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CHAPMAN AND CUTLER LLP T 312.845.3000
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Attorneys at Law - Focused on Finance(R) www.chapman.com
June 17, 2016
Marianne Dobelbower
Securities and Exchange Commission
100 F Street NE
Washington D.C. 20549
Re: Advisors Disciplined Trust 1682 (the "Fund")?
(File No. 333-210905)(CIK 1662283)
Ms. Dobelbower:
Transmitted herewith on behalf of Advisors Asset Management, Inc. (the
"Sponsor"), the depositor 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 April 25,
2016. The Fund consists of one unit investment trust, ACE MLT Portfolio, Series
2016-1 (the "Trust"). We received comments from the staff of the Commission in a
letter from Marianne Dobelbower dated May 25, 2016 requesting that we make
certain changes to the Registration Statement. As you note in your letter, you
provided a separate correspondence on May 6, 2016 requesting an analysis of the
Trust's proposed investment in derivatives. We will respond to that request in a
separate correspondence filing.
We have addressed the comments in your May 25, 2016 letter herein and the
prospectus has been revised in accordance with the comments of the staff.
Capitalized terms used herein and not otherwise defined use the definitions
included in the Registration Statement. In addition to making revisions in
response to the staff's comments, we have revised the Registration Statement to
reflect certain other changes and corrections including changing the Market
Reference to the SPDR(R) S&P 500(R) ETF Trust (and making corresponding
disclosure changes related to this change in the Market Reference) and making
certain changes to the sales charge amounts and dealer concession levels.
The following are our responses to the Commission's comments:
Comment 1
The comment requested that the prospectus describe in greater detail the
percentage of the Trust's assets that will be invested in Treasury Obligations,
Options and cash under "Investment Summary--Principal Investment Strategy".
Those percentages will not be known until the close of the market on the day
prior to the Trust's inception. We have added disclosure (with blanks left for
the percentages) in accordance with the staff's comment and will finalize those
percentages when filing the final pricing amendment Registration Statement.
Comment 2
The comment requested that we add a plain English description of the
circumstances in which a unitholder will receive a return under "Investment
Summary--Principal Investment Strategy". We have added disclosure in accordance
with the staff's comment.
Comment 3
The comment requested that we confirm that where the dollar amounts are
based on percentages of the Initial Market Reference Level, such dollar amounts
will be updated based on the Initial Market Reference Level provided in
paragraph 1. We confirm that these dollar amounts will be updated in the final
pricing amendment Registration Statement for the Trust which will be filed on
the Trust's inception date. All of the amounts shown in the prospectus will be
finalized and updated as necessary in the final pricing amendment Registration
Statement.
Comment 4
The comment requested that we clarify whether the Option Expiration Date
coincides with the Trust's mandatory termination date. The Option Expiration
Date will be on or before the Trust's mandatory termination date and will be
disclosed in the final pricing amendment Registration Statement for the Trust. A
blank for the Option Expiration Date has been added to the prospectus in
accordance with the staff's comment and will be filled in for the final pricing
amendment along with clarifying language that it is anticipated to be three days
prior to the Trust's mandatory termination date. The comment also requested that
we clarify that the $1,150 figure under "Investment Summary--Principal
Investment Strategy" figure represents the maximum capped return. The disclosure
has ben clarified in accordance with the staff's comment.
Comment 5
The comment requested that we revise the "Hypothetical Total Amount for
Your Trust" chart by adding information regarding the price a unitholder will
pay and the Initial Market Reference Level. We have added the Initial Unit
Price and a blank for the Initial Market Reference Level to the chart in
accordance with the staff's comment and those numbers will be completed with the
final pricing amendment Registration Statement for the Trust. The comment also
requested that we relocate the chart so that it appears after the "Principal
Risks" section. We have moved the chart in accordance with the staff's comment
under a new header titled "Graph of Hypothetical Total Amount for Trust".
Comment 6
The comment requested that we revise certain disclosure under "Investment
Summary--Principal Investment Strategy" to clarify in plain English the "various
circumstances" in which the Trust would liquidate its holdings before
expiration. That is already disclosed in the prospectus under "Understanding
Your Investment--How Your Trust Works--Changing Your Portfolio"; however, we
have added additional disclosure in accordance with the staff's comment. The
comment also requests that we include narrative disclosure describing the
circumstances under which the Trust's returns to investors are expected to
outperform or underperform the returns of the Market Reference. We have added
that disclosure in accordance with the staff's comment.
