This structure, also known as a “hub-and-spoke,” allows investors residing in the United States and investors residing offshore to invest, indirectly, in the same corporate entity commonly known as the “master fund” by providing two feeder funds, one domestic and one offshore, that each invest all assets directly into the fund. The master fund can be structured as a limited partnership or an offshore company. Ordinarily, U.S. taxable investors investing in a master-feeder structure directly invest in a limited partnership organized in the United States. This limited partnership is referred to as the “domestic feeder.” The offshore investors and U.S. tax-exempt organizations (e.g., IRAs) directly invest in an offshore corporation. This offshore corporation is referred to as the “offshore feeder.” The hedge fund manager then purchases and sells securities in an account held in the name of the master fund.

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