SEC Division of Trading and Markets no-action letter: WisdomTree Asia Local Debt Fund

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

DIVISION OF August 16,2011 TRADING AND MARKETS Mr. Jack P. Drogin, Esq.

Schiff Hardin LLP

1666 K StreetN.W., Suite 300

Washington, DC 20006
Re: WisdomTree Asia Local Debt Fund

File No. TP 11-16

Dear Mr. Drogin:
In your letter dated August 16, 2011, as supplemented by conversations with the staff ofthe Division ofTrading and Markets ("Staff'), you request on behalf of Wisdom Tree Trust (the "Trust") and the WisdomTree Asia Local Debt Fund (the "Fund") relief from Rule 10b￾17 under the Securities Exchange Act of 1934, as amended ("Exchange Act"). We have enclosed a photocopy of your letter. Each defined term in this letter has the same meaning as in your letter, unless we note otherwise. Response:
Rule 1 Ob-17, with certain exceptions, requires an issuer of a class of publicly traded securities to give notice of certain specified actions (for example, a dividend distribution) relating to such class of securities in accordance with Rule 1 Ob-17(b). On the basis of your representations and the facts presented, and without necessarily concurring in your analysis, particularly that the concerns that the Commission raised in adopting Rule 1 Ob-17 generally will not be implicated if exemptive relief is granted to the Trust because market participants will receive timely notification ofthe existence and timing of a pending distribution, the Commission hereby grants an exemption from the requirements of Rule 1 Ob-17 to the Trust with respect to transactions in the Shares. * This exemptive relief is subject to the following conditions:

• The Trust will comply with Rule 1 Ob-17 except for Rule 1 Ob-17(b)(1 )(v)(a) and (b);
  and
• The Trust will provide the information required by Rule lOb-17(b)(1)(v)(a) and (b) to
  the Exchange as soon as practicable before trading begins on the ex-dividend date, but We also note that timely compliance with Rule lOb-17(b)(1)(v)(a) and (b) would be impractical in light ofthe nature ofthe Trust. This is because it is not possible for the Trust to accurately project ten days in advance what dividend, if any, would be paid on a particular record date.

Mr. Jack P. Drogin, Esq.
Schiff Hardin LLP in no event later than the time when the Exchange last accepts information relating to distributions on the day before the ex-dividend date. This exemptive relief is subject to modification or revocation at any time the Commission or Staff determines that such action is necessary or appropriate in furtherance of the purposes of the Exchange Act. In addition, persons relying on this exemption are directed to the anti-fraud and anti-manipulation provisions ofthe federal securities laws, particularly
Section 1O(b) of the Exchange Act, and Rule lOb-5 thereunder. Responsibility for
compliance with these and any other applicable provisions ofthe federal securities laws must rest with the persons relying on this exemptive position. The Division expresses no view with respect to any other question that the proposed transactions may raise, including, but not limited to the adequacy ofthe disclosure concerning, and the applicability of other federal or state laws to, the proposed transactions. F or the Commission,

by the Division ofTrading and Markets,

pursuant to delegated authority,

~~~ Assistant Director
Attachment

1666 K STREET NW, SUITE 300 ttScHIFFHARDINLlP WASHINGlON, DC 20006 t 202.778.6400 Jack P. Drogln f 202.778.6460 202-778-6422 jdrogln@schlffhardln.com www.schiffhardin.com Josephine J. Tao Assistant Director Division ofTrading and Markets 100 F Street, N .E. Washington, DC 20549 Re:Request of Wisdom Tree Trust and WisdomTree Asia Local Debt Fund an Actively-Managed Fund for Exemptive Relief from Rule 1 Ob-17 under the Securities Exchange Act of 1934 Dear Ms. Tao:
SUMMARY OF REQUEST FOR RELIEF
