to a term that suggests an investment objective or strategy rather than a type of investment.2 Ultimately, in determining whether a particular name is misleading, the SEC stated that the Staff “will consider whether the name would lead a reasonable investor to conclude that the company invests in a manner that is inconsistent with the company’s intended investments or the risks of those investments.”
1 See Investment Company Names, Investment Company Act Release No. 24828 (Jan. 17, 2001).
2 See Frequently Asked Questions about Rule 35d-1 (Investment Company Names) (Dec. 4, 2001) (“Rule 35d-1 would not apply to the use of the term ‘income’ where that term suggests an investment objective or strategy rather than a type of investment.”).
[Dechert LLP Logo]
Ms. Karen Rossotto
U.S. Securities and Exchange Commission
March 25, 2020
Page 4
The Trust respectfully submits that the term “tokenized” is a widely used and understood term to describe assets recorded on a blockchain or distributed ledger, and does not reasonably suggest a focus in a particular type of investment or industry. Rather, the Trust believes that the term “tokenized” suggests the operational use of a technology that has the potential to benefit Fund investors. While, as the Staff notes, the Fund’s shares will not be solely recorded on a blockchain ledger, the secondary recording of Fund shares on a blockchain ledger would nevertheless represent a novel step forward for the mutual fund industry. The Trust believes that Fund investors may benefit from the use of this new technology and has included appropriate disclosure in the Fund’s prospectus and statement of additional information to describe how the Fund’s operations will be affected by the use of blockchain technology.
The Trust believes that, similar to a fund name that connotes a particular type of investment strategy or a particular type of use case, a fund name that connotes an operational feature of a fund is not within the purview of Rule 35d-1. Accordingly, the Trust does not believe that the term “tokenized” implicates Rule 35d-1(a)(2).
Moreover, the Trust does not believe that inclusion of the term “tokenized” in the Fund’s name is otherwise materially deceptive or misleading in contravention of Section 35(d). The Fund’s prospectus explicitly states that the Fund “intends to be a ‘government money market fund,’ as such term is defined in or interpreted under Rule 2a-7 under the [1940 Act],” and that the secondary recording of Fund shares on the blockchain will not affect the Fund’s investments. The Fund will invest, consistent with Rule 2a-7 under the 1940 Act, at least 99.5% of its total assets in government securities, cash and repurchase agreements collateralized fully by government securities or cash. Given the foregoing, the Trust believes that no reasonable investor would conclude that the Fund invests in a manner that is inconsistent with a U.S. government money market fund subject to the maturity, quality, liquidity and diversification requirements of Rule 2a-7. Moreover, for the reasons discussed above and notwithstanding that blockchain technology would be used to record share ownership as a secondary method of recording share ownership, the Trust believes that inclusion of the term “tokenized” in the Fund’s name is important for shareholders to understand a unique operational feature of the Fund and is therefore appropriate and not misleading under the circumstances.
Prospectus – Fees and Expenses of the Fund
5. Comment: The staff notes the Fund will maintain two sets of records. The Fund’s transfer agent will maintain the official record of share ownership, while an electronic distributed ledger (hereinafter, “blockchain”) of transaction data will also be kept. Please supplementally explain if the Fund will incur expenses associated with the
Fund’s secondary method of recording share transactions on the blockchain. If so, please explain who pays these costs. If the Fund pays these costs, explain if they are included in the line item “Other Expenses” in the Fund’s fee table.
[Dechert LLP Logo]
Ms. Karen Rossotto
U.S. Securities and Exchange Commission
March 25, 2020
Page 5
Response: The Trust confirms that the Fund will not be responsible for any expenses associated with the secondary recording of share transactions on the Stellar network. These expenses will initially be the responsibility of the Fund’s investment manager, Franklin Advisers, Inc. (“Advisers”), or its affiliates. However, investors that purchase and redeem Fund shares through the App may be directly responsible for certain account fees and other expenses, as described in the App’s account application and/or user agreement, which may be used to pay for expenses associated with the secondary recording of share transactions on the Stellar network. In the future, to the extent the Fund will incur these expenses, the Trust confirms that they will be included in the “Other Expenses” line item in the Fund’s fee table.
