SEC Company Response from U.S. Monthly Income Fund for Puerto Rico Residents, Inc. (CIK 0001843749) — Jan 26, 2022
U.S. Monthly Income Fund for Puerto Rico Residents, Inc. (CIK 0001843749)
Date: Jan. 26, 2022 · CIK: 0001843749 · Accession: 0001193125-22-017950
AI Filing Summary & Sentiment
File numbers found in text: 333-259184, 811-23687
Letter
VIA EDGAR Securities and Exchange Commission Washington, D.C. 20549 Attention: Christopher Bellacicco, Division of Investment Management Re: U.S. Monthly Income Fund for Puerto Rico Residents, Inc. (1933 Act File No. 333-259184 / 1940 Act File No. 811-23687)
Dear Mr. Bellacicco:
On behalf of the U.S. Monthly Income Fund for Puerto Rico Residents, Inc. (the “Fund”), below please find our responses to comments (the “Comments”) received from you on May 7, 2021 on the Fund’s draft registration statement on Form N-1A (the “Registration Statement”), as well as comments provided with respect to the Puerto Rico Short-Term Investment Fund, Inc. that you requested we incorporate herein. The Registration Statement was submitted via email to the Securities and Exchange Commission (the “Commission”) on March 12, 2021 and contained a Prospectus relating to the issuance of shares (the “Shares”) of the Fund, as well as a Statement of Additional Information relating to the Fund.
We have discussed your Comments with representatives of the Fund. Pursuant to your instructions, we are transmitting our responses to the Comments in the form of this response letter (the “Response Letter”) concurrently with a filing of the Registration Statement, including exhibits (the “Filing”), which Filing reflects our responses.
Unless otherwise indicated, defined terms used herein have the meaning set forth in the Registration Statement.
GENERAL
1. Comment: Please supplementally explain to the staff whether the Fund intends to apply for any exemptive or no action relief.
Response: We confirm that the Fund does not presently intend to apply for any exemptive or no action relief.
Sidley Austin (NY) LLP is a Delaware limited liability partnership doing business as Sidley Austin LLP and practicing in affiliation with other Sidley Austin partnerships.
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2. Comment: Please confirm to us that the Fund will stop selling Shares upon the filing of the N-8A until the staff accelerates the effectiveness of the registration statement under the Securities Act of 1933 (the “1933 Act”).
Response: We confirm that the Fund stopped selling Shares upon the filing of the N-8A until the Staff accelerates the effectiveness of the registration statement under the 1933 Act.
FORM N-1A FACING SHEET
3. Comment: Please confirm that the boxes indicating that the Registration Statement is filed under the Investment Company Act and the 1933 Act will be marked.
Response: We confirm that the boxes indicating that the Registration Statement is filed under the Investment Company Act and the 1933 Act have been marked in the Filing.
PROSPECTUS
FEE TABLE AND EXAMPLES
4. Comment: Footnote 3 of the Fee Table states that the “Expense Limitation Agreement is effective through [ ], 2022 ...” Please confirm that the expense limitation agreement will extend for at least one year. Otherwise, please remove this footnote and the waiver line items from the fee table.
Response: We confirm that the Expense Limitation Agreement will extend for at least one year.
5. Comment: The same footnote states that the “Expense Limitation Agreement … may be terminated upon 30 days’ notice by a majority of the non-interested trustees of the Fund, by a vote of a majority of the outstanding voting securities of the Fund or the Administrator.”:
a. If the Administrator can unilaterally terminate the agreement before the one year period expires, please remove the fee waiver and expense reimbursement item from the fee table.
Response: The Administrator cannot unilaterally terminate the agreement before the one year period expires; the fee waiver and expense reimbursement item has therefore been retained in the fee table.
b. Please confirm that the Board does not have any current intention to terminate within the first year.
Response: We confirm that the Board does not have any current intention to terminate within the first year.
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6. Comment: With respect to the Expense Example, if the Example reflects a waiver or reimbursement for the first year, please disclose this fact, as required by Item 3 Instruction 4(a) of Form N-1A.