We are writing on behalf ofthe WisdomTree Trust ("Trust") and the WisdomTree Asia Local Debt Fund (the "Fund"), a series ofthe Trust described herein. The Trust and the Fund hereby request from the staff of the Division ofTrading and Markets ("Staff") ofthe Securities and Exchange Commission ("Commission"), exemptive relief from Rule 10b-17 under the Securities Exchange Act of 1934 (the "Exchange Act,,).l The Fund is an exchange traded fund organized as an open-end management investment company (an "ETF''). J The shares ofthe Fund ("Shares") are listed on NYSE Area, Inc. (the "Listing Exchange"), as described herein, pursuant to a proposed rule change by NYSE Area, Inc. that was approved by the Commission pursuant to
Section 19(b) of the Exchange Act. See Securities Exchange Act Release No. 63919 (February 16, 2011). In
addition, the Commission granted the requested relief to the Trust from the application of certain sections of the Investment Company Act of 1940 and the rules promulgated thereunder (see ReI. No. IC-28471 (October 27, 2008». In the future, the Trust may detennine to list Shares on a market other than the Listing Exchange (each such market, a "Market"). Ifthe Trust lists Shares on a Market other than the Listing Exchange, Shares will be listed in accordance with exchange listing standards that are, or will become, effective pursuant to Section 19(b) of the Exchange Act. If the Shares also trade on a Market pursuant to unlisted trading privileges, such trading will be conducted pursuant to self-regulatory organization rules that have become effective pursuant to Exchange Act
Section 19(b).
CHICAGO I WASHINGTON I NEW YORK I LAKE FOREST I ATLANTA I SAN FRANCISCO

ttSCHIFF HARDINLLP
Josephine J. Tao
Assistant Director
Division ofTrading and Markets

August 16,2011
The Fund is actively managed. WisdomTree Asset Management, Inc. ("Adviser"), the investment adviser to the Fund, selects securities and other instruments consistent with the Fund's investment objective and policies without reference to the composition of an index} The Staff, by delegated authority,3 has previously issued exemptive relief from Rule 1 Ob-17 to index￾based ETFs that are listed and traded on a national securities exchange and that meet certain other conditions (''Prior fudex ETFs,,).4 The Staff also has issued exemptive relief from Rule 1 Ob-17 to non￾index-based or "actively managed" ETFs, including actively managed ETFs issued by the Trust, that are listed and traded on a national securities exchange and that meet certain other conditions (the "Prior Actively Managed ETFs,,).5 Prior fudex ETFs and Prior Actively Managed ETFs may be referred to collectively as the "Prior ETFs." The Fund operates in a manner substantially identical to the Prior ETFs. 2 Mellon Capital Management ("Sub-Adviser") serves as the sub-adviser for the Fund. The Sub-Adviser is responsible for day-to-day management of the Fund and, as such, typically makes all decisions with respect to portfolio holdings. The Adviser has ongoing oversight responsibility. ALPS Distributors, Inc. ("Distributor") serves as the distributor ofthe Fund. 3 17 CFR 200.30-3(a)(9). 4 See Letter from Josephine Tao to Paul, Hastings, Janofsky and Walker LLP regarding Class Relief for Combination Exchange Traded Funds, dated June 27, 2007; Letter from James A. Brigagliano to Wilkie Farr & Gallagher, LLP regarding Class Relief for Fixed Income Exchange Traded Index Funds, dated April 9, 2007 (the "Fixed Income Class Relief Letter"); Letter from James A. Brigagliano to PowerShares Exchange Traded Fund Trust regarding Class Relief for Exchange Traded Index Funds; dated October 24, 2006; Letter from James A. Brigagliano to Claire P. McGrath, Vice President and Special Counsel, American Stock Exchange LLC, dated August 17, 2001. 5 See letter from Josephine Tao to Dechert LLP, regarding Claymore Exchange-Traded Fund Trust, dated May 24, 2011. See, also, Letter from Victoria L. Crane to Schiff Hardin LLP regarding the WisdomTree Dreyfus Commodity Currency Fund, an Actively-Managed EFT, dated September 2, 2010; Letter from Josephine Tao to Schiff Hardin LLP regarding WisdomTree Emerging Markets Local Debt Fund an Actively Managed ETF, dated August 6, 2010; Letter from Josephine Tao to Morgan, Lewis & Bockius LLP, regarding AdvisorShares Trust Actively-Managed ETFI WCMlBNY Mellon Focused Growth ADR. dated June 18,2010; Letter from Josephine Tao to WisdomTree Trust Real Return Actively Managed ETF, dated May 27, 2010; Letter from James A. BrigagJiano to Morgan, Lewis & Bockius LLP, regarding U.S. One Trust Actively-Managed ETF of ETFs, dated May 4,2010; Letter from Josephine Tao to Grail Advisors ETF Trust Actively Managed Fixed Income Exchange Traded Fund, dated January 27, 2010; Letter from
