In addition, income distributed by the U.S. Master`s Fund to a non-U.S. feeder fund would generally be subject to the U.S. withholding tax of 30%. Depending on the tax structure and investment strategies of the funds, this withholding tax may be reduced to the extent that the distributions of the U.S. Master`s Fund come from qualified sources (for example. B interest on U.S. borrowers and capital gains from the sale of securities). In addition, depending on the circumstances, such withholding tax may be reduced under an applicable income tax agreement and/or be set off against the non-U.S. tax debt of non-U.S.

investors in the countries where they reside for tax purposes. Therefore, U.S. master`s funds, structured in such a way as to limit the potential impact of U.S. withholding tax, may be the funds most likely to benefit from the facilities provided for in the Staff Letter. Feeder Funds, which invest capital in a Master Fund, act as separate legal entities from the Master Fund and may be invested in more than one Master Fund. The different feeder funds invested in a master`s fund are often very different from things like effort fees or minimum investment values and generally do not have the same net asset value (NAV). Just as a feeder fund is free to invest in more than one master fund, a master fund is also free to accept investments from a number of feeder funds. Jurisdiction of the SEC for the Proposed Structure Pursuant to Section 12(d)(1)(E)(i), the primary insurer of the acquiring fund must be a dealer registered under the 1934 Act or a person controlled by such dealer dealer. Section 12(d)(1)(E)(i) appears to be intended to ensure that the SEC has sufficient jurisdiction to control and track claims against a major insurer in the course of its acquirer-related activities. The Request Letter found that non-US Feeder funds may not have a primary insurer that is a broker registered or controlled by the 1934 act, or that they may not have a primary insurer at all.

However, based on the affiliations between the parties to the proposed structure (as described above), the General Staff agreed that these jurisdictional issues be addressed, provided that the Feeder Fund Advisor: with respect to Feeder funds operating in the United States, it is customary for the master fund to be established as an offshore entity. . . .