Response: The Expense Example has been revised to reflect that a waiver or reimbursement is in effect for the first year only.
PRINCIPAL INVESTMENT STRATEGIES OF THE FUND
7. Comment: The first paragraph states that under “normal circumstances, up to 80% of the Fund’s net assets, plus the amount of any borrowings for investment purposes, will be invested in U.S. municipal securities (the “US Portion”)…” Please note that if using the term ‘municipal’ in its name, the Fund needs an 80% policy under Rule 35d-1(a)(4).
Response: The Fund’s name has been changed to the “U.S. Monthly Income Fund for Puerto Rico Residents, Inc.” In that regard, the Fund’s investment objective is to provide investors with current income, consistent with the preservation of capital.
8. Comment: The same paragraph states that the “Fund’s US Portion may include investments in Build America Bonds (“BABs”) and taxable municipal securities (i.e., municipal securities that are generally taxable to non-Puerto Rico investors).” Please disclose supplementally to what extent the Fund will invest in such securities and, with respect to the reference to “non-Puerto Rico investors,” please change such reference to “non-Puerto Rico residents.”
Response: We supplementally confirm that the Fund currently does not expect its combined holdings in BABs and taxable municipal securities to exceed 80% of total assets. The reference to “non-Puerto Rico investors” in the above-mentioned paragraph has been amended to refer to “non-Puerto Rico residents.”
9. Comment: The paragraph beginning with “The Fund invests” refers to mortgage-backed securities and asset-backed securities issued of Puerto Rico issuers. Please confirm supplementally that the referenced mortgage-backed and asset-backed securities will also be high quality securities pursuant to the disclosure in the prior paragraph.
Response: We confirm that the referenced mortgage-backed and asset-backed securities will also be high quality securities pursuant to the disclosure in the above-mentioned paragraph.
PRINCIPAL RISKS
10. Comment: “Repurchase Agreements Risk” and “Reverse Repurchase Agreements Risk.” The Staff notes that there is no reference to repurchase agreements and reverse repurchase agreements in the Strategies, but they are listed as principal risks. Please reconcile this discrepancy.
Response: Repurchase agreements were previously mentioned in the “Investment Process” Section and we also provided similar disclosure regarding repurchase Agreements
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in the Strategies Section that appears in the Summary. “Reverse Repurchase Agreements Risk” has been deleted from the above-mentioned section of the Filing.
11. Comment: “CMO Risk.” Please explain to the Staff what percentage of assets are in junk, CDOs, CMOs and CLOs. Please note that the Staff may have further comments based upon your response.
Response: We confirm that as of December 31, 2021, none of the Fund’s assets are invested in “junk” grade securities. The Fund currently does not have any investments in CDOs or CLOs.
12. Comment: “Asset-Backed Securities Risk.” Please disclose whether there any particular risk to the types of asset-backed securities in which the Fund will invest, such as automobiles and credit cards.
Response: The Fund is not currently exposed to a particular type of asset-backed security.
13. Comment: “Illiquid Securities Risk.” Please confirm that the Fund will develop a liquidity risk management program and classify its holdings as required by Rule 22(e)(4).
Response: The Fund has developed a liquidity risk management program to classify its holdings as required by Rule 22(e)(4).
PERFORMANCE INFORMATION (PAGE 9)
14. Comment:
a. If the Fund is including prior performance from the time when the Fund operated under the Puerto Rico Investment Companies Act, please disclose this here and note that the Fund was not subject to the same restrictions as U.S. registered investment companies.
Response: The above-mentioned disclosure has been included in the relevant section of the Filing, as requested.
b. Will the Fund use its actual performance prior to registration under the 1940 Act or will it be adjusted for the Fund’s current expenses. If the latter, please explain supplementally how it will be adjusted.
Response: We confirm that the Fund will include actual performance information for periods prior to its registration under the 1940 Act; such performance information will not be adjusted for the Fund’s current expenses.
INVESTMENT ADVISER AND SUBADVISER
15. Comment: Please confirm in the Prospectus that the Adviser will be registered with the Securities and Exchange Commission.