Josephine Tao to PIMCO ETF Trust Actively Managed Fixed Income Exchange Traded Fund, dated November 10,2009; Letter from Josephine Tao to Grail Advisors ETF Trust, dated April 30, 2009, as revised May 6, 2009; Letter from Josephine Tao to WisdomTree Asset Management, Inc. regarding the WisdomTree Dreyfus Emerging Currency Fund, dated January 7,2009; Letter from Josephine Tao to

-tSCHIFFHARDINlLP

Josephine J. Tao
Assistant Director
Division ofTrading and Markets
The letters for the Prior ETFs provided relief specific to the funds described therein and,therefore, the Trust and the Fund are not entitled to rely on those letters for relief. The Trust and the Fund note, however, that their proposal-the creation and issuance by an actively-managed investment company of shares that individually trade on a national securities exchange, but that can only be purchased from and redeemed with the issuing investment company in large aggregations - is no longer novel. For this reason, we do not believe that the Fund raises any significant new regulatory issues. In light of the many instances of exemptive relief previously issued, and based on discussions with the Staff, we hereby request exemptive relief from Rule 10b-17 under the facts and representations presented below. THE TRUST AND THE FUND The Trust was organized as a Delaware statutory trust on December 15, 2005 and is authorized to have multiple series or portfolios, one ofwhich is the subject of this request. The Trust is registered with the Commission under the Investment Company Act of 1940 ("1940-Act"),as an open-end management investment company and currently offers over fifty (50) separate investment portfolios. The Trust currently lists the Shares on NYSE Arca, Inc. ("Arca,,).6 The Trust offers and sells such shares pursuant to an amendment to its Registration Statement (Registration Nos. 811-21864 and 333-132380) on Form N-IA under the 1940 Act and the Securities Act of 1933 ("1933 Act"). The Fund's Registration Statement is effective and is dated February 14,2011, as revised on March 10,2011. The Fund seeks to provide investors with a high level ofreturn consisting ofboth income and capital appreciation. The Fund is designed to provide exposure to a broad range ofAsian government and corporate bonds through investment in both local currency (i&, Hong Kong Dollar, South Korean won) and U.S.-dollar denominated Fixed-Income Securities.7 The Fund sees to achieve its investment objective through direct and indirect investments in Fixed Income Securities issued by governments and corporations in Asian countries and intends to focus on the developing/emerging market economies in WisdomTree Asset Management, Inc. regarding WisdomTree Trust actively managed ETFs, dated May 9, 2008; Letter from James A. Brigagliano to Clifford Chance US LLP regarding PowerShares Actively Managed Exchange Traded Fund Trust, dated April 4, 2008; and Letter from Josephine J. Tao to Foley & Lardner LLP regarding Bear Steams Active ETF Trust, dated March 24, 2008. 6 The Fund was launched on March 17, 2011. 7 Fixed Income Securities include bonds, notes or other debt obligations, such as government or corporate bonds, denominated in local currencies or U.S. dollars, as well as issues denominated in local currencies that are issued by "supranational issuers," such as the European Investment Bank, International Bank for Reconstruction and Development, and the International Finance
Corporation, as well as development agencies supported by other national governments.

