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CHAPMAN AND CUTLER LLP T 312.845.3000
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March 18, 2016
Marianne Dobelbower
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Re: Advisors Disciplined Trust 1609 (the "Fund")
(File No. 333-209120) (CIK# 1655575)
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Ms. Dobelbower
Transmitted herewith on behalf of Advisors Asset Management, Inc. (the
"Sponsor"), depositor and principal underwriter of the Fund, is Amendment No. 1
to the Registration Statement on Form S-6 for the registration under the
Securities Act of 1933 (the "Securities Act") of units representing the
ownership of interests in the Fund.
The Registration Statement on Form S-6 relating to the Fund was initially
filed with the Securities and Exchange Commission (the "Commission") on
January 26, 2016. The Fund consists of three unit investment trusts, Rothschild
Smart Beta ERC Strategy, Eurozone Series 2016-1Q, Rothschild Smart Beta ERC
Strategy, Japan Series 2016-1Q and Rothschild Smart Beta ERC Strategy, U.S.
Series 2016-1Q (each, a "Trust" and collectively, the "Trusts"). We received
comments from the staff of the Commission in a phone conversation between
Marianne Dobelbower and Matthew Wirig on February 25, 2016 requesting that we
make certain changes to the Registration Statement and address certain other
concerns. We have addressed those comments herein and the prospectus has been
revised in accordance with the comments of the staff.
The following are our responses to the staff's comments:
Comment 1
The comment requested that we submit a description from Rothschild
detailing all aspects of the "Risk Contribution" and "ERC Model" formulas.
Matthew Wirig is separately submitting Rothschild's description of these
formulas to Marianne Dobelbower via email for the staff's review.
Comment 2
The comment requested that the "Investment Summary--Principal Investment
Strategy" section of the prospectus for each Trust be updated to clarify that
"full market capitalization" refers to the share price multiplied by the number
of shares outstanding. The prospectus has been updated in accordance with this
comment.
Comment 3
The comment requested that the "Investment Summary--Principal Investment
Strategy" section of the prospectus for each Trust be updated to rephrase the
description of the factors included in
Rothschild's "Risk Contribution" formula.
The prospectus has been updated in accordance with this comment.
Comment 4
The comment requested that the "Investment Summary--Principal Investment
Strategy" section of the prospectus for each Trust be updated to include a
sentence clarifying that, as a result of certain adjustments by each Trust's
strategy (described in the prospectus), securities in such Trust could have
different weighted Risk Contributions as of its selection date. The prospectus
has been updated in accordance with this comment.
Comment 5
The comment requested that the "Investment Summary--Principal Investment
Strategy" section of the prospectus for each Trust be updated to add an example
of the adjustments referred to in the paragraph beginning "If the ERC Model
results in one security.". The prospectus has been updated in accordance with
this comment.
Comment 6
The comment requested that the "Investment Summary--Principal Risks"
section of the prospectus for each Trust be updated to add disclosure noting
that hypothetical back-tested performance is not actual past performance of a
trust and is based on application of a trust's investment strategy as of a
particular time. The prospectus has been updated in accordance with this
comment.
Comment 7
The comment noted that the staff found the narrative description under
"Investment Summary--Fees and Expenses" confusing and suggested that the Sponsor
consider adding significant additional narrative disclosure. As discussed with
the staff, these disclosures are substantially similar to the presentation and
related disclosures in similar unit investment trusts for which the Sponsor
acted as depositor and principal underwriter that were previously reviewed and
declared effective by the Securities and Exchange Commission (the "Commission")
and the disclosures included in registration statements for similar unit
investment trusts of other sponsors. Accordingly, the Sponsor respectfully
declines to make changes to these disclosures.
Comment 8
The comment requested that the "Investment Summary--Principal Risks"
section of the prospectus for the Rothschild Smart Beta ERC Strategy, U.S.
Series trust be updated to clarify that the U.S. Strategy would only select a
security if it had a "Country Classification" of U.S. The prospectus has been
updated in accordance with this comment.
