Oppenheimer Commodity Strategy Total Return Fund Inactive
Filed: 28 Sep 06, 12:00am
OppenheimerFunds, Inc.
Two World Financial Center
225 Liberty Street, 16th Floor
New York, New York 10281-1008
September 28, 2006
Via Electronic Transmission
Richard Pfordte, Esq.
Vincent DiStefano, Esq.
U.S. Securities and Exchange Commission
Mail Stop 0-7, Filer Support
6432 General Green Way
Alexandria, Virginia 22312
Re: Registration Statement on Form N-1A
Oppenheimer Real Asset Fund
(SEC File Nos. 333-14087; 811-07857)
Dear Messrs. Pfordte and DiStefano:
We have reviewed your comments on Post-Effective Amendment No. 14
("Amendment 14") to the registration statement on Form N-1A (the "Registration
Statement") of the Oppenheimer Real Asset Fund (the "Fund") filed with the
Commission on August 8, 2006. For your convenience, we have included each of
your comments in italics, followed by our response. The captions used below
correspond to the captions the Fund uses in its Registration Statement and
defined terms have the meanings defined therein. The Fund is filing
Post-Effective Amendment No. 15 ("Amendment 15") to the Registration Statement,
marked to show changes from the disclosure contained in Amendment 14. Page
numbers listed in our responses below refer to page numbers in the Amendment
15 courtesy copies of the Prospectus, SAI and Part C provided to you separately.
We are also filing a request for acceleration of the effectiveness of Amendments
14 and 15.
General
1. Explain why the Fund's transfer of up to 25% of its assets to the
Subsidiary would not constitute a "reorganization" requiring a shareholder vote
under state law.
The Fund's Declaration of Trust specifically permits the creation, "without
the vote or consent of Shareholders," of "one or more corporations, trusts,
partnerships, limited liability companies, associations, or other organization,
under the laws of any jurisdiction, to take over all or a portion of the Trust
property . . . or to carry on any business in which the Trust shall directly or
indirectly have any interest." Massachusetts counsel has also confirmed that,
under Massachusetts law, these transactions would not otherwise constitute a
reorganization or require a shareholder vote.
2. Explain why the sale of shares of the Fund would not constitute an
indirect distribution of shares of the Subsidiary.
The sale of the Fund's shares in the U.S. will not constitute an indirect
distribution of the shares of the Subsidiary. The Fund will be the only
shareholder of the Subsidiary, and the Subsidiary's shares will not be offered
for sale or otherwise marketed to other investors. We are not aware of a
provision of the federal securities laws, or any Commission or Commission staff
interpretation thereunder, that would suggest that the shares of a wholly-owned
subsidiary comprising less than 25% of a registered investment company's net
assets are considered to be indirectly offered or distributed to the public
solely by virtue of an offering of the investment company's shares. Anecdotally,
we note that many public operating companies have multiple subsidiaries, the
shares of which are not required to be separately registered under the
Securities Act of 1933, as amended (the "Securities Act"). In addition, the
Commission staff, on several occasions, has provided no-action relief to
registrants that proposed to invest in a wholly-owned investment company
subsidiary organized in a non-U.S. jurisdiction.(1) In these letters, applicants
sought and received no-action assurance that the registered fund's investment in
a foreign, wholly-owned, unregistered investment company subsidiary would not
constitute an indirect offering of the foreign investment company subsidiary's
shares in violation of Section 7(d) of the Investment Company Act of 1940, as
amended (the "Investment Company Act"). We believe that the no-action letters
with respect to Section 7(d) support the conclusion that the Fund's investment
in the Subsidiary does not result in the indirect distribution of the
Subsidiary's shares.
The Fund and the Subsidiary have agreed that the Subsidiary will be subject
to certain provisions of the Investment Company Act and the Rules and
Regulations thereunder as reflected in the Fund's Prospectus & SAI.
Additionally, the Fund has included in the Prospectus all information about the
Subsidiary necessary to inform shareholders about the operation of the
Subsidiary and additional risks of the Subsidiary. The staff has requested, and
the Fund has agreed, to require the directors of the Subsidiary to sign the
registration statement of the Fund.
