Please note that the following information may be in need of an update.

A non-U.S. company that has U.S. trading activity usually seeks to bring itself within a “safe harbour” from taxation that is provided in the U.S. tax regulations.  In short, a Fund that trades stock, securities or commodities for its own account can avoid U.S. taxation on that activity.  Key exceptions are dividends (and certain “dividend equivalent payments”) and non-portfolio interest; these are subject to withholding tax.  One challenging area today arises from the creativity that many Fund sponsors and investment managers exhibit.  Products no longer neatly fit into the category of stock, securities or commodities and, therefore, cannot fit into the safe harbour.  Such activities risk being labelled as trade or business activity and, therefore, may become subject to U.S. taxation at full U.S. corporate income tax rates.  For example, a Fund may be subject to U.S. tax on certain of its investments in companies or pass-through investment vehicles that operate businesses in the United States and are also treated as partnerships for U.S. federal income tax purposes, or may be subject to U.S. tax if it engaged in certain lending activities in the U.S. that are regarded as the conduct of a U.S. trade or business.  In addition, investments in U.S. real property assets or in entities that invest primarily in U.S. real property assets would subject a Fund to U.S. income tax.