Correspondence 0001193125-24-196240 from Harbor ETF Trust (CIK 0001860434)
Harbor ETF Trust (CIK 0001860434)
Date: Aug. 7, 2024 · CIK: 0001860434 · Accession: 0001193125-24-196240
AI Filing Summary & Sentiment
File numbers found in text: 333-255884, 811-23661
Letter
One International Place, 40th Floor
100 Oliver Street
Boston, MA 02110-2605
+1 617 728 7100 Main
+1 617 426 6567 Fax
www.dechert.com
STEPHANIE CAPISTRON
Stephanie.Capistron@dechert.com
+1 617 728 7127 Direct
+1 617 275 8364 Fax
August 7, 2024
VIA ELECTRONIC TRANSMISSION
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC
Re: Harbor ETF Trust (the “Registrant”)
Post-Effective Amendment No. 51
File Nos. 333-255884; 811-23661
Ladies and Gentlemen:
This correspondence is being filed for the purpose of responding to comments of the staff of the Securities and Exchange Commission (the “Staff”) provided by Ms. Alison White of the Division of Investment Management with respect to Post-Effective Amendment (“PEA”) No. 51 to the Registrant’s registration statement on Form N-1A.
PEA No. 51 was filed for the purpose of registering shares of Harbor AlphaEdge Large Cap Value ETF and Harbor AlphaEdge Next Generation REITs ETF (each, a “Fund” and, collectively, the “Funds”), new series of the Registrant.
Set forth below are the Staff’s verbal comments together with the Registrant’s responses. Terms used but not defined herein have the same meaning as in PEA No. 51.
COMMENT 1:
(Principal Investment Strategy)
Please provide a copy of each Fund’s index methodology and a list of the top 10 proposed constituents, including sector and geographic allocations.
Response:
The Registrant has filed the white papers as exhibits to this letter. The Registrant has attached the sample lists of the top 10 proposed constituents, including sector and geographic allocations, in Appendix A to this letter.
August 7, 2024
Page
COMMENT 2:
(Fee and Expense Example Tables)
Please provide the completed fee and expense example tables.
Response:
The Registrant has attached the completed “Annual Fund Operating Expenses” and “Expense Example” tables in Appendix B to this letter.
COMMENT 3:
(Cover Page – Fund Name)
Because it is not clear from the Fund’s name that it is an index fund, please either include a separate 80% policy with respect to the term “Large Cap Value” in the Fund’s name or add the term “Index” after “Large Cap Value.”
Response:
As disclosed in the Fund’s “Principal Investment Strategy” section, “[t]he Fund invests at least 80% of its total assets in securities that are included in the Index.” The Registrant confirms that the Fund’s respective underlying Index is composed entirely of securities that are consistent with the types of investments suggested by the Fund’s name (i.e., large cap securities). Therefore, because the Fund has a policy to invest at least 80% of its assets in the securities included in its underlying Index, the Registrant submits that the Fund’s investment strategy meets the requirements of Rule 35d-1, as amended (“Rule 35d-1”), under the Investment Company Act of 1940, as amended (the “1940 Act”). The Registrant notes that there is no requirement that an index-tracking fund includes the term “Index” in the fund’s name to comply with Rule 35d-1. Further, the Registrant does not believe that it must include the term “Index” in the Fund’s name in order to be able to satisfy the Rule 35d-1 requirements by investing 80% of its assets in Index constituents (provided that the Index consists entirely of securities suggested by the Fund’s name). Accordingly, the Registrant respectfully declines to make the proposed change.
August 7, 2024
Page
The Registrant further notes that the amendments to Rule 35d-1 that expanded the scope of the rule to include the term “value” have a compliance date of December 11, 2025 for entities with net assets of $1 billion or more.1 Therefore, the Registrant respectfully notes that the term “value” in the Fund’s name does not currently implicate Rule 35d-1. Nonetheless, the Registrant believes that the Index consists entirely of securities with “value” characteristics.
COMMENT 4:
(Cover Page – Fund Name)
Because it is not clear from the Fund’s name that it is an index fund, please either include a separate 80% policy with respect to the term “Next Generation REITs” in the Fund’s name or add the term “Index” after “Next Generation REITs.”
Response:
Please see the Registrant’s response to Comment 3 above. The Registrant confirms that the Index consists entirely of “Next Generation REITs.”