Prospectus – Principal Investment Strategies
6. Comment: The sixth paragraph on page 2, titled Blockchain-based shares; no investment in cryptocurrencies, discloses the Fund’s recording of transactions on the blockchain. Please add a heading to this paragraph to clarify that blockchain is an operational aspect of the Fund (accordingly, the heading should distinguish this section from the immediately preceding paragraphs disclosed under the heading “The Fund invests in:”). In the heading, please avoid the term “Blockchain-based shares” as it could suggest investment in cryptocurrency or blockchain-based companies and may be misleading to investors. Within this paragraph, please disclose:
a. A plain English explanation of blockchain technology. Consider providing a cross-reference to the more detailed explanation of the blockchain later in the registration statement.
b. That the secondary recording of Fund shares on the blockchain does not affect the investments the Fund will make.
c. That the Fund is a money market fund, and accordingly will invest in government securities consistent with Rule 2a-7 of the 1940 Act.
d. That the Fund expects the operational differences of this Fund will have little, if any, effect on Fund shareholders currently.
[Dechert LLP Logo]
Ms. Karen Rossotto
U.S. Securities and Exchange Commission
March 25, 2020
Page 6
Furthermore, the disclosure in this paragraph states, “[a]lthough the Fund’s transfer agent will maintain the official record of share ownership in book-entry form, shares will also be recorded on the Stellar network, an electronic distributed ledger.”
e. Please clarify if the transfer agent will maintain both the book-entry and electronic ledger or if a third party will keep the electronic ledger.
f. If a third party is involved, please supplementally explain if the Fund will incur additional costs, how those costs will be disclosed to shareholders, and whether the third party contract will be approved by the Board.
Response: The Trust has revised the prospectus to incorporate the Staff’s comments. In addition, with respect to Staff Comment No. 6(e), please note that, at initial launch, the Fund’s transfer agent, Franklin Templeton Investor Services, LLC (the “Transfer Agent”), will maintain the official record of share ownership in book-entry form, and an affiliate of the Transfer Agent will coordinate with the Transfer Agent to record all transactions in Fund shares on the Stellar network. With respect to Staff Comment No. 6(f), please see the Trust’s response to Staff Comment No. 5. In addition, although the Board will approve the Transfer Agent and Shareholder Services Agreement with the Transfer Agent, the Board is not expected to approve the agreement with the Transfer Agent’s affiliate, as the Trust is not expected to be a party to that agreement.
7. Comment: The seventh paragraph on page 2 states:
At this time, shares of the Fund are not currently available for purchase, sale or transfer from one shareholder to another shareholder (or potential shareholder) (“peer-to-peer”) on the blockchain or in any secondary trading market. The Fund’s investment manager believes that blockchain-based shares will provide increased transparency to Fund shareholders and may, in the future, permit reduced settlement times and provide other benefits to Fund shareholders.
