Chapman and Cutler LLP
111 West Monroe Street
Chicago, Illinois 60603
February 12, 2018
Mr. Edward Bartz
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Guggenheim Defined Portfolios, Series 1720
Diversified Credit Portfolio of ETFs, Series 12
File Nos. 333-222229 and 811-03763
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Dear Mr. Bartz:
This letter responds to your comment made during a telephone conversation
with our office regarding the registration statement on Form S-6 for Guggenheim
Defined Portfolios, Series 1720, filed on December 21, 2017, with the Securities
and Exchange Commission (the "Commission"). The registration statement proposes
to offer the Diversified Credit Portfolio of ETFs, Series 12 (the "Trust").
PROSPECTUS
Investment Summary -- Principal Risks
1. Please add disclosure regarding the risks of investing in preferred
securities.
Response: In the final prospectus, risks are included based upon the
actual portfolio. Therefore, if the Trust invests a significant amount in
preferred securities, the following risks will be added to the "Principal Risks"
and "Investment Risks" sections, respectively.
Principal Risks section: Certain ETFs held by the trust invest in
preferred stocks and trust preferred securities. Preferred securities are
typically subordinated to bonds and other debt instruments in a company's
capital structure in terms of priority to corporate income and therefore will be
subject to greater risk than those debt instruments. In addition, trust
preferred securities often contain deferral features, whereby the issuer may
fail to make distributions up to 20 consecutive quarters without a default
occurring.
Investment Risks section: Preferred securities risk. Certain ETFs held by
the trust invest in preferred securities, such as preferred stock and trust
preferred securities.
Similar to bonds, preferred stocks typically offer a fixed rate of return,
paid in the form of a dividend. Like common stock, most preferred stocks are
equity securities representing ownership in a company. Preferred stocks are
generally considered "senior equity securities" and preferred stockholders enjoy
preference over common stockholders with regard to liquidations. For the
prospect of a higher or stated yield, preferred stockholders may forfeit or at
least be limited in their voting rights. Preferred stocks are generally traded
on national stock exchanges. Trust preferred securities are typically
subordinated to bonds and other debt instruments in a company's capital
structure, in terms of priority in liquidation and therefore will be subject to
greater credit risk than those debt instruments.
Trust preferred securities are limited-life securities typically issued by
corporations, generally in the form of interest-bearing notes or preferred
securities, or by an affiliated business trust of a corporation, generally in
the form of beneficial interests in subordinated debentures issued by the
corporation, or similarly structured securities. Dividend payments of the trust
preferred securities generally coincide with interest payments on the underlying
obligations. Trust preferred securities and the underlying subordinated
debentures typically rank senior to the company's common and preferred stock and
junior to the company's senior debt, subordinated debt and other indebtedness.
In addition to the risks set forth above, these securities are also
subject to the following risks:
o Trust preferred securities are designed to create the same business
risk for an investor as if the investor had bought the debentures
underlying the trust preferred securities. A corporation's ability
to pay distributions on the trust preferred securities is generally
dependent on whether the corporation issuing the debentures is able
to pay interest on the underlying debentures.
o Unitholders have no right to accelerate the trust preferred
securities or the underlying debentures for non-payment.
o A corporation issuing the underlying debentures may elect to defer
interest payments on those securities at any time during the life of
the trust preferred securities for up to 20 consecutive quarters. If
such an election is made, distributions on the trust preferred
securities will not be made during the deferral period. During any
deferral period investors may be taxed as if the trust had received
current income. In such a case, unitholders will have income taxes
due, but will not have received income distributions to pay the
taxes.
o Tax or regulatory changes may change the tax characterization of the
preferred securities or the underlying debentures, and, as a result,
effect the value of your units.
o Preferred securities may be subject to redemption after a certain
call date or as a result of certain tax or regulatory events. This
may occur prior to maturity.
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