COMMENT 5:
(Principal Investment Strategy)
The Funds’ Principal Investment Strategies state that the Index Provider’s scoring methodology includes “assess[ing] companies across five factor composites: Capital Deployment, Momentum, Quality, Risk and Valuation.” Please explain in the Additional Information section of the filing how each of the composites is measured.
1 See Securities and Exchange Commission Rel. No. 33-11238A (Oct. 24, 2023).
August 7, 2024
Page
Response:
The Registrant notes that each of the five composites is measured using several different factors. Accordingly, the Item 9 disclosure indicates as follows: “Each Factor Composite reflects a combination of various relevant factors (such as price-to-earnings ratio and price-to-book ratio, among others, for Valuation).”
The Registrant does not believe that it is necessary or practicable to list all of the factors incorporated in the composites. As such, the Registrant respectfully declines to revise the disclosure.
COMMENT 6:
(Principal Investment Strategy)
The Funds’ Principal Investment Strategies state that the “weighting of the factors to produce a security’s overall score is determined in accordance with the Index Provider’s ‘regime model,’ which is used to determine the prevailing business cycle regime.” Please provide examples of what is meant by “business cycle regime.”
Response:
The Registrant has incorporated this comment by revising the disclosure as follows:
“The weighting of the factors to produce a security’s overall score is determined in accordance with the Index Provider’s “regime model,” which is used to determine the prevailing business cycle regime. The business cycle regime is used to identify the current environment for riskier assets by evaluating various economic conditions (e.g. growth, liquidity, inflation, sentiment).”
COMMENT 7:
(Principal Investment Strategy)
Please revise the Fund’s Principal Investment Strategies to more clearly explain the index construction parameters and relationships between composites, scoring models, information ratios, and optimizations. Clearly explain what each is, what information/analyses it relies on, and how it factors into the overall construction of a large cap value index.
August 7, 2024
Page
Response:
The Registrant has revised the disclosure as set forth in Appendix C.
COMMENT 8:
(Principal Investment Strategy)
Please clarify in plain English the “point” of the information ratio used in the Index Provider’s proprietary scoring model. That is, what does the Advisor believe that it indicates.
Response:
The Registrant has revised the disclosure as set forth in Appendix C.
COMMENT 9:
(Principal Investment Strategy)
Given that the Index Provider is also the Funds’ Advisor, please remove the statements throughout the filings that each Fund can concentrate to the same extent as the index it tracks. The Staff does not believe that the facts fall within the First Australia Fund No-Action Letter (July 29, 1999) (“First Australia”).
Response:
While the Funds do not intend to rely on First Australia for the purpose of their concentration policies, the Registrant believes that the Funds’ concentration policies are consistent with Section 8(b)(1) of the 1940 Act, and applicable Staff interpretations of such section, including in First Australia. Section 8(b)(1) requires a fund to recite in its registration statement, among other things, whether it reserves the freedom to concentrate investments in a particular industry or group of industries (a fund is concentrated if it invests more than 25% of the value of its assets in any one industry2). If such freedom is reserved, Section
2 See Investment Company Act Rel. No. 9011 (Oct. 30, 1975).
August 7, 2024
Page
8(b)(1) requires the fund to include a statement briefly indicating, insofar as is practicable, the extent to which the fund intends to concentrate its investments.3 First Australia further explains, in pertinent part, that:
To satisfy this standard, we believe that a fund must clearly describe, in as much detail as is practicable, the circumstances under which the fund may concentrate its investmentsby setting clear, objective limitations on the manager’s ability to freely concentrate in an industry. (footnotes omitted).
The Registrant believes that the Funds’ concentration policies are consistent with the guidance referenced above. Given that the Funds are index-tracking, passively managed ETFs, the Advisor, in its capacity as such, has no discretion to make concentration determinations for the Funds (except to the extent necessary to track the Indexes). In addition, even though the Index Provider is also the Advisor, the personnel of the Advisor who are responsible for the day-to-day portfolio management of the Funds have no discretion over the construction of the Indexes. The Indexes are rules-based and have been designed to operate strictly in accordance with their stated methodologies. The Funds’ portfolio managers have no authority to change the Indexes’ methodology. The Indexes are calculated and published by Solactive AG, an independent third party. The Advisor has implemented and maintains an information barrier around personnel who have access to information concerning changes and adjustments to the Indexes, which is intended to prevent any inappropriate dissemination of Index information to Advisor personnel that have portfolio management responsibilities for the Funds.