a. With regard to the first phrase of the second sentence, if the Fund at launch will have “increased trans
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CORRESP 1 filename1.htm franklintempletontrust-n1are.htm - Generated by SEC Publisher for SEC Filing [Dechert LLP Logo] 650 Town Center Drive Suite 700 Costa Mesa, CA 92626 +1 949 442 6000 Main +1 949 442 6010 Fax www.dechert.com TIMOTHY SPANGLER timothy.spangler@dechert.com +1 949 442 6044 Direct +1 949 681 8658 Fax March 25, 2020 Filed via EDGAR Ms. Karen Rossotto U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Subject: Franklin Templeton Trust (the “Trust”) (File Nos. 811-23471; 333-233596) Dear Ms. Rossotto: On behalf of the Trust, submitted herewith via the EDGAR system are the responses to the comments of the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “SEC” or “Commission”) that you provided with regard to the Trust’s initial registration statement on Form N-1A (the “Registration Statement”), relating to the registration of the Franklin Tokenized U.S. Government Money Fund (formerly, Franklin Blockchain Enabled U.S. Government Money Fund) (the “Fund”), a series of the Trust. The Registration Statement was filed with the Commission on September 3, 2019 under the Securities Act of 1933 (the “Securities Act”) and the Investment Company Act of 1940 (the “1940 Act”). Below we have provided your comments (in bold) and the Trust’s response to each comment. Capitalized terms not otherwise defined in this letter have the meanings assigned to the terms in the Registration Statement. General 1. Comment: We note that a number of the comments below were provided orally to the Fund previously, consistent with the request for engagement outlined in the January 18, 2018, Letter from Dalia Blass. See Letter from Dalia Blass, Director of the Division of Investment Management of the U.S. Securities and Exchange Commission, to Paul Schott Stevens, President & CEO of the Investment Company Institute, and Timothy W. Cameron, Asset Management Group – Head of the Securities Industry and Financial Markets Association, (Jan. 18, 2018) available at: https://www.sec.gov/divisions/investment/noaction/2018/cryptocurrency-011818.htm. [Dechert LLP Logo] Ms. Karen Rossotto U.S. Securities and Exchange Commission March 25, 2020 Page 2 Response: The Trust acknowledges your comment. 2. Comment: We note that portions of the registration statement 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 exhibits added in any amendments. Response: The Trust acknowledges your comment. 3. Comment: Please supplementally explain if the Fund has submitted or intends to submit an exemptive application or no-action request in connection with the registration statement, or if the Fund anticipates requesting such relief in the future. Response: The Trust does not believe that the Fund, as it is intended to operate at initial launch, will require exemptive or no-action relief. Accordingly, the Trust does not intend to submit an exemptive application or no-action request in connection with the Registration Statement prior to initial launch. However, the Trust undertakes to consult with the Staff prior to introducing any material, novel operational features (such as, for example, secondary market or peer-to-peer trading of Fund shares) and will seek exemptive or no-action relief, as appropriate, if such relief is determined to be required in the future. 4. Comment: The Fund is named the Franklin Blockchain Enabled U.S. Government Money Fund. The name of the Fund, specifically the phrase “Blockchain Enabled,” could suggest that the Fund’s strategy includes investments that use blockchain technology. Under rule 35d-1(a)(2) of the Investment Company Act of 1940 (“the ‘1940 Act”), a fund with a name suggesting that the fund focuses its investments in a particular investment or industry, must have a policy to invest, under normal circumstances, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in that investment or industry. As the Fund must invest at least 99.5 percent of assets in government securities to comply with Rule 2a-7 of the 1940 Act, please explain to us why the name is not misleading within the meaning of rule 35d-1(a)(2) or revise the Fund’s name by removing the term “Blockchain.” Further, given that the Fund’s disclosure describes the Fund’s shares as “blockchain-based,” but the official records for the Fund’s share ownership will be maintained by the Fund’s transfer agent, please explain why the term “Blockchain Enabled” is appropriate and not misleading in the Fund’s name under Section 35(d) of the 1940 Act or revise the Fund’s name by removing “Blockchain Enabled.” Response: Subsequent to the Trust’s Form N-1A filing on September 3, 2019, the Trust has determined to rename the Fund to the “Franklin Tokenized U.S. Government Money Fund.” For the reasons discussed more fully below, however, the Trust respectfully asserts that neither the Fund’s former name nor its proposed new name are subject to the provisions of Rule 35d-1, as both the former name and the proposed new name describes an operational feature of the Fund, rather than suggesting