Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 7

Investor compliance with the laws and regulations in the home countries of their investments should be part of their regulators' due diligence process. They, in turn, should be treated equitably in the home country of their investments especially in respect to their rights to shareholder benefits and concessionary arrangements under double tax agreements.

1.	Do domestic regulators monitor the procedures in place at their locally based cross-border custodians to assure compliance with the laws and regulations of the home countries of their investments?	Yes, regulations require locally-based cross border custodians to review the local laws and regulations of the home country of assets for which they are custodian and to share such information with 1940 Act mutual fund companies, as specified under the specific rules that apply, namely 17f-4, 17f-5 and 17f-7. In addition, the Federal Financial Institutions Examination Council is a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS) and to make recommendations to promote uniformity in the supervision of financial institutions. Examination schedules vary depending on the type of institution, the size and volume of transactions processed by the institution, and the regulatory body involved which depends upon the type of institution involved.
2.	What are the areas (e.g. benefits, investor compensation) where foreign investors are not treated in the same way as local investors?	There is minimal discrimination under US law of foreign investors. There are a few specific issues where problems may arise and these are: Certain maritime and communication issues are subject to special reporting requirements concerning ownership by non-U.S. persons. Investments in regulated industries such as banking, communications, airlines, nuclear energy and defence are monitored by US government agencies in the interest of national security.
3.	Can sales proceeds and income be repatriated without any restrictions?	There are no restrictions on repatriation of funds although foreign investors should establish with their professional advisors whether they are subject to US tax on capital gains.
4.	Are double tax agreements simple to apply, and do foreign investors receive promptly their full entitlement to dividends and interest payments?	The US has established double taxation rules with several countries. To receive maximum benefit under such double taxation treaties, foreign financial intermediaries on behalf of their clients are required to apply to the Internal Revenue Service (IRS) to receive qualified intermediary status. With such arrangements in place, maximum tax relief at source applies.