U.S. Securities & Exchange Commission
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U.S. Securities and Exchange Commission

September 10, 2002

Ignacio Alvarez, Esq.
Pietrantoni, Mendez & Alvarez, LLP
Banco Popular Center, Suite 1901
Hato Rey, PR 00918

Re: Popular High Grade Fixed-Income Fund
TP No.: 02-114

Dear Mr. Alvarez,

In regard to your letter dated September 09, 2002, as supplemented by conversations with the staff, this response is attached to the enclosed photocopy of your letter. By doing so, we avoid having to recite or summarize the facts set forth in your letter. Each defined term in our response has the same meaning as defined in your letter, unless otherwise noted.


As a consequence of the continuous offering of the Popular High Grade Fixed-Income Fund (the "Fund"), the Fund will be engaged in a distribution subject to Rule 102 of Regulation M. As a result, bids for or purchases of Fund shares by the Fund or an "affiliated purchaser" are prohibited during the "restricted period" specified in Rule 102.1 The Fund is not eligible for the exceptions contained in paragraphs (b)(2)(i), (b)(2)(ii) or (b)(3) or (d)(4) of Rule 102 referenced in your letter.2

In considering your exemptive request from Rule 102 of Regulation M, we note especially the following facts:

  1. The Fund is a non-diversified, open-end investment company under the Investment Companies Act of Puerto Rico and is registered with the Securities Division of the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico. Operation of the Fund is subject to the regulation of the Puerto Rico Commissioner.
  2. The Fund will be offered and sold exclusively to individuals who have their principal residence in Puerto Rico and entities with their principal office and principal place of business in Puerto Rico and the Fund's Prospectus will so state.
  3. The Fund's shares are not transferable, except in special circumstances by operation of law, and may not be generally disposed of, except through weekly redemptions by the Fund.
  4. Once the Fund is in operation and the initial subscription period has terminated, all subsequent offers to sell the Fund's shares will be made at a price equal to the next determined net asset value per share (determined as described in your letter), plus a sales charge to be disclosed in the Prospectus and any supplement thereto.
  5. All Fund shareholders will receive a Prospectus detailing the procedures associated with the Fund's Redemptions.
  6. All redemptions of Fund shares by the Fund will be at a price equal to the net asset value per unit (determined weekly as described in your letter) less a fee to be disclosed in the Prospectus and any supplement thereto,
  7. Information about net asset value of the Fund will be available daily from the Fund, the Distributor, and selected dealers. The Fund will publish net asset value per Fund share in a newspaper of general circulation in Puerto Rico at least weekly.

Based upon your representations and the facts presented, but without necessarily concurring in your analysis, the Commission hereby grants the Fund an exemption from Rule 102 of Regulation M to permit the Fund to conduct the daily Redemptions during periodic offerings or a continuous offering of Fund shares as described in your letter subject to the condition that no secondary market for the Fund develops.

The foregoing exemption is based solely on your representations and the facts presented to the staff, and is strictly limited to the application of Rule 102 to the Redemptions. In the event that any material change occurs with respect to any of those facts or representations, the Redemptions should be discontinued, pending presentation of the facts for our consideration.

In addition, your attention is directed to the anti-fraud and anti-manipulation provisions of the federal securities laws, including Sections 9(a)(2) and 10(b) of the Exchange Act and Rule 10b-5 thereunder. Responsibility for compliance with these and any other applicable provisions of the federal securities laws must rest with the Fund. The Division does not express any view with respect to any other questions that the Redemptions may raise, including but not limited to the adequacy of disclosures concerning, and the applicability of any other federal or state laws to, the Redemptions.

For the Commission, by the
Division of Market Regulation,
pursuant to delegated authority,

James A. Brigagaliano
Assistant Director


1 The terms "affiliated purchaser" and "restricted period" are defined in Rule 100 of Regulation M.

2 See Rule 102(b)(2)(i) (exempting closed-end investment companies making periodic repurchases of their shares pursuant to Rule 23c-3 of the Investment Company Act of 1940), (b)(2)(ii) (exempting periodic tender offers of securities by registered closed-end investment companies that engage in a continuous offering of their securities pursuant to Rule 415 under the Securities Act of 1933, (b)(3) (exempting redemptions by commodity pools or limited partnerships, at a price based on net asset value, which are effected in accordance with the terms and conditions of the instruments governing the securities; provide however, that such securities are not traded on a securities exchange, or through an inter-dealer quotation system or electronic communications network, and (d)(4) (exempting open-end management investment companies).

Incoming Letter

The incoming letter is attached in PDF format.


Modified: 02/10/2005