ttSCHIFF HARDINllP
Josephine J. Tao
Assistant Director
Division ofTrading and Markets
Asia, primarily China, Hong Kong, India, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand.8 While the Fund is permitted to invest in developed market economies, this is not a focus ofthe Fund. However, the Fund intends to invest in issuers in Australia and New Zealand.9 The Fund intends to invest at least 70% of its net assets in Fixed Income Securities.lo The Fund expects to invest up to 20% of its net assets in Asian corporate bonds.ll The Fund will invest in corporate bonds 8 As of July 31, 2011, the sovereign debt of Australia, China, Hong Kong, India, Malaysia, Singapore, South Korea, Taiwan, Thailand and New Zealand was rated investment grade by S&P's and Moody's. Sovereign debt of Indonesia and the Philippines was rated just below investment grade by S&P's and Moody's. See http://www.standardandpoors.com. http://www.moodys.com. 9 As ofJuly 22, 2011, the Fund's allocation ofinvestment by country was: (i) Australia (11.28%), (ii) South Korea (I 1.23%), (iii) Singapore (11.17%), (iv) Malaysia (11.04%), (v) Thailand, (11.00%), (vi) Indonesia (10.97%), (vii) New Zealand (5.84%), (viii) India (5.63%), (ix) China (5.54%), (x) Hong Kong (5.54%), (xi) Philippines (5.49%), and (xii) Taiwan (5.27%). Source: http://www.wisdomtree.comletfs/fund"details-fixed￾income.asp?etfid=77 . 10 The category of "Asian debt" includes both U.S. dollar-denominated debt and non-U.S. or "local" currency debt. Asian sovereign debt is typically issued in large par size and tends to be very liquid. Local currency￾denominated Asian debt issued by supra-national entities is also actively traded. Intra-day, executable price quotations on such instruments are available from major broker-dealer firms. Intra-day price information is available through subscription services, such as Bloomberg and Thomson Reuters, which can be accessed by Authorized Participants and other investors. As of July 29, 2011, the Fund's top ten investments in Fixed Income Securities was: (i) Dreyfus Institutional Preferred Money Market Fund (6.3% of Fund assets), (ii) Singapore 2.50% yield, maturity 1011112 (5.2%), (iii) Singapore 1.625% yield, maturity 4/1/13 (4.81%), (iv) U.S. Treasury Bil~ maturity 8/18111 (4.57%), (v) New Zealand 6.00% yield, maturity 4115/15 (4.31%), (vi) Philippines 4.95% yield, maturity 1115/21 (3.99%), (vii) Malaysia 3.434% yield, maturity 8115/14 (3.84%), (viii) Korea Treasury Bond 4.5% yield, maturity 3110115, (ix) Australia 6.25% yield, maturity 4115/15 (3.45%), and (x) Inter-American Development Bank 4.75% yield, maturity 1/10114 (3.23%). Source: http://www.wisdomtree.comletfslfund-holdings..:fixed-income.asp?etfid=T7 . II The size and liquidity of the market for emerging market bonds, including Asian corporate bonds, generally has been increasing. in recent years. Overall emerging market debt trading in 2010 was approximately $6.765 trillion, a 52% increase over the $4.45 trillion reported for 2009. (Source: Emerging Markets Traders
Association Press Release, March 22,2011.) Annual growth in the emerging East Asian corporate bond markets (comprising China, Hong Kong, Taiwan, Indonesia, South Korea, Malaysia, Philippines, Singapore, Thailand and Viet Nam) increased by 13.6% to $5.2 trillion for 20.10. China's local currency corporate bond market grew by 11.6% over 2009. Total local currency corporate bonds outstanding grew by 20.3% to reach $1.6 trillion in 2010.

