Chapman and Cutler LLP
111 West Monroe Street
Chicago, Illinois 60603
July 2, 2015
Ms. Deborah O'Neal-Johnson
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Elkhorn Unit Trust, Series 5
Elkhorn CAP-X Achievers Portfolio, Series 2
Elkhorn Foundation Pure Water Portfolio, Series 2
Elkhorn Sector Neutral Portfolio of DWA ETFs, Series 2
File Nos. 333-204680 and 811-22925
--------------------------------------------------------------------------------
Dear Ms. O'Neal-Johnson:
This letter is in response to your comment letter dated June 22, 2015,
regarding the registration statement on Form S-6 for Elkhorn Unit Trust, Series
5, filed on June 3, 2015 with the Securities and Exchange Commission (the
"Commission"). The registration statement offers Elkhorn CAP-X Achievers
Portfolio, Series 2 (the "CAP-X Achievers Portfolio"), Elkhorn Foundation Pure
Water Portfolio, Series 2 (the "Pure Water Portfolio") and Elkhorn Sector
Neutral Portfolio of DWA ETFs, Series 2 (the "Sector Neutral Portfolio")
(collectively, the "Trust").
FUND STRUCTURE
1. The Fund is structured as a UIT of UITs. I.e., the Fund contemplates
investing in shares of the Elkhorn Unit Trust, Series 1. Explain to the staff
the purpose of structuring the Fund in this manner. Will this structure cause
shareholders to be exposed to double taxation and duplicate transaction costs?
If so, prominently disclose these risks and other risks associated with the
Fund's structure.
Response: The CAP-X Achievers Portfolio and the Pure Water Portfolio will
each invest in a portfolio of common stocks. The Sector Neutral Portfolio will
invest in a portfolio of shares of exchange-traded funds ("ETFs"). The Trust is
substantially similar to Elkhorn Unit Trust, Series 1, previously filed with the
Commission on January 14, 2015, but will not invest in Elkhorn Unit Trust,
Series 1.
2. Please inform the staff whether the Trust received exemptive relief from
Sections 12(d)(1) and 17(a) in connection with the purchase of shares of an
affiliated UIT.
Response: Please see the response to Comment 1.
PROSPECTUS
COVER PAGE
3. The portfolios listed are series of the Elkhorn Unit Trust, Series 1.
Please revise the disclosure here and throughout the document accordingly.
Response: The portfolios contained in the Trust, are distinct portfolios
and are only related to the portfolios of Elkhorn Unit Trust, Series 1, in that
they follow the same strategies.
PRINCIPAL INVESTMENT STRATEGY
4. In the section captioned, Portfolio Selection Strategy for the CAP-X
Achievers Portfolio, disclose the market capitalization of the common stocks in
which the Trust will invest. We may have further comments.
Response: The disclosure has been revised in response to your comment.
5. In the Principal Investment Strategy section for the Pure Water
Portfolio, the disclosure defines pure water companies as, "companies that
derive more than 50% of their net revenues in the global water industry." It
further states that, "The Trust will be required, under normal circumstances, to
invest at least 80% of its net assets in securities of water companies, as
defined above." However, in the Portfolio Selection Strategy section, the
disclosure states, "The portfolio principally [emphasis added] consists of
securities of companies that derive a majority [emphasis added] of their net
revenues from, one of the following categories within the global water
industry[.]" Please confirm that at least 80% of the portfolio will consist of
securities of water companies.
Response: The Pure Water Portfolio will invest at least 80% of its net
assets in securities of water companies, as defined in the Prospectus. The
disclosure has been revised in response to your comment.
6. Explain to the staff the meaning of the word "pure" and whether the term
could be confusing to shareholders? For example, does the word "pure" suggest
that portfolio companies will derive close to 100% of their revenues from the
water industry?
Response: The disclosure has been clarified to redefined the phrase "pure
water companies" as companies that derive more than 50% of their net revenues
from the following categories within the "global water industry": water
treatment, water testing, water infrastructure or distribution, and water
resource management.
