April 7, 2006
Mail-Stop 4561
Via facsimile and U.S. Mail
Mr. Carl G. Verboncoeur
Chief Executive Officer and Treasurer
Rydex Investments
9601 Blackwell Road, Suite 500
Rockville, Maryland 20850
Re: CurrencyShares British Pound Sterling Trust (333-
132361)
CurrencyShares Australian Dollar Trust (333-
132362)
CurrencyShares Canadian Dollar Trust (333-
132363)
CurrencyShares Mexican Peso Trust (333-
132367)
CurrencyShares Swedish Krona Trust (333-
132366)
CurrencyShares Swiss Franc Trust (333-132364)
Forms S-1
Filed March 17, 2006
Dear Mr. Verboncoeur:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We look forward to working
with you in these respects. We welcome any questions you may have
about our comments or on any other aspect of our review. Feel
free
to call us at the telephone numbers listed at the end of this
letter.
Form S-1
General Comments
1. Make corresponding changes to the other CurrencyShares
documents.
2. Revise the chart on the Creation and Redemption Processes to
show
the shares being redeemed as part of the redemption process or
advise
how it works without shares being redeemed.
3. Pursuant to the Sarbanes -Oxley Act of 2002 and Rule 10A-3
promulgated thereunder the staff has the following questions
related
to the issuer, Rydex Specialized Products LLC. Please provide an
analysis of the issuer`s obligation under Exchange Act rule 10A-
3(b).
In this regard, please advise as to your position regarding
whether
the Trust or the LLC are subject to Rule 10A-3(b) and if so,
advise
as to your position as to whether either entity has an exception
under Rule 10A-3(c) and whether any such exception applies to one
or
both entities.
Prospectus Summary
Trust Structure, page 2
4. Revise the first paragraph to indicate how management expects
the
Trust to earn income for investors or alternately, how
shareholders
may earn income on their investments. For example, the Trust will
earn income for investors, besides the interest earned on the
investment, only if the dollar declines in value against the
British
Pound. If earning income for shareholders is not the objective, so
state.
5. Revise the third paragraph (one sentence) or the last paragraph
of
this section, to more fully describe the Distributor, its
affiliation
to the Sponsor, its compensation, and other material terms of any
agreement between the Distributor, the Sponsor, the Trust,
Trustee,
or Authorized Participants. In addition, provide a cross-reference
to
a more complete description of the Distributor and to any
Agreement
filed as an exhibit to the registration statement.
The Offering
Interest on Deposits, page 4
6. Revise to define SONIA and provide a comparison to US Prime
Rate
or another widely used index.
7. Supplementally advise the staff if the Depository has any other
relationships with the Sponsor or the Distributor. If so, please
describe. In addition, advise the staff as to whether there are
any
tying arrangements between the parties.
Net Asset Value, page 4
8. Revise to disclose how shareholders will be notified that an
alternative NAV valuation is being used and a description of the
alternative valuation methodology.
Risk Factors, page 9
9. Revise the second risk on page 12, "Shareholders may incur
significant fees ..." to reconcile this disclosure with that on
page
7 (Termination Events). Herein it states that shareholders will
receive Pounds Sterling upon termination while page 7 indicates
Trustee will sell the Pounds and distribute dollars to
shareholders.
Overview of the Foreign Exchange Industry, page 18
10. The staff notes many statements of fact without citing the
source
of the information. For example, the first entire first paragraph
is
without a source. Please revise the entire section to disclose the
source of the facts stated or indicate that the statements are
management`s beliefs.
The British Pound Sterling, page 20
11. The staff notes many statements of fact without citing the
source
of the information. For example, the first entire first paragraph
is
without a source. Please revise the entire section to disclose the
source of the facts stated or indicate that the statements are
management`s beliefs.
Description of the Trust, page 24
12. Revise the fourth paragraph to disclose who will earn the $500
fee, e.g., the shareholders, the Trustee, etc.
The Sponsor, page 27
13. We note that you have entered into an arrangement with M7
Ventures, LLC. Please revise to quantify the fees to be paid to
M7
Ventures and the nature of the services being performed. In
addition,
file the agreement as an exhibit in the next pre-effective
amendment.
The Distributor, page 27
14. Revise to quantify the fees to be paid and disclose who will
ultimately pay the fees, e.g., the shareholders through the fees
paid
by the Trust.
Description of the Deposit Account Agreement, page 28
15. Revise to clearly disclose when interest will start to be
earned
on created baskets (disclose whether there is a time lag between
basket creation and deposit) and whether or not interest will be
earned on interest earned but not yet paid to shareholders and the
time lag between Trustee deposits in the secondary account and
payments to shareholders.
The Trustee, page 34
16. Supplementally cite for the staff the Registrant`s and/or
Trustee`s exemption from the Trust Indenture Act of 1939.
Legal Matters, page 49
17. We note your disclosure of the fee arrangement between M7
Ventures and Foley & Lardner, LLP, which is based upon NAV of the
trust. Please revise to specifically disclose how these fees are
derived (i.e. 20 bps) and quantify the fees paid.
Form of Statement of Financial Condition, page F-3
18. As the Trust becomes operational, please revise your future
filings to separately present the balance of British Pound
Sterling
Deposits held in the interest bearing account and the balance held
in
the non-interest bearing account.
Notes to Financial Statements
Note 2: Significant Accounting Policies
C. Foreign Currency Translation, page F-5
19. We note that you have determined the British Pound Sterling to
be
the functional currency of the Trust. Please provide us with your
analysis of how you made this determination. In your response,
please address the following:
a) The Sponsor fee is accrued based upon 0.4% of the British Pound
Sterling in the Trust. Please tell us the currency in which this
payment will be denominated.
b) We note that certain costs may be incurred which will require
settlement in US Dollars. Please tell us the magnitude of costs
which are anticipated to require settlement in US Dollars, and how
this was considered in your functional currency determination.
c) We note that in the event that the interest deposited exceeds
the
sum of the Sponsor`s fee for the prior month plus other Trust
expenses, if any, the Trustee will convert the excess into US
Dollars
at a prevailing market rate and distribute the US Dollars to
shareholders. Please tell us how this was considered in your
determination of the functional currency.
D. Federal Income Taxes, page F-5
20. We note that the last four paragraphs of your Federal Income
Tax
footnote appear to include duplicate disclosure (paragraphs 6 and
7
are the same as paragraphs 8 and 9). Please revise as necessary.
E. Revenue Recognition, page F-7
21. Please revise your disclosure to specifically state when
interest
income is recognized in your financial statements.
F. Distributions, page F-7
22. Please revise your disclosure regarding distributions to
reflect
the discussion regarding the distributions on page 28 of the
filing.
Part II
Exhibit 4.1, Depository Trust Agreement
23. Revise to provide a Statement of Purpose for the trust as well
as
a section for the duties and powers of the Trust.
Exhibits 5.1 and 8.1
24. Revise to file completed opinions in a pre-effective
amendment.
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert this action as defense in any
proceeding
initiated by the Commission or any person under the federal
securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
Any questions regarding the accounting comments may be
directed
to Margaret Fitzgerald (202) 551-3556 or Don Walker at (202) 551-
3490. All other questions may be directed to Michael Clampitt at
(202) 551-3434 or to me at (202) 551-3419.
Sincerely,
Christian N. Windsor
Special Counsel
Cc: Patrick Daugherty, Esq.
Foley & Lardner LLP
One Detroit Center
500 Woodard Ave., Suite 2700
Detroit, MI 48226-3489
Mr. Carl G. Verboncoeur
Rydex Investments
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