Response: The Prospectus has been amended to confirm that the Adviser is registered as an adviser under the Investment Advisers Act of 1940.
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TAX INFORMATION (PAGE 10)
16. Comment: If the Fund plans to rely on the Summary Prospectus Rule 498, please note that it must include the information required by Rule 498(b)(3)(ii)(B).
Response: The information required by Rule 498(b)(3)(ii)(B) has been included in the above-mentioned section of the Filing.
INVESTMENT PROCESS (Page 12)
17. Comment: Consider moving this section under the Principal Investment Strategies of the Fund heading as it seems more appropriate to be included there.
Response: “Investment Process” has been moved under “Principal Investment Strategies of the Fund” in the Filing.
PRINCIPAL INVESTMENT STRATEGIES OF THE FUND (PAGE 12)
18. Comment: The disclosure states that the “Investment Adviser or Subadviser, as applicable, are not required to sell portfolio securities if they are subsequently downgraded below investment grade after they are purchased by the Fund.” Please advise if the Adviser would consider other investments when determining whether to sell a security that was downgraded.
Response: We confirm that the Adviser will consider the ratings of its other investments when determining whether to sell a security that was downgraded.
PRINCIPAL RISKS (Page 13)
19. Comment: Please revise the numbering on what is now numbered as SAI-13.
Response: We have revised the page numbering in the document to be internally consistent.
20. Comment: Please include more detailed disclosure that expands on the risk disclosure provided in response to Item 4. See Investment Management Guidance Update 2014–08 for guidance on the risk disclosure to be provided in response to Item 9.
Response: The risk disclosure has been revised to satisfy the requirements of Items 4 and 9 in accordance with the referenced Guidance.
21. Comment: (Page 17). “Lower-Rated and Below Investment Grade Securities Risk”. Please disclose that these also may be referred to as junk bonds.
Response: The above-mentioned disclosure has been revised in the Filing as requested.
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MANAGING YOUR FUND ACCOUNT (Page 21)
22. Comment: (Discussion regarding sales charges). Please include the disclosure required by Item 12(a)(5) of Form N-1A.
Response: As shares may only be purchased through a brokerage account maintained with the Distributor or a Dealer, and not directly via telephone, mail or website, the above-referenced disclosure has not been added to the Amended Registration Statement.
MANAGING YOUR FUND ACCOUNT — Market Timing (Page 23)
23. Comment: Please provide a statement of the specific basis for the view of the Board that it is appropriate for the Fund not to have market timing procedures as required by Item 11(e)(3) of Form N-1A.
Response: The above-mentioned disclosure has been included in the Filing.
MANAGING YOUR FUND ACCOUNT — REDEEMING SHARES (PAGE 23)
24. Comment: Please disclose the methods the Fund typically expects to use to meet redemption request as required by Item 11(c)(8) of Form N-1A.
Response: The above-mentioned section has been revised to include the methods that the Fund typically expects to use to meet redemption requests, as required by Item 11(c)(8) of Form N-1A.
MANAGING YOUR FUND ACCOUNT — ADDITIONAL INFORMATION (PAGE 24)
25. Comment: Please provide the information required in response to Item 11(e) regarding frequent trading of Fund Shares.
Response: The above-mentioned disclosure has been included in the Filing.
26. Comment: The disclosure states: “If you want to redeem recently purchased Shares, the Fund may delay payment to assure that it has received good payment. If you purchased shares by check, this can take up to 15 days.” Please revise the first sentence to say: “If you want to redeem Shares that you recently purchased by check…”
Response: The above-mentioned disclosure has been revised in the Filing as requested.
DISTRIBUTION ARRANGEMENTS
27. Comment: (Page 25). In the final paragraph. Please disclose that because these are paid out of the Fund’s assets on an ongoing basis, over time these fees will increase the cost of your investment. See Item 12(b)(2) of Form N-1A.
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Response: The above-mentioned disclosure has been included in the Filing.