~t SCHIFFHARDINUl'

Josephine J. Tao
Assistant Director
Division of Trading and Markets that the Adviser or the Sub-Adviser deems sufficiently liquid. Generally a corporate bond must have $200 million or more par amount outstanding and significant par value traded to be considered as an eligible investment. Economic and other conditions in Asia may, from time to time, lead to a decrease in the average par amount outstanding of bond issuances. Therefore, although the Fund does not intend to do so, the Fund may invest up to 5% of its net assets in corporate bonds, with less than $200 million par amount if(i) the Adviser or the Sub-Adviser deems such security to be sufficiently liquid based on its analysis ofthe market for such security (based on, for example, broker-dealer quotations or its analysis of the trading history ofthe security of other securities issued by the issuer), (ii) such investment is consistent with the Fund's goal of providing exposure to a broad range ofAsian government and corporation bonds; and (iii) such investment is deemed by the Adviser or Sub-Adviser to be in the best interest ofthe fund. The Fund will hold Fixed Income Securities ofat least 13 non-affiliated issuers. The Fund is designed to provide a broad-based, representative exposure to Asian government and corporate bonds and therefore will invest in both investment grade and non-investment grade securities in a manner designed to provide this exposure. The Fund expects that it will have 75% or more of its assets invested in investment grade securities, and no more than 25% ofits assets invested in non-investment grade securities. Because the Fund is designed to provide broad exposure to a broad range ofAsian government and corporate bonds, and because the debt ratings ofthe Asian governments and those corporate issuers will change from time to time, the exact percentage ofthe Fund's investments in investment grade and non-investment grade securities will change from time to time in response to economic events and changes to the credit ratings ofthe Asian government and corporate issuers. Within the non-investment grade category, some issuers and instruments are considered to be of lower credit quality and at higher risk ofdefault. In order to limit its exposure to these more speculative credits, the Fund will not invest more than 15% of its assets in securities rated B or below by Moody's, or equivalently ratoo by S&P or Fitch. The Fund will not .invest in non-U.S. equity securities. The Fund intends to invest in Money Market Securities in.order to help manage cash flows in and out of the fund, such as in connection with payment ofdividends or expenses, and to satisfy margin requirements, to provide collateral or to otherwise back investments in derivative instruments. For these purposes, "Money Market Securities" include: short-term, high quality obligations issued or guaranteed by the U.S. Treasury or the agencies or instrumentalities ofthe U.S. government,; short-term, high quality securities issued or guaranteed by
non-U.S. governments, agencies and instrumentalities; repurchase (Source: Asian Development Bank, Emerging Asian Bond Markets Register Strong Growth in 2010 (March 29, 2011). www.adh.org.) As of July 29, 2011, the Fund's investment allocation was: (i) Foreign bonds (80.98%), (ii) Gilt bonds (high grade corporate bonds) (8.11%), (iii) Money Market Securities (6.33%), and (iv) u.S. Treasury bills (4.57%). Source: http://www.wisdomtree.comletfslfund-detaiIs-fixed-income.asp?etfid=77.

ttScHIFF HARDINLLP
Josephine J. Tao

Assistant Director

Division of Trading and Markets

agreements backed by U.S. government securities, money market mutual funds; and deposits and other obligations ofU.S. and non-U.S. banks and financial institutions. All Money Market Securities acquired by the Fund will be rated investment grade, except that the FUnd may invest in unrated Money Market Securities that are deemed by the Adviser or Sub-Adviser to be ofcomparable quality to Money Market Securities rated investment grade. The Fund may use derivative instruments as part of its investment strategy. Examples ofderivative instruments include listed futures contracts,12 forward currency contracts, non-deliverable forward currency contracts, currency and interest rate swaps, currency options, options on futures contracts, swap agreement and credit-linked notes.13 The Fund's use ofderivative instruments (other than credit-linked notes) will be collateralized or otherwise backed by investments in short-term, high quality U.S. money market securities. The Fund expects that no more than 30% ofthe value ofthe Fund's net assets will be invested in derivative instruments. Such investments will be consistent with the Fund's investment objective and will not be used to enhance leverage. The Fund may invest in the securities ofother investment companies (including money market funds and exchange-traded funds). The Fund may invest up to an aggregate amount of 10% of its net assets in illiquid securities. Illiquid securities include securities subject to contractual or other restrictions on resale and other instruments that lack readily available markets. Share Issuance and Redemption The Fund typically will issue and redeem its Shares only in aggregations of 50,000 Shares or multiples thereof("Creation Units"), with a minimum market value of approximately $1,000,000. Shares are not individually redeemable; only Shares combined into Creation Units will be redeemable. The Fund's initial NAV of Shares was established at a level convenient for trading purposes.14 Purchasers of Creati9n Units are able to unbundle the Creation Units into the individual Shares comprising such Creation Unit. 12 The listed futures contract in which the Fund will invest may be listed on exchanges in the U.S. or either in Hong Kong or Singapore. 13 The Fund's investments in credit-linked notes will be limited to notes providing a broad exposure to Asian Fixed Income Securities. The Fund's overall investment in credit-linked notes will not exceed 25% of the Fund's assets. 14 The Trust believes that a convenient trading range is between $25 - $100 per Share, and the Trust reserves the right to declare a share split, or a reverse share split, ifthe trading price over time deviates significantly from such price range. Each shareholder will have one vote per Share.