Section 48(a) of the Investment Company Act, in essence, prohibits an
investment company from doing indirectly what it cannot do directly under the
federal securities laws. The Commission staff has stated that a transaction
falls within Section 48(a) if the transaction is a "sham" or is effected for no
other purposes than evading the Investment Company Act,(2) or if there is no
"legitimate business reason" for the transaction.(3) Consequently, although the
shares of capital stock of the Subsidiary are not directly being distributed to
the public, if the Fund's investment in the Subsidiary were viewed as a "sham"
or without a "legitimate business reason," it could be argued that the Fund's
investment in the Subsidiary indirectly resulted in the distribution of the
Subsidiary's shares. As discussed below, the Fund has legitimate business
reasons for investing in the Subsidiary. Consequently, we do not believe Section
48(a) would apply to transform the Fund's investment in the Subsidiary into an
indirect distribution of the Subsidiary's shares.
3. Please provide a copy of the private letter ruling from the Internal
Revenue Service with regard to the Fund and the Subsidiary.
A copy of the private letter ruling has been provided supplementally.
4. Confirm that, although the Subsidiary is not a registered investment
company, it will comply with the provisions of the Investment Company Act with
regard to its fee structure, liquidity and leverage limits and other investment
policies, and that it will follow the same accounting rules and pricing
procedures and that its assets will be held by the same custodian and its
financial statements will be audited by the same independent registered public
accounting firm as the Fund.
We confirm that the Subsidiary will comply with the provisions of the
Investment Company Act with regard to its fee structure, liquidity and leverage
limits, and its other investment policies and restrictions, and that it will
follow the same accounting rules and pricing procedures as the Fund. We further
confirm that its assets will be held by the Fund's custodian and its financial
statements will be audited by the same independent registered public accounting
firm as the Fund's. Disclosure summarizing the above has been added to the
Prospectus (on pages 24 and 27) and to the SAI (on pages 3, 36, 40, 62 and 65)
and as an undertaking on page C-30 of Part C. The advisory and other material
agreements of the Subsidiary are being filed as exhibits to Amendment 15.
5. Explain whether the Subsidiary will be able to increase its management
fee, and thereby increase the indirect expenses to the Fund's shareholders,
without a vote of the Fund's shareholders.
The Fund and the Subsidiary have undertaken to comply with the requirements
of Section 15(c) of the Investment Company Act with respect to the advisory
agreement of the Subsidiary. Therefore the advisory agreement of the Subsidiary
will be subject to annual review and approval by the Fund's Board of Trustees as
part of the Board's review and approval of the Fund's own advisory agreement.
Additionally, the advisory agreement of the Subsidiary is the same as that of
the Fund in all material respects except that it provides that if the Fund's
advisory agreement is terminated, the Subsidiary's advisory agreement will also
terminate. The Manager has undertaken to seek shareholder approval prior to any
increase in the advisory fees of the Subsidiary that would impose additional
costs on the Fund and the Fund's shareholders will have the ability to vote to
terminate the advisory agreement of the Subsidiary to the same extent that they
have the ability to vote to terminate the advisory agreement of the Fund. This
information is included on pages 24 of the Prospectus and as an undertaking on
Page C-30 of Part C.
6. Will information about the Subsidiary's expenses be included in the
Fund's registration statement and shareholder reports?
Yes. The Fund intends to provide information in the Fund's registration
statement, and the amendments thereto, and in the Fund's shareholder reports
regarding the expenses of the Subsidiary that are indirectly borne by the Fund.
That information will include the Subsidiary's expense ratio and its payment of
brokerage commissions. In addition, the Fund will include the Subsidiary's
financial statements in its annual reports (which will include the full audited
financial statement of the Subsidiary) and semi-annual reports (which will
include unaudited financial statements of the Subsidiary) provided to
shareholders, which reports are also available to shareholders of the Fund upon
request, as stated on page 24 of the Prospectus and as an undertaking on page
C-30 of Part C. No financial statements for the Subsidiary are available at this
time; however, they will be filed with the Fund's annual report for its fiscal
year ended August 31, 2006.
7. Is the Fund's investment in the shares of the Subsidiary an illiquid
investment?
No, the Subsidiary will provide the Fund with daily liquidity.
8. Are either the Fund or the Subsidiary required to be registered as a
Commodity Pool Operator or a Commodity Trading Advisor?
Neither the Fund nor the Subsidiary is required to be registered as a
Commodity Pool Operator. However, Oppenheimer Real Asset Management, Inc., the
sub-advisor to the Fund and to the Subsidiary, is registered with the
Commodities Futures Trading Commission as a Commodity Trading Advisor.