7. The DWA Sector Neutral Portfolio states that, "The Trust seeks to
achieve its objective by selecting certain Invesco PowerShares DWA sector-based
momentum exchange-traded funds ("ETFs") and weighting them equal to the sector
weightings of the S&P 500 Index." Please inform the staff whether the structure
contemplated by the Fund, i.e., UIT of UITs, complies with the exemptive relief
received in connection with the offering units of Elkhorn Unit Trust, Series 1.
Response: Please see the response to Comment 1.
PORTFOLIO DIVERSIFICATION
8. This section of the prospectus is incomplete. Given the structure
contemplated, i.e., UIT of UITs, why isn't this information disclosed? We may
have further comments.
Response: Please see the response to Comment 1.
PRINCIPAL RISKS
9. The Principal Risks for the CAP-X Achievers Portfolio includes the
following sector risks: Consumer Products, Industrials, and Health Care. If
investments in these sectors will be part of the CAP-X Achievers Portfolio's
Principal Investment Strategy, add the relevant disclosure in the Principal
Investment Strategy section accordingly.
Response: As a result of the strategy, the prior iteration of the CAP-X
Achievers Portfolio was concentrated in the Consumer Products, Industrials and
Health Care sectors. Although we anticipate that the trust may be concentrated
in these sectors, such concentrations are not part of the Principal Investment
Strategy. The final portfolio for the CAP-X Achievers Portfolio has not been
selected. The risk disclosure will be updated on the day of deposit to reflect
the sector concentrations of the CAP-X Achievers Portfolio, if any.
10. The Principal Risks for the Pure Water Portfolio includes Industrials
sector risk. If investments in this sector will be part of the Pure Water
Portfolio's Principal Investment Strategy, add the relevant disclosure in the
Principal Investment Strategy section accordingly.
Response: As a result of the strategy, the prior iteration of the Pure
Water Portfolio was concentrated in the Industrials sector. Although we
anticipate that the trust may be concentrated in this sector, such concentration
is not part of the Principal Investment Strategy. The final portfolio for the
Pure Water Portfolio has not been selected. The risk disclosure will be updated
on the day of deposit to reflect the sector concentrations of the Pure Water
Portfolio, if any.
11. The Principal Risks for the Pure Water Portfolio includes small and
mid-cap company risk. If investments in small and mid-cap issuers will be part
of the Pure Water Portfolio's Principal Investment Strategy, add the relevant
disclosure in the Principal Investment Strategy section accordingly.
Response: As a result of the strategy, the prior iteration of the Pure
Water Portfolio included securities of small- and mid-capitalization issuers,
but these investments are not part of the Principal Investment Strategy. The
final portfolio for the Pure Water Portfolio has not been selected. The risk
disclosure will be updated on the day of deposit to reflect the issuer
capitalization of the Pure Water Portfolio. The Principal Investment Strategy
has been updated to reflect that the trust may invest in issuers of all market
capitalizations.
FEE TABLE
12. Footnote 4 to the fee table states "the C&D Fee is fixed at $0.05 per
unit and is paid to the Sponsor at the close of the initial offering period."
Disclose whether shareholders who subscribe after the end of the initial
offering period will have to pay the creation and development fee.
Response: The sponsor will not sell units of the Trust after the primary
offering period.
TRUST PORTFOLIO
13. Please inform the staff why the information required by this section of
the prospect is incomplete. This Fund proposes holding shares of the Elkhorn
Unit Trust, Series 1; therefore, the information should be readily available.
Response: Please see the response to Comment 1.
HOW TO BUY UNITS
14. In the section captioned "Exchange or Rollover Option," you state, "If
you are buying units of your Trust in the primary market with redemption or
termination proceeds from any other Elkhorn unit trust, you may purchase units
at 99% of the maximum Public Offering Price, which may include an upfront sales
fee and a deferred sales fee." Confirm to the staff that no units will be sold
below net asset value.
Response: The sponsor will not sell units of the Trusts below net asset
value.
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
--------------------------
Morrison C. Warren