ttSCHIFFHARDINLlP
Josephine J. Tao

Assistant Director

Division ofTrading and Markets

It is not expected that the Fund's Distributor will maintain a secondary market in individual Shares. The Listing Exchange has designated one or more member firms to act as a "Lead Market Maker" responsible for maintaining depth and quality oftrading in the Shares. The "Lead Market Maker" has 'quote and execution obligations and the responsibility for keeping tight spreads in the Shares. The Shares trade on the Listing Exchange in a manner similar to the shares ofthe Prior ETFs that are listed on Arca or another Market.ls , Shares are registered in book-entry form only; the Fund does not issue individual certificates for Shares. The Depository Trust Company ("DTC") serves as securities depository for Shares and DTC or its nominee is the record or registered owner of all outstanding Shares. Beneficial ownership ofShares is shown on the records ofDTC or a broker-dealer that is a participant in DTC (a "DTC Participant"). Beneficial owners ofShares ("Beneficial Owners") receive, at the Fund's expense, all ofthe statements, notices, and reports required under the 1940 Act and other applicable laws ("Required Materials"). The Trust understands that under existing industry practice, in the event the Trust requests any action of Beneficial Owners of Shares, or a Beneficial Owner desires to take any action that DTC, as the record owner of all outstanding Shares, is entitled to take, DTC would authorize the DTC Participants to take such action and that the DTC Participants would authorize the indirect participants and Beneficial Owners acting through such DTC Participants to take such action and would otherwise act upon the instructions ofBeneficial Owners owning Shares through them. As described above; the Trust recognizes DTC or its nominee as the record owner ofShares for all purposes; Accordingly, to exercise any rights of a holder cif Shares, each Beneficial Owner must rely upon the procedures of(1) DTC, (2) DTC Participants and (3) brokers, dealers, banks and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly, through which such Beneficial Owner holds its interest. Moreover, because the Trust's records reflect ownership of Shares by DTC only, the Trust will furnish the Required Materials to the DTC Participants who, in tum, will be responsible for distributing them to the Beneficial Owners. This arrangement is identical to that of all Prior ETFs. Disclosure Documents The primary disclosure documents with respect to the Shares is the Prospectus for the Fund. As with all investment company securities, the purchase of Shares in Creation Units from any Fund will be accompanied or preceded by a Prospectus. 16 IS The Trust expects that the trading of Shares on any other Market would be conducted in a similar manner. 16 The Trust notes that prospectus delivery is not required in certain instances, including purchases of

ttSCHIFF HARDINup

Josephine J. Tao
Assistant Director
Division ofTrading and Markets
August 16,2011
With respect to disclosure in the Prospectus concerning the non-redeemability ofShares, the Trust and the Fund observe the following policies: (I) the term "mutual fund" is not used except to compare and contrast the Trust or the Fund with conventional mutual funds; (2) the term "open-end management investment company" is used in the Prospectus only to the extent required by Form N-IA or other securities law requirements and this phrase is not be included on the prospectus cover page or summary; (3) the front cover page ofthe Prospectus and the prospectus summary includes a distinct paragraph or paragraphs setting forth the fact that Shares are listed on a Market and are individually non-redeemable; (4) the Prospectus discloses that the owners ofShares may acquire those Shares from the Fund, and tender those Shares for redemption to the Fund, only in Creation Units; and (5) the Prospectus clearly discloses that individual Shares prices may be below, abOve, or at the most recently calculated NAV. REQUEST FOR RELIEF The Trust and the Fund request that the Staff grant exemptive relief from Exchange Act Rule 1 Ob-17. As noted above, this requested relief is substantially similar to relief granted to the"Prior ETFs currently trading on a Market and to the other series ofthe TruSt. 