INVESTMENT ADVISORY AND OTHER ARRANGEMENTS — INVESTMENT ADVISORY CONTRACT (PAGE 25)
28. Comment: First paragraph – the Staff notes that the basis for the fee appears to be changing from net to gross assets. Please confirm whether shareholders approved this change, and if there was no shareholder approval, were shareholders notified of this change including the impact it would have on fees? Please explain in the correspondence that there actually is no change in the fee.
Response: We confirm that there has been no change in the actual advisory fee under the Investment Advisory Agreement. While the advisory fee is disclosed based on net assets in the fee table, the actual advisory under the Investment Advisory Agreement continues to be charged on the basis of the same percentage of gross assets. For purposes of disclosure in the fee table only, the dollar amount of the actual advisory fee charged to investors is recalculated so as to be based on net assets, resulting in a higher numerical percentage, although no actual change in fees has occurred.
DIVIDENDS AND TAXES (PAGE 28)
29. Comment: (Fourth paragraph on page 29). If the Fund has received an opinion from Puerto Rico counsel about its tax status, please include as an exhibit as required by Rule 436(a). If it has not received an opinion, please explain why one is not necessary.
Response: The Fund has received the necessary tax advice in connection with the offering, and on that basis and in light of the nature of the Fund’s offering of securities respectfully submits that a tax opinion is not required with respect to the Filing.
30. Comment: “United States Taxation” subsection (page 32). Please include disclosure regarding the tax consequences to U.S. Investors (i.e., non-Puerto Rico residents).
Response: The tax consequences to U.S. Investors has been included in the above-mentioned section of the Filing.
GENERAL INFORMATION (PAGE 37)
31. Comment: If the Fund is incorporating the Statement of Additional Information by reference, please state so.
Response: A discussion of the incorporation by reference of the Statement of Additional Information has been included in the above-mentioned section of the Filing.
GENERAL INFORMATION – ANNUAL/QUARTERLY REPORTS
32. Comment: Please advise if the header “Annual/Quarterly Reports” should be revised to “Annual/Semi-Annual Reports”.
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Response: The above-mentioned disclosure has been revised to refer to “Annual/Semi-Annual Reports.”
33. Comment: (P
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CORRESP 1 filename1.htm SEC Letter SIDLEY AUSTIN LLP 787 SEVENTH AVENUE NEW YORK, NY 10019 +1 212 839 5300 +1 212 839 5599 FAX AMERICA • ASIA PACIFIC • EUROPE +1 212 839 5969 CTEODORO@SIDLEY.COM January 26, 2022 VIA EDGAR Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Attention: Christopher Bellacicco, Division of Investment Management Re: U.S. Monthly Income Fund for Puerto Rico Residents, Inc. (1933 Act File No. 333-259184 / 1940 Act File No. 811-23687) Dear Mr. Bellacicco: On behalf of the U.S. Monthly Income Fund for Puerto Rico Residents, Inc. (the “Fund”), below please find our responses to comments (the “Comments”) received from you on May 7, 2021 on the Fund’s draft registration statement on Form N-1A (the “Registration Statement”), as well as comments provided with respect to the Puerto Rico Short-Term Investment Fund, Inc. that you requested we incorporate herein. The Registration Statement was submitted via email to the Securities and Exchange Commission (the “Commission”) on March 12, 2021 and contained a Prospectus relating to the issuance of shares (the “Shares”) of the Fund, as well as a Statement of Additional Information relating to the Fund. We have discussed your Comments with representatives of the Fund. Pursuant to your instructions, we are transmitting our responses to the Comments in the form of this response letter (the “Response Letter”) concurrently with a filing of the Registration Statement, including exhibits (the “Filing”), which Filing reflects our responses. Unless otherwise indicated, defined terms used herein have the meaning set forth in the Registration Statement. GENERAL 1. Comment: Please supplementally explain to the staff whether the Fund intends to apply for any exemptive or no action relief. Response: We confirm that the Fund does not presently intend to apply for any exemptive or no action relief. Sidley Austin (NY) LLP is a Delaware limited liability partnership doing business as Sidley Austin LLP and practicing in