9. Explain whether the trading and investment activities of the Fund and
the Subsidiary will be joint transactions for purposes of section 17(d) under
the Investment Company Act.
As explained below, the fact that the Subsidiary and the Fund share a
common investment adviser and sub-advisor would not constitute a joint
enterprise under Section 17(d) or Rule 17d-1. Additionally, none of the
self-dealing abuses that Section 17(d) and Rule 17d-1 are designed to prevent
are present in the Fund's investment in the Subsidiary since the Fund fully owns
and controls the Subsidiary and both are ultimately under the supervision and
control of the Fund's independent trustees.
Section 17(d) provides:
"It shall be unlawful for any affiliated person of or principal underwriter
for a registered investment company...or any affiliated person of such a person
or principal underwriter, acting as principal to effect any transaction in which
such registered company, or a company controlled by such registered company, is
a joint or a joint and several participant with such person, principal
underwriter, or affiliated person, in contravention of such rules and
regulations as the Commission may prescribe for the purpose of limiting or
preventing participation by such registered or controlled company on a basis
different from or less advantageous than that of such other participant."
Rule 17d-1(c), which implements the provisions of Section 17(d), defines a
joint enterprise as "any written or oral plan, contract, authorization or
arrangement, or any practice or understanding concerning an enterprise or
undertaking whereby a registered investment company or a controlled company
thereof and any affiliated person of or a principal underwriter...have a joint
or a joint and several participation, or a share in the profits of such
enterprise or undertaking, including, but not limited to, any stock option or
stock purchase plan, but shall not include an investment advisory contract
subject to section 15 of the Act."
We do not believe that the Fund's investment in the Subsidiary or the
Subsidiary's advisory arrangements with the Manager and Sub-Advisor constitute a
joint enterprise for purposes of Rule 17d-1. The Commission and the courts have
recognized that, for an arrangement to be subject to Section 17(d) and Rule
17d-1, some element of combination or profit-sharing motive generally must be
present.(4) We do not believe that the proposed arrangements present the element
of combination or profit. In particular, we note that the Manager has
contractually agreed to waive advisory fees paid by the Fund to the extent that
the Subsidiary pays the Manager advisory fees, with a corresponding reduction in
the fees received by the Sub-Advisor. Consequently, neither the Manager nor the
Sub-Advisor will realize any additional benefits from the arrangement. Moreover,
all profits of any sort that are earned by the Subsidiary will inure solely to
the benefit of the Fund, which is the 100% owner of the Subsidiary.
In addition, we note that the Commission staff has previously considered
subsidiary arrangements similar to those proposed by the Fund and either
provided no-action relief from Section 17(d) and Rule 17d-1,(5) or did not find
it necessary to address whether Section 17(d) or Rule 17d-1 applied to the
proposed arrangements.(6)
10. Will any other entity or person own shares of the Subsidiary in the future?
No, the Fund will be the sole shareholder of the Subsidiary. The Subsidiary
does not intend to offer its shares to any other person or entity. Further, the
Fund does not intend to make a direct or indirect distribution of the
Subsidiary's shares. Any such distribution that may occur at any future time
would be subject to all requirements for the registration of the Subsidiary's
shares. Disclosure regarding this policy is on page 23 of the Prospectus and as
an undertaking on page C-30 of Part C.
11. Will the Fund invest 80% of its assets in "real assets" or commodities?
No. The Fund will invest in commodity-linked derivative investments which
provide investors with exposure to the investment returns of "real assets" that
trade in the commodities markets without investing directly in physical
commodities. The Fund will invest a substantial portion of the Fund's assets in
U.S. government securities and other debt securities to provide liquidity and
income. Although the Fund will not invest directly in commodities, it will
normally provide a very high level of exposure to the commodities market through
its use of this strategy. The Fund's Board of Trustees will consider renaming
the Fund to more closely tie the Fund's name to its investment strategy of
investing in commodity-linked instruments and its total return investment
objective. We anticipate that such name change will be reflected in the Fund's
annual update of its registration statement for the Fund's fiscal year ended
August 31, 2006.
Prospectus
About the Fund - The Fund's Investment Objective and Principal Investment
Strategies
What Does the Fund Mainly Invest In?
12. Define "hybrid instruments," "commodity-linked derivative investments,"
and "structured securities" when those terms are first used.