17 Rule 1 Ob-17 requires an issuer of a class of publicly traded securities to give notice of certain specified actions (e.g., dividends, stock splits, rights offerings) relating to such class of securities in accordance with Rule 1 Ob-17(b). Specifically, Rule 1 Ob-17(b )(l)(v)(a-b) requires such advance notice to specify (a) for cash distributions, the amount of cash to be paid or distributed per share,ls and (b) for in-kind distributions, the amount ofthe security outstanding immediately prior to and immediately following the dividend or distribution and the rate of such dividend or distribution. Paragraph (c) ofthe Rule, however, states that the Rule shall not apply to redeemable securities issued by open-end investment companies and Shares by an investor who has previously been delivered a prospectus (until such prospectus is supplemented or otherwise updated) and unsolicited brokers' transactions in Shares (pursuant to Section 4(4) ofthe 1933 Act). Also, firms that do incur a prospectus-delivery obligation with respect to Shares will be reminded that under Securities Act Rule 153, a prospectus-delivery obligation under Section 5(bX2) of the Securities Act owed to a member of the Market in connection with a sale on such Market, is satisfied by the fact that the Prospectus are available at such Market upon request The Prospectus also will note that the prospectus delivery:mechanism provided in Rule 153 is only available with respect to transactions on the Market. 17 See notes 4 and 5, supra. IS The rule permits a reasonable approximation ofthe per share distribution to be provided if exact amounts cannot be given because of existing conversion rights which may be
exercised during the notice period and may affect the per share cash distribution, as long as the actual per share distribution is. subsequently provided on the record date.

ttSCHIFF HARDINllP

Josephine J. Tao
Assistant Director
Division ofTrading and Markets unit investment trusts registered under the 1940 Act. Except for the fact that redemption is subject to the minimum condition oftendering a Creation Unit Aggregation of Shares, the Trust is intended to function like any other open-end fund continuously-offering its shares. It is in recognition ofthe foregoing, that the Division of Investment Management issued an order permitting the Trust to issue shares with limited redeemability while still treating the Trust like any other open-end investment company. In addition, compliance with Rule IOb-17(b)(I)(v)(a-b) would be impractical in light ofthe nature ofthe Fund. 19 This is because it is not possible for the Trust to accurately project ten days in advance what dividend, if any, would be paid on a particular record date. Because ofthis inability to project the amount of any dividend ten days in advance of a record date, applying the timing requirements ofRule 10b￾17(b)(I)(v)(a-b) to the Trust would increase the chances that the Trust would mis-estimate the amount of any such dividend.20 The Trust represents that it will comply with the requirements ofRule 1 Ob-17 (other than paragraphs (b)(1)(v)(a-b) thereof). The Trust further represents that as soon as practicable following the end of trading on the Listing Exchange on the day prior to the ex-date (but not later than the last time at which the Listing Exchange accepts such information on such date) with respect to any distribution made by the Fund, the Trust will provide notice to the Listing Exchange containing the information required in Rule lOb-17(b)(l)(v)(a-b). 19 We note that compliance with Rule 10b-17 would be similarly impractical for other ETFs that also continuously create and redeem shares. 20 As an investment company, the Trust is required by the Internal Revenue Code to distnbute at least 98% of its ordinary income and capital gains during the calendar year. If the Trust declares too small a dividend, it will be charged an excise tax. If it declares too large a dividend, the excess could be considered a return of capital to investors. To avoid an over- or under-distribution of ordinary income, registered investment companies, including the Trust, must estimate: (i) the amount ofordinary income to be earned during the period from the date the dividend is declared to December 31; and (ii) the number of shares that will be outstanding as of the record date. Requiring the Trust to declare the amount of a dividend ten days in advance of the record date would increase the period for estimating ordinary income and the number of outstanding shares, and thus increase the risk of an over- or under￾distribution. Requiring the Trust to declare the amount of a dividend ten days in advance of the record date also would increase the chance that the Trust would over- or under-distribute capital gains. Further, unlike ordinary income, the Trust does not have the problem of estimating the aggregate amount of capital
gains it will earn between declaration date and year-end, but as noted above, requiring the Trust to declare the amount ofa dividend ten days in advance of a record date would increase the chance that the Trust would mis-estimate the number of outstanding shares. This, in turn, would increase the change that the Trust would mis-estimate the per share amount of capital gains it must distribute.