affiliation with other Sidley Austin partnerships. Page 2 2. Comment: Please confirm to us that the Fund will stop selling Shares upon the filing of the N-8A until the staff accelerates the effectiveness of the registration statement under the Securities Act of 1933 (the “1933 Act”). Response: We confirm that the Fund stopped selling Shares upon the filing of the N-8A until the Staff accelerates the effectiveness of the registration statement under the 1933 Act. FORM N-1A FACING SHEET 3. Comment: Please confirm that the boxes indicating that the Registration Statement is filed under the Investment Company Act and the 1933 Act will be marked. Response: We confirm that the boxes indicating that the Registration Statement is filed under the Investment Company Act and the 1933 Act have been marked in the Filing. PROSPECTUS FEE TABLE AND EXAMPLES 4. Comment: Footnote 3 of the Fee Table states that the “Expense Limitation Agreement is effective through [ ], 2022 ...” Please confirm that the expense limitation agreement will extend for at least one year. Otherwise, please remove this footnote and the waiver line items from the fee table. Response: We confirm that the Expense Limitation Agreement will extend for at least one year. 5. Comment: The same footnote states that the “Expense Limitation Agreement … may be terminated upon 30 days’ notice by a majority of the non-interested trustees of the Fund, by a vote of a majority of the outstanding voting securities of the Fund or the Administrator.”: a. If the Administrator can unilaterally terminate the agreement before the one year period expires, please remove the fee waiver and expense reimbursement item from the fee table. Response: The Administrator cannot unilaterally terminate the agreement before the one year period expires; the fee waiver and expense reimbursement item has therefore been retained in the fee table. b. Please confirm that the Board does not have any current intention to terminate within the first year. Response: We confirm that the Board does not have any current intention to terminate within the first year. Page 3 6. Comment: With respect to the Expense Example, if the Example reflects a waiver or reimbursement for the first year, please disclose this fact, as required by Item 3 Instruction 4(a) of Form N-1A. Response: The Expense Example has been revised to reflect that a waiver or reimbursement is in effect for the first year only. PRINCIPAL INVESTMENT STRATEGIES OF THE FUND 7. Comment: The first paragraph states that under “normal circumstances, up to 80% of the Fund’s net assets, plus the amount of any borrowings for investment purposes, will be invested in U.S. municipal securities (the “US Portion”)…” Please note that if using the term ‘municipal’ in its name, the Fund needs an 80% policy under Rule 35d-1(a)(4). Response: The Fund’s name has been changed to the “U.S. Monthly Income Fund for Puerto Rico Residents, Inc.” In that regard, the Fund’s investment objective is to provide investors with current income, consistent with the preservation of capital. 8. Comment: The same paragraph states that the “Fund’s US Portion may include investments in Build America Bonds (“BABs”) and taxable municipal securities (i.e., municipal securities that are generally taxable to non-Puerto Rico investors).” Please disclose supplementally to what extent the Fund will invest in such securities and, with respect to the reference to “non-Puerto Rico investors,” please change such reference to “non-Puerto Rico residents.” Response: We supplementally confirm that the Fund currently does not expect its combined holdings in BABs and taxable municipal securities to exceed 80% of total assets. The reference to “non-Puerto Rico investors” in the above-mentioned paragraph has been amended to refer to “non-Puerto Rico residents.” 9. Comment: The paragraph beginning with “The Fund invests” refers to mortgage-backed securities and asset-backed securities issued of Puerto Rico issuers. Please confirm supplementally that the referenced mortgage-backed and asset-backed securities will also be high quality securities pursuant to the disclosure in the prior paragraph. Response: We confirm that the referenced mortgage-backed and asset-backed securities will also be high quality securities pursuant to the disclosure in the above-mentioned paragraph. PRINCIPAL RISKS 10. Comment: “Repurchase Agreements Risk” and “Reverse Repurchase Agreements Risk.” The Staff notes that there is no reference to repurchase agreements and reverse repurchase agreements in the Strategies, but they are listed as principal risks. Please reconcile this discrepancy. Response: Repurchase agreements were previously mentioned in the “Investment Process” Section and we also provided similar disclosure regarding repurchase Agreements Page 4 in the Strategies Section that appears in the Summary. “Reverse Repurchase Agreements Risk” has been deleted from the above-mentioned section of the Filing. 