We have revised the disclosure to describe more clearly, and to distinguish
the types of, instruments in which the Fund invests. In particular, we have made
the following revisions:
o Hybrid instruments: "Hybrid instrument" is defined on page 3 of the
Prospectus as "a derivative instrument that has characteristics of a security
and of a commodity-linked derivative. Its value is linked to the value of a
commodity, commodity index or commodity futures contract."
o Commodity-linked derivatives: The Prospectus has been revised to indicate
that the Fund may invest broadly in derivatives, including "commodity-linked
derivative investments." That term is defined on page 3 of the Prospectus to
mean hybrid instruments and futures and options contracts the value of which is
linked to a commodity, commodity index, or commodity futures contract.
o Structured securities: The Prospectus has been revised to delete general
references to "structured securities," and to refer to structured securities as
a type of hybrid instrument in which the Fund may invest. Please see pages 12
and 13 of the Prospectus.
13. Disclose the reasons for the creation of the offshore subsidiary.
We have added disclosure to this section that the Subsidiary is expected to
provide the Fund with exposure to the investment returns of commodities markets
within the limitations of the U.S. federal tax requirements that apply to the
Fund.
We have also included a more detailed description in the section "About the
Fund's Investments - The Fund's Principal Investment Policies and Risks -
Investment in Wholly-Owned Subsidiary." That sections states that "[i]nvestment
in the Subsidiary is expected to provide the Fund with exposure to the
commodities markets within the limitations of the federal tax requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Subchapter M requires, among other things, that the Fund derive at least 90% of
its income from securities or derived with respect to its business of investing
in securities (typically referred to as "qualifying income"). Income from
certain of the commodity-linked derivatives in which the Fund invests may not be
treated as "qualifying income" for purposes the 90% income requirement. The Fund
has received a private letter ruling from the Internal Revenue Service ruling
that income from the Fund's investment in the Subsidiary will constitute
"qualifying income" for purposes of Subchapter M."
How do the Portfolio Managers Decide What Investments to Buy or Sell?
14. Add descriptions of the index-linked and commodity-linked securities
that the Fund invests in.
We have replaced references to "index-linked securities" and
"commodity-linked securities" with the term "hybrid instruments." We have added
the definition of "commodity-linked derivatives" noted in our response to
comment 11 above.
15. What is the relative proportion of debt securities to hybrid instruments?
As of August 31, 2006, the Fund's net assets were approximately $1.72
billion, assuming clearance of all outstanding trades. Of that amount, 79.4%
consisted of debt securities and 20.7% consisted of hybrid instruments
(providing net notional exposure to the commodities markets of 61.4%). The Fund
also has exposure to the commodities markets through futures positions that do
not have a market value for accounting purposes, but which provide net notional
exposure to the commodities markets of approximately 35.9%. Please note that the
combined market value of debt securities and hybrid instruments slightly exceeds
100% of net assets because of the settlement periods for certain transactions.
Main Risks of Investing in the Fund
16. Will the Fund or the Subsidiary have high portfolio turnover? If so,
disclose the risks of high turnover in this section.
The Fund's portfolio turnover has been less than 100% for each of its last
four fiscal years, and it is not currently anticipated that the Fund or the
Subsidiary will have high portfolio turnover. Consequently, we have not included
additional portfolio turnover information in the Prospectus.
17. Does the Fund have any limitations on the maturity or duration of the
debt instruments it purchases? If so, disclose those limitations.
The Fund does not have any policies limiting the maturity or duration of
the debt securities in which it invests.
18. In the section "Risks of Leverage," include a more detailed description
of leverage risks.
We have revised the disclosure as requested.
Fees and Expenses of the Fund
19. Does the Manager charge a fee to the Subsidiary under the advisory
agreement for that entity? If so, is there a "layering" of fees?
The Manager does charge a fee to the Subsidiary for the management of the
Subsidiary's portfolio investments. However, this fee does not result in a
layering of fees because. As stated on pages 12 (in footnote 6 to the fee table)
and 24 of the Prospectus and page 62 of the SAI, the Manager has contractually
agreed to waive the management fee it receives from the Fund in an amount equal
to the management fee paid to the Manager by the Subsidiary.
The Fund's Principal Investment Policies and Risks
Commodity-Linked Derivative Investments
20. Describe the difference between the Fund's hybrid instruments that
qualify for exemption from regulation under the Commodity Exchange Act and those
that do not so qualify.