ttSCHIFFHARDINup
Josephine J. Tao

Assistant Director

Division ofTrading and Markets

August 16,2011

PagelOofll

In the proposing release for Rule IOb-17 (the "Proposing Release"),21 the Commission stated:
It has been the experience ofthe Commission and the securities industry that the failure of a publicly held company to provide a timely announcement ofthe record date with respect to these types ofrights has had a misleading and deceptive effect on both the broker-dealer community and the investing public. As a direct result ofsuch failure, purchasers and their brokers may have entered into and settled securities transactions without knowledge of the accrual ofsuch rights and were thus unable to take necessary steps to protect their interests. Further, sellers who have received the benefits ofsuch rights as recordholders on the specified record date after having disposed oftheir securities, have also disposed ofthe cash or stock dividends or other rights received as such recordholders without knowledge of possible claims of purchasers ofthe underlying security to those rights.... In many instances, innocent buyers and sellers have suffered losses. In addition, some issuers have made belated declarations ofstock splits or dividends with the apparent knowledge that this action would have a manipulative effect on the market for their securities. We respectfully submit that none ofthese concerns raised by the Commission in the Proposing Release22 will be implicated ifthe requested relief is granted. As set forth above, the Trust will comply with the requirements ofRule IOb-17 except for the timing requirements for notification ofthe actual amounts of the distributions under Rule IOb-17(b)(1)(v)(a-b). Accordingly, market participants will receive timely notification ofthe existence and timing of a pending distribution, and will be able to plan their transactions in Fund shares accordingly. As a result, there should be no confusion or opportunity for manipulation regarding parties' rights to receive distributions, which concerns inspired the Commission to propose and adopt Rule I Ob-17. Therefore, the requested relief concerning the timing requirements of Rule IOb-17(b)(1)(v)(a-b)is consistent with the purposes underlying the adoption ofRule lOb-I? as outlined in the Proposing Releas.e and the Adopting Release. The exemption under paragraph (c) ofRule IOb-17, which covers open-end investment companies with fully redeemable shares, thus should be applicable to the Trust with respect to the timing requirements ofRule IOb-17(b)(I)(v)(a-b).

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21 Exchange Act Release No. 9076 (February 17, 1971).
22 The foregoing concerns were largely reiterated by the Commission in the release adopting Rule IOb-17. See Exchange Act Release No. 9192 (June 7,1971) (the "Adopting Release").

~t SCHIFF HARDINLLP

Josephine J. Tao
Assistant Director
Division ofTrading and Markets
Based on the foregoing, the Trust respectfully requests that the Commission and the Division ofTrading and Markets grant the relief requested herein. Thank you for your consideration ofthis request Should you have any questions or require additional infonnation, please do not hesitate to call the undersigned at (202) 778-6422. Very truly yours, ~r 4-~.Drogin Cc: Daniel Staroselsky Richard F. Morris