a focus in “a particular type of investment or investments.” Moreover, the Trust respectfully asserts that the Fund’s former name and the proposed new name is not otherwise “materially deceptive or misleading.” [Dechert LLP Logo] Ms. Karen Rossotto U.S. Securities and Exchange Commission March 25, 2020 Page 3 Section 35(d) of the 1940 Act makes it unlawful for “any registered investment company to adopt as a part of the name or title of such company, or of any securities of which it is the issuer, any word or words that the Commission finds are materially deceptive or misleading.” Section 35(d) authorizes the Commission to define any names or titles as being materially deceptive or misleading under that section by rule, regulation, or order. The Commission adopted Rule 35d-1 under the authority of this section. Rule 35d-1(a)(2) makes any name of a fund “materially deceptive and misleading” for purposes of Section 35(d) if the name “suggest[s] that the fund focuses its investments in a particular type of investment or investments,” unless the fund, among other things, adopts a policy to invest, under normal circumstances, at least 80% of the fund’s net assets plus borrowings for investment purposes in the types of investments suggested by the fund’s name. Historically, the SEC and Staff have distinguished between fund names that have suggested a focus in a particular type of investment or investments and fund names with other meanings, including fund names that connote a particular type of investment strategy (e.g., “income”) or a particular type of use case (e.g., “retirement”). For example, the SEC has stated that Rule 35d-1 “does not apply to fund names that incorporate terms … that connote types of investment strategies as opposed to types of investments.”1 Similarly, the Staff echoed this point by noting that Rule 35d-1 would not apply to a term that suggests an investment objective or strategy rather than a type of investment.2 Ultimately, in determining whether a particular name is misleading, the SEC stated that the Staff “will consider whether the name would lead a reasonable investor to conclude that the company invests in a manner that is inconsistent with the company’s intended investments or the risks of those investments.” 1 See Investment Company Names, Investment Company Act Release No. 24828 (Jan. 17, 2001). 2 See Frequently Asked Questions about Rule 35d-1 (Investment Company Names) (Dec. 4, 2001) (“Rule 35d-1 would not apply to the use of the term ‘income’ where that term suggests an investment objective or strategy rather than a type of investment.”). [Dechert LLP Logo] Ms. Karen Rossotto U.S. Securities and Exchange Commission March 25, 2020 Page 4 The Trust respectfully submits that the term “tokenized” is a widely used and understood term to describe assets recorded on a blockchain or distributed ledger, and does not reasonably suggest a focus in a particular type of investment or industry. Rather, the Trust believes that the term “tokenized” suggests the operational use of a technology that has the potential to benefit Fund investors. While, as the Staff notes, the Fund’s shares will not be solely recorded on a blockchain ledger, the secondary recording of Fund shares on a blockchain ledger would nevertheless represent a novel step forward for the mutual fund industry. The Trust believes that Fund investors may benefit from the use of this new technology and has included appropriate disclosure in the Fund’s prospectus and statement of additional information to describe how the Fund’s operations will be affected by the use of blockchain technology. The Trust believes that, similar to a fund name that connotes a particular type of investment strategy or a particular type of use case, a fund name that connotes an operational feature of a fund is not within the purview of Rule 35d-1. Accordingly, the Trust does not believe that the term “tokenized” implicates Rule 35d-1(a)(2). Moreover, the Trust does not believe that inclusion of the term “tokenized” in the Fund’s name is otherwise materially deceptive or misleading in contravention of Section 35(d). The Fund’s prospectus explicitly states that the Fund “intends to be a ‘government money market fund,’ as such term is defined in or interpreted under Rule 2a-7 under the [1940 Act],” and that the secondary recording of Fund shares on the blockchain will not affect the Fund’s investments. The Fund will invest, consistent with Rule 2a-7 under the 1940 Act, at least 99.5% of its total assets in government securities, cash and repurchase agreements collateralized fully by government securities or cash. Given the foregoing, the Trust believes that no reasonable investor would conclude that the Fund invests in a manner that is inconsistent with a U.S. government money market fund subject to the maturity, quality, liquidity and diversification requirements of Rule 2a-7. Moreover, for the reasons discussed above and notwithstanding that blockchain technology would be used to record share ownership as a secondary method of recording share ownership, the Trust believes that inclusion of the term “tokenized” in the