11. Comment: “CMO Risk.” Please explain to the Staff what percentage of assets are in junk, CDOs, CMOs and CLOs. Please note that the Staff may have further comments based upon your response. Response: We confirm that as of December 31, 2021, none of the Fund’s assets are invested in “junk” grade securities. The Fund currently does not have any investments in CDOs or CLOs. 12. Comment: “Asset-Backed Securities Risk.” Please disclose whether there any particular risk to the types of asset-backed securities in which the Fund will invest, such as automobiles and credit cards. Response: The Fund is not currently exposed to a particular type of asset-backed security. 13. Comment: “Illiquid Securities Risk.” Please confirm that the Fund will develop a liquidity risk management program and classify its holdings as required by Rule 22(e)(4). Response: The Fund has developed a liquidity risk management program to classify its holdings as required by Rule 22(e)(4). PERFORMANCE INFORMATION (PAGE 9) 14. Comment: a. If the Fund is including prior performance from the time when the Fund operated under the Puerto Rico Investment Companies Act, please disclose this here and note that the Fund was not subject to the same restrictions as U.S. registered investment companies. Response: The above-mentioned disclosure has been included in the relevant section of the Filing, as requested. b. Will the Fund use its actual performance prior to registration under the 1940 Act or will it be adjusted for the Fund’s current expenses. If the latter, please explain supplementally how it will be adjusted. Response: We confirm that the Fund will include actual performance information for periods prior to its registration under the 1940 Act; such performance information will not be adjusted for the Fund’s current expenses. INVESTMENT ADVISER AND SUBADVISER 15. Comment: Please confirm in the Prospectus that the Adviser will be registered with the Securities and Exchange Commission. Response: The Prospectus has been amended to confirm that the Adviser is registered as an adviser under the Investment Advisers Act of 1940. Page 5 TAX INFORMATION (PAGE 10) 16. Comment: If the Fund plans to rely on the Summary Prospectus Rule 498, please note that it must include the information required by Rule 498(b)(3)(ii)(B). Response: The information required by Rule 498(b)(3)(ii)(B) has been included in the above-mentioned section of the Filing. INVESTMENT PROCESS (Page 12) 17. Comment: Consider moving this section under the Principal Investment Strategies of the Fund heading as it seems more appropriate to be included there. Response: “Investment Process” has been moved under “Principal Investment Strategies of the Fund” in the Filing. PRINCIPAL INVESTMENT STRATEGIES OF THE FUND (PAGE 12) 18. Comment: The disclosure states that the “Investment Adviser or Subadviser, as applicable, are not required to sell portfolio securities if they are subsequently downgraded below investment grade after they are purchased by the Fund.” Please advise if the Adviser would consider other investments when determining whether to sell a security that was downgraded. Response: We confirm that the Adviser will consider the ratings of its other investments when determining whether to sell a security that was downgraded. PRINCIPAL RISKS (Page 13) 19. Comment: Please revise the numbering on what is now numbered as SAI-13. Response: We have revised the page numbering in the document to be internally consistent. 20. Comment: Please include more detailed disclosure that expands on the risk disclosure provided in response to Item 4. See Investment Management Guidance Update 2014–08 for guidance on the risk disclosure to be provided in response to Item 9. Response: The risk disclosure has been revised to satisfy the requirements of Items 4 and 9 in accordance with the referenced Guidance. 