A description of the characteristics that are necessary for a hybrid
instrument to qualify for exemption from Commodity Exchange Act regulations is
included in the second paragraph and the bullet points following it in the
section "About the Fund's Investments - The Fund's Principal Investment Policies
and Risks - Hybrid Instruments."
Index-Linked and Commodity-Linked "Structured" Securities
21. Add counter-party risk to this section.
This section has been revised to refer only to "hybrid instruments" and
lists only the special risks to which conventional debt and equity securities
may not be subject. To address the counterparty risk of hybrid investments, we
have included discussion of hybrid instrument counterparties in the separate
section regarding "Credit Risk" on page 7 of the Prospectus.
22. Explain how leverage occurs with these instruments and the Fund's limits on
leverage.
The requested disclosure has been added to the fourth bullet point in the
section "Special Risks of Hybrid Instruments" on page 6 of the Prospectus, and
to the discussion of in "Risks of Leverage" on page 8 of the Prospectus.
Investment in Wholly-Owned Subsidiary
23. Add further information regarding the Fund's wholly owned Subsidiary.
We have provided additional disclosure about the operation and management
of the Subsidiary in this section, as noted in our response to comment 13 above.
Industry Focus
24. List the five basic commodity sectors of the Goldman Sachs Commodity Index
(GSCI).
We have included the requested disclosure in this section.
Investments by "Funds of Funds"
25. Will the "funds-of-funds" that invest in the Fund be subject to the
Fund's 2% redemption fee?
The funds-of-funds that invest in the Fund will not be subject to the
Fund's 2% redemption fee. Those funds are subject to asset allocation policies
and will engage in periodic "rebalancing." They will not market time the Fund.
About Your Account - How to Buy Shares
At What Price are Shares Sold? - Net Asset Value
26. In calculating the entities' net asset values, will the investments of
the Fund and the Subsidiary be "marked-to-market"?
Both the Fund and the Subsidiary "mark to market" their investments for
purposes of calculating their net asset values. We have added disclosure to this
section regarding that policy on page 27 of the Prospectus.
Buying Through a Dealer
27. If a shareholder submits a purchase request to his or her dealer before
4:00 pm but the dealer does not place the order until after 5:00 pm, will the
investor's purchase or sale be valued at the day's net asset value?
Orders placed by an investor before the Fund's 4:00 pm cut-off time will
receive the day's net asset value. We have revised our disclosure on page 27 of
the Prospectus to clarify that policy.
Statement of Additional Information
About the Fund - Additional Information About the Fund's Investment Policies and
Risks
The Fund's Investment Policies
28. Include the information regarding the five principal sectors of the
Goldman Sachs Commodity Index in the Prospectus, as appropriate.
This disclosure has been added to the Prospectus, as noted in our response
to comment number 23, above..
Investment in Wholly-Owned Subsidiary
29. Include the information in this section in the Prospectus sections "How
the Fund Invests" and "Main Risks of the Fund," as appropriate.
This disclosure has been added to the Prospectus, as requested.
Investments in Hybrid Instruments
30. Include the information in these sections in the Prospectus, as appropriate.
This disclosure has been added to the Prospectus, as requested.
Counterparty Risk
31. Distinguish the "risks" from the descriptions and policies in this section.
This disclosure has been revised, as requested.
Commodity Futures Contracts
32. Include additional information about Commodity Futures Contract in the
discussion of these instruments in the Prospectus as appropriate.
This disclosure has been added to the Prospectus, as requested.
Options
33. Please add disclosure to the Prospectus regarding the following types
of investments: OTC options, exchange traded options, swaps, options on swaps
Disclosure has been added to the Prospectus, as requested.
Leverage
34. Add the appropriate information from this section to the Prospectus.
Supplementally quantify the Fund's anticipated use of leverage.
This disclosure has been added to the Prospectus, as requested.
The Fund typically seeks to provide dollar-for-dollar investment exposure.
Consequently, the Fund's portfolio, in the aggregate, is not leveraged.
Individual investments may create economic leverage, but the Fund complies, and
the Subsidiary will comply, with Section 18 of the Investment Company Act and
Commission and Commission staff requirements relating to asset segregation and
other methods designed to reduce the leverage of any one instrument.
Other Investment Techniques and Strategies
Foreign Securities
35. Add information regarding foreign securities from this section to the
Prospectus.
This disclosure has been added to the Prospectus, as requested.
