What does TRS stand for?

The new shares, worth $79 million, are backed by a total return swap with an investment grade counterparty, the fund said on its Web site.

Of interest in the decision was the indication that the Court may have been prepared to treat an economic interest in securities through cash-settled equity total return swaps as constituting beneficial ownership for the purpose of public disclosure requirements.

Evolution says the latest purchases are being made via a total return swap tolimit the downside if the share price falls.

The court found, however, that the bank or other financial counterparty to a large total return swap almost always hedges its position through a matching purchase of shares.

During the three months ended June 30, 2006, the company made nine new loans, three CMBS investments and one total return swap investment aggregating $378 million.

The RESIX transactions are credit-linked structures whereby the note holders obtain credit exposure to underlying notes and certificates via a total return swap with Bank of America, National Association (BOANA).

Unlike most catastrophe bonds, the transaction will not include a total return swap, under which a counterparty is contracted to ensure the collateral backing the bonds is sufficient to cover interest and principal repayments.

The court sidestepped ruling on the central issue in the case, whether total return swaps confer beneficial ownership on the "long" party to the swap, and instead decided the case based on a finding that the total return swaps in which the investment funds participated were part of a plan or scheme to evade the reporting requirements of Section 13(d) and, thus, conferred on the funds beneficial ownership of the shares underlying the swaps.