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Comment 7
The comment requested that we include a plain English explanation of the
"proportional relationship" between the Flex Options and the Treasury
Obligations referred to under "Investment Summary--Principal Investment
Strategy". Disclosure has been added in accordance with the staff's comment.
Comment 8
The comment requested that we disclose whether shareholders who subscribe
after the close of the initial offering period will have to pay the creation and
development fee under "Investment Summary--Fees and Expenses".
Comment 9
The comment requested that in the bullet under "Investment Summary--
Principal Risks" with the heading "Security prices will fluctuate" that we
clarify that the amounts available or distribution will depend primarily on the
performance of the Options. Disclosure has been revised in accordance with the
staff's comment.
Comment 10
The comment requested that we revise the bullet under "Investment Summary--
Principal Risks" with the heading "The trust is subject to risk related to the
Market Reference and securities comprising the Market Reference" to state the
risk in plain English. We have revised this bullet in accordance with the
staff's comment.
Comment 11
The comment requested that we consider rephrasing the bullet under
"Investment Summary--Principal Risks" with the heading "Liquidity risk is the
risk that the value of a security will fall in value if trading in the security
is limited or absent" to more appropriately tailor the risk description to the
risk actually posed to the Trust by the potential illiquidity of the Options.
While we believe the risk descriptions were appropriately tailored to the risk
actually posed to the Trust by the potential illiquidity of the Options, we have
made revisions to the disclosure in accordance with the staff's comment.
Comment 12
The comment requested that we clarify why the bullet under "Investment
Summary--Principal Risks" with the heading "There may not be a market for
options with the same customized terms as the Options at all times and an active
market may not be established" given that the Trust will not buy or sell
securities during the life of the Trust. We have deleted this disclosure and
believe that the prior bullet describing liquidity risk sufficiently describes
the risks associated with limited trading in a particular security.
Comment 13
The comment notes that under the "Notes to Portfolio" footnotes (4) and (5)
are included but not referenced in the description of the Trust's "Portfolio".
Footnote (5) has been added to
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the Options in accordance with the staff's comment and footnote (4) will be
added, as applicable, when the Treasury Obligations are added to the final
pricing amendment Registration Statement on the Trust's date of deposit.
Comment 14
The comment requested that with respect to the Trust's investments in
derivatives, we review and confirm that the disclosure with regard to
derivatives is and will be consistent with the staff guidance including the July
30, 2010 letter from Barry Miller, Associate Director, Office of Legal and
Disclosure to Karrie McMillan, General Counsel, Investment Company Institute. We
acknowledge these comments and concerns and have considered them in drafting
disclosure for the Trust's Registration Statement. The focus of that letter was
the Commission's concerns relating to its observation that certain funds were
providing generic disclosures of limited usefulness for investors in evaluating
the anticipated investment operations of such funds, including how the funds'
investment advisers actually intended to manage the funds' portfolios and the
consequent risks. The Trust's Registration Statement describes a clearly defined
investment strategy with detailed disclosures about derivative use tailored to
the specific types of derivatives used by the Trust, the extent of their use and
the risks associated with their use.
Comment 15
The comment requested that we clarify the disclosure under "Understanding
Your Investment--Distributions--Distributions" regarding what "other receipts"
are credited to the "capital account". The disclosure has been updated in
accordance with the staff's comment.
Comment 16
The comment requested that that we confirm whether the Trust will invest in
real estate investment trusts and, if not, remove the disclosure under
"Understanding Your Investment--Taxes" relating to investments in real estate
investment trusts. We confirm that the Trust will not invest in real estate
investment trusts and have removed that disclosure in accordance with the
staff's comment.
Comment 17
The comment noted that disclosure in the Trust's information supplement
states that the Trust maintains a "reserve account" and requests clarification
of the term "reserve account" and indicate its purpose. Disclosure has been
added to the information supplement in accordance with the staff's comment.
Comment 18
The comment requested that we provide a copy of the option agreements
applicable to the Options or provide analysis as to why they are not required
under Form N-8B-2. Because the Options are listed options, there is not a
separate contract entered into between the Trust and the OCC with respect to the
Options. The Options are purchased through an options broker.
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"
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letter). The Sponsor will include a Tandy letter with the final pricing
amendment filing of the Registration Statement.
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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