We further note that the Funds’ concentration policies are similar to those of other index-tracking ETFs for which the advisor also serves as the index provider. For the foregoing reasons, we believe that the Funds’ concentration policies comply with Section 8(b)(1) of the 1940 Act.
Id.
August 7, 2024
Page
While the Registrant respectfully declines to change its concentration policy, the Registrant has made the certain changes to each Fund’s disclosure to emphasize the lack of freedom to concentrate. In particular, the Registrant has revised each Fund’s Item 4 strategy disclosure as follows:
The Fund uses an indexing investment approach to attempt to approximate, before fees and expenses, the investment performance of the Index. The Fund generally will use a replication strategy, which means that the Fund seeks to hold each security found in the Index in approximately the same proportion as represented in the Index itself. However, the Fund may under certain circumstances use a representative sampling strategy, which means the Fund would invest in a representative sample of securities with an investment profile, collectively, similar to that of the Index. The Fund does not take temporary defensive positions when markets decline or appear overvalued. The Fund may also invest in cash and cash equivalents, including shares of money market funds.
The Registrant has deleted the following Item 9 disclosure:
“The Advisor may also, in order to comply with the tax diversification requirements of the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”), temporarily invest a Fund’s assets in securities not included in the Index that are expected to be highly correlated with the securities included in the Index.”
In addition, the Registrant has added the following disclosure to Item 9 under the description of each Index:
August 7, 2024
Page
“The personnel of the Advisor who are responsible for the day-to-day portfolio management of the Fund have no discretion over the construction of the Index. The Advisor has implemented and maintains an information barrier around personnel who have access to information concerning changes and adjustments to the Index.”
COMMENT 10:
(Principal Investment Strategy – Next Generation REITs)
Please consider disclosing the size of the Index Universe.
Response:
The Registrant has incorporated this comment by adding the following disclosure:
“As of June 30, 2024, the Index Universe consisted of 57 companies.”
COMMENT 11:
(Principal Investment Strategy – Next Generation REITs)
In Item 9, please provide additional information about each category of REITS listed in the Fund’s Principal Investment Strategy. The added disclosure should address the types of business activities or property activities associated with each REIT sub-industry classification, its particular risks, and what makes it “next generation.”
Response:
The Registrant has revised the disclosure as set forth in Appendix C.
COMMENT 12:
(Principal Investment Strategy – Next Generation REITs)
In the Item 4 disclosure, discuss if the index construction process includes any restrictions on REIT sub-industry classification categories. If it does, please revise the Item 4 disclosure to discuss.
August 7, 2024
Page
Response:
The Registrant has incorporated this comment by revising the disclosure to include the following statement:
“At the time of reconstitution, the hotel and motel equity REITs sub-industry is capped at 15% of the Index.”
COMMENT 13:
(Investment Objective)
Consider disclosing the number of days of notice that shareholders would receive if the Board were to change the Funds’ Investment Objectives without shareholder approval.
Response:
The Registrant confirms that shareholders will be notified of changes to the Funds’ Investment Objectives. The Registrant notes that Form N-1A requires disclosure of whether a fund’s investment objective may be changed without shareholder approval but does not require disclosure of any notice requirement or notice period. For this reason, the Registrant respectfully declines to make any changes in response to this comment.
COMMENT 14:
(Indexing and Index Description)
If there is a written licensing arrangement for the Funds to use the Index, please file it as exhibit to registration statement.
Response:
The Registrant confirms that it will file the licensing agreement with the registration statement.
COMMENT 15:
(Principal Investments – Equity Securities)
If the Fund will invest principally in preferred stocks, please add this to the Item 4 strategy and risk disclosure.
August 7, 2024
Page
Response:
The Registrant confirms that it will not invest principally in preferred stocks. The Registrant has revised the Item 9 disclosure accordingly.
COMMENT 16:
(SAI - Additional Policies and Investment Techniques)
Given that the Funds are index-tracking ETFs, is the disclosure that a “Fund may temporarily depart from its normal investment policies and strategies” applicable? Please advise or revise.
Response:
The Registrant notes that the disclosure referenced states that “[a] Fund may temporarily depart from its normal investment policies and strategies when the Fund’s advisor believes that doing so is in the Fund’s best interest, so long as the strategy or policy employed is consistent with the Fund’s investment objective.” (emphasis added) The Registrant notes that this is distinct from a temporary defensive position where a Fund would temporarily depart from its investment objective. Instead, it refers to the Funds’ use of different investment strategies (e.g., investment in derivatives) to achieve its investment objective. Accordingly, the Registrant respectfully declines to make any changes to this disclosure.