Comment 9
The comment requested that the "Understanding Your Investment--How to Buy
Units--Transactional Sales Fee" section of the prospectus be updated to clarify
in its final paragraph that unitholders who buy in the secondary market after
collection of the deferred sales fee are not charged deferred sales fees. The
prospectus has been updated in accordance with this comment.
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Comment 10
The comment requested that the "Understanding Your Investment--Investment
Risks--Strategy correlation risk" section of the prospectus be updated to add
disclosure noting that hypothetical back-tested performance is not actual past
performance of a trust and is based on application of a trust's investment
strategy as of a particular time. The prospectus has been updated in accordance
with this comment. The staff also requested that we provide an explanation of
whether it was expected that the trust would not be fully invested at certain
times and describe a circumstance under which a trust may not be fully invested
at all times. While unit investment trusts typically do not hold significant
cash positions and most of the capital remains fully invested at most times, a
trust may periodically hold cash positions. For example, when an underlying
security pays a cash dividend, this cash will typically be held until it is
distributed to unitholders on the next scheduled distribution date. This
disclosure is substantially similar to the presentation and related disclosures
in similar unit investment trusts for which the Sponsor acted as depositor and
principal underwriter that were previously reviewed and declared effective by
the Commission.
Comment 11
The comment requested that the "Understanding Your Investment--Hypothetical
Performance Information" section of the prospectus be updated to replace "past"
and "simulated" with "hypothetical back-tested" in various places. The comment
also requested that "hypothetical performance" be replaced with "hypothetical
back-tested performance" throughout the prospectus. The prospectus has been
updated in accordance with this comment.
Comment 12
The comment requested that the "Understanding Your Investment--Hypothetical
Performance Information" section of the prospectus be updated to clarify that
the "total return figures" referred to in the fifth paragraph refer to the
figures in the table. The prospectus has been updated in accordance with this
comment.
Comment 13
The comment requested that we provide an explanation of what the "liquidity
constraints" in the "Understanding Your Investment--Hypothetical Performance
Information" section of the prospectus refer to given that the Trusts'
strategies include certain liquidity screens. That disclosure highlights for
potential investors that the hypothetical back-tested returns do not represent
actual trading conditions and that an actual investment could vary from
hypothetical back-tested performance due to certain events that could arising
during the trading of an actual account (such as liquidity constraints on a
particular security that could occur on a particular day). As discussed with the
staff, this disclosure is substantially similar to the presentation and related
disclosures in similar unit investment trusts for which the Sponsor acted as
depositor and principal underwriter that were previously reviewed and declared
effective by the Commission.
In addition to making revisions in response to the staff's comments, the
Registration Statement has been revised to reflect certain other changes and
corrections including changes to the "Investment Summary--Principal Investment
Strategy" section of the prospectus for each Trust and updating the amounts in
the table under "Understanding Your Investment--Hypothetical Performance
Information".
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The staff requested that the registrant represent in writing that that it
will not use the staff's comment process as a defense in any securities related
litigation against it (i.e., a "Tandy" letter). The Sponsor will include a Tandy
letter with the final pricing amendment filing of the Registration Statement.
We have been advised that the Sponsor would like to activate the Fund and
have the Registration Statement declared effective on March 24, 2016 or as soon
as possible thereafter. An appropriate amendment to the Registration Statement
to reflect such deposit will be promptly filed with the Commission at that time,
accompanied by the request of the Sponsor that the Registration Statement be
made effective.
No notification of registration or registration statement under the
Investment Company Act of 1940 is currently being submitted to the Commission,
as the filings under Investment Company Act File No. 811-21056 for Advisors
Disciplined Trust are intended to be applicable to this series of the Fund.
Inasmuch as the Fund is not yet operative, no filings have been required
under any of the acts administered by the Commission. Therefore, for purposes of
Securities Act Release No. 5196 there are no delinquencies to be reported or
other references to be made to filings under the Securities Exchange Act of
1934.
If you have any questions, please do not hesitate to contact Scott R.
Anderson at (312) 845-3834 or Matthew T. Wirig at (312) 845-3432.
Very truly yours,
/s/ CHAPMAN AND CUTLER LLP
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CHAPMAN AND CUTLER LLP
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