In this series. Each separate election needs this statement. Who can sign it is a question of control. A fund with no audit history is not, for that reason, unable to provide it. The practice page is Cayman funds.
The statement that supports a qualified electing fund election is a specific list in the regulations. Audited financial statements are not on it. A fund in its first year is not disqualified by the absence of an audit history. The list is shorter than the version that circulates in term-sheet negotiations. It is not a letter of comfort.
What the regulation requires
Treasury Regulation section 1.1295-1(g)(1) requires the PFIC, for each year of the PFIC ending in a taxable year of a shareholder to which the shareholder's election applies, to provide a PFIC Annual Information Statement. The statement is a statement of the PFIC, signed by the PFIC or an authorized representative of the PFIC. It contains the following.
The first and last days of the taxable year of the PFIC to which the statement applies.
One of three earnings items. The shareholder's pro rata shares of the PFIC's ordinary earnings and net capital gain for that year. Or sufficient information to enable the shareholder to calculate those shares. Or a statement that the foreign corporation has permitted the shareholder to examine the books of account, records, and other documents in order to calculate ordinary earnings and net capital gain according to federal income tax principles, and to calculate the shareholder's pro rata shares. Ordinary earnings and net capital gain are the qualified-electing-fund measures. They are not the fund's local-law profit, and they are not an auditor's net income figure.
The amount of cash and the fair market value of other property distributed or deemed distributed to the shareholder during that taxable year of the PFIC.
And either a statement that the PFIC will permit the shareholder to inspect and copy the PFIC's permanent books of account, records, and such other documents as the PFIC maintains to establish that ordinary earnings and net capital gain are computed in accordance with U.S. income tax principles, and to verify those amounts and the shareholder's pro rata shares; or, in place of that statement, a description of alternative documentation the Commissioner has approved, together with the private letter ruling and the closing agreement. Paragraph (g)(2) says the Commissioner will consider alternative documentation in rare and unusual circumstances, and only by a ruling and a closing agreement. It is not an ordinary substitute. If the ruling is not in hand when the shareholder must elect, the shareholder may not use an alternative method for that year.
The Instructions for Form 8621 (December 2025) point to this regulation for the contents of the statement, and they confirm that the statement provides the pro rata share of ordinary earnings and net capital gain or information sufficient to calculate it. A shareholder who includes the earnings under a qualified electing fund election includes them whether or not the same amount was distributed. The statement reports the earnings shares and the distributions as separate items because they are separate items.
What it does not require
Paragraph (g) does not require audited financial statements, an auditor's opinion, a minimum period of operations, or a prior-year statement as a condition of the first year's statement. A new fund can provide a statement for its first year if the books can support the computation. The condition is the books. It is not a track record.
If the PFIC uses the third earnings alternative, the examination-of-books statement in paragraph (g)(1)(ii)(C), the shareholder must attach a statement to Form 8621 that the shareholder, rather than the PFIC, calculated ordinary earnings and net capital gain. That path still depends on access to the books. It is not a way to elect with no information.
A combined statement is a format
Section 1.1295-1(g)(4) allows a PFIC that owns other PFICs to combine their information with its own, in any format, provided the required information and representations are separately stated and identified with the respective corporations. The combination does not reduce the number of elections. An upper-tier election still does not cover a lower-tier PFIC.
Section 1.1295-1(g)(3) allows an intermediary to issue an Annual Intermediary Statement in lieu of the PFIC's own statement only if the intermediary received the PFIC's statement, or received another intermediary's statement that itself chains back to the PFIC's statement, the information matches, and the PFIC's statement contains the inspection representation or the ruling alternative. An intermediary letter written without that underlying statement is not the statement the regulation describes.
Who prepares it
The PFIC provides the statement. The shareholder reflects it on Form 8621 and makes the election by the due date of the return, as extended. Section 1.1295-1(f)(2) requires the shareholder to keep the Forms 8621 and the statements. Failure to produce them at the request of the Commissioner in an examination may result in invalidation or termination of the election. That is the regulation's consequence for a missing file. It is not a description of any other penalty.
Whether the fund can cause the statement to be signed is the structural question in information rights. A third-party fund that will not provide one is the holding discussed in the portfolio holding you cannot elect over.
Recalde Law Firm, P.A. is a Florida law firm with an office in Miami, Florida. We advise on United States law only. We do not practice Cayman law (or the law of any other country). Formation of a Cayman (or other non-U.S.) vehicle, Cayman legal advice, and CIMA registration stay with qualified Cayman counsel. We coordinate; we do not replace them. This is general information, not an offer of fund interests, and not Cayman legal advice.
The firm works on the U.S. structure and documents. The tax adviser prepares the returns and models the numbers.