COMMENT 17:
(SAI – Fundamental Investment Restrictions)
Please remove the statements throughout the filings that each Fund can concentrate
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CORRESP 1 filename1.htm CORRESP One International Place, 40th Floor 100 Oliver Street Boston, MA 02110-2605 +1 617 728 7100 Main +1 617 426 6567 Fax www.dechert.com STEPHANIE CAPISTRON Stephanie.Capistron@dechert.com +1 617 728 7127 Direct +1 617 275 8364 Fax August 7, 2024 VIA ELECTRONIC TRANSMISSION U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Re: Harbor ETF Trust (the “Registrant”) Post-Effective Amendment No. 51 File Nos. 333-255884; 811-23661 Ladies and Gentlemen: This correspondence is being filed for the purpose of responding to comments of the staff of the Securities and Exchange Commission (the “Staff”) provided by Ms. Alison White of the Division of Investment Management with respect to Post-Effective Amendment (“PEA”) No. 51 to the Registrant’s registration statement on Form N-1A. PEA No. 51 was filed for the purpose of registering shares of Harbor AlphaEdge Large Cap Value ETF and Harbor AlphaEdge Next Generation REITs ETF (each, a “Fund” and, collectively, the “Funds”), new series of the Registrant. Set forth below are the Staff’s verbal comments together with the Registrant’s responses. Terms used but not defined herein have the same meaning as in PEA No. 51. COMMENT 1: (Principal Investment Strategy) Please provide a copy of each Fund’s index methodology and a list of the top 10 proposed constituents, including sector and geographic allocations. Response: The Registrant has filed the white papers as exhibits to this letter. The Registrant has attached the sample lists of the top 10 proposed constituents, including sector and geographic allocations, in Appendix A to this letter. August 7, 2024 Page 2 COMMENT 2: (Fee and Expense Example Tables) Please provide the completed fee and expense example tables. Response: The Registrant has attached the completed “Annual Fund Operating Expenses” and “Expense Example” tables in Appendix B to this letter. COMMENT 3: (Cover Page – Fund Name) Because it is not clear from the Fund’s name that it is an index fund, please either include a separate 80% policy with respect to the term “Large Cap Value” in the Fund’s name or add the term “Index” after “Large Cap Value.” Response: As disclosed in the Fund’s “Principal Investment Strategy” section, “[t]he Fund invests at least 80% of its total assets in securities that are included in the Index.” The Registrant confirms that the Fund’s respective underlying Index is composed entirely of securities that are consistent with the types of investments suggested by the Fund’s name (i.e., large cap securities). Therefore, because the Fund has a policy to invest at least 80% of its assets in the securities included in its underlying Index, the Registrant submits that the Fund’s investment strategy meets the requirements of Rule 35d-1, as amended (“Rule 35d-1”), under the Investment Company Act of 1940, as amended (the “1940 Act”). The Registrant notes that there is no requirement that an index-tracking fund includes the term “Index” in the fund’s name to comply with Rule 35d-1. Further, the Registrant does not believe that it must include the term “Index” in the Fund’s name in order to be able to satisfy the Rule 35d-1 requirements by investing 80% of its assets in Index constituents (provided that the Index consists entirely of securities suggested by the Fund’s name). Accordingly, the Registrant respectfully declines to make the proposed change. August 7, 2024 Page 3 The Registrant further notes that the amendments to Rule 35d-1 that expanded the scope of the rule to include the term “value” have a compliance date of December 11, 2025 for entities with net assets of $1 billion or more.1 Therefore, the Registrant respectfully notes that the term “value” in the Fund’s name does not currently implicate Rule 35d-1. Nonetheless, the Registrant believes that the Index consists entirely of securities with “value” characteristics. COMMENT 4: (Cover Page – Fund Name) Because it is not clear from the Fund’s name that it is an index fund, please either include a separate 80% policy with respect to the term “Next Generation REITs” in the Fund’s name or add the term “Index” after “Next Generation REITs.” Response: Please see the Registrant’s response to Comment 3 above. The Registrant confirms that the Index consists entirely of “Next Generation REITs.” COMMENT 5: (Principal Investment Strategy) The Funds’ Principal Investment Strategies state that the Index Provider’s scoring methodology includes “assess[ing] companies across five factor composites: Capital Deployment, Momentum, Quality, Risk and Valuation.” Please explain in the Additional Information section of the filing how each of the composites is measured. 