Special Risks of Emerging Markets
36. Add information regarding foreign securities from this section to the
Prospectus.
This disclosure has been added to the Prospectus, as requested.
Loans of Portfolio Securities
37. Add information regarding foreign securities from this section to the
Prospectus.
This disclosure has been added to the Prospectus, as requested.
Other Investment Restrictions - What Are "Fundamental Policies?"
Does the Fund Have Additional Fundamental Policies?
38. Include the Fund's concentration policies in the section of the
Prospectus that responds to Item 2 of Form N-1A.
The Fund's concentration policies have been added to the section "How do
the Portfolio Managers Decide What Investments to Buy or Sell?" in the
Prospectus, as requested.
Appendix D
39. Summarize this disclosure regarding Qualifying Hybrid Investments in
the Prospectus.
This disclosure has been summarized in the section "Hybrid Instruments" in
the Prospectus, as requested.
The undersigned hereby acknowledges that (i) should the Commission or the
staff, acting pursuant to delegated authority, declare the filing effective, it
does not foreclose the Commission from taking any action with respect to the
filing; (ii) the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not relieve the
Registrant from its full responsibility for the adequacy and accuracy of the
disclosure in the filing; and (iii) the Registrant may not assert this action as
defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
Please direct any questions you may have regarding the draft amendment or
this letter to:
Nancy S. Vann
Vice President and Assistant Counsel
Tel: (212) 323-5089
Fax: (212) 321-4071
nvann@oppenheimerfunds.com
Sincerely,
/s/ Robert Hawkins
Robert Hawkins
Assistant Vice President &
Assistant Counsel
212.323.5039
cc: Board II Board of Trustees
Myer, Swanson, Adams & Wolf, P.C.
Bell, Boyd & Lloyd LLC
Phillip S. Gillespie, Esq.
Gloria LaFond
Nancy S. Vann, Esq.
Robert Zack, Esq.
(1) Infra footnotes 5 and 6.
(2) See, e.g., Cornish and Carey Commercial, Inc., SEC No-Action Letter
(pub. avail. June 21, 1996) (Section 3(c)(1)).
(3) See, e.g., Shoreline Fund, L.P., SEC No-Action Letter (pub. avail. Apr.
21, 1994) (Section 3(c)(1)).
(4) See Massachusetts Mutual Life Insurance Company (pub. avail. June 7,
2000) and SMC Capital, Inc. (pub. avail. Sept. 5, 1995) (citing In re Steadman
Security Corp., [1974-75 Transfer Binder] Fed. Sec. L. Rep. (CCH)P. 80,038 at
84,848 (Dec. 20, 1974) and SEC v. Talley Industries, Inc., 399 F.2d 396, 403 (2d
Cir. 1968), cert. denied, 393 U.S. 1015 (1969)).
(5) See The Spain Fund, Inc., SEC No-Act. Letter (pub. avail. Nov. 2,
1987). The incoming letter indicated that a registered fund proposed to
establish a Netherlands entity substantially equivalent to a limited partnership
(the "Partnership") of which the fund would be the sole general partner. A
wholly-owned subsidiary of the fund (the "Subsidiary") would be established
under Netherlands law as a limited liability company with the investment company
as the subsidiary's sole shareholder solely for the purpose of acting as the
sole limited partner of the partnership. The fund's investment adviser would
manage the investments of the Partnership, subject to the supervision of the
fund's board of directors in the fund's role as general partner, without any
charge other than the investment advisory fee it would be receiving from the
fund.
(6) See Templeton Vietnam Opportunities Fund, Inc., SEC No-Action Letter
(pub. avail. Sept. 10, 1996)(proposing to invest registered fund assets in one
or more Vietnamese LLCs, with (a) the fund acquiring 100% of the equity interest
in one or more Hong Kong or other foreign holding companies (each a "Holding
Company"), each of which would purchase securities of a Vietnamese LLC, and (b)
the fund's investment adviser managing each Holding Company's assets, subject to
the supervision of the fund's board of directors); see also South Asia
Portfolio, SEC No-Action Letter (pub. avail. March 12, 1997)(proposing
arrangement under which (a) a registered fund would establish a Mauritius
limited life company, of which the fund would be the sole shareholder and
through which investments in Indian securities would be made, and (b) fund's
investment adviser would manage the investments of the Mauritius company,
subject to the supervision of the fund's board of trustees, without any charge
for advisory services other than the investment advisory fee received from the
fund).