Fund’s name is important for shareholders to understand a unique operational feature of the Fund and is therefore appropriate and not misleading under the circumstances. Prospectus – Fees and Expenses of the Fund 5. Comment: The staff notes the Fund will maintain two sets of records. The Fund’s transfer agent will maintain the official record of share ownership, while an electronic distributed ledger (hereinafter, “blockchain”) of transaction data will also be kept. Please supplementally explain if the Fund will incur expenses associated with the Fund’s secondary method of recording share transactions on the blockchain. If so, please explain who pays these costs. If the Fund pays these costs, explain if they are included in the line item “Other Expenses” in the Fund’s fee table. [Dechert LLP Logo] Ms. Karen Rossotto U.S. Securities and Exchange Commission March 25, 2020 Page 5 Response: The Trust confirms that the Fund will not be responsible for any expenses associated with the secondary recording of share transactions on the Stellar network. These expenses will initially be the responsibility of the Fund’s investment manager, Franklin Advisers, Inc. (“Advisers”), or its affiliates. However, investors that purchase and redeem Fund shares through the App may be directly responsible for certain account fees and other expenses, as described in the App’s account application and/or user agreement, which may be used to pay for expenses associated with the secondary recording of share transactions on the Stellar network. In the future, to the extent the Fund will incur these expenses, the Trust confirms that they will be included in the “Other Expenses” line item in the Fund’s fee table. Prospectus – Principal Investment Strategies 6. Comment: The sixth paragraph on page 2, titled Blockchain-based shares; no investment in cryptocurrencies, discloses the Fund’s recording of transactions on the blockchain. Please add a heading to this paragraph to clarify that blockchain is an operational aspect of the Fund (accordingly, the heading should distinguish this section from the immediately preceding paragraphs disclosed under the heading “The Fund invests in:”). In the heading, please avoid the term “Blockchain-based shares” as it could suggest investment in cryptocurrency or blockchain-based companies and may be misleading to investors. Within this paragraph, please disclose: a. A plain English explanation of blockchain technology. Consider providing a cross-reference to the more detailed explanation of the blockchain later in the registration statement. b. That the secondary recording of Fund shares on the blockchain does not affect the investments the Fund will make. c. That the Fund is a money market fund, and accordingly will invest in government securities consistent with Rule 2a-7 of the 1940 Act. d. That the Fund expects the operational differences of this Fund will have little, if any, effect on Fund shareholders currently. [Dechert LLP Logo] Ms. Karen Rossotto U.S. Securities and Exchange Commission March 25, 2020 Page 6 Furthermore, the disclosure in this paragraph states, “[a]lthough the Fund’s transfer agent will maintain the official record of share ownership in book-entry form, shares will also be recorded on the Stellar network, an electronic distributed ledger.” e. Please clarify if the transfer agent will maintain both the book-entry and electronic ledger or if a third party will keep the electronic ledger. f. If a third party is involved, please supplementally explain if the Fund will incur additional costs, how those costs will be disclosed to shareholders, and whether the third party contract will be approved by the Board. Response: The Trust has revised the prospectus to incorporate the Staff’s comments. In addition, with respect to Staff Comment No. 6(e), please note that, at initial launch, the Fund’s transfer agent, Franklin Templeton Investor Services, LLC (the “Transfer Agent”), will maintain the official record of share ownership in book-entry form, and an affiliate of the Transfer Agent will coordinate with the Transfer Agent to record all transactions in Fund shares on the Stellar network. With respect to Staff Comment No. 6(f), please see the Trust’s response to Staff Comment No. 5. In addition, although the Board will approve the Transfer Agent and Shareholder Services Agreement with the Transfer Agent, the Board is not expected to approve the agreement with the Transfer Agent’s affiliate, as the Trust is not expected to be a party to that agreement. 7. Comment: The seventh paragraph on page 2 states: At this time, shares of the Fund are not currently available for purchase, sale or transfer from one shareholder to another shareholder (or potential shareholder) (“peer-to-peer”) on the blockchain or in any secondary trading market. The Fund’s investment manager believes that blockchain-based shares will provide increased transparency to Fund shareholders and may, in the future, permit reduced settlement times and provide other benefits to Fund shareholders. a. With regard to the first phrase of the second sentence, if the Fund at launch will have “increased trans