1 See Securities and Exchange Commission Rel. No. 33-11238A (Oct. 24, 2023). August 7, 2024 Page 4 Response: The Registrant notes that each of the five composites is measured using several different factors. Accordingly, the Item 9 disclosure indicates as follows: “Each Factor Composite reflects a combination of various relevant factors (such as price-to-earnings ratio and price-to-book ratio, among others, for Valuation).” The Registrant does not believe that it is necessary or practicable to list all of the factors incorporated in the composites. As such, the Registrant respectfully declines to revise the disclosure. COMMENT 6: (Principal Investment Strategy) The Funds’ Principal Investment Strategies state that the “weighting of the factors to produce a security’s overall score is determined in accordance with the Index Provider’s ‘regime model,’ which is used to determine the prevailing business cycle regime.” Please provide examples of what is meant by “business cycle regime.” Response: The Registrant has incorporated this comment by revising the disclosure as follows: “The weighting of the factors to produce a security’s overall score is determined in accordance with the Index Provider’s “regime model,” which is used to determine the prevailing business cycle regime. The business cycle regime is used to identify the current environment for riskier assets by evaluating various economic conditions (e.g. growth, liquidity, inflation, sentiment).” COMMENT 7: (Principal Investment Strategy) Please revise the Fund’s Principal Investment Strategies to more clearly explain the index construction parameters and relationships between composites, scoring models, information ratios, and optimizations. Clearly explain what each is, what information/analyses it relies on, and how it factors into the overall construction of a large cap value index. August 7, 2024 Page 5 Response: The Registrant has revised the disclosure as set forth in Appendix C. COMMENT 8: (Principal Investment Strategy) Please clarify in plain English the “point” of the information ratio used in the Index Provider’s proprietary scoring model. That is, what does the Advisor believe that it indicates. Response: The Registrant has revised the disclosure as set forth in Appendix C. COMMENT 9: (Principal Investment Strategy) Given that the Index Provider is also the Funds’ Advisor, please remove the statements throughout the filings that each Fund can concentrate to the same extent as the index it tracks. The Staff does not believe that the facts fall within the First Australia Fund No-Action Letter (July 29, 1999) (“First Australia”). Response: While the Funds do not intend to rely on First Australia for the purpose of their concentration policies, the Registrant believes that the Funds’ concentration policies are consistent with Section 8(b)(1) of the 1940 Act, and applicable Staff interpretations of such section, including in First Australia. Section 8(b)(1) requires a fund to recite in its registration statement, among other things, whether it reserves the freedom to concentrate investments in a particular industry or group of industries (a fund is concentrated if it invests more than 25% of the value of its assets in any one industry2). If such freedom is reserved, Section 2 See Investment Company Act Rel. No. 9011 (Oct. 30, 1975). August 7, 2024 Page 6 8(b)(1) requires the fund to include a statement briefly indicating, insofar as is practicable, the extent to which the fund intends to concentrate its investments.3 First Australia further explains, in pertinent part, that: To satisfy this standard, we believe that a fund must clearly describe, in as much detail as is practicable, the circumstances under which the fund may concentrate its investmentsby setting clear, objective limitations on the manager’s ability to freely concentrate in an industry. (footnotes omitted). The Registrant believes that the Funds’ concentration policies are consistent with the guidance referenced above. Given that the Funds are index-tracking, passively managed ETFs, the Advisor, in its capacity as such, has no discretion to make concentration determinations for the Funds (except to the extent necessary to track the Indexes). In addition, even though the Index Provider is also the Advisor, the personnel of the Advisor who are responsible for the day-to-day portfolio management of the Funds have no discretion over the construction of the Indexes. The Indexes are rules-based and have been designed to operate strictly in accordance with their stated methodologies. The Funds’ portfolio managers have no authority to change the Indexes’ methodology. The Indexes are calculated and published by Solactive AG, an independent third party. The Advisor has implemented and maintains an information barrier around personnel who have access to information concerning changes and adjustments to the Indexes, which is intended to prevent any inappropriate dissemination of Index information to Advisor personnel that have portfolio management responsibilities for the Funds. We further note that the Funds’ concentration policies are similar to those of other index-tracking ETFs for which the advisor also serves as the index provider. For the foregoing reasons, we believe that the Funds’ concentration policies comply with Section 8(b)(1) of the 1940 Act. 3 Id. August 7, 2024 Page 7 While the Registrant respectfully declines to change its concentration policy, the Registrant has made the certain changes to each Fund’s disclosure to emphasize the lack of freedom to concentrate. In particular, the Registrant has revised each Fund’s Item 4 strategy disclosure as