CHAPMAN AND CUTLER LLP
111 WEST MONROE STREET
CHICAGO, IL 60603
May 9, 2013
Mr. Edward Bartz
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Guggenheim Defined Portfolios, Series 1039
Floating Rate & Dividend Growth Portfolio, Series 1
File Nos. 333-187804 and 811-03763
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Dear Mr. Bartz:
This letter is in response to your comments in your letter dated May 8,
2013 regarding the registration statement on Form S-6 for Guggenheim Defined
Portfolios, Series 1039, filed on April 8, 2013 with the Securities and Exchange
Commission (the "Commission"). The registration statement offers the Floating
Rate & Dividend Growth Portfolio, Series 1 (the "Trust").
PROSPECTUS
Investment Summary -- Principal Investment Strategy
1. The first sentence of this section provides that the Trust will normally
invest 80% of its assets in a combination of dividend-paying equities, and
shares of closed-end investment companies ("Closed-End Funds") and
exchange-traded funds ("ETFs") that invest substantially all of their assets in
"floating rate securities and/or income-producing securities." (Emphasis added.)
Since the Fund uses the term "floating rate" and not "income-producing" in its
name, please delete the phrase "and/or income-producing securities" from the
Fund's 80% investment policy. See Rule 35d-1(a)(2)(i) under the Investment
Company Act of 1940.
Response: The disclosure has been revised as requested.
2. This section also describes the characteristics of the types of
securities in which the Trust will invest. Please disclose the Trust's market
capitalization policy for is equity investments.
Response: The following disclosure has been added to the first paragraph
under "Principal Investment Strategy": "The trust may invest in stocks of
companies with all market capitalizations."
Investment Summary -- Exchange-Traded Fund Selection
3. This section states that, when selecting exchange-traded funds, the
sponsor considers numerous factors, including duration. Please provide a brief
definition of duration, a description of the Fund's duration policy, and an
example that illustrates the effect that a 1% increase in interest rates would
have on debt securities with the highest duration permitted by the Fund's
duration policy.
Response: The following disclosure has been added at the end of this
section: "The sponsor will consider ETFs investing in securities of all
durations. The duration of a security is a measure of its price sensitivity to
changes in interest rates based on the weighted average term to maturity of its
interest and principal cash flows. In general, rising interest rates may lead to
a decline in security prices and declining interest rates may lead to a rise in
security prices. For example, if a security has a duration of 3 years and
interest rates go up by 1%, it can be expected that the security price will move
down by 3%."
Investment Summary -- Investing in Senior Loans
4. The first paragraph of this section states that the Trust will invest
approximately 50% of its assets in Closed-End Funds and ETFs that invest
substantially all of their assets in senior loans. The fourth paragraph of this
section states that the majority of senior loans are considered below
investment-grade. Please add these disclosures to the Principal Investment
Strategy summary, and include the term "junk" bonds" when referring to senior
loans considered below investment-grade.
Response: The second sentence of the first paragraph under "Principal
Investment Strategy" has been replaced with the following disclosure: "The trust
seeks to provide current income with the potential for capital appreciation by
investing approximately 50% of the portfolio in dividend-paying equity
securities that have historically increased their dividends and approximately
50% of the portfolio in ETFs and Closed-End Funds that invest substantially all
of their assets in floating rate securities, which will be senior loans. The
senior loans held by the Closed-End Funds or ETFs in the trust will include
high-yield or "junk" securities."
Additional Revision
The Trust also has the ability to invest in the securities of foreign
companies as long as the securities are listed on an U.S. securities exchange.
Accordingly, the "Principal Investment Strategy," "Security Selection - Equity
Securities," "Principal Risks" and "Investment Risks" sections have been revised
to reflect this. The sentence added by comment 2 ends with "that trade on an
U.S. securities exchange, including U.S.-listed foreign companies." The phrase
"U.S. companies" in the first sentence under "Security Selection - Equity
Securities" has been revised to "U.S.-traded companies." In addition, the
appropriate risks have been added to the risk sections.
We appreciate your prompt attention to this registration statement. If you
have any questions or comments or would like to discuss our responses to your
questions please feel free to contact the undersigned at (312) 845-3484.
Very truly yours,
CHAPMAN AND CUTLER LLP
By /s/ Morrison C. Warren
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Morrison C. Warren