21. Comment: (Page 17). “Lower-Rated and Below Investment Grade Securities Risk”. Please disclose that these also may be referred to as junk bonds. Response: The above-mentioned disclosure has been revised in the Filing as requested. Page 6 MANAGING YOUR FUND ACCOUNT (Page 21) 22. Comment: (Discussion regarding sales charges). Please include the disclosure required by Item 12(a)(5) of Form N-1A. Response: As shares may only be purchased through a brokerage account maintained with the Distributor or a Dealer, and not directly via telephone, mail or website, the above-referenced disclosure has not been added to the Amended Registration Statement. MANAGING YOUR FUND ACCOUNT — Market Timing (Page 23) 23. Comment: Please provide a statement of the specific basis for the view of the Board that it is appropriate for the Fund not to have market timing procedures as required by Item 11(e)(3) of Form N-1A. Response: The above-mentioned disclosure has been included in the Filing. MANAGING YOUR FUND ACCOUNT — REDEEMING SHARES (PAGE 23) 24. Comment: Please disclose the methods the Fund typically expects to use to meet redemption request as required by Item 11(c)(8) of Form N-1A. Response: The above-mentioned section has been revised to include the methods that the Fund typically expects to use to meet redemption requests, as required by Item 11(c)(8) of Form N-1A. MANAGING YOUR FUND ACCOUNT — ADDITIONAL INFORMATION (PAGE 24) 25. Comment: Please provide the information required in response to Item 11(e) regarding frequent trading of Fund Shares. Response: The above-mentioned disclosure has been included in the Filing. 26. Comment: The disclosure states: “If you want to redeem recently purchased Shares, the Fund may delay payment to assure that it has received good payment. If you purchased shares by check, this can take up to 15 days.” Please revise the first sentence to say: “If you want to redeem Shares that you recently purchased by check…” Response: The above-mentioned disclosure has been revised in the Filing as requested. DISTRIBUTION ARRANGEMENTS 27. Comment: (Page 25). In the final paragraph. Please disclose that because these are paid out of the Fund’s assets on an ongoing basis, over time these fees will increase the cost of your investment. See Item 12(b)(2) of Form N-1A. Page 7 Response: The above-mentioned disclosure has been included in the Filing. INVESTMENT ADVISORY AND OTHER ARRANGEMENTS — INVESTMENT ADVISORY CONTRACT (PAGE 25) 28. Comment: First paragraph – the Staff notes that the basis for the fee appears to be changing from net to gross assets. Please confirm whether shareholders approved this change, and if there was no shareholder approval, were shareholders notified of this change including the impact it would have on fees? Please explain in the correspondence that there actually is no change in the fee. Response: We confirm that there has been no change in the actual advisory fee under the Investment Advisory Agreement. While the advisory fee is disclosed based on net assets in the fee table, the actual advisory under the Investment Advisory Agreement continues to be charged on the basis of the same percentage of gross assets. For purposes of disclosure in the fee table only, the dollar amount of the actual advisory fee charged to investors is recalculated so as to be based on net assets, resulting in a higher numerical percentage, although no actual change in fees has occurred. DIVIDENDS AND TAXES (PAGE 28) 29. Comment: (Fourth paragraph on page 29). If the Fund has received an opinion from Puerto Rico counsel about its tax status, please include as an exhibit as required by Rule 436(a). If it has not received an opinion, please explain why one is not necessary. Response: The Fund has received the necessary tax advice in connection with the offering, and on that basis and in light of the nature of the Fund’s offering of securities respectfully submits that a tax opinion is not required with respect to the Filing. 30. Comment: “United States Taxation” subsection (page 32). Please include disclosure regarding the tax consequences to U.S. Investors (i.e., non-Puerto Rico residents). Response: The tax consequences to U.S. Investors has been included in the above-mentioned section of the Filing. GENERAL INFORMATION (PAGE 37) 31. Comment: If the Fund is incorporating the Statement of Additional Information by reference, please state so. Response: A discussion of the incorporation by reference of the Statement of Additional Information has been included in the above-mentioned section of the Filing. GENERAL INFORMATION – ANNUAL/QUARTERLY REPORTS 32. Comment: Please advise if the header “Annual/Quarterly Reports” should be revised to “Annual/Semi-Annual Reports”. Page 8 Response: The above-mentioned disclosure has been revised to refer to “Annual/Semi-Annual Reports.” 33. Comment: (P