follows: The Fund uses an indexing investment approach to attempt to approximate, before fees and expenses, the investment performance of the Index. The Fund generally will use a replication strategy, which means that the Fund seeks to hold each security found in the Index in approximately the same proportion as represented in the Index itself. However, the Fund may under certain circumstances use a representative sampling strategy, which means the Fund would invest in a representative sample of securities with an investment profile, collectively, similar to that of the Index. The Fund does not take temporary defensive positions when markets decline or appear overvalued. The Fund may also invest in cash and cash equivalents, including shares of money market funds. The Registrant has deleted the following Item 9 disclosure: “The Advisor may also, in order to comply with the tax diversification requirements of the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”), temporarily invest a Fund’s assets in securities not included in the Index that are expected to be highly correlated with the securities included in the Index.” In addition, the Registrant has added the following disclosure to Item 9 under the description of each Index: August 7, 2024 Page 8 “The personnel of the Advisor who are responsible for the day-to-day portfolio management of the Fund have no discretion over the construction of the Index. The Advisor has implemented and maintains an information barrier around personnel who have access to information concerning changes and adjustments to the Index.” COMMENT 10: (Principal Investment Strategy – Next Generation REITs) Please consider disclosing the size of the Index Universe. Response: The Registrant has incorporated this comment by adding the following disclosure: “As of June 30, 2024, the Index Universe consisted of 57 companies.” COMMENT 11: (Principal Investment Strategy – Next Generation REITs) In Item 9, please provide additional information about each category of REITS listed in the Fund’s Principal Investment Strategy. The added disclosure should address the types of business activities or property activities associated with each REIT sub-industry classification, its particular risks, and what makes it “next generation.” Response: The Registrant has revised the disclosure as set forth in Appendix C. COMMENT 12: (Principal Investment Strategy – Next Generation REITs) In the Item 4 disclosure, discuss if the index construction process includes any restrictions on REIT sub-industry classification categories. If it does, please revise the Item 4 disclosure to discuss. August 7, 2024 Page 9 Response: The Registrant has incorporated this comment by revising the disclosure to include the following statement: “At the time of reconstitution, the hotel and motel equity REITs sub-industry is capped at 15% of the Index.” COMMENT 13: (Investment Objective) Consider disclosing the number of days of notice that shareholders would receive if the Board were to change the Funds’ Investment Objectives without shareholder approval. Response: The Registrant confirms that shareholders will be notified of changes to the Funds’ Investment Objectives. The Registrant notes that Form N-1A requires disclosure of whether a fund’s investment objective may be changed without shareholder approval but does not require disclosure of any notice requirement or notice period. For this reason, the Registrant respectfully declines to make any changes in response to this comment. COMMENT 14: (Indexing and Index Description) If there is a written licensing arrangement for the Funds to use the Index, please file it as exhibit to registration statement. Response: The Registrant confirms that it will file the licensing agreement with the registration statement. COMMENT 15: (Principal Investments – Equity Securities) If the Fund will invest principally in preferred stocks, please add this to the Item 4 strategy and risk disclosure. August 7, 2024 Page 10 Response: The Registrant confirms that it will not invest principally in preferred stocks. The Registrant has revised the Item 9 disclosure accordingly. COMMENT 16: (SAI - Additional Policies and Investment Techniques) Given that the Funds are index-tracking ETFs, is the disclosure that a “Fund may temporarily depart from its normal investment policies and strategies” applicable? Please advise or revise. Response: The Registrant notes that the disclosure referenced states that “[a] Fund may temporarily depart from its normal investment policies and strategies when the Fund’s advisor believes that doing so is in the Fund’s best interest, so long as the strategy or policy employed is consistent with the Fund’s investment objective.” (emphasis added) The Registrant notes that this is distinct from a temporary defensive position where a Fund would temporarily depart from its investment objective. Instead, it refers to the Funds’ use of different investment strategies (e.g., investment in derivatives) to achieve its investment objective. Accordingly, the Registrant respectfully declines to make any changes to this disclosure. COMMENT 17: (SAI – Fundamental Investment Restrictions) Please remove the statements throughout the filings that each Fund can concentrate